Strategic Exploitation of Multiple Award ID/IQ Task Order Contracts & Competitive Price Analysis of Awarded IDIQ Contract Task Orders

Lured by large aggregate value contract ceilings and relatively low barriers to market entry, bidders line up to bid for task order hunting licenses under multiple award ID/IQ vehicles. Most bidders that receive such awards pounce on early task order requests (TORs), develop and price their responses, and eagerly await an award. For most contract holders the task order awards never come. Why?

Acquiring a berth under a multiple award contract is in many ways easier than winning its competitive task orders. Usually 20%, or less, of the awardees end up winning 80%, or more, of the competed task orders. The reason is simple: the winners are executing to a task order acquisition strategic plan that usually sacrifices short-term profitability for long-term growth and scale. The goal of such a well-managed exploitation strategy is to win early and often, execute well, build scale, and, over time, effectively deny less strategic competitors entry to the market. After all, when it comes to capturing government business at any level, hope is definitely not a winning strategy.

Before deciding to pursue a multiple award ID/IQ contract bidders need to develop their post-award exploitation strategy for acquiring contract task orders. The strategy must consider the way in which task order proposals are evaluated. One approach could be based on a "best value" task order capture strategy. For one team such a strategy may revolve around targeting specific expected task order opportunities that are within the bidder's sweet spot with respect to experience, past performance, or even personnel. Another firm's strategic approach could be to respond to most all task order requests underpinned by aggressive recruiting and pricing to win as many "LPTA-ish" task orders as possible while relying on increasing scale to pare costs and improve margins over time. CAI/SISCo has a study offering that can help you fashion a strategy that maximizes your task order capture success and overall margin potential.

Firms that are already multiple award ID/IQ task order contract holders and are not experiencing the hoped for level of success can also benefit from a CAI/SISCo study. The significant difference between developing an "in-process" task order vehicle exploitation strategy and the pro-active strategy development approach described above is that "in process" case will benefit from whatever is available in terms of a history of awarded task orders.

The heartbreak of winning a multiple award, indefinite delivery/indefinite quantity (IDIQ) contract berth and not being able to win any of its task orders happens too often. This circumstance, however, is an avoidable one that can often be remedied by developing a Vehicle Exploitation Strategy that maps out the how, who, what and where of task order demand generation and capture.

In today's fiercely competitive government IT, C&E and S&T marketplaces, every contract and task order opportunityhas to be:

• bid aggressively, then managed to price;
• sold to a wide franchise of buying entities, usually against aggressively priced government-wide acquisition contracts (GWACs); and
• aggressively and time-dependently refreshed to:
  • substitute desirable products and services for less desirable items,
  • include products that were not within the original purview of the contract, and
  • produce and/or maintain desired revenues and profitability.

To help bidders accomplish these goals, CAI/SISCo recommends that a Sales Strategy be developed and aggressively followed once an IDIQ contract berth has been secured. Pre-award, the contract Sales Strategy should document and animate an overarching strategic approach to task order harvesting.

Post-award, the contract Sales Strategy provides a dynamic blueprint for profitable contract execution covering strategies and routes to market by customer. The Sales Strategy should also provide an overview of the strengths and weaknesses of competing IDIQ vehicles (e.g., GWACs) and other relevant competing contract vehicles. Overall, the Sales Strategy is aimed at maximizing customer acceptance and penetration while improving the probability of a return on the pursuit's investment.

Of course, without a well-reasoned Sales Strategy it is going to be much harder to to make your IDIQ contract berth successful. For this reason CAI/SISCo offers our Competitive Price Analysis of Awarded IDIQ Contract Task Orders service to find out why task order opportunities are being lost and to retrofit a Sales Strategy (or tune-up an existing strategy) into the quest to land task order business. Here's how this service works.

Overview: Because almost 50% of all contract dollars are awarded to holders of multiple award IDIQ contracts, firms labor long and hard and pay dearly to secure coveted IDIQ contract berths. Sometimes, however, these IDIQ contracts are easier to win than the task orders that are competed under them.

If there is reason to believe that your firm is losing more IDIQ contract task orders than it should consider investing in a confidential CAI/SISCo Competitive Price Analysis of Awarded IDIQ Contract Task Orders that your firm bid for and lost. Our rapid response service provides an impartial assessment of how the winners' bid strategies and prices have put them in the winner's circle instead of your firm's offer.

Since the past is prologue it is always prudent to understand pricing approaches that have worked for others. In a government acquisition environment that is increasingly focused on price a timely analysis of your losses can provide the means to help your company focus on winnable task orders while conserving bid pursuit dollars by avoiding unwinnable ones.

Initial client reaction to this service offering has been very positive. The IDIQ contracts that we have supported so far with Competitive Price Analysis of Awarded IDIQ Task Orders studies include: GSA Alliant LB; GSA Alliant SB; CDC CIMS; DHS Eagle; NASA SEWP; Army ITES; and DISA Encore. Other IDIQ vehicles are also available.

Study Approach: To receive a study proposal the client identifies the awarded IDIQ Contract vehicle of interest and the number of awarded task orders the analysis is to include. The IDIQ vehicle selected should have been in place for at least a year and have a robust task order award history. Typical study pricing consists of a basic price which includes up to 10 task orders plus add-ons for additional task orders, if any.

Once a purchase order has been received we rapidly embark on independent/ghost pricing and analysis of the awarded task orders. Since CAI/SISCo has no standing to receive IDIQ contract task order requests or other IDIQ contract details the customer must furnish the task order request, their proposal, and details of the winning price and winning contractor, as published by the Government. The customer should also reveal what their IDIQ contract pricing strategy was and how it was to be implemented in pursuit of task orders.

By creating and then comparing/analyzing the independent/ghost price to the awarded price as well as to the price bid by the client, then repeating that process for each of the included task orders, a wealth of useful data emerges.

To complete the analysis, we use salary survey data and our database of "corporate personalities" inputs to CAI/SISCo's labor rate development models to develop competitive labor rates, wrap rates on the IDIQ task order awardees, to help deconstruct the winning prices. We also show the adjustments that should be made to the overarching IDIQ contract pricing strategy as well as the level/s of discount that the prices offered represent to each task order winner's prevailing IDIQ contract ceiling labor rates.

Additionally, to further understand the competition, and in an effort to reverse engineer the winning price, we will analyze key proposed direct labor rates, using several sets of current salary survey data as well as internal industry knowledge. By using all this information in concert, a number of useful trends emerge, which can be translated into new bid strategies which have a greater chance of success. This new base of knowledge can be further refined over time as more task orders are awarded and more information becomes available.

Client Case Study: For a nationally known contractor we reviewed 15 awarded task orders (to 8 discrete awardees) under the HHS CDC CIMS contract. Results included reverse engineering of each of the winning task order (TO) bids to deconstruct and identify wrap rates, bid price and bid strategy. Rules of thumb were derived for target direct labor and fully burdened rates based on task order requirements and related metrics.

Recommendations included 1) closer adherence to the pricing strategy that was used to secure the customer's contract berth in the first place, plus 2) a profile of the sorts of IDIQ TOs that the client should focus on and, conversely, which types of IDIQ TOs the client should stay away from.

Continuing IDIQ TO Analysis Benefits: Clients can also build on the data developed by CAI/SISCo by means of a Competitive Price Analysis of Awarded IDIQ Task Orders with additional awarded task order research aimed at keeping the data and trending current. By this means the client can constantly refine competitor data, isolate actionable information, and develop the ability to drill down into a specific competitor's bid strategy pertaining to certain types of TOs.

Summary: Besides a general understanding of the competitive landscape of your selected IDIQ vehicle, the analysis should clearly show the types of efforts, from a pricing standpoint, and for a particular client, which have a higher probability of a win. For example, is your firm competitive on the more "cookie cutterish" service desk and O&M efforts, or is your sweet spot more along the lines of TOs that deal with pilot programs, application development, and enterprise architecture activities?

The bottom line is that clients see our Competitive Price Analysis of Awarded IDIQ Task Orders as a way to actually save the company money, by focusing capture and proposal resources on those types of TOs where they have a greater chance of success, and in using the competitive analysis to guide the overall pricing strategy to yield more and profitable TO wins.

To request a proposal or more information about any of our studies, services and products, please e-mail Tony Constable or call him at (301) 807-8171.