The archenemy to many small businesses pursuing federal contracting opportunities is very often time and money. Specifically, too much time waiting for larger opportunities to come in, and not enough money coming in to survive until the next win. When it comes to the amount of effort and money spent pursuing certain rewards, small federal contractors should consider sometimes, the biggest buckets of dollars don’t always equate to the biggest bang for the bucks!
– The Chief Visionary
A funny thing happened on the way to the forum. I planned this to be a continuation of two other pieces I wrote comparing Simplified Acquisition spending to dollars obligated against the Federal Supply Schedule at the $500K and $250K levels, when I discovered something pretty cool!
Truthfully, this is information intended for small federal contractors already in the game and even those new to the game, who could benefit from a $250K or half a million dollar bump in their government contracting pipeline. The thing is, I’ve already heard from several mid-tier companies who are exploring this opportunity because the addition of those dollars wouldn’t hurt their feelings (or bottom lines) one bit either.
Simplified Acquisitions Get a Bum Deal!
It’s true. This procurement method is the proverbial red-headed stepchild in government contracting, to both Government and Industry. It’s under-appreciated, misunderstood and neglected, right Congress? Yet written into the legislation that will eventually become the 2016 NDAA, was language to expand their use because agencies would benefit from the efficiencies that are the very reasons the procedures were established those years ago. Alas, it did not make the cut. As the saying goes, c’est la vie!
Small Business Economic Impact
What prompted me to write this and the previous pieces is because of lost opportunities. That’s lost opportunities to capture a foot in the door, revenues, relationships and past performance chasing requirements with a shorter lifecycle on average, lower level of effort for industry in responding (in many cases due to RFQ vs RFP) and greater distribution of dollars when compared to pretty much any other type of purchase. No kidding. When I looked at five fiscal years of obligations made via Simplified Acquisition purchases versus the GSA Schedules, Simplified Acquisitions handily took the trophy, accounting for nearly six-thousand more small business concerns who received at least $250K in a fiscal year. Click here to see the graphic describing the result.
My point is, if these are robust opportunities that cost less to find and win, use them as a baseline to sustain chasing the really big opportunities that take two or more years to take down.
Background: Battle Royale FY2015!
The information I captured to build this comparison was the result of obligations reported to FPDS-NG for the first three quarters of FY2015. That’s why it’s not final! When the DoD numbers are finalized, I’ll update this information by adding in Q4. Here are the other factors at play:
- Initial Awards vs. Modifications – I want this to represent dollars that were “on the street” so to speak, as opposed to what amounts to a sole source.
- To make the list, each small business concern had to receive total obligations of $250K or more from a single procurement type reviewed. It couldn’t be $100K from Simplified and $50K from GSA Schedules, for example.
- Inclusive of set-asides and unrestricted procurements.
- Obligation ‘date signed’ between October 1, 2014 and June 30, 2015
As I mentioned, I expanded the comparison beyond Simplified Acquisitions and the Federal Supply Schedule. I also included buys made against the following Indefinite Delivery Vehicles (IDV):
– Blanket Purchase Agreements
– Federal Supply Schedules
– Government Wide Acquisition Contracts
– Indefinite Delivery Contracts (IDDQ, IDIQ and IDR)
their respective Award Types:
– BPA Calls
– Delivery Orders (also represents Task Orders in FPDS-NG)
and the last minute entry, Non-IDV (Standalone) Awards:
– Definitive Contracts
– Purchase Orders
NOTE: The representation of the Non-IDV Awards is based on obligations not resulting from buys made using Simplified Acquisition Procedures.
Let’s Get Ready to Rumble!
When it comes down to initial awards made to small business concerns during the first three quarters of FY2015 where each company netted no less than one-quarter million dollars via Simplified Acquisitions or one of the Award/IDV Types referenced above, agencies obligated $29 billion.
Think that’s a lot? You should see the number when I add modifications. Breathtaking to say the least.
By the way, that $29 billion was shared by 10,253 small business concerns. Here’s how that breaks down starting with the spend against Indefinite Delivery Vehicles.
Small Business Economic Impact of Established Contract Vehicles (Does not include $400M in Simplified Acquisition obligations to BOAs, BPAs and IDCs)
There’s no doubt delivery order and task order contracts are significant in government contracting across the board. But they don’t account for nearly as many dollars as most tend to believe they do. In fact, at the end of FY2014, the total fiscal government-wide spend on IDVs was less than three billion more than the spend on standalone contracts or Non-IDV Awards. Nonetheless, in this competition, IDVs account for roughly seventy percent of the $29 billion obligated. As you’ll see, however, they did not account for the greatest economic impact to small business.
– Basic Ordering Agreements accounted for $275M distributed to 137 small businesses, an average of $2M per company
– Federal Supply Schedules accounted for $1.8B distributed to 1,218 small businesses, an average of $1.5M per company
– Government Wide Acquisition Contracts accounted for $995M distributed to 218 small businesses, an average of $4.6M per company
– Indefinite Delivery Contracts accounted for $15B distributed to 4,298 small businesses, an average of $3.4M per company
– Blanket Purchase Agreements accounted for $860M distributed to 433 small businesses, an average of $2M per company
Small Business Economic Impact of Simplified Acquisitions
If you know me or have read my articles previously, you know I’m smiling right now! Here’s why. When it comes to Simplified Acquisitions, keep in mind the majority of these buys are subject to a per action threshold limit of $150,000. None of the other contenders in this bout are subject to the same or similar. Which makes it all that much sweeter!
– Simplified Acquisition Procedure buys accounted for $4B distributed to 3,369 small businesses, an average of $1.2M per company
Now compare that to all of the IDV buys and tell me where the greatest benefit is to small business. Indefinite Delivery Contracts accounted for nearly four times the spend and only about twenty percent more small business than Simplified Acquisitions. Yep! Still smiling! But I’m not done yet.
NOTE: All but $900M of the Simplified Acquisition obligations were awarded via Definitive Contract and Purchase Order (Non-IDV Awards).
Wildcard: Standalone Contract Spending Not Simplified Acquisitions!
Here’s the twist. For all of the small federal contractors lining up to invest in the pursuit of the large multiple year, multiple award mega-contracts (I’m not saying it’s wrong!) there are billions of dollars being spent by agencies that don’t require the upfront investment of a hunting license. Consider adding them to your portfolio by expanding your view of how buys are made.
Which is why I’ll preface the next set of numbers by telling you when agencies made obligations for goods and services this way, they were not placing orders against established contract vehicles, they were simply placing orders. We refer to these as ‘standalone contracts’ because if you review the transactions in FPDS-NG, there is only one contract number on these awards. These contract numbers ‘stand alone’ because they are not orders under an existing contract vehicle. Those transactions have two contract numbers in FPDS, one for the unique identifier of the order and one for the ‘master’ contract that contains the terms and conditions. That being said:
– Definitive Contracts and Purchase Orders accounted for $5.9B in obligations distributed to 2,888 small businesses, a $2M average per company
When you combine this spending and the Simplified Acquisition dollars, we end up with $10B distributed to 6,257 small businesses, an average of $1.5M per company. With less than half of the obligated dollars of IDVs, Simplified Acquisitions and Standalone Contracts had a greater impact, touching more unique companies, affecting more communities and more existing and new jobs.
NOTE: You might notice the combined total number of small businesses (12561) is more than the total number of companies referenced initially (10253). This is due to multiple companies capturing at least $250K in multiple categories. There were 5,968 unique small businesses for combined SAP and Definitive Contract and Purchase Order obligations, and 5,735 unique small businesses for obligations to established contract vehicles.
Just think, this only accounts for dollars spent during the first three quarters of FY2015. By the way, if you’re interested in learning more about Simplified Acquisitions, tune in for our free webinar on October 20th.
Will your small business expand its pipeline to include agency purchases that are easier, less costly and the only one that can boast six years of spending increases averaging one billion each fiscal year since FY2009?
“The person who says it cannot be done should not interrupt the person doing it.”