The One Who Pays Is Not Always The One Who Buys
If you are familiar with and subscribe to the philosophy of 'Follow the money!' then this piece should resonate with you. It's a golden rule in any business setting, but especially in government contracting. The reason? To an outsider or neophyte, the way agencies move money around might seem pretty funky, but if you've been engaged in contracting with federal civilian, defense and intelligence agencies for any length of time, it's not really anything new. In a nutshell, if tracking the activities of the contracting shop local to your customer is your primary strategy, a lot of opportunities of interest to you may be slipping out the side door.
The term for the process I'm eluding to is interagency contracting which 'describes several procurement relationships between government agencies' according to a report published by the Congressional Research Service (Interagency Contracting: An Overview of Federal Procurement and Appropriations Law)
The report offers the following examples of interagency contracting:
- The first is one of buyer and seller, where agency A directly purchases goods or services from agency B.
- Second is that of co-purchasers, where agency A joins with agency B to contract for goods or services to obtain economies of scale or some other benefit.
- Third, agency A might hire agency B to negotiate and/or manage agency A’s contracts in toto or in a specific area.
What's this mean to the average company pursuing business opportunities with agencies? The person, group or organization you speak with might be spending someone else's money if it's a procurement shop, or they may be sending their money and requirements package to another organization (internal or external to their agency) to make the purchase if an end-user.
Here's what I mean. For the current fiscal year the number of contracting agencies and funding agencies reporting to the Federal Procurement Data System (FPDS-NG) are:
- 163 contracting agencies with obligations and related actions;
- 315 funding agencies with obligations and related actions.
Additionally, more than three-thousand contracting offices are in the mix as well. Now a contracting agency refers to an organization responsible for the issuance and administration of an award (such as a BPA Call, delivery/task order, definitive contract or purchase order) or indefinite delivery vehicle (such as a GSA Schedule, BPA, GWAC, BOA, IDIQ or MAC). Funding agencies (and funding offices) are the organizations reported to FPDS-NG as where the dollars for the purchase came from. In some instances it might represent an actual customer or end-user organization, but in many cases the money is moved in a way that doesn't reveal much beyond the acquisition organization. One of the ways we use this information for members and clients is when we're deconstructing prior buys and trying to detect trends in how agencies make buys when certain factors are in play (e.g., dollar amounts, products, services, contract vehicles, etc.).
As an example, this first graphic shows State Department as a contracting agency. The dollars they have obligated FY14 year-to-date originated from sixty-six external funding organizations in addition to the dollars originating from State Department.
In the following scenario, State Department is the funding organization with the total dollars being obligated (committed to an agreement, call, contract or an order) by State Department and nine external contracting agencies. NOTE: Where State Department is the funding agency, the difference in total obligations is $85M.
The Chief Visionary
Apply this same tactic to the contracting agency, contracting office, funding agency or funding office relevant to your company to get a clear picture of how this might impact your business pursuits. While you're at it, be sure to filter by NAICS Code, PSC Code, contract type, vendor name and more to get results you can leverage today.
Not sure how to tap the FPDS-NG system to extract this information? Give us a call or click here.
"The person who says it cannot be done should not interrupt the person doing it."