Procurement

IT acquisition bill would push 'bid-to-price' selection process

Rep. Darrell Issa

Rep. Darrell Issa's acquisition reform bill puts a new twist in the debate between low price and value.

An updated draft Federal IT Acquisition Reform Act might open the door to a new way of choosing how to evaluate contractors’ proposals, and because the source selection technique would be in a statute, agencies could slowly shift toward that approach.

Rep. Darrell Issa (R-Calif.), chairman of the Oversight and Government Reform Committee, included the fixed-price technical competition or bid-to-price method in his FITARA proposal. The little-known selection process attempts to balance price and value while weeding out low-balling bidders.

Under this technique, the agency issuing a solicitation would set a predetermined award price and invite contractors to compete on other factors, such as quality, past performance or technical details. With the price set beforehand, evaluation of proposals would be simpler and based solely on technical factors.

The buyer would need a good understanding of the acquisition’s requirements and the technologies involved to use the technique appropriately. That knowledge is also important to determine whether agencies would be getting the best value from the solutions offered for the established award price.

Issa’s committee wrote that if used properly, the approach could lower bid and proposal costs while simplifying the evaluation process, which can alleviate pressures on the acquisition workforce.

“This type of evaluation technique is not prohibited by the” Federal Acquisition Regulation, the committee wrote. But “the FAR lacks clear guidance on when a ‘fixed-price technical competition’ approach would be appropriate.”

The provision in FITARA is a small part of the overall reform bill, which includes codifying the principles in the Office of Federal Procurement Policy’s Myth-Busters memo and changing the CIO to a political appointee. But the committee pays plenty of attention to the overall concerns about lowest price technically acceptable (LPTA) versus best value in a new discussion document released March 14. It outlines the reforms to the original draft bill, which was released in September. In discussions, Issa received blowback regarding the FITARA provision.

“A few commenters equated this provision with LPTA. That is a misunderstanding,” the committee wrote, arguing the differences as well as the benefits of the provision.

Whichever way it is viewed, Issa is giving the approach credibility, and that might have an impact on agency officials, said Trey Hodgkins, senior vice president of the global public sector at TechAmerica. History has shown that when Congress “blesses” an approach in acquisition, as it would fixed-price technical competition, agency officials tend to use it more frequently, he said. Yet the acquisition workforce is still averse to risk and avoids innovation at times, to the detriment of taxpayers.

Fixed-price technical competition is not widely known or widely used. “They had to explain it to us,” Hodgkins said.

That leads to a larger question about how it would be used.

“How it is implemented will be where the rubber hits the road,” said Roger Jordan, vice president of government relations at the Professional Services Council. Officials will need training and a deep understanding of how it is supposed to work.

However, Hodgkins said the new approach would not foil LPTA, which bases awards on the lowest price. In tight budget times, officials can more easily justify their award decisions when they choose the lowest price, although that can undermine quality.

“LPTA still will be -- if not officially, then unofficially - the overall preference,” he said. And as for fixed-price technical competition, “it still gives overseers the ability to second-guess a decision.”

About the Author

Matthew Weigelt is a freelance journalist who writes about acquisition and procurement.

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Reader comments

Tue, Apr 30, 2013 Louis Jurgens MD

Let's hear it for resurrecting the old "Design To Cost" acquisition model! But we'd need to ratchet up the comp level for government acquisition personnel so better quality folks could be retained.

Mon, Mar 18, 2013 OccupyIT

This is an imminently reasonable approach and one I've seen used successfully. Let’s face it, the USG does a terrible job managing multiple variables and try to compare scope, price, and qualifications against a vague SOO and it has been a disaster recently under LPTA. The USG is being told after award what they bought by the low-ball bidder’s lawyers (take a look at Vanguard 2.2.1 at STATE) – and no surprised they didn’t buy what the HOPED they bought and talked themselves into believing there’s a free lunch. Where’s the pre-award due diligence – AWOL! Don’t people read the FAR? This is naturally followed by massive mods for the smiling LPTA contractor. Anyone want to compare current value of the VG221 award vs. the losers’ original pricing? It’s much easier for the USG to say, “We’ve got this much, here’s our mission and requirements, give us the most you can in solutioning for this because there is no more budget coming!” and judge the proposals accordingly. At least then they’re less likely to chase a pipedream from a slick, low-balling, body-shopping, mod-hungry contractor. These agencies are like abused children now and don’t even seem to notice they’re being taken to the woodshed against their will…. But if LPTA is getting ‘er done…..

Mon, Mar 18, 2013

How will this be possible? Most IGEs are way off. The Govt has essentially lost its in-house expertise to be able to define a requirement and then to develop a price estimate and often relies on contractors to define its needs. So contractors will essentially be establishing the pricing that they or other firms will then bid. Talk about the fox guarding the hen house.

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