Smaller Piece Of The Pie For Small Businesses

With the end of the fiscal year upon us, the “feeding frenzy,” as I like to call it, is in full swing. With possible sweeping budgets on the horizon through sequestration, and overall declines in revenues, agencies are unloading end-of-year dollars at a dizzying pace.  It should be particularly good times for small businesses, as opportunities should be plentiful.

Alas, that is not entirely the case. It is the same story, but amplified. Smaller sized contracts, especially those that use simplified acquisition procedures, are still going to large businesses. According to the Federal Procurement Data System (FPDS), it is on track to be about 40%.

Large businesses are getting a surprisingly larger share of contracts that should be going to small businesses because they are known commodities, with a wealth of past performance in a risk-averse environment. However, the lack of small business focus by federal buyers is the main reason.

The single greatest factor is the one true common denominator, the acquisition workforce. A recent story in the Washington Post highlighted the problems industry is facing through the rise of inexperienced federal buyers, and the difficulties in not only awarding contracts, but managing them as well.   

One of the greatest challenges small businesses face is this inexperience. We can all acknowledge that the acquisition workforce is overworked and under-resourced. However, that excuse does wear thin. People need to do their jobs at the end of the day, that phantom word in the federal vernacular; accountability.

As a result, insufficient, or simply no market research, is being conducted to qualify small businesses as eligible for a given solicitation. The question seems to be, why be bothered? I have this large company over here doing everything under the sun; so let me make sure they win this contract. They have all the vehicles, the past performance, etc. They are a known entity. Sounds like a plan!

It is the path of least resistance, as qualifying small businesses, conducting a Request for Information, simply doing a Google search, simply takes too much time. Further, many program offices should be conducting this market research, but many do not understand their roles and responsibilities in the acquisition planning phase. A major point I make in training classes to PMs during Acquisition 101 classes.

The trend of awarding “small business” contracts to large businesses is endemic, and will not abate anytime soon. Small businesses can continue to hope for crumbs, or that someone in Congress actually pays attention to real issues affecting small businesses.

Time versus Money: Taxpayers Take a Bath Again

A recent disturbing story about facilities management by the General Services Administration (GSA) in Chattanooga is a perfect template for how poor (or little) acquisition planning, combined with inadequate market research, creates an environment where questionable acquisition strategy decisions are created. The result is a typical one, where sole-source contracts are created at prices that almost invariable go in only one direction, and quickly surpass any budgets or estimates.

…Taxpayers will foot a $5.75 million rental bill over the 10-year term. The new offices will cost the federal government $1.35 million more than the U.S. General Services Administration's initial estimate over the next decade and triple the amount now spent to house federal prosecutors in Chattanooga…

Here we go, time to buckle up:

…But real estate experts question why the government didn't solicit bids for needed space, which will cost $23,366 per employee for the first five years in the new fifth-floor office at Warehouse Row.

For that much, the U.S. attorney's office could double its number of attorneys and staff to 56 and pay each new worker $11.23 per hour. For the same amount, the feds could buy a median-priced home for each of its employees within the next seven years…

According to the Department of Justice (DoJ), who was the federal customer that GSA was serving, security and proximity where important factors, combined with accessibility standards.

Translation – Our requirements are so unique that our “market research” shows only one source able to meet these requirements. 

…"They would be paying the highest rate in the city," said David DeVaney, president of NAI Charter Real Estate. "You can find space in Chattanooga all day long at $22 per square foot, for full-service, including a generous build-out."

The rent is more than double the previous rate in the same building -- $14 per square foot -- and well above Warehouse Row's advertised lease rate of $16 per square foot.

By not using competitive bidding, federal officials ignored more than 1 million available square feet of office space downtown…

Sole source justifications are of course a vital tool in any procurement toolbox. However, adequate justification is required to circumvent regulations and guidance for ensuring taxpayers will not take a bath.

Regarding the requirements for justification to lease the space that met all the DoJ requirements, which was the impetus for the lack of competition, not to mention the fuzzy math estimates:

…But those justifications weren't mentioned in the original no-bid request…

So the reasons for the sole-source contract were not explained in the justification? Really?

"With the current lease set to expire and facing the need for additional space, the U.S. attorney's office in Chattanooga worked in conjunction with GSA to find an office in proximity to the federal courthouse that met all suitability and security requirements in accordance with applicable regulations," Killian wrote in an email. "GSA conducted a market analysis and determined that the Warehouse Row location was the only location that met all requirements that would serve the office and the community."

However, neither Killian nor the GSA would say what, exactly, drove the rent to the top of the charts.

Translation: We needed the space and we need it yesterday. We checked the boxes, so let’s move forward.

Competition drive price reductions, and in the case of real estate, allows for the government to aggressively negotiate better prices, as real estate managers need tenants to make money. Unused real estate just sits there unproductive.

According to these real estate experts, presumably aware of the DoJ’s requirements, they all unanimously agreed that this was a bad deal.

Translation - Taxpayers lose again.

How Does a Small Business Get on an IDIQ?

Some of the trends that have been written about in 2012, and beyond, is the government relying more and more on issuing task orders via IDIQ vehicles, as opposed to full and open competition and the normal acquisition process.

Although many courses and consultants discuss winning these task orders, little information is available on actually winning the IDIQ, and as a result, winning the ability to even compete for a task order.  

• What is the best way to research these IDIQ opportunities?

• How does a small business get on these IDIQs?

• What is the best strategy to position yourself to win the IDIQ?