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2016 NDAA is Code for ‘Game Changer’ in Federal Contracting.

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The proposed 2016 NDAA contains several approaches intended to help agencies cut costs and improve performance, but one in particular is focused on increased utilization of a streamlined purchasing method used by civilian, defense and intelligence agencies. If it’s still there when the latest DoD spending bill becomes law, it will result in transformative change to agency procurement and significant economic impact to small and small disadvantaged federal contractors.

– The Chief Visionary

State of the GSA and VA Federal Supply Schedule Programs

When you look at combined spending on the Federal Supply Schedule programs run by GSA and VA, total reported sales are roughly $240 billion over the last five completed fiscal years. Based on budget shrinkage and apparent changes in agency buying behaviors, the GSA FSS program shows a very obvious decline in reported sales, about $6 billion from FY10 to FY14. Nevertheless, the GSA Schedule is very well-known, continues to be a viable tool for both Government and Industry, and is still a top destination for fiscal obligations.

But there is a possibility it could drop in the rankings based on current trends continuing, and the survival of Section 854 that currently exists in the 2016 NDAA.

‘Obscure’ Purchasing Method Growing Despite Budget Woes

During fiscal years FY10 through FY14 when overall agency spending declined by nearly $100 billion and sales against the GSA Schedule declined by six billion, another method of purchasing that’s never had the broad visibility of the GSA Schedule program has been slowly gaining steam. Very quietly and consistently this program that was designed specifically to help agency buyers realize efficiencies in contracting while creating additional opportunities for small business concerns to participate in government contracting, has grown while overall federal spending dropped.  In fact, where the GSA Schedule programs lost six billion, this program gained five billion, averaging a $1 billion jump each fiscal year since FY2010.

20150103 FY10 through FY14 Total Obligations vs SAPJust in case you’re curious, FY15 is on the same trajectory as the previous five fiscal years. As I predicted, this purchasing method will break the $20 billion barrier this fiscal year. On top of that, we will see at least a one billion dollar increase over last year. Want to know a secret? We’ve already hit that mark for FY15!

I’m Not Talking MicroPurchases

Unless this is the very first time you’ve read one of my blogs, you know I’m referring to the purchasing program authorized under FAR Part 13 known as Simplified Acquisitions . It’s a topic I get pretty excited about. Why? Because I’ve sold this way, we advise other companies how to sell this way (one company gives us credit for helping them snag a $2.5 million Simplified Acquisition direct award from the Navy in FY14) and we teach lots of companies how leverage them as part of a balanced approach to their federal contracting strategy. Then there’s the part about the economic impact to small companies when comparing Simplified Acquisitions to the GSA Schedule. I’m still amazed at those results.

2016 NDAA Contains Gift for Government and Small Business

Now there’s something underway to completely change the landscape of federal contracting as it’s known today. In the version of the 2016 NDAA that according to Congress.gov is in the “Resolving Differences” stage, there is language that will increase the ceiling of the Simplified Acquisition Threshold (SAT) from $150,00 to $500,000. There are so many peripheral benefits the small business community will realize from this, but let’s start with the reason why this might happen, which actually has nothing to do with small business. It’s about efficiency in contracting, one of the four tenets in the FAR as to why the Simplified Acquisition Procedures (SAP) exist. How cool is that? In an effort to do more with less, Congress may actually create benefits of monstrous proportions for small business concerns.

Monstrous: Understatement vs. Exaggeration (You’ll See!)

GSA Schedule sales from FY10 through FY14 accounted for about $240 billion in fiscal obligations. Obligations made using the Simplified Acquisition Procedures accounted for $83 billion during the same period. Should the increase to the SAT go through, Simplified Acquisition obligations would account for $50 to $80 billion in fiscal spending. This would be more than what’s obligated to the combined GSA and VA Schedule programs. As a matter of fact, even adding in GSA GWAC spending for FY10-FY14 ($16 billion) to include obligations made to STARS, STARS II, Alliant, Alliant SB and VETS, Simplified Acquisitions still comes out on top. That’s what I call a game-changer!

But Wait! There’s More! Seriously!

As if a proverbial bucket of money primarily reserved for small business concerns wasn’t enough, here are some of the other reasons this will be a big deal for small federal contractors if it survives the Congressional gauntlet:

  • Majority of current obligations are awarded via purchase orders and definitive contracts versus contract vehicles and task orders which means a lower cost of entry for buys made this way
  • Over seventy percent of obligated dollars are competitively awarded
  • Average procurement life cycle is thirty to sixty days which contributes to a lower cost of pursuing and winning these opportunities
  • Solicitation method is often Request for Quote versus Request for Proposal which typically means a lower level of effort to respond
Use Your Voice to Make This Happen (and Keep Your Fingers Crossed!)

Treat this as if an agency was coming out to identify ‘two or more viable small business concerns’ they would get offers from for a planned purchase and make yourself known! If you work for or lead a small business working in the federal sector, call your Representative or Senator to help them understand how significant this change will be for you and thousands, if not tens of thousands of American Small Businesses.

To say I will be excited when this goes through would be an understatement of colossal proportions. Over the years and operating at the current threshold, we’ve been able to teach and assist countless companies with understanding and pursuing these opportunities to get their first win and/or additional business with awards ranging from a few thousand dollars to more than two million dollars in one fell swoop.

Increasing the Simplified Acquisition Threshold along with agencies having more incentive to leverage these streamlined rules only makes it more compelling for American Small Businesses.

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

Go-To-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

8 thoughts on “2016 NDAA is Code for ‘Game Changer’ in Federal Contracting.

  1. While it seems US Congress has come together to pass the 2016 NDAA, they’ve apparently failed (again) to capitalize on an opportunity that would have far-reaching benefits to agencies and vendors related to the cost of doing business. Simultaneously, they’ve missed an easy opportunity to help small federal contractors in a way that would have pushed billions more in contracting dollars to small business concerns helping agencies to legitimately meet small business contracting goals. http://armedservices.house.gov/index.cfm/ndaa-home?p=ndaa

    Like

    Posted by govconchannelchief | October 2, 2015, 15:12
  2. For everyone who asked about impact of Sec. 854 on the 2016 NDAA, the small business reservation that applies to the current threshold of $150,000 would increase with the Simplified Acquisition Threshold – (Sec. 854) Raises acquisition thresholds, including the simplified acquisition threshold, the micro-purchase threshold, the emergency procurement threshold, and the small business reservation threshold.

    Like

    Posted by govconchannelchief | September 29, 2015, 20:23
  3. As of today (29SEP2015) agencies have obligated $14.5 billion using Simplified Acquisitions Procedures. YTD (October -June 2015) DoD has obligated $1.3 billion more via SAP buys than in FY14. If they spend $4.5 billion during FY15 Q4, then the governmentwide SAP spend for FY15 will have increased by one billion dollars for the sixth fiscal year (average). I think DoD will spend more than $4.5 billion during Q4. All of this and the potential for greater use governmentwide in FY16 and beyond!

    Like

    Posted by govconchannelchief | September 29, 2015, 19:40

Trackbacks/Pingbacks

  1. Pingback: Follow the Money of ‘Solicitation Procedures’ Spending | GovConChannel - October 3, 2015

  2. Pingback: Six Years of Increased Federal Spending for Small Business | GovConChannel - September 30, 2015

  3. Pingback: Home Runs vs Base Hits – Finding Balance for Small Business | GovConChannel - September 20, 2015

  4. Pingback: Is the Federal Supply Schedule Program ‘Unsinkable’ Too? | GovConChannel - September 14, 2015

  5. Pingback: SmallGovCon Week In Review: September 7-11, 2015 - SmallGovCon - September 11, 2015

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