Our Government customers used to award on a "best value" paradigm in which they were often willing to pay a little more for superior products and services. IS&GS prospered in that environment and was able to provide its employees with better than average pay/benefits as a means of retaining a superior workforce. After decades of Government waste and mismanagement that buried the country in $18 trillion of debt, that best value paradigm has changed, and nearly all contracts (especially services contracts) are now awarded to technically adequate, lowest price offers. In an effort to be competitive in this cost shootout environment, IS&GS has had to bid 3-5% profit margins and hope that we win enough (and perform well enough when we win) to remain viable. As we continue to lose bids based on price, our direct labor hours decrease which, in turn, increases our overhead rates. We're in a graveyard spiral that we can't get out of. So Management now faces limited choices: 1) continue the same course and watch our sales and profit margins continue to decline as other companies undercut our prices, 2) further reduce employee pay/benefits and overhead to the bare bones and live with 3% margins in hopes of competing with the hundreds of other companies who are also trying to survive, or 3) get out of the "services" business and focus on the other LM core businesses that traditionally have higher profit margins. Management is responsible for maximizing shareholder value, not ensuring that employees have the best pay and benefits. That's the reality of the situation, and it's likely to be ugly for the employees. Unfortunately, this is probably the new normal.
Is this a repost? The Lockheed Martin I knew got contracts not so much based on "superior products and services" but sole source awards & follow-ons and very generous defense & intel budgets (not to mention buying up all the other companies and the ever-popular strategy of overrunning cost-plus contracts). Surely they were not alone in these pursuits.