Government Contracts Monitor

New Solicitation Method Fixes Prices, But May Hinder Competition

June 7, 2013

By: Lindsay Simmons

Legislation recently introduced in the House of Representatives proposes a new bid evaluation method called “fixed-price technical competition.”  Under this method, the solicitation would pre-set the award price based on the government’s independent cost estimate, leaving offerors to distinguish themselves based on non-price factors alone, such as technical differences and past performance.  The bill, the Federal Information Technology Acquisition Reform Act, § 503, would amend the Competition in Contracting Act, 41 U.S.C. § 3306(d).  The text of the Act focuses on IT acquisitions but the new evaluation method is not limited to those types of acquisitions.   A recent explanation of the Act by the House Oversight Committee can be found here.

The bill’s proponents contend that fixed-price technical competition will be advantageous in reducing low-ball proposals from vendors who are not actually qualified to perform the work if awarded the contract.  Vendors sometimes offer extremely low prices and create situations where contracting officers are unable to determine whether, and if so how, the proposals are technically insufficient as a result of the discounted pricing.

The government claims that fixed-price technical competition would promote an increased exchange of ideas among government buyers before sending out a solicitation because they would be required to determine the price beforehand.  Another possible advantage would be that it would prevent companies from submitting multiple bids on a solicitation at different prices where bidders do not know whether the government values price or technical aspects more.

Critics of the bill contend that many of these advantages are faulty or non-existent and are outweighed by the drawbacks of fixed-price technical competition.  Low-ball, unrealistic proposals could very well continue, with variations on technical aspects instead of price.  For example, companies could promise to provide more than they could possibly deliver under the given price.  Further, just because price is eliminated as a criterion does not actually force the government to put more thought into the technical specifications in its solicitations.  What it does do is force contractors to fit their proposals into a constricting price range and prevent a wider range of potentially creative proposals.

The bill was approved by the House Oversight and Government Reform Committee on March 20 and now proceeds to a full House vote, for which no timetable has been set.  Stay tuned for updates on this legislation as it makes its way through Congress.

 

This article was drafted by Summer Associate Michael Samuels, with guidance from attorneys Lindsay Simmons and Katie Calogero.