Competitive Pressures Loom for Defense Tech Firms

ROSE COVERED GLASSES

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“NATIONAL DEFENSE MAGAZINE”
“The Pentagon is spending less on contractors, wooing new vendors and selecting the lowest bids.
That confluence of trends has been discomforting to many defense companies, especially information technology providers that compete for a share of the Pentagon’s $37 billion annual IT budget.

The government’s increasing focus on price has been “incredibly disruptive” in the IT services market, said Timothy Wickham, managing director at the consulting firm Avascent.

The Defense Department opted for “lowest price technically acceptable” bids in about 36 percent of its contract awards over $1 million in fiscal year 2013, up from 26 percent in 2009. And the trend is likely to grow as the government comes under greater pressures to cut costs, Wickham and other experts predict.

The shift to LPTA rewards lean companies even when they may not have the technical and scale advantage of other contractors, Wickham said.

“LPTA is a…

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