By Gloria Larkin
According to USASpending.gov, the government spent $472,158,562,285 last year through contracting for services and products with large and small companies nationwide. This was a $34 billion increase over the previous year, and 2017 is anticipating another increase, especially in Department of Defense spending.
To dive deeper, Maryland was the place of performance for $29,744,228,534 in contract awards during fiscal year 2016, with subcontract awardees receiving an additional $3,603,994,381 in Maryland. None of the noted totals include entitlements, grants or non-contract obligations.
The real questions most contractors ask are what does the government really want, and how do they decide on who wins what contract? As an initial requirement, most government agencies must follow the Federal Acquisition Regulations (FAR) or in the case of the Department of Defense, the Defense Federal Acquisition Regulations (DFAR). These extensive legal rules are available online for anyone who is interested in learning about them as they become part of every federal contract as stated in the contract paperwork. Some agencies such as the Smithsonian Institution, the Federal Aviation Administration, and the Department of the Treasury may have their own rules and regulations outside of FAR and DFAR. It is wise to educate oneself regarding targeted agencies contracting rules.
Many contractors think that lowest price is always the next deciding factor. While the federal government is mandated to spend our tax dollars wisely, lowest price does not always win. Most often, the decision-makers are looking for the best deal. Often, the best deal includes a very competitive price, balanced with several other factors such as proof of abilities, clear capacity to preform and strong references.
The challenge for all contractors is how to avoid the “chasing the bid” mentality and instead determine how to identify and reach decision-makers early enough in the purchase process to effectively and legally influence and educate those decision-makers in the best way to write the requirements.
The answer to this conundrum is taken directly from a government source, the United States Air Force, in its industry outreach process. Other government entities have been proven to follow similar if not exactly alike guidelines. The Air Force state that these five processes must be incorporated into any company’s business development tactics: Market Research, Business and Financial Plan, Network, Communication & Relationships, Past Performance and Continuous Marketing.
Market research seems to be obvious but it is surprising how many businesses fail to complete this first requirement. Instead they wait until they meet with the target and at that point ask them for opportunity recommendations. This is a huge mistake and will result in the decision-maker closing the door on future opportunities. One would be better served checking FBO.gov for sources sought notices, solicitations and records of previously-awarded contracts through the Federal Procurement Data System as well as the target agency’s business forecast and budget.
The business and financial plan is a mystery to most businesses regarding federal contracting. In this case, the decision maker is NOT asking the contractor for their entire business plan, but rather what the plan is to finance the targeted opportunity should it be awarded. This little-known step will go a long way in mitigating perceived risk for businesses of all sizes, especially for any business that may be pursuing opportunities which are larger than ever won in the past. Elements to include in the opportunity financial plan include projections of anticipated contract-oriented costs (payroll, overhead, products, legal, accounting, subcontracting, etc.), the timeline of those costs, anticipated invoicing and payment dates, and a letter from the bank of the or other financial institution stating that a line of credit is available to finance at least the first two billing cycles, until payment is received.
When the Air Force states that it wants a contractor to network, communicate and build relationships they mean that no matter what it takes, one should network by attending all possible in-person events, communicate regarding sources sought notices, participate in industry days for specific opportunities and make recommendations to improve services and products used by the agency. By being consistent in these efforts the contractor will benefit by building a strong relationship with all decision-makers. This is difficult to do and requires a commitment of time, effort and money. One must determine the short list of targets with whom to make this financial and time commitment as it is impossible to perform this level of effort for every possible federal target.
The fourth element, Past Performance, is a legal term as defined in FAR Part 42.15 Contractor Performance Information. Essentially FAR states that “past performance information (including the ratings and supporting narratives) is relevant information, for future source selection purposes, regarding a contractor’s actions under previously awarded contracts or orders. It includes, for example, the contractor’s record of:
(1) Conforming to requirements and to standards of good workmanship;
(2) Forecasting and controlling costs;
(3) Adherence to schedules, including the administrative aspects of performance;
(4) Reasonable and cooperative behavior and commitment to customer satisfaction;
(5) Reporting into databases (see subpart 4.14, and reporting requirements in the solicitation provisions and clauses referenced in 9.104-7);
(6) Integrity and business ethics; and
(7) Business-like concern for the interest of the customer.”
Most losing bids do not address these seven elements of past performance and instead serve only as a record of describing projects similar to the targeted opportunity. Winning contractors take into account and describe at least all seven elements and further offer proof of differentiators and the value add for the project.
The final recommendation of continuous marketing is lost on most contractors. This marketing, when successful, targets all decision-makers and incorporates both a corporate messaging process performed throughout the year as well as ongoing an individual effort of the business development or capture person assigned to that target. Rarely do companies perform both processes simultaneously. And it is even more rare that this is done well, with appropriate messages crafted for each layer of decision-maker. This translates to different messaging for the program layer, other messaging for the contracting layer and yet different messaging for the small business representatives.
To see success, listen to the customer and give them what they want, what they really really want and even outright ask for.