Basically, federal government contracts are either “single award” or “multiple award.” Single award contracts are awarded only to you – you’re the only person who can get any revenue under that contract. Multiple award contracts are awarded under a “hunting license” (which allows you to go out and find game) but they limit competition to only those who have won one of these multiple award contracts (allowing you to “hunt” for revenue amongst a select or broad class of potential customers).
The biggest example of these is the GSA Schedule program – this is how the government buys paper clips, reams of paper, and so forth. They have a multiple awards schedule for office supplies, and businesses submit contract offers and establish pricing. Once a vendor is on the GSA schedule, then these opportunities are limited to only those people who have that schedule.
Note that underneath the schedules are SINS (special item numbers) that sub-divide this even further; so not all holders of a particular multiple award schedule contract is eligible for every opportunity. Initially the revenue of a multiple award contract may be relatively small (maybe $10,000), but it may have a huge potential maximum value.
For example, TAPE, LLC has a multiple award contract to do research development on the OMNI 3 project – there were seven winners in total (now TAPE’s competitors for this work) and the contract value is $400 million. Five of the winners are great big giant businesses, with TAPE and the other being a smaller company. This division is common for these types of contracts.
Having won these contracts means that if we can find customers who want to hire us to perform certain functions, having the multiple award contract in place makes it a win for the customer because it’s a straightforward process for them to connect with this multiple award contract vehicle and put the work out as a task order on the contract. For us, it’s a win because the only people who can bid against us are these other six companies.
Why is winning multiple award contracts significant? Many times when you’re in these situations under a multiple award contract, task orders can be both “competed” – amongst only the small businesses who have won – or “directed,” meaning that with some justification, the government will put out a sole source contract and just give it to one person without any competition.
When you’re in start-up mode or you’re a very small business, your role is almost always going to be as sub-contractor to the large businesses who have won these great big awards. In a later post, we’ll cover how to operate as a sub-contractor on a multiple award contract.
Bill Jaffe is a co-founder and the Senior Vice President/General Manager for TAPE, LLC.