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ACQUISITION & CONTRACTING, Chief Visionary's Blog, FEATURED ARTICLES, Industry Contributor, Industry News, Op-Ed/Blog

Win-Win Game-Changer in Government Contracting

GTThere’s change afoot in government contracting that if adopted, could actually achieve the always elusive win-win scenario. Its origin? Quite literally the last place on Earth anyone would expect something like this to have roots.

The business of contracting (and subcontracting) with civilian, defense and intelligence agencies of the federal government can be a tremendous opportunity for those who crack the code, persevere and receive some old-fashioned, but never out of style, luck. For the vast majority, however, it is a frustrating black hole sucking the life from companies of every size and discipline due to any number of business processes and life cycles unique to this domain.

When you consider the initial registration to be a government contractor, the multiple classifications such 11224434_l questionas NAICS and PSC used to describe products and services, the small business programs and, of course, the Sources Sought Notices, Requests For Information, Requests for Quote, Requests for Proposal, Contracts, Contract Vehicles, Task Orders, Delivery Orders…

I think you get the idea.

Even so, companies from around the globe continue to stick their proverbial toes in the water to gauge the opportunity based on what they’ve seen and heard about the mythical ease of achieving a windfall in Government Contracting. In the end, some are able to carve out an existence to sustain an established or desired lifestyle, and others achieve the growth that allows them to execute the succession event they envisioned at the start of their journey in GovCon.

22339080_l cannot reach ladder broken strategyOf the many challenges facing Government and Industry today, in my opinion, efficiency is at or near the top of the list. Achieving and maintaining efficiency in business operations speaks directly to the cost of doing business, something Government is desperately trying to decrease, as are the companies who support them. For agencies it means more or fewer dollars to execute and sustain organizational missions, and for vendors it means being in or out of the competitive range and realizing profit objectives, or not. So when movement occurs at the legislative level with potential to benefit both sides in the area of reducing costs, it’s a good thing. When that activity also comes with an indirect bonus of increased revenue opportunities for American Small Businesses, it’s a great thing!

Recently, when I read the blog by my friend and government contracts attorney Steven Koprince about the proposed change to the Simplified 8230212_ml fruit dollarsAcquisition Threshold, I was excited, but for the wrong reason. I took the proposed change as an action by Congress to enhance opportunities for small business concerns, an incorrect assumption. That would actually be an indirect (yet tremendously huge) benefit. I learned, through a conversation with a former federal procurement executive, the real driver for this proposed bill is efficiency in contracting. So in this case, as I was told, it’s all about Uncle Sam. That’s a good thing too and here’s why. When I believed it was occurring primarily to benefit small business, I said it was doomed because the large business lobbies would work to kill it. Why? Think ‘Who Moved My Cheese?‘ But now understanding the real push behind it, this changes things, including my opinion.

Now let me share why I see the efforts proposed by the U.S House of Representatives in H.R.1735 (2016 NDAA) as a big deal.

If you review the House and Senate versions of the 2016 NDAA, language related to ‘achieving more efficiency’ literally riddles these documents. Apparently, it’s important to both sides. How they plan to get there appears to be an entirely 12391574_l capitoldifferent matter. Section 854 of the House version spells out expanding the number of buys made using the Simplified Acquisition Procedures at FAR Part 13 by increasing the threshold from $150,000 per action to $500,000 per action. As best I can tell, the language associated with buys made within the Simplified Acquisition Threshold would remain intact. That is, they would continue to be ‘reserved exclusively for small business concerns.’ The only way to make this even better is by changing ‘reserved’ to ‘set-aside’ which is something I continue to put on the table to Congress. After all, some agencies already do it in one form or another, so why not?

Now I routinely discuss the many benefits companies can derive from including Simplified Acquisitions (we call them ‘low-hanging fruit’) as a part of their pipeline diet to include the 6911798_ml low hanging fruitfact fiscal obligations to these buys have increased an average of one billion dollars each fiscal year since FY2010. Should this rule be implemented and things were to stay relatively proportional to how they look today for Simplified Acquisitions, the overall fiscal spend for these streamlined buys could increase to as much as $70 billion (versus the current $19 billion) effectively accounting for more the twice the obligations made against the Federal Supply Schedule.

I think I just heard someone yell ‘Blasphemy!’ so let me ratchet it up a notch.

Currently, close to seventy percent of obligations made using Simplified Acquisitions do not result from buys made against an established 15396748_l time and moneycontract vehicle such as a BPA, FSS, GWAC or other Indefinite Delivery Vehicle. This creates an inherent lower cost of doing business since the need to pursue a ‘hunting license’ is largely not a factor. Then there is the point of quotes versus proposals. The largest bucket of obligations each year are awarded via a purchase order which is an ‘offer’ from the Government to purchase goods or services from a vendor. These are usually the result of a response submitted via a Request for Quote vice a Request for Proposal, the latter usually requiring a higher level of effort for respondents. For the record, buys made using a purchase order are not orders placed against a contract vehicle.

As for the threshold change, even though agencies can already exceed the current threshold by exercising the exception at FAR Subpart 13.5, allowing Simplified Acquisition buys valued up to $6.5 million per action, this change truly does represent a significant shift in favor of small business concerns who already receive the majority of Simplified Acquisition dollars, but not nearly enough based on the intent of this type of procurement. A good chunk of the responsibility here is on the back of the small business community for leaving money on the table.

Agencies get a ‘win’ by virtue of the reduced administrative burdens associated with these buys, a tenet of why they were 37116712_loriginally created. But there is another benefit the Government can realize as a result of this proposed change. Based on the current math used to calculate small business goal achievement, agencies would have an easier time at succeeding.

I have often asked myself “If Uncle Sam truly realizes better efficiency when using Simplified Acquisition Procedures, why not expand its use?”

I may finally get an answer to this one.

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.'

Discussion

9 thoughts on “Win-Win Game-Changer in Government Contracting

  1. I just wanted to add that the threshold at FAR 13.5 will increase to $7 million (effective: 1 October 2015), AND the test program found at 13.5 was made permanent (see FAC 2005-83)…

    Liked by 1 person

    Posted by Keaston D. Simmons | September 20, 2015, 08:00
  2. Thanks for your comment Stacey!

    I’ve not seen a memo from SECAF or DPAP disallowing the use of FAR Part 13 for that service. If that has occurred and you have a link, please forward it as that is news to be known. As far as making it easy for the Government to do business with you, the only thing easier than Simplified Acquisitions is MicroPurchases. Keep in mind that GSA Schedules and Contract Vehicles in general are limited to CLIN’s. Most Simplified Acquisitions are purchased via standalone contracts (purchase orders and definitive contracts) so those SOW’s or Parts List are created on-demand. Additionally, if you read HR 1735 Sec 854, you will understand the push behind this expansion of the Simplified Acquisition Procedures is based on ‘efficiency in contracting’ which happens to be one of the key reasons they were created in the first place.

    But let’s talk about contract vehicles for a second. The GSA Schedule accounts for 7-8 percent of the fiscal spend. More dollars are spent via standalone contracts than on the GSA GWACs for goods and services purchased under the same NAICS and PSC’s and let’s not get started on agency-specific multiple and single award Indefinite Delivery Contracts.

    If you look at the distribution of dollars last fiscal year, the split was fifty-fifty for dollars to any established contract vehicle versus dollars on standalone contracts. At the end of FY13, standalone contracts came out ahead by $8B.

    Last item. Yes, GSA is making a push, but it seems many agencies are pushing on themselves. Let’s not forget that DoD and NASA still have class deviations in place forcing their buyers to ignore GSA Schedule ‘fair and reasonable pricing’ language and to develop their own determination or price reasonableness, which means it likely takes more time to place an order against the FSS than it used to, possibly more time than placing an order against their own or another vehicle not owned by GSA.

    So respectfully, I strongly disagree with your assertion that companies can’t live without a GSA contract vehicle. I did if for many years and help many companies do it today.

    Like

    Posted by govconchannelchief | July 20, 2015, 15:55
  3. As fast as you say that, GSA is working to move more and more of the acquisition market to their GWAC’s. Because they are selective purchasing vehicles, it leaves companies out in the cold. For the Air Force, SAP acquisitions are no longer allowed. All A&AS type contracting must go on OASIS.

    Everyone knows that you have to make it easy for the government to do business with you but as they eliminate or consolidate contract vehicles, it will provide a death nail to businesses that have not or cannot get on a GSA vehicle.

    Like

    Posted by Stacey Smith | July 20, 2015, 15:37
    • Hi Stacey,

      In speaking with a friend who is a Contracting Officer with Air Force Materiel Command, their response to my question “Has Air Force placed a limitation or exclusion on the use of Simplified Acquisitions?” the response I received was:

      “Simplified Acquisitions are still a major player and we are measured against it.”

      If you have tangible information to support your initial statement, I would be very interested in seeing it as that would be a significant change counter to everything else I see happening with regard to the purchasing method at DoD and elsewhere in Government.

      Like

      Posted by govconchannelchief | July 23, 2015, 13:24

Trackbacks/Pingbacks

  1. Pingback: Here’s What’s Happening on the Simplified Front for FY2016 Q1 and Q2 | GovConChannel - March 30, 2016

  2. Pingback: 2016 NDAA is Code for ‘Game Changer’ in Federal Contracting. | GovConChannel - September 10, 2015

  3. Pingback: Got Your Fingers Crossed Small Federal Contractors? | GovConChannel - July 25, 2015

  4. Pingback: Finding and Winning Simplified Acquisitions to Grow Your Business! 8/27 at the Frankfort Convention Center | GovConChannel - July 22, 2015

  5. Pingback: Finding and Winning Simplified Acquisitions to Grow Your Business! (Columbia JUL2015) – The American Small Business Coalition | GovConChannel - July 21, 2015

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