Federal Government contracting is an often scary and complex environment to many small businesses. Without the proper assistance of experts in the field it can also be dangerous to a small companies fiscal prosperity, but the risk is worth the rewards!!!!
Less than 5% of the businesses in the United States do business with the U. S. Government. The 1195 Federal budget was $1,518.3 BILLION DOLLARS! Approximately $1 billion in new opportunities in the services sector of Government contracting were available to bid on by private business each day. The services range from Food Services and Janitorial projects to complex space flight systems development.
Companies are winning and are awarded this amount in new contracts daily. Where is our part as a small business concern in this multi-billion dollar marketplace?
The Government uses two techniques to procure products and services which have values over $25,000.00 per year, Invitation for Bids (IFB’s) and Request for Proposals (RFP’s).
The IFB is an advertised procurement in which contract award is based on upon award to the lowest priced responsible bidder. The bid must offer performance and delivery at least equal to the minimum standards established by the IFB.
The RFP will often require a full Scope of Work (SOW) response (how the project will be performed, on what schedule, and by whom), the key personnel who will be assigned to the project, as well as a full company qualifications package.
The way in which the Government procures these contracts are changing rapidly. President Bill Clinton’s budget message is clear and target two principle areas:
1. Keep deficits on a downward path.
2. Continue to invest in long-term economic growth, in fighting crime, and in the skills of our children and workers.
The trends in Federal Contracting that have an impact on the small business sector are:
1. Procurement Reform - Streamlining Federal procurement was a specific target of Vice President Gore’s National Performance Review Report Issued in September 1995, focused on creating a Government that works better and costs less. The report made nearly 400 recommendations for streamlining the Federal Government while improving the quality of service to the nation’s citizens. This has ignited procurement reform legislation that will re-shape the Federal procurement process. For example, the expected changes in the current Senate Procurement Bill (S. 1587) include no CBD notices for contracts less than $100,00 if electronic commerce (Bulletin Boards) exists, small business provisions aimed at encouraging bids by small disadvantaged business Government wide and streamlined procedures that will take less than a month to complete.
2. National Performance Review (NPR) - Impact on Information Technology - Based on the market research firm Federal Sources. , headquartered in the Washington, D. C. area, the NRP will generate $10-$20 billion in new business opportunities between 1994-1999. The outsourcing its support services and procuring information technology systems to increase the productivity and effectiveness of the federal workforce.
3. Health Care Reform - Based on the Clinton Administration’s current plan, a new health care plan will be enacted this year. Although there are still issues to work out, market research firms are forecasting significant opportunities to result from this reform initiatives include imaging, data entry technologies, ID cards/smart cards, multimedia and business process re-engineering. This will open up unlimited opportunities for small business concerns nationwide.
4. Proposal Quality - A Washington D. C. technology publication recently issued a contractor report on “Winning Proposals Win Bids, " underscoring the link the government is acknowledging between the quality of the proposal and the quality of work the contractor will perform under contract. IN a recent RFP, in section M “Selection Criteria", the following statement was made “The offerors ability to follow the proposal instructions set forth in the solicitation will also be considered to be an indication of the offeror’s ability to follow instructions should they be awarded a contract as a result of this solicitation.
5. Smaller, Shorter Duration Technology Equipment Buys - According to the Government’s internal policy document the period of performance of Indefinite Delivery/Indefinite Quantity (IDIQ) hardware buys has been reduced significantly from five years to two and the size of these contracts has also been significantly reduced. This will result in more opportunities, more solicitations and more potential contract opportunities as these become within reach of small to medium-sized businesses.
The time to begin to get involved in Federal Government contracting is now. Companies currently involved, and who are successful in, Federal Government contracting started out with smaller contracts and worked their way into larger and larger contract awards.
Much of the new Source Selection Board criteria is based upon past performance, not only in Federal Government contracting, but in commercial contracting as well. The use of our current contracts as references is essential to a successful proposal to Government agencies.
The helpful hint for this month is to call your major clients and have them sign recommendation letters for your company.
In summary, Government contracting allows many businesses to have a bevy of profitable, long term contracts (normally 3-5 years) in your corporate receivables listing. This allows for stability and volume increases. Begin to prepare your company today for long term growth in the expanding Federal Government marketplace.
Paul S. Flaherty
Government Contract Services, Inc.