WANT AN EDGE ON THE COMPETITION? INVEST YOUR OWN MONEY
Contractors got a new addition to the term “partnership” last week in the form of a redacted GAO opinion on the Air Force’s bomber protest. Winning contractor Northrop Grumman substantially helped its own case by investing some of its own money in development. As a result, their proposed costs were well-below those of their competitors. Northrop also proposed lower over-all labor rates. While affordability was recognized as being a key factor in this decision, it is also possible that Grumman was keenly aware of the Air Force’s general preference for LPTA contracting. While contractors may balk at both approaches, they clearly worked for Grumman in this specific case. The approach, though, raises critical questions for smaller businesses that may not be able to match their larger colleagues when it comes to the capability to make up-front, corporate investments. Now that the precedent has been set, though, it is possible that other DOD entities will expect to see increased contractor skin in the game. At a minimum, companies of all sizes will have to decide whether and when they can use the Northrop approach and what that means for their competitive chances when they don’t.