Stop Being Okay With Patience, Ctd Ctd

In a relevant post, Sharon Weinberger points a damning finger at sole-source government contracts.

The Air Force planned to award a multibillion-dollar contract for a new tanker, based on the Boeing 767,  as a “sole source” — meaning there would be no opportunity for a formal competition. The unusual lease-to-own deal would have cost the Defense Department approximately $37 billion, according to one government estimate.
But the tanker lease contract never went through. The deal derailed after it came to light that Darleen Druyun, a senior Air Force official involved with the tanker negotiations, had also conducted job talks with Boeing’s then–chief financial officer, breaking federal conflict-of-interest laws. Almost 10 years later, Boeing won the tanker contract — this time, in a full and open competition.
The nearly decade-long tanker battle is typically viewed as a fiasco. But taxpayers actually benefited from it. According to EADS, Boeing’s European rival, the competition saved the Air Force $16 billion by driving down Boeing’s offer price. The Air Force, for its part, says that it got a 20 percent cost reduction from Boeing by holding competition, which still places the savings in the billions of dollars.

But even worse, here's this little quotelet:

"The vast majority of the dollars on sole source contracts are simply follow-ons to large contracts,” said Jacques Gansler, who served as undersecretary of defense for acquisition, technology and logistics from 1997 to 2001."

If you've been following this thread you'd understand how absurd this sounds. A company that won a mega-contract gets a second even larger (continuation) mega contract without any competition.


It's not like Sharon and I are the only people who realize this is a problem, either:

Competition helps in a lot of ways, ranging from price to quality, according to Scott Amey, general counsel for the Project on Government Oversight. “If you know somebody else can step in, it acts as an incentive for the incumbent to do good, because the next contract could be awarded to someone else,” he told Danger Room. “To play the skeptic, if you know no one else is out there, will the contractor be performing at 110 percent?”

But the problem isn't solved just by making competition for the contract competitive. There really does need to be a heavier incentive to complete the tasks of the contract in the given time and budget. One way to increase the incentive is to increase the penalty for failure.


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