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Lowest Price, Technically Acceptable

I would like to preface this article by telling the reader that I have no idea why the Army is purchasing PASGT (Personal Armor System, Ground Troops) helmets, especially considering that they are preparing to transition to the new Enhanced Combat Helmet from the Advanced Combat Helmet that had already replaced the PASGT. Whatever the reason, thankfully they are as it gives me a chance to discuss a rather disconcerting issue.

The Army is looking to award two contracts for a total of 136,350 PASGT helmets. Other than the proverbial “why?” (probably Foreign Military Sales), a couple of things stand out. While there is no set aside, the NAICS code of “339113 — Surgical Appliance and Supplies Manufacturing” is interesting in that it may mean the contracting office knows who will be bidding. After all, what do “Surgical Appliance and Supplies” have to do with ballistic helmets? Another issue is that the contracting office has stated that the ballistic material needed to manufacture PASGT helmets (kevlar) is unavailable and has directed offerors to explain their proposed alternate material. After some checking, the reported lack of kevlar for this project is also questionable. Lots of anomalies here. But all of these pale in comparison to the big issue.

Having mentioned all of those issues, we finally come to the point of this article; “Lowest Price, Technically Acceptable”. Quite frankly, this can be a recipe for disaster and we are seeing more and more contracts go this way. With this method of contract award, your equipment will truly be manufactured by the lowest bidder. For years this has not been the case, especially in instances involving Personal Protective Equipment where the Government used the tradeoff method to examine technical as well as cost factors. In such cases “best value” looked for the piece of equipment that worked best.

The idea of using Lowest Price, Technically Acceptable is to save a couple of bucks. Understandable, but does anyone believe that the Lowest Price method would be used for aircraft? Or nuclear weapons? In a hierarchy of wrongs it might almost be worse to outfit the ground Soldier with cheap kit. After all, these are people we are talking about. Helmets made by the lowest bidder? Body armor? Rifles? Ammunition? Boots? FR uniforms? What if ANY of these items failed due to poor construction or substandard materials? What if something that cost a little bit more did a better job?

Another issue is that saving a couple of pennies now could cost pounds later. Despite the assertion by many that folks in the domestic textile business are rolling in the dough, the reality is altogether different. Running a business in America is expensive, and quite cut throat when your only real customer of any size is the US military. A couple of companies vying for the same business are going to answer solicitations with bids that that are so low that they basically get to keep the doors open and keep folks working. Civilians sales generally aren’t an option since they aren’t going to buy American made products. Low prices at the big boxes have seen to that, and succeeded in moving American jobs offshore in order to sustain those “bargains”. That self-licking ice cream cone is an entirely different conversation.

The competition for military procurement dollars is fierce and many companies stay in the business out of patriotism more than anything else. Under tradeoff procurement rules, a vendor has to show the government that they have the infrastructure and savvy to build the products they are bidding on. The Government also audits them to ensure they will fulfill the contract by looking at their books, processes, business history as well as take a look see at their materials suppliers. Unfortunately, under Lowest Price, Technically Acceptable bids, the Government will look at the cost and examine a sample of the commodity but will likely not look at the firm’s ability to fulfill a contract nor it’s quality assurance program or chain of supply for materials. So if a bidder can craft a sharp looking sample and offer a low price, they are in.

Sounds great right? Wrong. When companies that are not up to the task win bids, we all lose. In the short-term, quality can suffer and in extreme cases, contracts go unfulfilled if they are won by someone who has bitten more than they can chew. It’s one thing to build a one-off prototype and quite another to manufacture thousands upon thousands of an item and meet delivery demands. Even late deliveries mean troops deploy without needed gear. It’s worse when it doesn’t work or doesn’t show up at all.

The second and third order effects can be alarming as well. When companies who have invested in substantial infrastructure in order to support military contracts lose, they may go out of business or decide to refrain from bidding on military contracts. It is not cost effective to keep the doors open when there is no business. Over time, this means that there will be fewer and fewer firms willing to bid. Low prices require competition in the market place. The fewer companies that are left, the less likely they are to offer low prices or to flex production in times of crisis.

In order to avoid such scenarios, it is imperative that military contracting officials ensure that winning bidders are capable of sustaining quality production over the course of a contract. The domestic American footwear, textile, and armor industries are fragile. Berry compliance requires a viable industrial base. Undermining it to save a few bucks is detrimental to the long-term protection of the American service member.

For those who want to learn more go the FAR.

One Response to “Lowest Price, Technically Acceptable”

  1. […] Lowest Price, Technically Acceptable « Soldier Systems Soldier Systems Tactical Tailor . After all, what do “Surgical Appliance and Supplies” have to do with ballistic helmets Another issue is that the contracting office has stated that the ballistic material needed to manufacture PASGT helmets (kevlar) is unavailable and has directed offerors to explain their proposed alternate material. After some checking, the reported lack of kevlar for this project is also questionable. Lots of anomalies here. […]