Here in the States, the Friday after Thanksgiving is known as the biggest shopping day of the year. This week we’ve all been buried in advertisements about Black Friday and Cyber Monday. This is on sale, that is on sale, and wouldn’t you just love to spend all your money on those?
In some ways, this resembles the frenzy that occurs in contracting at the end of the fiscal year, when government agencies are trying to spend the money they’ve accumulated, and contractors are out to get more than their fair share of that largesse.
So what lessons can we learn from what the retailers are doing to entice us into their stores or online markets, and use those same capabilities in our selling – not only at fiscal year end, but all year round?some ways, this resembles the frenzy that occurs in contracting at the end of the fiscal year, when government agencies are trying to spend the money they’ve accumulated, and contractors are out to get more than their fair share of that largesse.
The main tactic retailers use in this period is to hold special sales. Let’s say you’re shopping for a TV. The retailer hopes that if they offer a great price on TVs, you’ll come into their store, and once you’re there, you’ll buy the rest of your electronics as well.
Now we’re not going to discount our service merchandise as government contractors (though we do when required in this competitive world), but let’s look at how each of these retailers is trying to tell the “Why us?” story so that you will come in to their store instead of another.
It all comes back to relationships, as have so many of the topics we’ve discussed on this blog. In order to get noticed, and then establish or build on relationships with customers, retailers use discounts and special sales. Federal contractors, on the other hand, use their discriminators and special capabilities, and tap into their customers’ hot buttons.
In discussions we’ve been having recently in various small business communities, we’ve often noticed that even in a “lowest price technically acceptable” (LPTA) marketplace, people are still interested in what you have to offer, and how what you have to offer is different.
That’s the key to how you get in the door to talk to your customer at ANY time of year. Because no matter how strong an emphasis there is on price, you still have to get in the door and talk to your customer.
There are three ways in which federal contractors can discriminate:
- Offer the same service for a lower price
- Offer a higher version of the same service
- Offer special add-ons
For example, a gardener with 20 years of experience will offer a higher level of service (discriminator #2) than someone with fewer years behind them. A company with access to a special laser-cutting tool will be able to guarantee a higher level of precision (discriminator #3).
A hot button is whatever is most important to your customer. To continue our gardening example, let’s say the customer has a vendor, but that person is chopping up the hedges in a way that looks messy and uneven. So this customer’s hot button is an even hedge, even though that wouldn’t necessarily be detailed in the requirement – it may only say, “Trim the hedges.”
You’ll only find the hot button by having a conversation with the customer and asking lots of questions about their current situation and what’s working and not working. Once you dig up the details about the uneven hedge, imagine how much more attractive your bid will be if you can guarantee even hedges because of one of the discriminators mentioned above.
That’s the magic combination right there, and the key to success as a federal contractor – when the customer’s hot button matches your capabilities and discriminators, and you make sure they know that. That’s what will get you in the door so you can show them your wares.
When sequestration was looming in the distance, I wrote about the trend we were seeing for federal contracts to be awarded based on LPTA criteria – “lowest price technically acceptable,” and the negative impact this has on small businesses. Unfortunately, the trend is continuing.
LPTA is overpowering the “best value” approach, where the government seeks to award technical excellence in a proposal. This new movement is obviously driven by budget concerns and constraints, which are valid. We all recognize the U.S. Federal Government has significant budgetary constraints.
So how can you succeed as a small business federal contractor under these circumstances? How do you win business? How does this migration towards a lowest-pricing strategy affect all the things we’ve been talking about on this blog?
We’ve talked many times about how developing a relationship is your key business-building activity. It still is, but you’ll want to handle it a little differently in a low-price world than if you were looking at best value.
First, you want to think about how you can help the customer (your program folks, the people with whom you have the relationships) shape the definition of “technically acceptable” as they’re designing their Request For Proposal (RFP). The more the definition looks like or favors your company, the better your chances of winning.
Make use of Judy Bradt’s backcasting techniques to determine when an RFP is coming, and then work backwards so you’re having meaningful conversations with your contacts that help them understand what you do and how your level of technical expertise is essential to their project.
The second thing you want to bring into your relationships in the LPTA world is an in-depth understanding of your customer’s cost parameters. That’s going to be far more important than the “hot buttons” you may have focused on when bidding based on best value.
I’ve heard horror stories of long-term incumbents losing a contract because someone came in and way underbid them. The government accepted that bid, moved to a new supplier, and suffered from their incompetence.
If the government wants innovation, it had better be part of their definition of technically acceptable so the cost of that innovation is built right into the RFP and contractors will have to demonstrate that type of innovation in order to get the job.
It’s like a pendulum swing. This has happened before. There were other periods where low price was the only thing that counted. As we know, low price belies technical excellence – the LPTA approach makes it less likely to get the best technically excellent and innovative solutions because those things cost extra money. And that’s why the pendulum always swings back around again to best value.
On December 19, 2013, the National Contract Management Association (NCMA) will bring together experts to cover small business topics in a four-hour virtual conference. I am co-presenting with my wife Louisa Jaffe, CEO of TAPE, LLC, and we invite you to join us.
Our presentation is called: Not Small Anymore—Beyond the 8(a) and Small Business Size Standards.
We’ll discuss how a small business can ensure they remain successful upon graduation from the 8(a) program and small business size standards, and present tools and tips to guarantee business success over the long term. We’ll answer questions such as:
- What are the steps to be taken now to prepare for the time when the competition from other small businesses and open competition becomes more challenging?
- How do you keep and develop new customers during this crucial time?
Because this is such a unique format, I recently interviewed Michael Fischetti, J.D. CPCM, Fellow, Executive Director, National Contract Management Association, about what attendees can expect from this virtual event.
1. What are you most excited about in presenting this event?
The opportunity to help our small business community with an event tailored just for them. We’ve designed an online event that will provide regulatory and legislative guidance, review proposal evaluation models used by the government, look at audit preparation, and discuss open competition beyond the 8(a) status.
2. What advice do you have for people attending their first virtual conference?
We recommend that attendees bring together their colleagues and participate as a team. We find that virtual training lends itself to a collaborative learning environment. After the session is over, many teams will hold wrap-up sessions to discuss lessons learned. After the seminar, everyone is on the same page and willing to work toward these new ideas.
3. The NCMA puts on many events, both live and virtual. What are some of the benefits of virtual events?
Besides the obvious ease of signing up and becoming astute on the biggest issues in our community, NCMA is able to obtain just the right presenter for the goals of a particular event, since the available pool of experts increases in a virtual environment.
For our attendees (and their employers), it’s being able to participate in training without having to leave the office. Since members can participate as a group, the lowered cost per person makes the format really reasonable.
4. What has been your experience with past virtual events?
That our members like them and are motivated to attend a live event (e.g., the NCMA Government Contract Management Symposium or World Congress) next time to meet more of their peers, mentors, customers and clients in person.
5. What do you hear from NCMA members about the value of continuing education through attending events like this?
That it can’t be beat in terms of cost and time efficiency for meeting their CPE requirements and again, encourages them to attend a local chapter or other “in-person” event, or at least read up and become more proficient in their profession.
Thanks for sharing these insights, Michael!
NOTE: Early bird pricing ends next week! Please use this link to register now, and share with anyone in your network who might benefit. http://www.ncmahq.org/SBVC13_spkr
Blanket purchase agreements (BPAs) are a convenient way for federal agencies to fill recurring orders for supplies and services. BPAs save time and costs because there’s no need to go through the whole selection and procurement process.
A BPA is a task order under a Multiple Award Schedule (like IT70 or MOBIS), that is a tasker that can be used like a “charge account” for a federal agency to use money from their budget to apply to IDIQ task orders.
The biggest benefit of BPAs for contractors is that it allows the customer to keep issuing tasks to you, without any competition. And because it’s a sub-agreement under the multiple award schedule, your customer, and any other customer in a connected or qualified circumstance (a related customer, someone from another agency who does a similar job), can add money to the ceiling (limit) of the BPA.
In other words, there’s no limit to the limit.
You can win a BPA for $10 million but end up earning a lot more money, depending on whether other customers bring work to your BPA. It’s a matter of an agency being willing to move money from their budget to your BPA vehicle.
For example, let’s say you win a BPA contract under your IT70 multiple award contract with GSA with U.S. Customs & Border Protection for $10 million. Now, here comes the U.S. Citizenship & Immigration Services who wants you to also do work for them, and they say to CBP, here’s my $10 million, so now your ceiling can be increased to $20 million.
You’re doing the work you originally contracted for, plus you’re doing the work for another sub-agency. As long as it’s the same scope (there are stringent rules about that), it can be added to the same BPA and your limit can be increased.
BPAs are a way for you to win an empty bucket, just like you would do on a multiple award IDIQ, except that you’re not competing with other people.
This is an overly simplistic explanation and of course you’ll need to get familiar with all the issues, rules and complications, but I hope it’s enough to get you excited about the possibility!
The most important thing that will go into your BPA is a statement of work, that’s the core value you bring to the customer. Also consider offering a discount to make this option more attractive for the agency – besides all the time it will save. Above all, be sure to follow the precise BPA format and know all the requirements.
More information, including a template in Microsoft Word, is available from the GSA website.
GSA recently did a webinar about BPAs – visit their site to browse and sign up for future training events.
Recently I sat down with our regular guest poster Eileen Kent for an interview, only this time she asked the questions! You can listen to our entire conversation at http://www.blogtalkradio.com/linkedlocalnetwork/2013/10/15/federal-sales-sherpa-show, and you can also read our discussion about LinkedIn as a networking tool for federal contractors.
Eileen: I have a quick question in regards to small businesses contracting directly with the government. Getting paid from the government isn’t so tough as it is getting paid from a prime, do you agree?
Bill: That’s correct because the government has an obligation. They specifically run according to some obligations about everything that you’re going to do and how fast it’s going to be delivered. And this has actually gotten way, way easier now because it’s all been automated (while primes can be slow to pay).
Everything you do through DFAS, the Defense Financial and Accounting folks, is completely automated, and the money comes to you on a lot better basis than it used to. For a company like TAPE, what we call ‘Day Sales Outstanding’ or DSO, is running around 45 days. In the old days, 60 to 75 days was not at all unusual.
Eileen: Forty-five days in this marketplace, that’s not too bad.
Bill: No, not too bad at all. Absolutely.
Eileen: So do you suggest that small businesses start thinking about finding a way to make it in for themselves as the prime, if they can?
Bill: That’s correct. And there are ways in which you can do that. It’s about talking to a customer and establishing a set of relationships and then going through the process of obtaining an actual prime contract of your own. Those things are exactly what we need, all of us.
It’s important to understand the difference between being a prime contractor or a subcontractor. As a prime you’ll have a much more decent relationship between you and the actual customer. But it’s important to note, if you have a prime, that the prime is your customer and you have to build a relationship with the prime just like you would with any other customer.
Thanks again for the interview, Eileen! You can listen to our whole conversation at http://www.blogtalkradio.com/linkedlocalnetwork/2013/10/15/federal-sales-sherpa-show.
Eileen Kent has shared her ideas as a guest author on this site multiple times. Recently she turned the tables and interviewed me for her Federal Sales Sherpa Show on Blog Talk Radio.
You can listen to the full interview at http://www.blogtalkradio.com/linkedlocalnetwork/2013/10/15/federal-sales-sherpa-show, and I’m also going to share two of the topics we discussed as two separate blog posts.
Eileen: You also use LinkedIn a lot for networking. Any thoughts or ideas about LinkedIn?
Bill: Yes. First of all, we use LinkedIn a lot for the blogging side. Social media is the new wave. And while I’m by no means a young person walking around with my iPhone or something, I’m certainly attuned to the whole phenomenon. And LinkedIn has groups, so I post teasers for my blog posts, the same things that I use on Twitter, and all of those things go out to whom I affectionately call my 4,000 closest friends.
LinkedIn is a place where I can keep up with folks. I mean, what I love about it is, I don’t have to worry about whether they’ve change jobs. LinkedIn tells me. I don’t have to worry about whether they’ve change email addresses or anything like that. They’re all in the same place. And when I want to go look for Harry or Sally Smith who I met three or four years ago and now I want to figure out whether that’s a good teaming partner or a good prime for me, I know right where to go.
Eileen: I also find that the Feds are starting to use LinkedIn too. Have you noticed that?
Bill: I have. It’s interesting you say that because just recently I was going through a list of suggested people to connect up with and I noticed that there were a large number of actual decision makers. Now, I specifically have a policy of only attempting to link with someone that I actually know. But I have to tell you, I was tempted to link in with a number of the people whom I didn’t know personally, but I knew their position, or I knew their agency, or had some connection to it.
Eileen: Surprisingly enough, they’re sending me connections. Have you found the same thing?
Bill: Yep, and I think that’s because they recognize that they need the industry partnership relationship as much as we need the industry partner relationships, as well. We need them, they need us.
Eileen: So what is your advice to the newbie about selling to the Feds and using LinkedIn?
Bill: Well, the first thing I’d do is connect up in LinkedIn and make sure I was on the groups that met up with my particular industry, organization or whatever I’m doing. If you’re selling cyber security, then you need to be on the cyber security groups. If you’re selling construction, then you need to be on the facilities management groups and so forth.
Then I’d start looking for the people who offer help, ranging from people like you, the Sales Sherpa, to the procurement technical assistance centres (PTACs), small business offices, all the folks that are there to help and that there’s quite a bit of basic free resources available to get you connected.
The PTACs are an amazing resource that is untapped. All they want to do is help you get that first piece of business in the door so that they can put it down on their lists and say, “Wow, I did that!”
Also check out organizations like National Contract Management Association (they’re also on LinkedIn), where you can attend conferences (live or sometimes by webinar) and hear government officials talk about how procurement works.
Thanks for a great discussion, Eileen!
Check out the recording at http://www.blogtalkradio.com/linkedlocalnetwork/2013/10/15/federal-sales-sherpa-show and watch for the next post where we talk about getting paid by the government.
During last week’s conversation with Judy Bradt about backcasting as a research strategy for federal contractors, she also had some excellent suggestions about bidding. I asked her to return with another guest post to answer the question:
What are the most important steps to take before you make a bid on a federal contract?
(1) Know everything you can about your buyer. If the first time you’re hearing about a requirement is on FedBizOps.gov or another bid notification service, and you don’t know the buyer, budget, incumbent or history, your odds of winning are in the single digits. In this case the question is not, “How can I win?” but “Why didn’t I hear about this before and how can I hear about it sooner next time?”
While your chances are slim, there are some valid reasons for making a cold bid without knowing anyone or anything about the project. For example, maybe you’re trying to get into an agency but you haven’t had any luck. Putting in a cold bid will at least get you the opportunity to sit down for a debrief and discuss why you lost and what you can do better next time, and collect whatever competitive intelligence you can get about the winning company.
(2) Focus on opportunities that match your own capabilities. Your performance history will force you to focus because if your past performance is not strong in the area where you’re bidding, your time and effort will be wasted.
(3) Assess your odds of winning, based on what you already know about the buyer, the project and the budget.
(4) Go through your Go/No Go checklist. Most successful businesses have something like this, for the simple reason that bids cost money. If you don’t know how much it will cost you to bid, figure out that first. If you haven’t done a federal bid, ask around to get an estimate. Then look for signs that you have a good chance of winning, so you know the bid will be worth the cost.
The checklist will be unique to each company, and may includes items such as:
- How well do you know the buyers?
- How closely does your past performance match this new opportunity?
- Which projects have you done that are like this one?
- What is the size of the contract?
- Do you have the resources, e.g., bonding, staffing, cleared staff, to take on this project right now?
- What do you already know about the project?
- How does your past performance position you to win?
(5) If you’re not familiar with the federal contracting process, get professional help with your proposal.
(6) Win or lose, get that debrief! This is your chance to start or continue building relationships with the agency and position yourself better for the next bid that comes along.
Great advice, Judy – thanks for stopping by!
Judy Bradt is the CEO of Summit Insight LLC and author of Government Contracts Made Easier. For 25 years, Judy has worked with her clients on business strategies to win government contracts. Judy blogs at http://blog.summitinsight.com/.
This is a guest post by Judy Bradt, CEO of Summit Insight LLC and author of Government Contracts Made Easier. For 25 years, Judy has worked with her clients on business strategies to win government contracts. Judy blogs at http://blog.summitinsight.com/.
What do you mean by backcasting, and how is it different from forecasting?
Backcasting is really a combination of research with imagination and extrapolation that gets out ahead of the funding cycle. Federal agency forecasts are based on near-term budgets, sometimes already approved and sometimes just requested. Forecasts don’t always guarantee a procurement will take place, but suggest a high likelihood if funding proceeds as planned (which gets riskier every year).
Most forecasts deal with the current fiscal year, sometimes two. But on some procurement you might only get five or six months’ notice. Even though that can sound like a lot of lead time, it’s often not enough to design a bid for more complex projects or bigger requirements, or to develop the relationships you’ll need to position yourself to win.
Often, chances are good that whatever the government is buying now, or doing now, they’ll probably be doing more of it later. Backcasting is about anticipating and positioning your company for future opportunities based on current projects.
Backcasting, combined with forecasting, can get you out ahead of the game, by looking at contracts already in place and checking the expiry dates on those contracts; you’re essentially working backwards.
Let’s say you’re interested in a big project you want to develop for your company. You know it may take a couple of years of lead time. The agency only gets funding one year at a time so it’s not in the forecast yet, but what you want to provide is aligned with the agency’s primary mission. There’s already a related or precursor contract in place. You know there will be another acquisition, but it’s so far in the future that the agency’s not saying when. You can look to see when the contract expires with the agency you want to work with, for the work you want to get the follow-on for.
If the contract is expiring in late 2015 or 2016, you can build relationships long before the requirement comes out. That’s the advantage backcasting gives you: You’re building relationships before a contract is forecasted or announced.
Know your precursors – what are the common activities/purchases that usually happen in the months and years before someone hires you?
For example, let’s say you’re in the interior design business, or own a small general construction company. After the construction of a new office building, at some point the agency will be buying furniture, artwork, and office equipment. Later, they’ll need renovations and repairs. If you want to start loading your pipeline with possibilities for interior design or renovation contracts a year or two down the road, one way to do it is to start tracking the construction projects in the regions where you want to do business. Then watch for those contracts and be ready.
The goal of your research should be to find no more than three agencies whose problems are the best fit with your past performance, i.e., the problems you’ve shown that you know how to solve.
Who is the incumbent contractor? What type of contract process or contract vehicle did they use? If the federal agency you want to do business with uses GSA schedules and you don’t have one, you’d better get one or get access to one, or another multiple award or government-wide acquisition contract (GWAC).
Once you’ve identified your three prospective agency customers, set priorities and start looking for points of contract and those five key people you need to meet in any agency. I’ll lay out other steps of the bidding process in a future post.
Backcasting is what winners do – it helps contractors identify opportunities and build relationships with the lead time it takes to be competitive. With backcasting and a smart contact development program, successful contractors are positioning themselves for the win long before the contract is published or a notice is published that there’s going to be a competition. It’s a significant competitive advantage used by all successful companies, large and small.
What specific research should federal contractors be doing?
That varies a little, depending on what products or services you sell. Every company will get some insight by starting with the Federal agency forecasts published at Acquisition Central. There, you’ll see who has money to spend.
If your company offers products or services to customers in the commercial (non-government) market, you’ll also want to research whether your target buyers are purchasing through GSA Schedule Contracts. If so, I’d recommend two other research sources. First, at US General Services Administration, look at existing GSA Schedule Contracts to see where your products and services will fit in.
Then – and this is resource many people don’t know about – you can check out the GSA Schedule Sales Query (SSQ) System, where you can see sales stats for every GSA Schedule contract holder – including those who aren’t successfully selling anything.
Then we get to the heart of backcasting: USASpending.Gov. Here’s where you can look at past contract awards to assess buying trends. You “backcast” future opportunities by looking at when the current contracts will expire. For projects that are coming up for renewal, you’ll want to find out all you can about the incumbent contractor who’s providing the service now, look into possible competitors on the recompete, consider how small business certifications might play into your choice of potential partners, and get started on researching the buyers and decision influencers in the federal agency.
For precise instructions on how to get started on this research in less than two hours, I’m happy to share my free white paper, Four Easy Lessons in Free Federal Market Research. Please complete the contact form below so I can send it to you right away.
Thanks for another informative article, Judy! Stay tuned for the next post from Judy, where she’ll lay out the steps of the bidding process. Here’s the form where you can request Judy’s white paper:
The new SBA final rule includes more clarification about what constitutes a small business contract. It needs clarifying, because unfortunately some prime contractors have been skirting the rules about small business requirements. They might claim a small business contractor participated in the project, even if that meant they went down to their local “Mom and Pop” shop to have some photocopies done.
It’s great to support local Mom and Pop shops, but that shouldn’t take away the prime’s responsibility to bring in small businesses to perform a certain portion of the actual project.
With the new rule, if the small business activity a prime claims has nothing to do with the main contract, it may no longer qualify as small business subcontracting activity.
The thing about all of these new SBA rules is that they give the contracting officer the authority to look at these issues, and they allow more actual small business subcontracting activity to be counted in the small business plan.
If the contracting officers know about them and enforce the rules, but the prime isn’t following them, the CPARS ratings of prime contractors can be downgraded, and that can get their attention. And believe me, that will make a difference.
It’s our job as small business owners to inform our contracting officers about these changes. I mentioned this in the last post about how subcontracting can now be monitored at the task order level, and it is worth repeating here. It’s really just a matter of education.
Organizations like the NCMA – the National Contract Management Association – do a great job with educational events to get this news out there to the contracting professionals, and there are also resources like the Veterans Affairs Acquisition Academy, the Defense Acquisition University, and the Federal Acquisition Academy.
Here are links to all the posts in this series about the SBA final rules:
Over the last several blog posts, we’ve been looking at the details of the new SBA final rule and its impact on small business. For example, prime contractors who are slow to pay can now be reported, potentially reducing their rating in the Contractor Performance Assessment Reporting System (CPARS).
The next set of requirements we’re discussing deals with a major and long-standing loophole that has existed in the small business requirement. So as you remember, 23% is the overall goal set as the amount the government should be spending on small business. However, before now, this spending has only been measured at the prime contract level.
Only prime contracts were allowed to count towards an agency’s 23% small business success rate. If the prime contractor was a large business, then the agency got no credit (which wasn’t really a problem because of lack of enforcement, as we’ve discussed before).
This new requirement stipulates that if a multiple award IDIQ contract or a federal supply schedule contract exceeds a certain threshold, the prime contractor must submit a subcontracting plan to the contracting officer, including the details of the work that will be awarded to small business.
Up until now, subcontracting details were only evaluated for CPARS purposes at the end of the contract. So a prime could run along and just say, “Well, we’re going to use the small businesses in years three, four and five, but right now we’re going another way,” and then in years four and five nothing much changes, but there’s no impact on their evaluation because by then the contract is over and no one knew there was a problem.
What’s so important about this rule is that it has brought small business accountability to the task order level. The subcontracting reports have to come back on an annual basis, even on task orders, as long as they meet the threshold. This means that contracting officers will be able to see how a prime contractor is doing on their small business activity all the way along (provided, of course, that the CO enforces this rule).
The next point is also very critical, and that is that an agency can count small business subcontractor activity as credit towards their small business goals. This is the first time that’s ever been true, as I pointed out above – unless the prime contractor was a small business, it didn’t count. To some extent this may prove a double-edged sword; more subcontractor activity is counted, but hopefully that won’t reduce the prime activity.
Finally, all of these rules apply not only to the main MA-IDIQ and FSS contracts, but also to blanket purchasing agreements (BPAs) and basic ordering agreements (BOAs) awarded underneath these, especially the FSS. That’s important because often a prime contractor who had a big contract could get a BPA (like a mini contract) or a BOA off a big contract and the small business set aside requirements didn’t (or might not) apply. This is still discretionary rather than mandatory, but agencies do now have the option of setting small business goals for BPAs and BOAs to help meet their small business activity.
A couple of notes for the naysayers:
First of all, the caveat is that if the prime has a commercial subcontracting plan, which will then mean they have their own “approved purchasing system” and rules for how to award subcontractors, that will override this SBA rule. These “approved” purchasing systems require competition, even for subcontracts, and the rules are quite stringent, but many primes have such systems in place.
The other caveat is one that’s come up repeatedly in this series of blog posts and in discussions in my LinkedIn groups – as encouraging as these requirements are, it’s still up to the contracting officer to enforce them.
As small businesses, it’s our job to help educate our contracting officers, because the more they know about these rules, the more they will be enforced.