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.
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.
Back on October 1, 2015, GSA launched its new Professional Services Schedule (PSS), which consolidates eight professional services contract schedules into one.
The eight schedules are:
#520 – Financial and Business Solutions (FABS)
#541 – Advertising and Integrated Marketing Services (AIMS)
#738II – Language Services
#871 – Professional Engineering Services (PES)
#874 – Mission Oriented Business Integrated Services (MOBIS)
#874V – Logistics Worldwide (LOGWORLD)
#899 – Environmental Services
#00CORP – Consolidated Services
This is important for everybody to understand because it means that the old MOBIS schedule that many of us had, the one that handles program management services, is now a part of this new schedule and has a lot more scope than before.
This creates a new opportunity for people who have a MOBIS schedule or one of these other schedules to now add all these different functions to their schedule and bid on more work.
In particular, there may be things that you didn’t feel like you were quite qualified for, but now all you have to do is add another SIN code (this is not any kind of moral judgment; it stands for Special Item Number) to your profile. GSA has detailed instructions for how to modify your information.
It’s very important to understand and follow GSA’s rules for how you stay on a schedule, because the whole reason for this change is that GSA is trying to reduce the number of vendors and the number of contracting staff they need, in order to hold their costs down.
As Tiffany Hixson writes on the GSA blog, “By reducing the number of contracts supporting the Professional Services category of spend, GSA will eliminate more than 700 contracts resulting in an estimated five year savings of $3.95 million, and sustained savings of $1.29 million annually thereafter.”
MOBIS was a big deal before, but this new combination of MOBIS with professional engineering and the other schedules makes it a really big deal. So as readers, you should really be up to date on what these schedules look like, what your obligations are to stay on GSA’s good list, and most importantly how to make use of this increased opportunity.
This article originally appeared on The Chief Visionary’s Blog of The American Small Business Coalition, LLC, and was reprinted with permission.
(This is the first of six reports based on a conversation with Amy Morris, Morning Anchor at WNEW All News 99.1 (CBS Radio DC) These reports will also ‘air’ on All News 99.1.)
Once upon a time, the U.S. Government developed a way to streamline how it makes certain buys in a way that reduced the administrative burden for both agencies and vendors. But they didn’t stop there. Also built-in to this process was a way for agencies to increase business opportunities for small and disadvantaged business concerns in government contracting. Known as the ‘Simplified Acquisition Procedures,’ this procurement method accounts for billions of dollars in competitive and non-competitive obligations each fiscal year.
But while many in industry bid on and are awarded buys this way every day, most don’t realize it’s a different type of contracting when compared to how most dollars are obligated each fiscal year. “Simplified Acquisitions account for nearly $40B in obligations since the start of FY12,” says Guy Timberlake, chief visionary officer and CEO of The American Small Business Coalition. “It may be a drop in the bucket, but I never turned down an opportunity to engage agencies this way.”
That’s because according to Timberlake, his first million dollar deal in government contracting was the result of developing a relationship with a Navy customer via these smaller buys.
Another potential perk for some in industry is the fact most Simplified Acquisition buys are awarded via a purchase order, a standalone contract. “Purchase orders are not buys placed against an established contract vehicle so this eliminates some of the traditional upfront investment of pursuing and being awarded a GSA Schedule, Blanket Purchase Agreement or Indefinite Delivery Contract.”
So which agencies are buying this way and what are they buying? Timberlake says “Nearly all of them and pretty much anything they want to buy that is considered goods and services.”
Note from Bill: As Guy points out, this is a way to build a relationship. These small purchase items represent “starter” contracts, requiring no vehicle, and can be a way to prove yourself or your solution. Part of the reason for reaching out to ASBC is because they have really focused on the simplified acquisition process, and have made this a way of business to be reckoned with. And since we were members of ASBC back when it started, it’s always good to see more of our small business advocates succeeding.
Guy Timberlake is Chief Visionary and Chief Executive Officer of The American Small Business Coalition (The ASBC). Under Guy’s leadership, The American Small Business Coalition is credited with enhancing the knowledge, skills and confidence of small government contractors, facilitating hundreds of productive partnerships between small, mid-tier and large companies, and contributing to the successful award and capture of contracts and subcontracts valued at more than $10 billion dollars.
It’s been estimated that the government spends between 60-75% of its contractor dollars in the period between June and September (known as the “buying season”). A third of year, but two-thirds of its total contractor dollars (note this doesn’t include salaries, buildings, or other costs that go on all the time like entitlement payments, social security, and unemployment).
So money comes in at the upper levels and then flows down through the various organizational structures, with individual programs getting their budgets to allocate in the first quarter of the following calendar year.
That starts the sequence of gathering requirements, documenting them, establishing how they’re going to be competed, going through the legal process, putting out RFPs, and when all that was said and done it’s possible they wouldn’t have things awarded within the same fiscal year.
Meanwhile, there is a lot of continuing activity that might require a short contract action, for example a maintenance contract on some copiers and printers. Not changing over to a new supplier or anything, just renewing an existing contract to keep things working. Well, that kind of activity often also fell into the final quarter of the year.
What makes this particular buying season relatively unique is that it’s the first time in five years we’ve had an actual budget, and 2015 could be disastrous. They deferred sequestration for a year or so, which just puts more and more pressure on the people at government agencies. They really have to spend the money.
We’re not on a continuing resolution anymore. A continuing resolution limits the contracting that can be done for brand new stuff – you can continue or recompete, but you can’t change scope. It’s frustrating for everyone – and it’s designed this way to make things so onerous that Congress will be motivated to get the job done and put a budget together.
The good news is that we have a budget; the bad news is we’ve got to spend it.
So how do small businesses get work in this compressed buying season? A lot of this can be handled with first what’s called a “simplified purchasing agreement” – many agencies can spend up to $50,000 and others like Defense can use small purchase authority to spend up to $250,000. There is no competition for these awards, and small businesses can use this to get a foot in the door. Once you get started, you can work on competing for something bigger down the line.
In fact, my old friend Guy Timberlake of the American Small Business Coalition helps small business owners find success in government contracting, including how to use simplified purchasing.
If you’re going to stuff a year’s worth of spending into four months, you’ve got to find faster, more efficient ways, including these non-competitive spending options. These opportunities are strictly dependent on relationships. The customer – whether a contracting officer or government requiring group – makes their decision based on who they know. It’s exactly what Judy Bradt and Matt Falls have been talking about on this blog. In this compressed buying season, relationships are the ONLY thing that matters. If you don’t have them, you’re not going to get the business.
The second thing you’ve got to have, and this is a little more difficult, is a clear-cut strategy for how to get a contract without competition. Small purchase limits and simplified purchasing is one way your customer can award something to you without having to go through the timeframe necessary for a competitive result.
The other way is through purchasing vehicles that allow someone in a government agency to tell a contracting officer to put out their requirements in a BPA or IDIQ to a specific company (in this case, yours).
Another possibility, though less desirable, is that government agencies can award sole-source contracts to those kinds of companies companies with special certifications, using something called a J & A (justification and authorization).
Those are your three options. You either have something small enough to fit into simplified purchase authority, a contract vehicle with your name on it, or you’re one of those specially certified folks.
Fundamentally, a small business must be able to understand these options and be able to clearly convey to the customer how to use one of them to hire you.
Congresswoman Anna Eshoo and Congressman Gerry Connolly (who happens to be the representative of my local area) have proposed draft legislation that would overhaul how the federal government develops its IT projects.
Let’s look at the two key things they’re trying to do, and then tackle the third issue of how they’re proposing to pay for it.
First, they want to create an office within the Executive Office of the President (EOP), which would basically review major IT plans. Currently, every IT expenditure above a certain cost or that has mission critical importance falls under a requirement to have budgetary line items established well in advance and placed in a portfolio system called Exhibit 300. From the OMB website: “Under the Clinger-Cohen Act of 1996, agencies are required to submit business plans for IT investments to OMB that outline the steps they have taken to ensure they have adequately planned each investment to promote success.”
This new legislation will go beyond justifying the money, and get at how you’re actually going to carry out the project. This stems out of the technical problems with the launch of the Healthcare.gov website in October 2013. Healthcare.gov was slated for failure from Day One because the government, which is simply not equipped to do this, tried to do the systems integration. Systems integration is a complicated discipline requiring a lot of knowledge about how to put pieces together. No matter how talented our government IT professionals are, that’s not what they’re about.
The more companies and agencies have to describe and justify the follow-through of what they are planning with their IT ventures, the more likely you are to catch these things in advance. Of course, bureaucracy is a double-edged sword. You’ll catch a few big things and avoid some disasters, but you’ll also create delays and problems in getting numerous other things through.
The second thing this new legislation would do will allegedly be good for small businesses. It will raise the threshold on “streamlined contracting process,” from $150,000-$500,000. (From some people’s perspective this is a really good thing. Not working for a big company, I don’t have the same stake in the game.)
Streamlined acquisition processes are designed essentially to cut away all the wheat and chaff, and come down to what is often a very limited competition. The reason non-streamlined acquisition takes so long is because you have to have all the terms and conditions, and publish to a large community. Even with an IDIQ, a more limited community, it’s still a lot of people. With a streamlined process, you only have to pick two or three bidders, and no one else gets a shot at the job.
Unfortunately, this change is just as likely to produce crony-ism as efficiency. While it’s good to hire the people you know best and trust, are they automatically going to be the best for the job?
We have to realize that a lot of these $500,000 projects represent the bulk of what becomes task orders of IDIQ contracts. So for the big guys who are living off these as task orders, if we force these into the single acquisition process, the large companies will just bundle more work, making these contracts less accessible to small business. There’s always going to be a way for the big businesses to figure out how to keep their work and get around these new ideas. They big guys got big for a reason – they’re successful at doing what it takes to win business.
Lastly, let’s look at how Eshoo and Connolly propose to pay for this new office in the EOP, and that is to “repurpose” surplus GSA fees. Currently, everybody who has a GSA multiple award contract pays GSA a finder’s fee if they get any work out of the contract. GSA goes through the trouble of doing the contracting, the agency orders off that contract, and gives GSA payment in return. However, GSA may go about collecting more money than it costs to execute that particular contract, e.g., there’s a ton of work under IT70, so the money collected from IT70 contractors may in turn be redirected to cover the costs of contracting in an area with fewer transactions.
So while it seems like extra money that’s up for grabs, it’s actually not. The fact is that the GSA has built a structure based on knowing they can move around these excess fees to cover costs for things they need to do – things that Congress has asked them to do. It’s not “free money.” We can’t just use that money without having detrimental effects on something GSA is doing with that money. Something that is currently being supported will no longer be supported.
IT procurement is definitely in need of reform, but in my opinion, so is this bill.
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.
In federal contracting, the government has regulations in place that try to prohibit unfair advantages between companies competing for the same bid. This is a good thing, but can reduce your opportunities as a subcontractor if you don’t know your customer (the prime contractor) well enough.
If you find yourself missing out on contracts because your prime won’t bid on them, there might be an OCI problem at play.
When it comes to doing business with the federal government, there are several types of work. The first is “building stuff,” anything from a computer system to a tank to a ship. At the end of these contracts, the government is procuring something physical. Large businesses (your typical prime contractors) will often have their eye on contracts like these.
Another type of work is operations and maintenance, to keep those physical items functioning. For example, the Pentagon has probably more than 100,000 computers, so there’s somebody who is employed by the Washington Headquarters Service (an arm of the Secretary of Defense), who makes sure those computers are running, connected and secure. Sure, if a computer breaks, you have to go and buy a replacement, but you’re not actually building anything.
Then there are services, which are probably more up your alley as a small business. There are many kinds of services, such as janitorial/sanitation (Jan/San), electrical, building maintenance, driving trucks, etc. Let’s look now at three particular services that are most likely to get into OCI issues:
- Acquisitions/Support work, which includes helping with bids, RFPs and evaluation. If you’re involved with creating and collecting bids and RFPs, you would have an unfair advantage so you’re not allowed to put in a bid yourself.
- A & AS (Advisory and Assistance Services), where you work with the government customer to define the policy and processes they’re using throughout the organization. In A & AS, you can see right away how you would have privileged information (unavailable to the public) about how big an opportunity for a “building things” contract will be, which you could use to beat out your competition. You have an OCI – organizational conflict of interest – and so does your prime contractor if you’re a sub in this type of work.
- SETA (Systems Engineering Technical Assistance) work also creates an OCI, because as the engineer you could design something that only your staff know how to build. That’s why you’re prohibited to bid on building or even maintaining something that your company designed. Another type of SETA work is PMO (Project Management Office) support – after all the upfront design work is done, the Government still needs someone to help them run the contract. Are the contractors making the right tanks (inspection), are they doing it for the right cost (cost build-up issues), are they on schedule? Some of these PMO contracts can get quite substantial, but still not as big as the building contracts.
If you’re subcontracted to someone with designs in their business strategy about actually building the stuff, they’re not going to want to bid on the PMO work and risk an OCI. So if you’re a PMO contractor, this kind of prime isn’t going to bid on anything you want to do. They’re also probably not going to give you their own PMO work or you’ll know too much about their stuff as well.
In some cases companies can set up “firewalls,” designed to ensure that the people doing the SETA work never talk to the people doing the building work. However, that’s not always enough to satisfy the government. The current administration has been very harsh on the OCI issue and as a result there have been some major divestitures, where companies have actually sold off their services groups so they can focus only on the building-type contracts. (Northrop Grumman is one well-known example, as explained in this article by the Civitas Group.)
We ran into an OCI obstacle at TAPE, with an MA-IDIQ contract at a large civilian agency. TAPE had subbed to a large business on that contract, but the large business only wanted to do the building stuff on that contract – the big business items. We were looking for the project management jobs, but they didn’t want to bid on any of those. They knew that would destroy their opportunity of winning the bigger, more lucrative bids.
Today we’re on a different team that’s bidding on a lot of the stuff that we want to work on. Now we have an opportunity for revenue, where we really didn’t have an opportunity for revenue when we were subcontracting to the large company.
This is why as a subcontractor you really have to know your customer – the prime contractor. It doesn’t mean there isn’t work for the small business to do in building a tank, but if your core capabilities are going to be in OCI conflict with the work your prime contractor is going after, things aren’t going to work out well for you.
Congratulations, you’ve won a big IDIQ, where you’re the prime. You got together with a bunch of subcontractors, and now as a group you have won the right to bid on task orders for a given scope or collection of individual agencies.
So here you are, probably with visions of dollar signs, because IDIQ contracts usually have big ceilings. You’re probably thinking, “Send me the revenue!”
Not so fast. Here are seven components you need to understand about operating as a prime in a multiple award contract:
1. Know the customer
As we’ve talked about many, many times, the fish aren’t going to jump in the boat. If you don’t have a relationship with the customer, chances are you won’t get the job.
The exception to this would be contract orders that are based on LPTA or “least price, technically acceptable.”
You also have to understand that you can’t count on your relationship with the contracting officer who issued your contract, because that may or may not be who issues your task orders. In many cases the contracting officers will be in the actual sites that are using this contract to get their work out.
2. Meet with your team regularly
Go over prospective task orders and make an honest assessment of whether you can win. This may be a task order you’ve never seen before, but one of your subcontractors may have a relationship with the customer.
3. Keep up with deal flow and make sure you’re in front of all the potential customers in some fashion
Let’s take a big obvious example like the Navy’s SeaPort-e, an electronic portal where 1,800+ IDIQ multiple award contract holders compete for task orders – 5-25 of which are issued every single day.
SeaPort-e also publish an advanced planning matrix every week, and a source’s sought list (asking for people who might be able to bid) – both of these notices are opportunities to identify a customer you can visit before the task order comes out.
What if you’re a typical small business, without the people available to be at all these agencies at once? This is where your team of subcontractors comes in. If you’ve built it carefully, you’ll have people who can touch all the different organizations that are eligible to use the contract.
As soon as you get one of these notices, find out which of your teammates might know this customer or do this work, and figure out how you can work together. Then you’ll be ready as soon as that task order is issued.
4. Bid when you can win, or when you want to meet the customer
In those cases where you don’t actually know the customer, and so your PWin (“probability of winning”) might be low, you might still want to send in a credible response. Not necessarily because you expect to win, although you always hope you will, but because when you get the debriefing, you have an opportunity to talk to the actual customer and build a relationship for the next task order.
5. Help your partners succeed, or get rid of them
Make sure you’re doing everything you can to work with your partners or teammates to help them succeed. If any of your partners are not responding, participating, or adding value, you need to get those people off your team. As an example, my company TAPE just got added to a contract that’s been in existence for a year, and we’ve been added because we can help that prime win more work (replacing former partners who weren’t helping).
6. Be a good prime, don’t steal the sub’s work
Let’s say you’re in the fortunate position where a sub has a piece of work they’ve been doing and they want to bring it to this contract vehicle. Work that out profitably, but do not take over your sub’s work. I’ve heard countless horror stories from small businesses who were on IDIQ contracts and had their work stolen by a big prime who suddenly took over their customers. It may seem tempting, but don’t do it. Those kinds of hits to your reputation do not go away.
7. Make sure you understand the subcontractor’s financing deal, so they can work profitably
There are many performance risks, but the worst performance risk of all is that the sub cannot pay their own people. Since most small companies aren’t in a position to pay the sub before the customer pays, there’s a further delay to the sub than they would normally experience. Can they wait that long?
Stay tuned for the third post in this three-part series (we started with Prime Versus Sub – A Critical Decision), this time focusing on how to operate as a subcontractor in a multiple award contract. Government contracting has shifted over the last 20-25 years. Today I’d say that probably 70% of service-based business from the federal government goes out via IDIQ or GSA schedules, so you’d better learn how to be a prime and you’d better learn how to be a sub.
When you are looking to sell your business, you need to know how much it will be worth to the new owner – that process is called business valuation.
Small businesses in the federal sector are often puzzled when they find out that their business’s valuation is very low. The big issue is when most or all of your revenue is coming from set-aside contracts that are specifically for small businesses.
When a big business buys a small business with set-aside contracts, the contracts get “novated” (changed over to the big business’s name). You keep the contract, but the government agency (your client) no longer gets small business credit for tasks awarded to you.
It’s even more restrictive for 8(a) (minority) small businesses; their contracts can be cancelled by the CO (contracting officer) when a novation is requested. And some multiple award IDIQs have provisions that when novated (transferred to the new ownership), the business’s size is re-certified at its new level (presumably large).
The big business can keep the revenue from these set-aside contracts for the length of the contract, but can’t re-compete for the work because they are too big, unless they can move the contract to another vehicle where their Full and Open status is allowed.
That’s why your small business may not be very appealing for a big business to buy. In the valuation of your business, your set-aside revenue is heavily discounted (by as much as 80%) versus work won full-and-open.
So if you can’t sell, you’ll have to grow. The challenge there is that you might get too big to qualify for small business set-asides. That’s why it’s important to follow the work of the Mid-Tier Advocacy Group at https://www.businessgrowthforall.org/. They’re committed to creating a mid-tier where larger small businesses can compete with each other, instead of being forced into competing with the giants of the industry.