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Follow The Money, Small Federal Contractors.

In two recent posts I asked and answered the question about the economic impact of small federal contractors receiving $500,000 or $250,000 in agency obligations in a given fiscal year when the procurement method was either the GSA Federal Supply Schedule or purchases made using the Simplified Acquisition Procedures. To say the results surprised quite a few, including me, would be an understatement.

So naturally, my curiosity was piqued and I decided to expand the field of view a bit more.

The results continue to surprise me.

In my latest analysis I reviewed obligations made during FY2014 when agencies leveraged an Indefinite Delivery Vehicle (IDV) such as 16467121_l whats in the cana BOA, BPA, FSS, GWAC or IDC, and IDV or Non-IDV Awards such as a BPA CALL, DEFINITIVE CONTRACT, DELIVERY ORDER or PURCHASE ORDER. For the record, an IDV is the class of contracts and agreements awarded to one or more vendors to facilitate the delivery of supply and service orders. IDVs are specifically the only type of award that can have orders placed against them. In many cases, contract actions establishing IDVs don’t involve dollars changing hands since the initial award can represent the issuance of a ‘hunting license’ for future opportunities.

For example, if your company has a GSA FEDERAL SUPPLY SCHEDULE, GWAC or multiple award BPA, BOA or IDIQ, the very first transaction in the Federal Procurement Data System-Next Generation (FPDS-NG) will be referenced as an ‘IDV’ with an ‘Action Obligation’ of $0 unless somehow a delivery or task order accompanies that initial award. For established contract vehicles like these, the money movement occurs when agencies issue an AWARD in the form of a DELIVERY ORDER which in FPDS-NG represents a delivery (product) or task (services) order placed against a BOA, FSS, GWAC or IDC, or a BPA CALL which is a delivery or task order placed against a BLANKET PURCHASE AGREEMENT.

When agencies make a purchase of goods and services not attributed to an established contract vehicle, they use a DEFINITIVE CONTRACT or PURCHASE ORDER which are considered standalone contracts. All of these terms are how agencies describe these contract and agreement instruments in the Federal Procurement Data System. Not familiar with them? This is a good time to read up on them as this knowledge can enhance the development of competitive intelligence.

Additionally, I did not include dollars resulting from modifications (such as ‘exercising an option’ or ‘new work in or out of scope’) rather, I only considered dollars resulting from one or more competitive or non-competitive initial awards. My threshold for this report is $250,000 or more in cumulative obligations during a fiscal year. Literally, a drop in the bucket when you consider the number of dollars that move in this business each fiscal year.

3076411_l drop in bucket moneyTo set the stage just a bit more, here are some additional data points:

  • Fifty-five agencies, boards and commissions contributed to this spending
  • Competitive awards accounted for nearly $48 billion of the total spend
  • Agencies reported posting notices to FedBizOpps for nearly $30 billion of the total spend
  • Just over $22 billion of the total spend was not the result of a set-aside procurement

The following summary provides a snapshot of:

  • how much agencies obligated;
  • how many small business concerns were impacted by the various Award/IDV Types, and;
  • the top goods and services purchased by agencies based on the Product and Service Code (PSC) classifications.

Small Business Economic Impact in Dollars and Cents
32323643_l slice of american dollar pie

According to information reported to FPDS-NG, during fiscal year 2014, the dollars meeting my analysis criteria totaled $56,555,134,125.99 and made its way to 28,313 small business concerns.  This made the average award nearly two million dollars per small business. Keep in mind this total does not include dollars resulting from modifications which in FY14 accounted for more than half of the $443 billion in obligations reported to FPDS-NG.

For the record, the small business concern at the top of this list took home $857 million in obligations.

Obligations to Indefinite Delivery Vehicles

If you are one of the many vendors who has been awarded an established contract vehicle such as a BOA, BPA, FSS, GWAC or IDC, here’s a summary (by IDV Type) of what occurred during FY2014 when small business 24961529_l growthconcerns were awarded at least $250K in total initial awards:

  • Basic Ordering Agreement (BOA) – 219 small business concerns captured $483 million in orders against this IDV type.
  • Blanket Purchase Agreement (BPA) – Of the $2.7 billion obligated to BPAs, only $7.6 million was attributed to GSA/BPAs (accounting for nine small business concerns meeting the criteria) while standalone BPAs contributed to 1,531 small business concerns making my list.
  • Federal Supply Schedule (FSS) – Not including the dollars attributed to the GSA/BPA obligations, the GSA Schedule rang up $3.8 billion and added 2886 small business concerns to the list.
  • Governmentwide Acquisition Contract (GWAC) – These information technology contract vehicles accounted for $2.5 billion and 833 small business concerns. Wonder how many of those came from STARS II? Maybe next time.
  • Indefinite Delivery Contract (IDC) – This includes IDIQ, MAC and a couple of other contract types no one in industry ever talks about. This IDV subcategory accounts for the overall biggest impact on small business concerns. IDCs come in at $29.4 billion in related obligations with its impact felt by 10,672 small business concerns.

In the end, Indefinite Delivery Vehicles and their associated awards accounted for $39 billion in FY14 obligations that touches 16,150 small business concerns. Not bad. That’s an average of $2.4 million per small business.

Now let’s see how the Non-IDV obligations fare.

Obligations to Standalone Contracts (Non-IDV)

I’ll try to make this short and sweet, but there is a lot of goodness to share.

I’m sure I’ll repeat myself somewhere in this post, but I need to put it out there for all of the non-believers who have been sucked in by some of the less than scrupulous consultants and mills hocking GSA Schedules and others who would have  you believe federal contract spending doesn’t occur unless somehow attached to an established contract vehicle. That’s just not the case. In fact, obligations made to IDVs during FY14 only exceeded Non-IDV obligations by two billion dollars. The year before (FY13) Non-IDV dollars exceeded IDV dollars by $8 billion.

16217555_ml growthThat said, there are two Non-IDV Awards and they are Definitive Contracts and Purchase Orders. The most significant difference between these and IDV awards in FPDS-NG is that Non-IDV Awards  have only one contract number (known as a PIID or Contract ID in FPDS-NG) whereas, orders placed against an established contract vehicle have two contract numbers. One being the unique identifier for the order (Contract or Award ID) and the second being the reference to the contract vehicle the order was placed against known as the ‘Referenced IDV PIID’.

During FY2014, these two award types contributed this way:

  • Definitive Contract – 7,344 small business concerns benefited from this award type to the tune of $13 billion. Over the last few fiscal years, the delta between Definitive Contracts and Delivery Orders (represents orders against BOA, BPA, FSS and IDC) has been little more than a rounding error. They currently represent the two biggest pots of the fiscal spend each year.
  • Purchase Order (PO) – While most often associated with Simplified Acquisitions, not all purchase orders are for buys under the Simplified Acquisition Threshold. For FY2015 I’ve seen three PO’s to the same company worth at least nine million dollars each. For this report, POs accounted for $4.2 billion in spending with a reach extending to 4,819 small business concerns.

Ultimately, standalone contracts impacted 12,163 small business concerns or seventy-five percent of the number of companies touched by IDVs. That was accomplished with less than half of the dollars that IDVs had to work with, $17.5 billion as opposed to $39 billion. In my opinion, that’s a good spreading of the wealth.

What Agencies Were Buying

The PSC classification is used in FPDS-NG to describe the primary goods or services purchased in a specific transaction. For FY2014 there were 1,351 Product and Service Codes (PSC) referenced Featured Image -- 4329based on the criteria I used. The top ten (10) account for $12.5 billion of the $56 billion obligated and include:

  1. Support Professional: Other
  2. ADP Software
  3. Precious Metals Primary Form
  4. IT and Telecom – Other IT and Telecommunications
  5. Fuel Oils
  6. Support Professional: Engineering/Technical
  7. Construction of Miscellaneous Buildings
  8. Repair or Alteration of Miscellaneous Buildings
  9. Support Professional” Program Management/Support
  10. Fruits and Vegetables

NOTE: A top ten list of PSC Codes for IDV Awards accounts for $10.1 billion and contains eight of the PSCs listed above, while a top ten list of Non-IDV Awards accounts for $3.8 billion and contains just five of the PSC Codes listed above.

If you want to know to which NAICS Codes these PSCs were attributed, you can pretty easily do that in an ezSearch in the Federal Procurement Data System. In fact, you can tell which agencies down to the specific contracting offices made the buys and much, much more. If you’re timid about using FPDS-NG, keep an eye out for my #AskGovConGuy: FPDS-NG for Government Contractors webinars and seminars. These are fairly-priced two-hour overviews of using this system to perform simple but essential queries on this key repository of government contracting data.

My Conclusion
19310684_l

As I normally say, you need more information than I’ve provided here in order to narrow the field to your offering, current and prospective customers, place of performance, etc. However, this should give you substantive clues for where to look or how to adjust course. The bottom line is the bottom line, follow the money.

I plan to keep asking the question. What impact will $250,000 (or more) in realized revenues this fiscal year have on your small business, and when will you do what’s needed to achieve those results?

Peace!

Guy Timberlake, The Chief Visionary
http://www.theasbc.org/visionary

“The person who says it cannot be done should not interrupt the person doing it.”

About Editor-in-Chief Visionary

Guy Timberlake is the Editor-in-Chief Visionary of GovConChannel and oversees the creation and curation of relevant and timely 'News And Information That Matters To Small Government Contractors.'

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  1. Pingback: Growth Opportunity for Investors | GovConChannel - November 14, 2015

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