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Share in savings: Where are the emperor's clothes?

Today FCW.com has a story about share in savings. Essentially, the future of the unconventional contracting practice is uncertain because lawmakers have failed to revive expired statutory authority.

That may be true, but the future of this contracting practice has been in question for some time – and not because of any statutory authority. The statutory authority was there and (I'm exaggerating to make a point) nobody was doing it.

For those of you who don't know, share-in-savings is an innovative type of contract where the vendor gets paid more if the system produces some kind of savings -- literally, the contractor shares in the resulting savings.

From my perspective, that is because of a number of factors. One is the time and place in which we live. People are nervous enough about procurement issues without trying something that might get them in hot water of some kind.

But I have wondered that if this is such a good idea, why has it been so difficult? One can argue that feds are slow to adopt new ideas… OK, well, my experience is that feds are slow to adopt ideas that have yet to prove themselves. But industry has also not been rushing to implement these contracts either. So there has been a lot of time, effort and energy spent by GSA, by Davis's people, some time and effort by OFPP… but if something is this difficult to implement, what does that mean?

I'm not making a pronouncement one way or another. Many people who I respect deeply – Drabkin, Kelman, Flyzik – believe share in savings is the way of the new world, but… why is everybody so afaid?

Posted by Christopher Dorobek on Jan 30, 2006 at 12:15 PM


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