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Make It More Simplified for Small Business to Work with Uncle Sam (and Vice-Versa).

Monday, March 07, 2011   (0 Comments)
Posted by: Chief Visionary Blog
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Make It More Simplified for Small Business to Work with Uncle Sam (and Vice-Versa).

By applying Simplified Acquisition Procedures to a threshold of $1M and making these purchases set-aside for companies eligible for SBA government contracting support, federal agencies could further streamline getting the goods and services they need and simultaneously accelerate the process of vetting and growing the small companies that will be large primes one day.

The debate and posturing over the goals agencies and contractors must meet for working with small business concerns only shows that very little progress is being made on this particular beachhead. So let's offer up an alternative less likely to draw the attention of snipers and gunners since it is not even on the radar of the major Industry players.

What pray tell might this option be? How about Simplified Acquisitions?

Think about it. If the threshold for simplified acquisitions that recently increased from $100K to $150K already creates a positive impact for small businesses and those acquisition professionals tasked with managing small purchases, what happens if that threshold is increased to $1M and those same streamlined procedures are in effect? The Government reports processing over 620,000 contract actions during FY2010 which total just over $11B. A little over $6B of that was awarded to various types of small business concerns and that was based on the previous limit of $100K per transaction. $6B to small companies seems like a benefit to me.

After all, this process was established in part to: improve opportunities for small, small disadvantaged, women-owned, veteran-owned, HUBZone, and service-disabled veteran-owned small business concerns to obtain a fair proportion of Government contracts. That's what it says in the Federal Acquisition Regulation (FAR).

What about for the agencies?

For them, the FAR states that Simplified Acquisition Procedures are intended to: reduce administrative costs; promote efficiency and economy in contracting; and avoid unnecessary burdens for agencies and contractors. So based on similar thought-process applied in creating the [IMPAC, SmartPay and SmartPay2] Purchase Card Programs, in that the burden time associated with processing, competing and awarding a $3000 order was the same as processing, competing and awarding a $3M order, let's remove the burden and take advantage of the processes associated with Simplified Acquisitions.

Here's my logic. The average company in the Washington Technology Top 100 would most likely lose money on a deal at or under one million dollars. It's the proverbial "My PT boat can circle your destroyer fifty times and still be on scene before you even weigh anchor" scenario. Not a slight to those large companies, just the fact of the matter when you take into consideration the time associated with the processes necessary for larger organizations to make decisions. This is what they and their customers in the government tell us.

So, if one million dollar deals are not cost-effective for large organizations and otherwise don't warrant their attention, set them aside for companies who will be genuinely eager to earn that business and use the opportunity to develop relationships for down the line. See how this works?

I remember back to the days when my friend Ernie Taggart at NUWC Keyport let me earn his business and trust through fulfilling requirements using the micropurchase and simplified acquisition procedures. I was a rookie inside salesman at the time and was happy to get this business and worked with him and other customers like this for quite a while. Then one day, Ernie had a much larger requirement and asked me to give him price and availability. After compiling the quote I was shocked to see the amount was bigger than all of the combined purchases Ernie had made from me the previous six months. Long story short, that quote turned into my first big deal, supporting the Navy's FA-18 Electronic Classrom Program.

So simplified acquisitions with a higher threshold and set-aside for small businesses is not just about revenues, it is a bona fide opportunity for smaller companies and government agencies to develop meaningful relationships for the future. The level of mutual risk is greatly reduced and the acquisition procedures are such that the time frames associated with pursuing these requirements often do not cause small companies to leverage their entire annual marketing budget on one opportunity. That's what I would call helping to avoid unnecessary burdens for small contractors who want to play a role in supporting the business operations of federal agencies.

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