The advent of the Federal Acquisition Streamlining Act (FASA) in 1994 created a new window of opportunity for small companies to engage agency customers. FASA authorized the use of simplified acquisition procedures so agencies could begin to apply expedited and streamlined evaluation and selection processes for awarding smaller dollar value contracts. These rules lower the overall level of risk for agency and vendor and reduce the level of effort associated with issuing and responding to these requirements.
Unfortunately, quite a few small companies are either unaware of these buys or simply bypass them in their hunt for ‘the big ones.’ This means each fiscal year small federal contractors leave billions in obligations reserved for small business concerns ‘on the table’ for larger companies to scarf up via Full and Open Competition. I repeat, billions.
– Guy Timberlake, The Chief Visionary
Many companies pursuing opportunities in the federal sector are laser-focused on the very biggest contracting and subcontracting opportunities to be had. Quite a few, it seems, have forgotten (or never learned) the necessity of starting small and working up to opportunities where relationship, trust and insights would be tremendously helpful. They apparently assume socioeconomic designations, contract vehicles or strategic hires will bestow on them the much needed know, like and trust, and we see everyday how that typically plays out.
Here’s my point.
20 years ago, after spending my first six years in government contracting in support of U.S. Intelligence Community requirements, I landed an inside sales gig at one of the beltway VAR’s. Being the new guy (pun intended!) I found myself in possession of a really great territory (West Coast) where the company had developed a really bad reputation courtesy of my predecessor. The good news is, the only direction I could possibly go was up! I began making calls to contact buyers and customers, but there was no love for quite a while. That’s not good for someone trying to collect salary, commission and generally stay employed!
Eventually, a retired sailor connected with the Combat Engineering Division at Naval Undersea Warfare Center Keyport (think it was Code 41) took pity on me and started throwing some small deals my way. These were micropurchases before the GSA SmartPay program existed. Payments for the memory cards, toner cartridges and the like came from the IMPAC cards his colleagues held. Soon, the buys got bigger, into the tens of thousands of dollars. These were Simplified Acquisitions in the early days, and this meant I was now working through the contracting office at Keyport.
Cutting to the chase, six or so months into our relationship and lots of small buys later, that retired sailor, Ernie, sent me a really big requirement to bid on. When it was priced, the value was over $1 million dollars. A week later I got a call followed by a fax with an order to provide a million dollars worth of computer equipment to build three electronic classrooms for F/A-18 pilots. Very cool!
This was the beginning of my appreciation for what most refer to as ‘scraps.’ Over the years, I’ve had my share of deals, large and small, but I always tried to stay true to the bread and butter opportunities that pressed one’s skills for developing relationships and achieving a level of customer intimacy. Even when the companies I worked for didn’t see them as a good use of time. Mine or theirs.
That’s one of the chief objections I get from many new (and not so new) to government contracting and Simplified Acquisitions. Why spend the time pursuing these when we can focus energies on bigger fish? Fair question. Let me put it this way. Ernie at NUWC Keyport and I began a relationship based on micropurchases that eventually grew to a million dollar deal. That one was a tipping point for many others that came over the next 20 years. Leveraging this ‘simplified’ opportunity kept revenue coming in and gave me an opportunity to prove myself when there were real stakes even, if at a lower level of risk.
Here’s another point.
Over the last 7 years, agencies (civilian, defense and intelligence for the record) have increased their use of Simplified Acquisition Procedures. In FY2009, agencies reported $13B in Simplified Acquisition obligations. Compare that to FY2015 where agencies reported over $20B. Keep in mind, the overall fiscal spend (reported to FPDS-NG) fell by $100B from FY2009 to FY2015. That simplified buys apparently increased while other purchasing methods saw decreases, surely means something.
Couple that with efforts by Congress to increase its use even more by expanding the threshold from $150K to $500K, and now we have a scenario where Simplified Acquisition spending could outpace that of the Federal Supply Schedules. That would be both the GSA and VA programs potentially losing a spot in the rankings to these FAR Part 13 buys.
Now let’s roll in the additional time and money-saving perk for small businesses. That is, 70 percent of the obligations are made using purchase orders and definitive contracts and are not ‘orders’ placed against an established contract vehicle. For the most part, there’s no need to apply for a hunting license.
Now here’s the downside. As a community, small businesses are leaving money on the table to the tune of $5B each fiscal year, for large companies.
How is this happening?
The $5B going to large companies is being awarded Full and Open, which to me means small businesses are not showing up. Remember, the ‘burden‘ of setting these purchases aside is based on the buyer determining they would receive offers from at least two responsible small business concerns. That’s the ‘Rule of Two.’
The majority of Simplified Acquisitions are competitively awarded. A majority of those are captured by small business concerns. Still, a majority of those dollars are via Full and Open Competition versus Set-Aside.
So why are there $5 billion plus dollars being awarded to ‘other than small businesses‘ via a purchase method that reserves dollars for small business? I believe the small business community should look inward to answer and then fix this.
Think about the community impact of 10,000 American small businesses each capturing $500,000 of those dollars.
Guy Timberlake, The Chief Visionary
“The person who says it cannot be done should not interrupt the person doing it.”