Mandated Market Research Can Create a Windfall

By: Gloria Larkin

 

The U.S. federal government marketplace has a strange and unique process called market research. It has its origins in the cumbersome 1,933 page Federal Acquisition Regulations (FAR) available at https://www.acquisition.gov.  Business people who understand the process of market research can leverage these simple public notices into a hefty increase to their bottom line, if they know and follow the hard to understand process.

For those legal minds, the FAR reference is FAR Part 10 where it states “This part prescribes policies and procedures for conducting market research to arrive at the most suitable approach to acquiring, distributing, and supporting supplies and services. This part implements the requirements of 41 U.S.C. 3306(a)(1), 41 U.S.C. 3307, 10 U.S.C. 2377, and 6 U.S.C. 796.”

Federal market research may be called Sources Sought Notices (SSN) or Requests for Information (RFI) and a wide selection can be found in a public web site: www.fbo.gov. While it is not the only location, over 2,000 such announcements are posted here every month.

In layman’s terms, the government entity (civilian or defense) uses both RFIs and SSNs to notify the public that the government has upcoming needs for specific products or services. The purpose of this notification is two-fold: first to determine if the private sector can indeed provide the requested services or products and secondly, to determine if a small business is capable of providing the quality, quantity and expertise in a timely fashion.

The federal government awarded over $100 billion in contracts to small business in fiscal year 2016, and many of those opportunities started as a Sources Sought Notice. However, contracting officers have frequently commented that they do not hear from enough small businesses and therefor end up offering opportunities as “full and open competition” where businesses of any size can compete.

Sources Sought Notices are normally very short inquiries, relatively straight-forward to answer with fewer than 10 questions. Pricing is rarely if ever included in the SSN. The focus instead, is on determining if the potential contract will be open for every type of large and small company to bid, or, if the opportunity will be set-aside for just small business, and possibly even a particular type of small business, such as service-disable veteran-owned.

This decision will be made by the contracting officer responsible for the acquisition. She will review all responses and if two or more capable small businesses respond appropriately, she must set that contract aside for only small business. The Small Business Administration states: “There must be at least two or more (Rule of Two) responsible small business concerns that are competitive in terms of market prices, quality, and delivery for an automatic set-aside to occur.”

Knowledgeable companies will not just answer the SSN in full and by the deadline, they will also begin a proactive process to identify all of the related decision-makers and market their abilities to the appropriate people in a timely basis, even asking for in-person capability briefings well before the Request for Proposal is advertised.

This is also when many companies ask for a set-aside contract or even the ultimate, a direct-award contract. The direct award contract means there is no competition, the award goes directly to a capable, competitively priced company.  Most small business direct awards have a contract life size limit of $4 million for services and $6.5 million for manufacturers. There is no limit to the number of direct awards a company may receive.

Those small business that understand the rules and processes related to direct awards can significantly increase their federal revenues, especially when they have proof of excellent performance on similar contracts in the past.

The timeline involved in SSN can be as short as a few weeks from start to direct award, or longer, a few months to a year, depending on the complexity of the requirement and if it results in a set-aside or a full and open competition contract.

While the terms SSN and RFI may be interchanged by many, Requests for Information are quite different by design and usually go into a great deal more detail, similar to a traditional Request for Proposal (RFP).

RFIs are published when a new technology, product or process is needed to replace a program that is no longer performing as expected or there is a new need in the government market.  It may provide a product solution (such as biometric identity products) or address a very complicated service issue. An example of this is the situation that developed after years of substandard care received by many veterans through the Depart of Veterans Affairs hospitals and clinics. The VA has engaged with industry to ask for ideas, suggestions, processes and products that would dramatically improve the level of care quickly and at reasonable costs.

RFIs are known to ask for proprietary information to describe the “how” one would accomplish the goal. Many companies choose against giving this information for fear of the government sharing it with competitors. This is a business decision and those companies that instead use this opportunity to communicate their solutions clearly and succinctly, highlighting the benefits to the government customer experience a greater win rate, increasing their revenue.

There are ways to protect intellectual property and the government is aware and honors those methods, if the business requests as such in the appropriate manner. One never assumes in this situation. And of course, appropriate legal counsel is always recommended.

The second element that is unusual in an RFI is the question of pricing. The government will usually ask for an estimate of anticipated prices so that they can determine if they have the budget available, and if not, they must address if they adjust the requirements or try to increase the budget.

The timeline with an RFI is most often longer than a SSN, stretching from months into years, especially if the budget is not defined or available.

Gloria Larkin is President and CEO of TargetGov and a national expert in business development in government markets.  Email glorialarkin@targetgov.com, visit www.targetgov.com or call toll-free 1-866-579-1346 for more information.

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