NEWS + ADVICE
Pay Cuts, Layoffs and Contract Recompetes
The government essentially has two options when it comes to soliciting work from contracting companies. They can base their selection criteria on a best value basis or a Lowest Price, Technically Acceptable (LPTA) basis. Best value, sometimes referred to as Performance/Price Trade-Off (PPT), needs little explanation. It means the government is willing to pay more to get a better solution or service. LPTA contracts on the other hand ultimately come down to price. The government will rank the proposals they receive in order of price. Beginning with the lowest-priced solution proposed, the government will determine if it meets all of the technical requirements. If it does that company will receive the contract award.
The government will usually provide the previous contract award dollar amount and the number of personnel on the contract to potential bidders. This is important data because, unless the scope of the work significantly changes, companies will always try and bid lower than the last award amount on an LPTA solicitation. Aside from sharpening their pencil when it comes to profit, there are two main strategies bidders use to cut costs:
- Proposing fewer people (resulting in layoffs and an increased workload for the remaining crew), and
- Proposing pay rates that are barely enough to hire minimally-qualified personnel.
Here’s where you come in.
When companies receive the solicitation from the government the list of qualifications needed for your position is usually very different from what you bring to the table. You are a systems engineer with 20+ years of experience, a Master’s degree and a handful of high-level certifications, but the solicitation calls for a systems administrator with 2+ years of experience, no degree and only one certification. Companies who are bidding on the work typically know nothing about your qualifications or your current pay rate. Even if they did, they wouldn’t be competitive if they priced your position to keep you at the same rate. Companies do market salary research using the minimum qualifications identified in the solicitation and propose rates accordingly. If they can divvy up your workload to others, they will cut your position. It’s not about you.
LPTA contracts have grown in number over the last decade due to increasing budget cuts. They aren’t popular with anyone except the people managing the budgets. The warfighter gets an inferior solution devoid of innovation. The customer gets personnel needing significant ramp-up time and additional training. The contracting company fights a constant battle between making enough money to keep the lights on and keeping their customer and employees happy. Employees change jobs more frequently to keep their pay rate in line with their qualifications.
If you’re looking for someone to blame, you’re going to have a hard time finding the right person. Even the top brass are working to curb the use of LPTA. The Under Secretary of Defense, Frank Kendall, issued a memo in March of this year clarifying the appropriate use of LPTA. Summary: Good for buying toilet paper. Bad for buying technical services. Click here to read the LPTA memo.
How should you prepare for an upcoming recompete? If you don’t already know how long your contract is for, ask your company’s Program Manager for the dates of the base period of performance and any option years. Your CAC expiration date should also give you an idea. When the end of the current period approaches, search a government site called FedBizOpps.gov (also fbo.gov) to see if there is a new solicitation. When you find it, look at the selection criteria and determine if it’s LPTA. Then find your own position in the performance work statement and see how you match up with the requirements. If you’re overqualified or if your specific responsibilities aren’t mentioned, you should update your resume and LinkedIn profile.
As I stated at the beginning, I have oversimplified many aspects of the process. There are too many possible variations to account for in a blog post, but I hope this sheds some light on what goes on behind the scenes during a recompete and why it sometimes results in pay cuts and layoffs.
Bill Branstetter is a corporate IT Recruiter, HR Director, Facility Security Officer and IT Manager for ASG in San Antonio, TX. He’s also the author of The Six Second Resume. Follow Bill on Twitter @billbranstetter.This entry was posted on Monday, June 08, 2015 7:28 am