Getting PO’d for Cash Flow and Business Growth!
Own or lead a small business? Then you know a key consideration for day-to-day operations is the flow of cash. It's tough to do much of anything related to business growth if the coffers are empty. If your business currently or plans to include tracking the purchasing activities of federal agencies, boards and commissions, one particular type of award might be worth investigating as part of your strategy.
The award type to which I refer does not share the limelight with GSA Schedules, Blanket Purchase Agreements, Government Wide Acquisition Contracts or Indefinite Delivery Contracts which collectively account for about half of fiscal contract spending. However, on its own, this award type accounts for tens of billions of dollars ($17B average for last three completed fiscal years) in mostly competitive buys of products and services by at least sixty federal agencies each fiscal year. You might be familiar with the term purchase order or PO but you may not be aware of its virtues when it comes to government contracting.
‘Risk’ is one reason I’d like more small federal contractors to consider getting PO’d by Uncle Sam, frequently. By risk I mean lowered risk for the agencies issuing these types of buys. Consider this. If you are new to government contracting or trying to expand your company’s footprint, a key obstacle is you are new to these customers and buyers. And if no one has said it to you yet, being "new" very often equates to "increased risk." The fact purchase order buys are typically smaller is one reason some risk is mitigated. As an example of purchase order size, during the first sixty days of FY2014 nearly thirty thousand competitive purchase orders were issued by a host of agencies. Some of the buys were under $100 while $133M was spent in increments greater than one million dollars each. The total value of the October-November buys was $694M and the average value was $23,228.00. Based on your current offering, what type of deliverable could you provide a new customer considering that average? How far would those dollars go to keeping the lights on for your company? What if you were getting PO’d like this a few times each month or even each week? Think of these as supplemental to the ‘big game’ you will be hunting at the same time.
Need another reason? How about the fact more of the dollars are the result of an actual contract being issued rather than dollars added to a previous buy via modification. That means more opportunities. Something else to consider is that most of the dollars are solicited via Simplified Acquisition Procedures which infers a preference for agencies to do business with small companies and a streamlined process that reduces the burden for agencies and contractors for these types of buys. For the $9B in purchase orders issued this year, just over $6B was solicited via Simplified Acquisition Procedures and $5B of these were competitively awarded. Purchase orders are traditionally the result of a Request for Quotation (RFQ) versus a Request for Proposal (RFP).
One question I’m always asked is ‘Do agencies buy products or services this way?’ and the answer is both. Nearly $6B of the $9B spent this fiscal year was for products. From a diversity or purchasing standpoint, sixty-one agencies have referenced 1,135 NAICS Codes so far.
Did I mention these are not buys against an established contract like the GSA Schedule? When agencies make buys against GSA Schedules, BPAs, BOAs, GWACs and Indefinite Delivery Contracts (e.g., IDIQs and MACs), they have to reference the ‘master’ contract number in addition to the unique contract number every order receives. That means two contract numbers for ‘contract vehicle’ buys versus one contract number for buys made via purchase order. That means your initial investment does not include the need to acquire a GSA Schedule or respond to an RFP to win a ‘hunting license’ whose initial value is “$0.”
How do you take advantage of this information kickstart? Most of what you need to assess the viability of pursuing purchase order opportunities for your company is at your fingertips and freely available. Finding out which agencies (down to specific contracting offices) are buying, what they are buying, and who the buyers are (typically referred to as ‘small purchase buyers’ or ‘Simplified Acquisitions Contacts’) is not difficult. Additionally, since some of these buys (under $25,000.00) are not necessarily subject to synopsis (being posted in a location such as FBO.gov) these are very much relationship opportunities. When I sold this way, my job was to ensure there was little to nothing on the desks of the buyers I knew. That helped me stay top of mind with them, and earned me the “GoToGuy” tag.
Like to know more about Getting Your Company PO’d by Uncle Sam? The American Small Business Coalition offer seminars, webinars and market intelligence so you can find and win more government contracts and subcontracts. Click here to give me a call or you can email me at firstname.lastname@example.org.The Chief Visionary
"The person who says it cannot be done should not interrupt the person doing it."