Most companies I know pursuing federal agency contracts, are constantly on the lookout for ways to increase their ability to find and win business while not increasing (or decreasing) their cost of acquiring that business. The logical tendency is to ‘follow the money’ since more dollars being obligated can often equate to more opportunity.
But not always.
I recently analyzed agency obligations from FY2010 through FY2014 to identify areas of greater opportunity for small federal contractors. To establish a baseline I looked at initial obligations, specifically excluding dollars resulting from modifications based on the premise only the company with the contract being modified has a shot at those dollars. I only considered awards where the contracting officer indicated the order went to a small business concern whether a set-aside was used or not, and I limited the review to company’s receiving obligations of $500,000 or more. To clarify, a small business made my list if FPDS-NG showed agencies obligating at least $500,000 in total initial awards against a purchase order, definitive contract, BPA Call (purchase against a Blanket Purchase Agreement) or delivery/task order (a purchase against a Basic Ordering Agreement, GSA Schedule, Governmentwide Acquisition Contract or Indefinite Delivery Contract such as an IDIQ or MAC).
Comparing Two of the Easy Procurement Methods
When it comes to the ease of doing business with Uncle Sam, outside of Micropurchases, the GSA Schedule and Simplified Acquisitions are my top two. The rules for both make it easier for agencies to do business as well as vendors, although the GSA Schedule ‘application process’ often leaves many companies wondering ‘is this trip really necessary?’ There is no application process for Simplified Acquisitions unless the agency intends to make such an award against an indefinite delivery vehicle (IDV) such as a BOA, BPA, FSS, GWAC or IDC. Additionally, where the GSA Schedule is a contract vehicle with specified line items and pricing, Simplified Acquisitions are more flexible and can be used to purchase goods and services not available through the Federal Supply Schedule. Take construction for instance. For the record, the GSA Schedule accounts for roughly two percent of Simplified Acquisition obligations during this five year stretch, so while it does account for some dollars it’s not really a factor in the scheme of things. In the last two fiscal years, that number has dropped below one percent.
Here’s another reason they can be easier. The prevalent solicitation type used is the Request for Quotation (RFQ) which normally demands a lower level of effort for agencies when issuing them, and for vendors when responding to them. Add to that less time between need identified and purchase occurring, and you might agree these represent easier ways of doing business.
GSA Schedule Impact on Small Business
Of the $2.5 trillion in obligations reported to FPDS-NG during the last five completed fiscal years, $108 billion was to the GSA Schedule (GSA reports $184B via their Schedule Sales Query Tool). Of the $108 billion, $22.3 billion was the result that matched my criteria with $1.8 billion of that attributed to VA Federal Supply Schedules. This total includes $2.3 billion in Simplified Acquisition obligations. The $22.3 billion was distributed among 3,790 concerns identified as small business by contracting officers.
Here are some stats to help you understand the breakdown of the FSS spend:
- Of the total spend ($22.3 billion), only $4 billion was set-aside for small business
- The vast majority of these obligations, $22.2 billion in fact, were tagged as ‘competitive’ buys
- FPDS-NG indicates $6 billion of these buys were solicited through FedBizOpps
- All but $41 million of the obligations were issued as ‘delivery orders’ while the rest were orders against GSA/BPAs
Simplified Acquisitions Impact on Small Business
Here’s where I was very surprised. While I am a big advocate of Simplified Acquisitions and may have hoped for results like this, the truth is the FSS still accounts for more overall spend although SAP has narrowed the gap greatly over the years. Bear in mind this analysis does not take into account total FSS spending since the GSA Schedule is used by agencies, boards and commissions who do not report to FPDS-NG. This also means there are Simplified Acquisition dollars not reported to FPDS-NG as well. Nevertheless, the results are still pretty cool and pretty telling once you see the difference in how much of the total spend each accounts for in a given fiscal year.
Here we go.
Obligations made when agencies employed the Simplified Acquisition Procedures during FY10 to FY14, total $83.4 billion. That’s a difference of $25 billion in favor of the FSS. The amount that matches the criteria I used for this assessment is $18.3 billion, which is four billion less than the FSS total. With that said, here’s how it breaks down:
- FPDS-NG reports 4,755 small business concerns received $500K or more in initial award obligations during this period. That’s nearly 1000 more small businesses in favor of Simplified Acquisitions.
- The prevailing ‘award type’ is purchase order accounting for nearly $11 billion. Combined with definitive contracts, dollars obligated to non-IDV or ‘standalone contracts‘ account for $13 billion of the $18 billion. The remaining $5 billion is split between BPAs, BOAs, GWACs and IDIQs with the FSS accounting for an average of two-percent of the spend reported to FPDS-NG.
- Competitive buys account for $14.5 billion.
- Just over $7 billion was set-aside for small business.
- FPDS-NG reports $6 billion having been solicited through FedBizOpps.
Here’s another perspective. Here are the number of small business concerns (based on individual Global DUNS Numbers) who received at least $500k during the reviewed period listed as Fiscal Year – SAP/FSS:
- FY10 – SAP 1232/FSS 1908
- FY11 – SAP 1492/FSS 1644
- FY12 – SAP 1272/FSS 1685
- FY13 – SAP 1495/FSS 1425
- FY14 – SAP 2036/FSS 1407
Comparing the respective trajectories helps with understanding these results.
The Big Finish!
Please don’t put off your plans of getting a GSA Schedule based on this information, that’s not the intent. However, you likely will want to ensure how good of a fit the GSA Schedule is based on the agencies you intend to pursue and your offering being a good fit for the FSS. You may also want to explore the opportunities related to Simplified Acquisitions since those buys are different than orders placed against the GSA Schedule. In order to make a good and sound decision for your company, a deeper dive is needed to tell you which agencies are buying what you offer, to what extent and which award instruments they prefer. Getting the information you need is not difficult, in fact it’s pretty simple, and it could provide very useful in how your company views and approaches the federal sector.
Here’s one last perspective. During this five year period, 573 companies on this list have shared $12 billion in federal agency obligations when Simplified Acquisitions were used. How much did the ‘low company’ on the list make? At least five million or $1 million for each year of the report, all from Simplified Acquisitions. Did I mention these are small business concerns according to FPDS-NG?
If you work for or lead a small business pursuing federal contracts, how much of an impact would $500,000 or even $250,000 in sales this fiscal year have on your peace of mind?
Peace (of Mind)!
Guy Timberlake, The Chief Visionary
“The person who says it cannot be done should not interrupt the person doing it.”