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Having spent 33+ years in Federal Government service in both Contracting and Information Technology and now as an IT contractor, I’ve been pondering the current situation in contracting for IT services, especially software development. I’ve come to the conclusion that we’re in a real pickle!
Rule #1 of contract type selection is to place as much risk on the contractor as is practicable. We’ve been at the task of software development in Government-Contractor relationships for a few decades now (the Government used to use its own programmers, but that’s another blog post).
Conventional contracting wisdom is that if a process is well known and practitioners of the process are abundant then the amount of risk to either party is low and therefore firm, fixed price is the appropriate contract type. As a COTR and SOO/SOW writer I engaged more than one contracting officer in a discussion of the difficulties associated with this approach. Either the Government defaults to the straight-line method (“just bill the same amount every month”) or each system change is treated as a task order with its own price. The latter is much more in line with what FAR and DFARS envisions but it is also fraught with difficulty.
The other principle for when FFP is the appropriate contract type is that the requirements are well known. Requirements definition for software, when done correctly, is exacting. Ensuring that the software users’ needs are met requires details about data, processes, inputs, outputs, roles, permissions, formats, communications protocols and reporting. Even the best requirements writers inadvertently leave gaps in requirements. Once the requirements get to the developers there is often more than one way to produce the same outcome, each with a different cost. Most of […]
The House version of the fiscal 2013 National Defense Authorization Act (H.R. 4310) recommends raising the Small business goals to 25%. Sen. Ben Cardin (D-Md.), along with Sen. Mary Landrieu (D-La.), chairwoman of the Small Business and Entrepreneurship Committee, introduced the Small Business Goaling Act (S. 3213) on May 22. It would raise the annual prime contracting goal by 2 percentage points, from 23 percent of contract dollars spent with small businesses to 25 percent. It also would raise agency subcontracting goals for small businesses from 35.9 percent to 40 percent.
The bill would also put the onus of succeeding at the contracting goals on the senior executives at an agency. Evaluators would have to consider in their performance how they did in meeting the contracting goals. The goals would become another factor in evaluations, along with productivity, efficiency and meeting affirmative action goals.
However, a survey conducted by American Express in 2011 found that it was increasingly hard for Small Business to get a government contract. The survey found that Small Business are having to spend an estimated 21% more in 2011 to compete for a government contract and succeeding less. As the average total investment made in seeking federal contracts has risen over the past year, bidding activity has declined by nearly half – both in prime and subcontracting activity. The average success rates for active small business contracts in both prime and subcontracting have declined as well – pointing to a more competitive and tighter environment.
Small business bring a number of advantages to the Government including lower overhead, more flexibility with ever changing requirements and increased innovation. As the saying goes, “A smaller ship is easier to turn.” Also Small Business usually have fewer clients and therefore are more dedicated to […]