Defense Acquisition: Competition Is Not Just About Price

Competition has many benefits: It fosters the growth of new businesses; puts downward pressure on prices; and pushes companies to innovate in order to offer the best possible services and products.

Frank Kendall, Under Secretary of Defense for Acquisition, Technology and Logistics, has ordered several policy changes to ensure that the defense acquisition community is implementing competitive bids.  This comes out on the heels of the launch of the first draft of the Better Buying Power 3.0 (BBP 3.0) initiative, which is intended to help remove the bureaucracy and other barriers to buying commercial products. It will also help incorporate industry feedback into final solicitations.

“Given the declining trend in competition in the department and in light of today’s limited resources, we must maximize our use of direct and indirect competition. Every dollar saved through competition benefits the warfighter and the taxpayers,” Kendall wrote in the new guidelines for building a competitive acquisition strategy.

Some of these strategies include:

  • Urging program managers to avoid being locked into a single vendor by using open systems architectures wherever possible.
  • Making sure the government owns enough intellectual property so that it can maintain a competitive environment.
  • Asking would-be bidders why they chose not to participate in a particular bid.

While much of the public-facing efforts of this new strategy focus only on the price issue, the new guidelines also tout the innovation benefits that come from competition. Here are some key points:

  • Competition spurs innovation of transformational technologies, which allows the Department to field the best weapons systems for U.S. warfighters quickly.
  • Competition yields improvements in the quality of products delivered and services rendered (firms that turn out low quality are driven out of the market and are unable to effectively compete).
  • Competition affords the Department the opportunity to acquire performance improvements (e.g., faster, lighter, more sustainable) by using “best value” source selection criteria.
  • Competition provides opportunities for capable small businesses to enter new markets.

While on the surface this new acquisition effort is all about lowering price, there is much more to it, which will hopefully move us away from the “lowest price, technically acceptable” (LPTA) mentality.

Innovation and supporting mission goals should be paramount for any acquisition strategy, and competition amongst industry could help us get there.

As John Ruskin famously said more than 100 years ago; “There is hardly anything in the world that someone cannot make a little worse and sell a little cheaper, and the people who consider price alone are that person’s lawful prey.”

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