FROM BOOM TO BUST: WHY CONTRACTORS NEED TO BE CAREFUL ABOUT BIDDING ON FOLLOW-ON IDIQ CONTRACTS
Even in the era of “Best in Class” contracts and resultant reductions in contract duplication, contractors must be careful about the number and types of contracts on which they bid. Not everyone produces the business expected. This can be due to a number of factors. Protests sunk the GSA Alliant II SB contract. Inadequate market research has resulted in others being issued without any apparent market for them. Issuing follow-on contracts that look little like their successful predecessors is another. Perhaps the most obvious example of that, so far, is the Army’s transition from Encore II to Encore III. Federal buyers, especially those in the intelligence community (IC), loved Encore II. Its ability to consider both technical factors and price made it a solid vehicle through which the community, the contract’s heaviest user, could issue complex task orders. The Army, though, significantly changed the format of Encore III, making it an LPTA-based contract and introducing other changes popular at that time that made it difficult for the IC community to use it. The Army did this despite consistent expressions of concern from both users and contractors. The Army Encore III team was told several times that users wanted the new vehicle to look largely like the old one. Despite this feedback, the Army ploughed ahead. The result? Federal Procurement Data System (FPDS) information shows that Encore III business plummeted almost 77% from Encore II. Sales data from fiscal years 2017 to current day (after Encore II expired) show that Encore II racked up $1,247,850,080 in sales vs. $289,301,552 for Encore III. It is obvious that the bulk of Encore II work is now being done under other contracts. It should also be obvious to contractors that they need to invest bid and proposal assets wisely. Just because one vehicle has been successful, doesn’t mean that the follow-on will be – especially if the follow on is considerably different. Agencies contemplating follow-ons to their own successful vehicles should take note as well. If your customers and contractors are concerned with your new approach, perhaps that approach should be revisited, even if it is designed with good intentions.