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Multi-billion dollar, multi-year federal contract vehicles awarded to selected pools of vendors don’t represent the most significant portion of federal contract spending each fiscal year, and they never have.
The buzz related to contracts like the GSA and VA Schedules, Alliant II, OASIS, SEWP, Seaport, and other Multiple-Award Contracts (MACs) has many current and aspiring contractors literally stumbling over themselves to gain spots on more than one.
Lost in the seasons of change related to how agencies buy are the agreements and contracts awarded to a single vendor. This article takes a look at the impact of these contracts, which are given to companies of every size for a wide range of supplies and services.
Being effective in finding and winning federal contract opportunities, requires a good understanding of the processes and tools used by federal agencies. Understanding how agencies buy is as much about knowing which instruments they will use as it is about competition methods, cost models, and set-asides. Each one can have a direct impact on your ability to compete for a given requirement.
The Tyranny of Tiers
Category Management is the current acquisition strategy led by GSA that is super heavy on MACs and leverages a four-tier system that rates contracts based on their adherence to the prescribed enterprise-wide approach for managing common categories of government spend. Tier 3 is Best (literally called Best in Class or BIC). Tier 0 is considered less desirable because those buys, while the meat and potatoes of how agencies have done their buying since I came into the business, aren’t aligned to Category Management spend principles.
Even with the hoopla associated with BIC’s, GSA is trolled by Tier 0 awards that totaled $360 billion in FY2021. That’s greater than half the federal fiscal spend.
Remember the Defense Department’s Joint Enterprise Defense Infrastructure (JEDI) contract? That was the $10 billion dollar cloud initiative awarded to Microsoft and protested by Amazon Web Services that was ultimately canceled. People made a big to-do about DOD choosing a ‘winner takes all’ approach as if it were so extreme and different from how things are done.
News flash! That approach isn’t new, for DOD or most other agencies.
Travel back in time with me to 1992, also known as my fourth year in federal contracting. If you were part of the “down with JEDI because you can’t do single awards” crowd, you will be appalled at how agencies spent dollars back then. Of the total obligations during that fiscal year, 92% was awarded using single vendor agreements and contracts.
Granted, the overall spending was four times less than it is today, but here’s the trick—the percentage of dollars awarded to single vendor contracts today is still 78%. Where single awards accounted for $145 billion (of $158 billion ) in fiscal 1992, they accounted for nearly $500 billion (of $636 billion) in fiscal 2021.
Instrument by Instrument
To help this sink in, let’s look at it this way. The Federal Acquisition Regulations (FAR), are the primary rules for use by executive agencies in their acquisition of supplies and services with appropriated funds. When the government conducts FAR procurements, they report those transactions to the Federal Procurement Data System (FPDS) and utilize the following instruments:
- Basic Ordering Agreement or BOA (Delivery Order),
- Blanket Purchase Agreement or BPA (BPA Call),
- Federal Supply Schedule or FSS/MAS (Delivery Order),
- Government Wide Acquisition Contract or GWAC (Delivery Order), or
- Indefinite Delivery Contract or IDC (Delivery Order).
- Definitive Contract or DCA and
- Purchase Order or PO.
The first five bullets represent “indefinite delivery vehicles” (IDVs), commonly referred to as established contract vehicles. The term in parentheses following each represents the “award type” used to put money and work on those vehicles. For all but FSS and GWAC, which are multiple-award contracts 24/7, the majority of dollars are single award.
The two remaining award types—”definitive contracts” and “purchase orders”—are considered stand-alone awards. That description refers to the fact they are not beholden to an established contract vehicle.
Remember 1992? During that year, definitive contracts and purchase orders accounted for 82% of total obligations. In fiscal 2021, their value was 47%, nearly half of the fiscal spending on government contracts.
When you drill down to the operational level of a specific department, agency, contracting, or funding activity based on what you sell, you’ll see results directly applicable to you. This will provide you clarity on how to position your company regardless of the source. It beats assuming or listening to rhetoric.
The leaders and growth professionals in many companies, large and small, have little or no knowledge of buys made other than on a MAC. The result is they’ve become their own worst obstacles to growth.
Clarity is key to thriving in federal contracting. Make sure you see exactly how your customers buy. The obligations scoreboard doesn’t support the current assumption by most in industry, and many in government, that it’s going to be on a MAC.
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Go-To-Guy Timberlake™ brings over 30 years of federal sector experience, knowledge and relationships to every client, cohort, and community engagement. He’s developed his acumen while supporting civilian, defense, and intelligence agency programs, starting with Operation Desert Shield. He is chief executive visionary and co-founder of the community known as The American Small Business Coalition , and he’s referred to as “Professor” and ‘Edutainer’ for his ability to make mundane discussions about business essential topics interesting and practical. Guy is also the creator of Ethical Stalking for Government Contractors®, the curriculum and philosophy that has guided hundreds of small and large companies to successfully find and win federal contracts and subcontracts valued at more than $5 billion in realized revenues since 2010.
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