Small Federal Contractors Should Respect the Fruit!
Let me start with how psyched I am that over the last thirty days I've been contacted by members letting me know they've been awarded orders processed using Simplified Acquisition Procedures, valued over $2 million dollars! Graciously, they attribute these successes to either participating in our trainings or receiving direct support during the development of the deal. Let's go get more!
When I'm leading our workshop 'Finding and Winning Simplified Acquisitions to Grow Your Business' one of the first points I make is 'these small buys often lead to bigger opportunities.' I quickly follow with the tale of my reseller days taking over a mismanaged territory when I was brand new and low man on the pole. I think the company figured I couldn't do any more harm since they had no business there whatsoever so off I went! In order to get opportunities (and keep my job!) I had to build trust, and fast. Long story short, one of the people I convinced to give me a shot was Ernie Taggart, a retired sailor running projects at Naval Undersea Warfare Center Keyport. Six months of micropurchases (on the IMPAC card versus SmartPay) and some simplified acquisition buys later, Ernie flipped me my first million dollar program buy building three electronic classrooms for the F/A-18 Hornet. Not bad for a kid who was still very wet behind the ears in the world of government contracting.
This is just one of the many reasons I try to help small federal contractors understand why they need to have respect for what I consider to be low-hanging fruit. Some of the other reasons include:
- in recent fiscal years, Simplified Acquisitions represent over four percent of governmentwide spending;
- lower cost of pursuing and responding to these opportunities (ask me about RFQ vs. RFP);
- majority of the buys are competitively awarded;
- an inherent preference for small business contracting;
- on average, two-thirds of the dollars obligated are not against established contract vehicles, limiting (or eliminating) the need to invest in GSA Schedules, BPAs, IDIQs, etc.;
- in FY14, less than fifteen percent of total dollars obligated were the result of modifications, meaning more dollars were contestable.
Today, however, buys made via the Simplified Acquisition Procedures are much more robust when it comes to overall fiscal obligations and you don't need to wait for larger buys to come along. In some cases, the simplified acquisition buys themselves are the larger buys. It's not uncommon to see simplified acquisition purchases in excess of one million dollars. You can, at least in part, thank agencies for leveraging the Commercial Item Test Program at FAR Subpart 13.5 for this.
For example, reviewing FPDS-NG for initial buys (no modifications included) where the action obligations for each unique contract number was $1M or more accounts for $3.3B in spending during FY14. This was shared by 516 small and large companies over 837 contract actions. The spread from top to bottom ranges from $1M to $586M for each company. By the way, the company with $586M is a small business out in Idaho working for U.S. Mint. In a way, you could say they are literally printing their own money since they provide the raw materials Treasury uses for coinage!
Another area I focus on is the fact spending by fiscal year since FY10 shows a steady increase in obligations for these types of buys while at the same time, total governmentwide contracting dollars are declining. For these simplified buys, it's not that the percentage has increased due to an overall smaller pot, the actual number of dollars obligated has grown each fiscal year. To top it off, we appear to be on track to do it again in FY2014 but won't know the final spend until December 31st since DoD obligations are made viewable to the public ninety days in arrears. We only need two billion more to show up between now and then to match FY13 spending. Did I mention DoD is the biggest spender in, well, everything! Based on total obligations we're already ahead of last year by percentage since the governmentwide total is roughly $100B less than the FY13 spend. Stay tuned.
Let's talk about results for small business. Of the $15B FPDS-NG reports for FY14 Simplified Acquisitions, over $8B was obligated to small federal contractors. Of that total, less than $4B was the result of a set-aside.
How much business is good business for you? For quite a few companies we know, $500,000 can go a long way, so that's my benchmark for this next factoid. FY14 YTD (remember, we're still tallying FY14) FPDS-NG reports 2,676 small business concerns being obligated at least $500K and as much as $574M. This represents a total pot worth $5.75 billion dollars. That could be quite a few jobs created and/or sustained and the kind of dollars that can make it possible for small companies to stay afloat while awaiting larger opportunities through the various contract vehicles and programs they may be chasing.
During FY14, sixty-one federal agencies, boards and commissions took part in the simplified festivities with the top fifteen accounting for $14.5B of the spend. By the way, all of this information is easy to access and readily available in the public domain. Any company can quickly ratchet up a plan to identify who is spending at the department, agency or even contracting office level. Like everything in government contracting, what matter's most is how relevant and timely your information is, and how good you are at developing and managing relationships.
The diversity of what agencies buy using streamlined procedures never ceases to amaze me. Over one-thousand NAICS Codes and more than 2300 Product and Service Codes were referenced, making it literally an opportunity for nearly every type of business, regardless of product or discipline, to pick some low-hanging fruit of their own.
The one area I would like to see changed is the number of dollars competitively awarded to large companies. For FY14, that number currently stands at $4.5B. You may have heard me refer to these dollars as the 'Small Business No-Show Penalty' because it really should not be happening in my opinion and it's something at least partially within our control.
With the exception of buys made using the Test Program exception, these purchases are 'reserved exclusively for small business concerns' which means agencies in a sense have to justify when they don't set-aside buys in the threshold ($3000 to $150K). In order to compete these as Full And Open versus Set-Asides, agencies made the determination they would not receive offers from at least two small business concerns competitive in terms of price, delivery and quality. As I've said before, I'm not blaming the agencies, I'm blaming us for not showing up!
Again, using publicly available information, you can determine precisely who is buying what you sell, who the last order went to, and how it was purchased. All we need to do is take the opportunity to make ourselves visible and then we can show them how viable the small business community is.
The part that really bugs me is the 'profile' of who is buying and what they are buying is very, very similar when you compare buys from small businesses and buys from other than small businesses when Simplified Acquisitions are leveraged. We need to get on the ball so small businesses can capture the lion's share of Simplified Acquisition obligations during the new fiscal year.
Speaking of the new fiscal year, nearly $300M in Simplified Acquisition have already been obligated, but keep in mind, that does not include Department of Defense spending, yet.
In a previous article I closed by referencing low-hanging fruit as part of a balanced
diet approach. This time I ask, do you like apples?
The Chief Visionary
"The person who says it cannot be done should not interrupt the person doing it."