The stingy and much maligned federal market is still well over $ 500 billion annually. The core functions of government still need to happen, although probably slower than before the tightening of the purse strings.

Layoffs and furloughs of federal employees will soon the happening. Who will they turn to perform what’s needed to keep the government operating. Service contracts because service levels can be adjusted with the stroke of a pen.

And how will they buy the required services with an already overburdened contracting staff? With multiple award contracts know as “IDIQ contracts”.

In an IDIQ contract a number of contractors are pre-qualified based on experience and prices and awaked large, five-year umbrella contract without any funding of work. Services are ordered and funded through task orders as the need arises during the five-year period.

Theoretically, the competition for an individual task order (funded work) is limited to the winners of the IDIQ contract (awardees). In practice, the real number of competitors for a task order is usually considerably less than the total number of awardees.

And what will they do when they don’t have enough contracting staff to write, publish, evaluate, IDIQ contracts? Award IDIQ contracts for acquisition services. In other words, hire contractors to assist in awarding contracts. A well-kept secret in federal contracting is that around one billion dollars a year are spent on acquisition contracts.

And what will be the upcoming IDIQ contacts for services?

1. Government-wide Acquisition Contracts (known as GWACs) for information technology services an products

2. GSA Schedules for professional and operating support services GSA schedules are GWACs.

3. Agency specific IDIQ contracts for professional, information technology, engineering, and technical services

4. Construction and facility maintenance IDIQs let by facility construction and service agencies like the Corp of Engineers

And what will be the hot service areas for the next several years?

• Funds recovery
• Health program services
• Productivity improvement services
• Transaction processing
• Constituency Services

Even congress knows that transactions still need to be processed, constituency checks still must be written. Government services still have to be provided even though they may be slowed down for political purposes.

Business Development in federal contracting usually means a combination of marketing (web site, brochures, white papers, etc.) and opportunity identification.
In many companies opportunity identification is exclusively research based without a relationship element.

Research for opportunities usually includes agency web site research, procurement forecast analysis, purchase of commercial opportunity databases, etc. While these opportunity sources are valuable they often end up with the need for frustrating and expensive cold calls.

The best source of opportunities is people who have relationships of any kind with potential federal buyers. This type of opportunity identification is inherently more complex than research and is difficult to manage and control as a standard business process. A relationhip-based process could include the following sources of leads.

1. Contract employees working on site at a federal facility. The advantages of this source are obvious. The employees can form strong bonds with the people they work with every day. The downside is that they may think selling is not ethical or do not have the type of personality that recognize opportunities.

“Selling as you work” is not unethical and is a valuable process for successful federal service contractors. You get paid to sell and the federal government understands that this type of sales is inherent to contacting is done off the clock.

2. Your subcontractors, business partners, team members, etc. can be valuable opportunity sources as long as the relationship is mutually beneficial.

3. Your employees can have federal friends and acquaintances that you are unaware of but could be helpful for referrals and introductions.

4. Company management may have friends and/or business relationships that can be of assistance in developing business.

The problem with the use of people relationships to grow more relationships is that someone has to make “asking for the lead” a more formal process than it is in most companies.

Federal market statistics are notoriously confusing, incomplete, and difficult to find and analyze. GSA schedules are the biggest and widest multiple award contracts. GSA schedule sales are reasonably accurate; around $ 40 billion annually for all schedules, and represent about 20% of new contract awards. They can be used as a measure of the federal market for most products and services. A rough estimate of the annual market for what you sell is five (5) times GSA schedule sales. This is a gross measure and should be considered as a guideline only. But the measure is better than other contact award
statistics published by the federal government.  Top down market analyses (government-wide or at an agency level) will only tell you that federal agencies buy what you sell in gross amounts. They don’t tell you what specific products and services were bought or who bought them.

The federal purchasing process often does not reflect what is really going on concerning the amount of competition for a bidding opportunity because of the need to show the public the perception of competition for taxpayer contracting dollars; why?

1. Open competition is too expensive and time consuming for most federal purchases. The government would grind to a halt if open competition were used for every purchase.
2. Federal buyers cannot just purchase a product of service without following rules concerning the amount of competition required. Limited competition is allowed and the number of bids required depends on the dollar amount of the purchase.
3. The actual competition is usually less than allowed by the rules.
4. Discussions with vendors early in the buying process is critical so end users know the features, benefits, and value of what they are buying.
5. Contracting officials often discourage early discussions (pre-selling) when in fact the federal purchasing regulations actually encourage it.
6. Contracting officers do not tell prospective bidders about pre-selling activity that may or may not have taken place; in order to give the appearance of a level playing field.
7. The award file and what it shows on paper is the all-important document in federal contracting.
8. The appearance of completion in the award file is as important as actual competition because the file has to pass the scrutiny of superiors and the unsuccessful competitors, and survive an audit by federal auditors.

What should you know as a newcomer to the federal market?

1. Federal end users (the decision makers) are risk averse because their jobs and reputations depend on contractor performance. As a result, in most cases they will select the known company over the new company.
2. Incumbent contractors usually win reoccurring contracts. They have an inherent edge because they know the contract and the customer inside and out. Some say they should not be able to compete for contracts that they hold but that would be not be practical or cost effective for the federal government.
3. Companies with federal customers have a built in sales network because they are known to their customers and use customers for referrals to other customers. They can pre-sell as they preform contracts at little cost.
4. Aggressive pre-sellers have an edge (whether new to the market or insiders) because they know the customer and the customer knows them at the time of the bid.
5. In short, newcomers to the market have a tough sales job and experience long lead times. Yet the government selects new comers every day who execute aggressive sales programs, and get to know the customers well ahead of the announcement of a contract opportunity. In some cases before the customer has even defined the purchasing requirement. Newcomers also need to know the purchasing rules and the ways to close deals they have sold within the rules.

Call me directly, I’m happy to answer your basic federal contracting questions.

Regards,
Richard White
President
Fedmarket
rwhite@fedmarket.com
301 908 0546 (cell)