How DIUx Works With Non-Traditional Innovators

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In a recent blog post we described a procurement method known as other transaction agreements (OTA) that has become increasingly popular to access valuable war-fighting technologies, especially from non-traditional defense companies.

We highlight a structure used by Army Contracting Command – New Jersey (ACC-NJ) that leverages a consortia of companies that agree to participate under a common ruleset to submit white papers in response to the government’s interest in emerging technologies.

10 USC 2371b (Other Transaction Authority for Prototype Projects) provides significant flexibility in how DoD can use OTAs for prototype projects. Another methodology in use by DoD’s Defense Innovation Unit Experimental (DIUx) bypasses the use of consortia and solicits ideas directly from industry with a focus on non-traditional defense companies.

DIUx was stood up in 2016 to “develop new partnerships with the private sector in communities in Silicon Valley and America’s many other great innovation hubs” to “put commercial-based innovation in the hands of America’s soldiers, sailors, airmen and marines.” That same year DIUx initiated a first-of-its-kind acquisition framework called the Commercial Solutions Opening (CSO) by which DIUx solicits solutions to problems that our warfighters are facing.

To effectively work with non-traditional innovators DIUx divided the CSO into several phases: Solicitation, Phase 1 Evaluation, Pitch, Phase II Evaluation, Kick-offs, Proposal, Negotiation and Awards, and OT Modifications as applicable.

In the solicitation phase, DIUx posts areas of interest (AOIs) on its website. Instead of complex requirements and specifications, AOIs describe problems to be solved or particular technologies DoD is interested in. In response to solicitations posted on the DIUx website, companies submit either a short 5-page white paper or a presentation not to exceed 15 slides. In their submission they simply describe their technology and their company.

In Evaluation Phase I, DIUx uses four factors for evaluation:

  1. Relevance: Is the company’s solution relevant to the AOI?
  2. Technical merit: Does the proposed solution feasibly address the AOI?
  3. Business viability: Is the company viable enough to perform the work?
  4. Innovation: Does the solution represent a truly unique and innovative approach?

If the company receives a favorable evaluation they will be asked to pitch their idea either in person or through video conference. During the pitch phase the company and DIUx discuss the technology and potential use cases in more detail as well as a rough order of magnitude (ROM) of the costs involved.

After the pitch DIUx re-evaluates the technology based on the Phase 1 factors and three additional Phase II factors: cost, schedule, and data rights. Based on a positive evaluation the agreements officer (AO) will issue a Request for Prototype Proposal (RPP).

Once the RPP is issued DIUx schedules a kickoff meeting with the company, the DoD customer and the AO. At the kickoff meeting, the DoD team will explain the proposal process, which is a collaborative process wherein the contractor will develop the statement of work in collaboration with the government. During this process the government team and contractor discuss different ideas and send drafts of the proposal back and forth.

In the proposal process a final statement of work has been collaboratively developed, accordingly the technical aspects of the proposal have already been evaluated and the government performs a final cost/price evaluation based upon non-traditional government methods which might include return on investment.

After evaluation the agreements officer will negotiate the terms and conditions of the OT with the company. Since the government and the company have worked collaboratively, this is usually a relatively quick process. Often the company is willing to sign the baseline OT without any modifications.

Once the project is underway the government may want to modify the scope of the OT based upon requirements changes or even because of emerging technology. As long as the scope changes are within the original AOI, the government and the contractor work together to update the project scope and modify the OT.

The CSO process outlined above and OTs have allowed DIUx to effectively access innovative technologies from non-traditional defense companies. It offers another way to do this without the use of consortia by reaching out directly to the technology companies and leveraging the OT authorities recently given to the Department of Defense.


Intellectual Property and the NDAA 2018

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Early in 2018, Edmund Amorisi of Smith Pachter McWhorter PLC and and Bill Walters of Dixon Hughes Goodman LLP presented a comprehensive summary of the key provisions of the FY 2018 NDAA. As they explained, Sec. 802 emphasizes DoD’s ongoing interest in intellectual property issues.

It directs DoD establish a “cadre of intellectual property experts” to “ensure a consistent, strategic, and highly knowledgeable approach to acquiring or licensing [IP] by providing expert advice” to the acquisition workforce. Sec. 802 also authorizes DoD to contract with a private-sector entity for “specialized expertise” to support the cadre.

Currently there are FAR and DFAR provisions to protect intellectual property, both the portion that the government should own after something new is developed, and the portion that the contractor brings to the table. However, this expertise does not exist in the regular contracting workforce. So this provision really goes into detail about intellectual property and directs the DoD to establish some intellectual property expertise that they can use.

Any company with an innovation will have a real issue about bringing their innovation into the contracting community because they may not be properly protected to keep their IP. Too often contractors don’t pursue their innovative ideas because they don’t want their innovation to become the property of the government.

So this provision is really about allowing innovation to play a part, and that’s a very good thing.


Commercial Item Contracting Changes in NDAA 2018

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While we at TAPE provide services, other companies provide products, or a combination of the two. In terms of federal contracting, commercial items are all the things that are stuff, for example office supplies like pencils and paper clips.

What Sec. 846 of NDAA 2018 is trying to do is establish Amazon-like online portals where contracting officers and authorized people can simply go online and order their products and commercial items.

That would replace the current process, which in many cases is ordering these supplies off GSA schedules, and will make it easier and more efficient for government buyers to do their job. The problem is whether this takes away opportunities for competition. How do you regulate all of these things?

There is still work to be done to determine who is included in the portal, how search results are delivered, what kind of e-commerce portal do you create, and how this relates to the Federal Acquisition Regulation (FAR) and the Defense Federal Acquisition Regulation Supplement (DFARS).

Until we figure out these things, I don’t think this portal will happen immediately. There doesn’t seem to be a rush to implement this, and this might be partially because GSA sees this as a competitor to their own portal. But I also don’t think we’ll be waiting too long.


Bid Protest Changes in NDAA 2018

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We’ve been taking a closer look at some of the most relevant changes to the 2018 National Defense Authorization Act (NDAA), which includes several provisions designed to reduce the number of protests.

According to the U.S. Government Accountability Office (GAO), “federal agencies are required to award government contracts in accordance with numerous acquisition laws and regulations. If a party interested in a government contract believes that an agency has violated procurement law or regulation in a solicitation for goods or services, or in the award of a contract, it may file a bid protest with our Office.”

With contracting dollars being so tight over the last 10 years, every loss was a big deal, and large losses in particular resulted in long and involved protests. This led to us seeing more and more contracts being protested, which is creating a lot of problems.

So there are a number of things that this provision attempts to do, including to increase the amount of information flow in the debriefing (see: how to take full advantage of a debriefing).

That’s a double-edged sword for both the government and the contractor. On the one hand, it will help bidders better understand the decisions and help them shape future proposals for more success.

For example, they will now allow businesses pursuing contracts of $100 million or greater to see a redacted version of the source selection decision document. This is the recommendation document that goes to the source selection authority (SSA) – the panel that decides who to select among the bids – and is an incredible source of information. Small businesses may request the same disclosure for contracts valued at $10 million or more.

On the other side, these changes will produce a lot more documentation and paper trails, and sometimes when a contractor learns more about a decision, it actually increases the possibility of protest.

Another potential down side is a potential pilot program of charging protesters if they’re unsuccessful when a protest is made and denied. This compensates for the fact that the government has to spend money to defend the protest.

That means you’ll have to really think twice because there is the potential to incur hard costs (where before it was just your legal fees).

The hope in all of this is to get rid of frivolous protests that are only meant to extend existing contracts. Unfortunately, some incumbents who are about to be replaced start a protest knowing that for the 4-6 months while it’s in process, they can still be performing and collecting their money. While the protest is going on the government is prohibited to hire the new company. This is an unfair practice and definitely needs to stop. Time will tell if these changes are successful in doing that.


Acquisition Threshold Changes in NDAA 2018

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Simplified acquisition is “a contracting method which seeks to reduce the amount of work the government must undertake to evaluate an offer. Because source selection is less arduous under simplified acquisition, the dollar value of contracts allowable under simplified acquisition …is capped.” (Georgia Tech Contracting Education Academy.)

In the NDAA 2018, this simplified acquisition threshold increased from $100,000 to $250,000, in order to expand opportunities and increase participation of small and disadvantaged businesses – service-disabled, women-owned, small, and small disadvantaged (what used to be known as 8(a)).

What that means is that contracts valued up to $250,000 – a pretty fair amount to most small businesses – don’t have a justification and authorization requirement (known as a J&A). The government contracting officer can just issue a purchase order to the small business.

The Truthful Cost or Pricing Act (TINA) (previously known as the Truth in Negotiations Act) was instituted to protect government agencies from unfair pricing practices by contractors. NDAA 2018 also bumps up the threshold for which contracts need this particular oversight – from $750,000 to $2 million. From a government standpoint, this means fewer regulations associated with a larger pool of contract dollars.

As we head into the year-end federal purchasing blitz, everybody just got their budgets and they have to spend all of their money by September 30th. These changes give small business contractors important opportunities to get bigger amounts of money in sole sourcing.


Multiple-Award IDIQ – How to Pick and Choose Targets That You Didn’t Bring to the Table

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We’ve been discussing multiple-award IDIQ contracts and what to do once you’ve won one. The most important thing to remember is that there is no guarantee you’ll be awarded the work.

In some cases, you can give yourself an advantage by bringing your own customer or prospective customer to the table and setting yourself up to win. But what if you didn’t bring the customer? Is it still worth trying? It depends.

When it comes to multiple-award IDIQ contracts, the more detailed the proposal evaluation criteria and proposal instructions, the better – but only when you’ve worked with the customer to correspond those details to your company’s specific past performance. Otherwise, you could be putting yourself in competition with someone who did. Here are two specific clues that that’s the case:

  1. Key resumes – the more key resumes that there are, and the more detailed the resume requirements, the faster you should run away. If they’re specifying 10 or more key people and they have extensive requirements for what those key people need to have, you’re never going to win. Even if you were to find matching people, they’re not THE people that the customer wants. They wrote the requirements that way because they want a specific set of people.
  2. Past performance – similarly, if the proposal criteria include a whole host of technical systems and functions that you’re supposed to have done, it means the customer already has somebody in mind who has all those requirements.

So if you’re deciding whether or not to bid on a proposal for a customer you didn’t bring to the table, measure carefully against these two factors before making your choice.

Something else you might want to avoid when you’re considering potential multiple-award IDIQ proposals are LPTA (“lowest-price technically acceptable”) jobs. Most people who are successful at bidding on LPTA jobs have very, very low indirect rates. It is highly unlikely that you’re going to beat them at their game and still manage to keep your good people and your reputation with those people; and run your business successfully the way you want to run it; with the culture that you want to foster in your business.

At TAPE, we rarely if ever bid on LPTA jobs. The expectation is that you’re going to deliver the same qualified staff at a dramatically lower rate and we just don’t think we can do it, nor do we want do. It’s not the kind of culture we want to run.

So unless you brought the customer to the table and you’re fairly sure you’re the only one who can win, be very careful before choosing to bid on a multiple-award IDIQ task order.


Multiple-Award IDIQ Contracts – How to Make Sure You’re the Only One Who Can Win

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Even when you win a multiple-award IDIQ contract, there is no actual guaranteed work. You still need to find customers who will award the work to you.

There are two situations where it’s easier to make sure you’re the only one who can win. The first is if there is a customer you’ve previously worked with, and the second is if you’ve done all the upfront work with a new customer who is ready and wants to buy from you.

In either case, when you are bringing a customer to the table in a multiple-award IDIQ you want to make it easy for them to choose you over the other companies in the mix, by advising them as they create their proposal instructions and proposal evaluation criteria.

The more detailed their criteria – and that those details are based on your actual experience – the more likely you will be able to eliminate the companies who don’t have the same exact requirements you have specified.

Aim to have the customer include these details:

  • The key people who will be involved in the work, along with their specific technical skills and the functions they perform
  • A requirement that these key people are current employees of the company
  • A performance work statement (PWS) and statement of work (SOW) that correspond closely to your company’s actual past performance

If you are successful in guiding the prospective customer to base their proposal evaluation criteria on these details, your own proposal will send a strong message that you are ready for this contract.

Will you have an unfair advantage? Certainly! The point is, if you’re going to try to make it so nobody else can win, you’d better be sure no one else can win. This is not about being fair; if you want to be fair, then you’re not going to do any of these things and you’re going to have more competition.


Multiple-Award IDIQs: How to Bring Your Customers to the Vehicle

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In previous posts we talked a little about first what is a multiple-award IDIQ, then about what happens after you’ve won one. Today we’re talking about choosing target customers and bringing them to this contracting vehicle.

This really goes back to our discussions of knowing your customer base instead of chasing the wrong customers. So if you’ve already been making contacts in the government contracting community, and you know that there’s a target customer that you’d like to work with, a multiple-award IDIQ is particularly valuable because it gives you an opportunity to connect.

Now you can approach the customer to talk not just about their business, but about the opportunity they may have to use this particular vehicle and why that would be valuable to them.

You need to prepare for that conversation in two ways: you must be able to clearly state what your value is and what the vehicle value is to your government customer. This value may be the ease of contracting and, though this may be counterintuitive, the breadth of potential contract bids.

Why do you want to play up the fact that there will be multiple bids besides yours? Because even though you want to minimize competition and be the one to win, your customer wants to ensure that they’ve checked the boxes that there are enough contractors bidding on the job.

Otherwise, they’ll have to write up sole source justifications and all those kinds of things. They don’t mind evaluating proposals, but they don’t want this extra work, and this vehicle being an already-awarded contract helps them avoid that.

So your job here is to prepare your customer to see the benefits of this multiple-award vehicle, and to be clear that you are offering them exactly what they need. And in our next discussion, we’ll talk about how to make sure that you’re the only one who can win.


So You Won a Multiple-Award IDIQ, Now What Do You Do?

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Winning a multiple-award IDIQ contract does not give you any new work; in fact it causes work, because you’re going to have to go figure out who can use this contract from amongst your customers, and help show them why moving things over to this contract you’ve won is the right step for them (because it’s also the way for you to get more work!).

Look at it this way: If we have a contract with a customer, and that contract is going to be eligible for renewal, would we rather have it competed in its current open scenario, let’s say through FedBizOpps, or would we prefer it to be a more limited competition under one of these multiple award IDIQ vehicles?

Assuming for the moment that we think it’s to our advantage as a small business, we now need to convince the government program office and contracting office that this new vehicle is easier to use and meets their needs better.

In the case of the GSA vehicles, GSA also wants to help you do that. This is not specifically about any particular piece of business, but that the more you actually bring over business or bring over an old customer doing a new function to this new vehicle where they can get to you, the more likely you are to win that work.

You’re trying to convince your existing customer that some piece of work should be put on this vehicle because you can respond to it as a prime. It doesn’t mean you’re going to win over your competitors within the contract, but it does mean that you’re at least going to be in the game as long as you have the capacity to respond.

Multiple-award IDIQs are a tempting source of revenue for small business federal contractors, particularly because the numbers are usually very big. Our VETS 2 contract, for example, has a ceiling of $2 billion! But only if you’re prepared, first to be able to write the proposals, and second to bring in the work where you have the knowledge, background or information. Otherwise it’s going to be like shooting in the dark.

Stay tuned for a later post when we’ll talk about how to pick and choose targets that you didn’t bring to the table.


What is a Multiple-Award IDIQ Contract?

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Many federal contracts are issued as IDIQ – indefinite delivery, indefinite quantity. What an IDIQ means is that although the government may award you a contract with a ceiling value of let’s say $25 million, nothing is guaranteed. It’s all issued in the form of task orders.

That’s what makes this an indefinite quantity, because although there’s a ceiling, there is no actual guaranteed contract. In contrast, you may have an annual contract for $25 million, but it’s what’s called a level-of-effort (LOE) contract. Every year for five years you get an option or agreement for $5 million, one-fifth of your 25 million. That is a definite quantity.

The indefinite delivery refers to the fact that the task orders can be for differing durations – you could get a task order for one month, six months, or longer. They’re not for a specified time frame. Your LOE contract, on the other hand, has a set delivery schedule of one year, repeated four times.

The next distinction we have to make is between single award and multiple award. Obviously if you win a single-award contract you’re the only awardee. Everything that’s done under that contract is done by you. You may have sub-contractors, but in essence you’re the prime; all the revenue comes through you.

In a multiple-award, not only are the projects issued as task orders, but you have competitors who may also be able to bid on and win those items. For example, with the GSA’s IT Schedule 70, you don’t have to compete to get your contract, but every task order is competed. So you don’t actually get any work or any revenue unless you win a task order under the contract.

While a lot of this is changing (we won’t go into that here) the reality is that almost every agency uses some form of multiple-award IDIQ to focus portions of their effort. It may be something central to their mission, or it may be a service that contributes to the mission, like information technology or something of that nature.

There are several GSA multiple-award IDIQs in the information technology and engineering areas, such as Alliant, the Veterans Technology Services 2 (VETS 2) program, which is limited to service-disabled veteran-owned small businesses), STARS, which is limited to companies designated 8(a) or small disadvantaged businesses, and OASIS, that’s limited to engineering and related companies in various size standards.

Most of thee contracts will have a small business set-aside component, as well as an unrestricted or large business component. Think a multiple-award IDIQ is for you? Stay tuned for the next post, where we’ll discuss what to do once you’ve actually won one.


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