Blizzard of Bids

Early reviews help agencies and contractors save time and money in the rush for Iraq rebuilding work.

Dan Mehney needed help. The director of acquisition for the U.S. Army's Tank-automotive and Armaments Command was about to get blitzed with hundreds of bid submissions from companies hoping to get in on $5 billion worth of Iraqi reconstruction contracts. He wanted a quick and easy way of narrowing his choices.

Mehney doesn't remember who suggested it, but his team decided to use an obscure rule in the Federal Acquisition Regulation, the guide for federal agencies buying goods and services. The rule allows agencies to give companies an early clue as to whether their bids will likely be competitive based on preliminary information.

Under the process, prospective bidders submit basic information about their companies, including past performance, organizational structure and financial capability, but leave out cost projections. Agencies then review the submissions and respond with a short letter that advises bidders whether they should submit a final proposal. Despite its potential for savings, the process is used infrequently, partly because procurement officials aren't familiar with it, or they don't see how it could help them.

"It probably saved us time and energy looking at companies later on," Mehney says, when each rejected proposal would have required a detailed debriefing that could take days and stacks of paperwork.

The 40-year veteran of federal acquisition projects says he had never used the process before, and it is most helpful when agencies are expecting many bids, particularly from lesser-known companies.

First introduced into the Federal Acquisition Regulation under the Clinton administration as a way to save agencies and contractors money, the advisory multistep process-also known as advisory down-select-failed to gain the momentum its creators had envisioned. Their intentions were straightforward: Agencies shouldn't waste their time on in-depth reviews of weak proposals, and contractors shouldn't spend money writing them.

"Many firms said, 'If you're not interested in us, tell us early,' " recalls Steven Kelman, administrator for the Office of Federal Procurement Policy under Clinton. He encouraged the use of the advisory multistep process, as does the Bush administration.

In practice, the benefits are elusive. The advisory process is useful in situations such as Iraqi reconstruction, in which an agency expects many bids from unqualified companies. But it is not as helpful when agencies anticipate only a handful of proposals from well qualified companies. Also, some companies that receive letters of deficiency still submit proposals in the final round, diminishing savings from the early advisory.

Still, some companies are glad not to be led on. When George Heidenreich, executive manager at Integrits Corp., a San Diego-based information technology company, was working on the strategy for winning a bid to install computer systems on a ship for the U.S. Navy, he spent just three hours writing a five-page summary of his company's relevant work experience.

Writing a final proposal, he says, would have cost Integrits between $250,000 and $450,000. "It saves you from spending a whole lot of money to bid efforts where your capabilities aren't viewed favorably by a potential customer," he says. He compares the process to having a teacher read over an essay outline before it's due.

After receiving about 150 submissions for the advisory process, Mehney's Iraqi reconstruction team sent rejections to more than half, and received 88 final proposals. He says it's impossible to estimate how many firms dropped out of the competition as a result of the advisory they received and how much money the government saved. He did, however, hear words of appreciation from contractors, who said they saved money from getting the "thanks, but no thanks" news early.