Tight budget times have largely forced federal agencies into being low-price buyers. Vendors are seeing more procurements than ever based on price, under lowest-price, technically acceptable procurements.
Lee Dougherty, leader of the government contracting practice at General Counsel PC, says it’s not a new trend and it likely isn’t going away anytime soon.
Lee Dougherty’s Top 3 for 2013
There will be a continued move away from best value and more emphasis placed on price. Throughout 2012, both in contracting and seen in GAO decisions, agencies were focused on getting more for shrinking budgets. Contractors who in the past had focused their efforts on providing a premium service at a premium price began to lose contracts and when protested they lost protests because they failed to recognize that price was the driving factor. That trend will continue and increase in 2013. Even where a solicitation calls for best value, price will be a significant factor. There will be more LPTA solicitations. Price will be the most important factor in contracting for 2013.
Agencies will find a way to consolidate contracts to minimize the cost of procurement. Bundling will see some limited growth. GWACs will continue to grow in use. Reverse auctions or reverse bidding will continue to be used. FSS schedule purchases will take the place of negotiated contracts more. We may also see a renewed interest in multi-agency procurement. Anything that an agency can do to reduce its acquisition workforce and work load it will do in 2013.
There will be less money to spend therefore much greater competition. Regardless of what happens in the next week no one doubts that the outcome will be budget cuts. The past decade has seen an unprecedented rise in government procurement spending and therefore in the numbers of contractors. From $207 billion in 2000 to a height of $550 billion in 2009 the growth of procurement spending far outpaced the rest of the economy. Since 2009 we have seen minor reductions, but there will be more significant cuts this year. Contractors must be prepared for fierce competition for fewer dollars, which means they must find ways to give a better service and they must cut prices or they will not survive 2013.