President Obama is attempting to reform how Defense contracts are granted by greatly reducing no-bid contracts and opening up the process to more small businesses. No doubt there are several abuses of no-bid contracts by large companies, especially those in war zones who are simply not performing the work requested. But there is a reality when dealing with the govt as a small business. First off, direct contracts with the Federal govt require a lot of overhead to keep up-to-date with the volumes of regulations. Compliance with all these rules requires an entire staff which the vast majority of small companies cannot afford.
Another very expensive exercise for companies is the proposal process, which is often delayed multiple times before awarded and uses hundreds of man-hours on B&P. Of course all these delays and overhead charges are incorporated into the rates charged to the govt. So while generally competition is much better than not, sometimes no-bid contracts save the govt money when dealing with specialized contractors who have expertise in critical areas.
So what is my solution? Pay govt employees more. May sound like I’m trying to increase the size of govt but it is actually the opposite. Given the current pay scales and incentive structures in the govt, it is generally difficult to recruit good technical and management talent. While many contractors neglect their duties or underperform, the real issue is that they are not held accountable by their govt sponsors. More times than not, the problems could be mitigated early in a contract but too often the govt sponsors in charge of the contractors do not understand what they are being asked to manage. Once the problems are realized, the govt sponsors do not want to look like they were incompetent so it creates for some easy situations for contractors to milk the govt for more money because it is common to “throw good money after bad”. To prevent this we do not need more people to perform oversight, etc, but rather the same, if not fewer, people performing the oversight properly which means recruiting and keeping real talent and not those looking to get a stable low-stress govt job.
NOTE: In full disclosure I have been a Federal contractor for almost 13 years of which the last 9 was as a small business owner and I have and do work with many talented and hard-working govt officials.
