When The Federal Acquisition Log Jam Breaks... (5-17-11)

Many of you who run or manage contracting companies, or are in business development roles, are asking yourselves the serious questions addressed in this piece. How about some feedback! Well I asked for it - here is some of it.

Barry Landew, formerly with SRA International and now an independent business development consultant, had an interesting perspective. He sees a gradual increase in the number of procurements, particularly as durations move from 5 years to 3 years IAW OMB guidance. He expects the "logjam" to ease after the debt ceiling is raised. But, he added, pricing pressure will persist.

John Lauderdale with Proposal Leadership. Inc., an independent proposal consultant, allowed this historical perspective: Those of us old enough to remember the days of the GFY running from July 1 through June 30 also remember the creation of the Transition Quarter ("TQ") between GFYs 76 and 77. At the time, some very bright individuals in government believed that moving the GFY three months down the calendar would surely give the Congress enough time to consider the President’s Budget, so that there would be no need for the habitual Continuing Resolution (CR). So what has history shown? The Congress that was incapable of doing its job in six months has proved to be just as incapable of doing its job in nine months. There has been zero improvement in the Congress' performance since 1976. In fact, I believe a detailed analysis would show that the use of the CR has been MORE frequent since 1976 than the 20 years before.

Brian Clark, President / CTO of Carolina Satellite Networks said this: The Federal procurement process will have to change in a major way. Many companies low ball contracts and never deliver the full SOW request. Increasingly, proposal evaluators have no clue how to compare "technically capable" or "cost realism" in proposals they evaluate. Government is literally wasting billions of tax dollars spent on solutions that are nowhere close to being capable of delivering what was actually requested. Case in point: MEOC contract on FEDBIZOPS - a $4.5M to $5.5M requirement, with a budget of $2.7M.

Last, from the latest Vangent CEO address to their stockholders that someone led us to: (Last year) We did lose about 35 percent to 40 percent (of our losing bids) on price. That leaves roughly 60 percent which may be the past performance wasn't as strong or some of the work that we were doing wasn't quite as strong. … I think what the customer is looking for given the budget environment, they’re looking for what’s technically acceptable based on responding to the RFP and lowest evaluated price.

THIS CONTINUES THE ORIGINAL TEXT: The wrangling over the Federal budget and deficit, while seemingly over for FY11's budget, continues. These deliberations have produced, and will continue to produce, several presumably unintended consequences. We remember well the lessons we learned during Ronald Reagan's first 18 months in office. Of course, he was all about increasing DOD's budget rather than trying to rein in spending of all sorts.

Faced with FY11 fiscal uncertainty, many agencies have opted to extend their extendable incumbent contracts, thus deferring inevitable recompetes until FY12. What this means is that, assuming FY12 turns out to be more of a normal contracting year, business developers will be facing a tsunami of opportunity as FY11's recompetes that were not recompeted will be added to the FY12 recompetes (unless the FY12 recompetes are extended also). With continuing resolutions, debt ceiling debates, and the lack of an FY12 budget, all connected with winning new business can look forward to either the best or worst 18 months of their business development careers.

Meanwhile, as FY11 draws to a close, business developers find themselves chasing fewer and fewer near-term opportunities as promising acquisitions are deferred, or fizzle entirely. So what does the future hold? Will FY12 be a bumper year for opportunities, or will uncertainty push many real opportunities futher to the right? Will contract consolidation occur in the face of what is likely to be mostly reduced budgets? Will GWAC usage increase? Will competition become brutal as contracts are recompeted with lower budgets but without any reductions in requirements or service levels?

In summary, the future of government contracting is about to become a "survival of the fittest" competition. If opportunity volume remains at historically low levels, then those who do the best job of positioning, proposing and, most importantly, pricing, (the 3Ps) will continue to prosper. If FY12 turns out to be a bumper year for opportunity, but with better solutions at more aggressive price points, then the 3Ps will also apply.

If FY12 does turn out to be "TheYear of Expanded Opportunity," then demand for CAI/SISCo's capture support services such as Price To Win (PTW) training and studies is likely to be robust. It would also be prudent for firms that have not done so to use the opportunity lull to learn about Competitive Analysis, PTW and Strategic Pricing from our professionals and possibly lock us in to provide study support in advance. Remember, CAI/SISCo works on a first come, first served opportunity exclusive basis.

Good luck and happy hunting!