In the government contracting business there have been some new trends that have begun to show up. Due to government agency budget cuts, they are cancelling contracts for some small companies, they are cancelling them just a few days before submission and many projects are moving to IDIQs or GA and VA schedules. Pretty much the government is trying to get work done with fewer headaches.
There are definite trends I have been noticing in the direction the government contracting and proposal world has taken as of late. Here are a few recent occurrences I have observed that may be common:
I have been talking to government employees about it, and here is what they report:
In a nutshell, the government is trying to award faster, with fewer headaches because they don’t have much time to dilly-dally with extended procurements and a higher possibility of protest. In response, companies are working diligently to move their existing work to IDIQs where they prime, while their competitors play a tug-of-war looking to move them to other vehicles. Procurements that were once stand-alone are now task orders, with some exceeding $800 million.
Industry-wise, my personal crystal ball is telling me that the most stable areas are going to be security, cyber, and intel, as the world is not getting much safer and some areas (lifecycle logistics, or operations and maintenance) just cannot be eliminated very easily.
While all of this is from personal conversations, here is some data to show that this multiple award trend is real.
As of August, there was roughly a $132 billion ceiling for IDIQ contracts in the soon-to-be-ending 2011 fiscal year (FY) according to a quick ballpark in Centurion Research’s pipeline tool. This represents a 27% increase from FY 2010. It would be interesting to see how many task orders are issued under this ceiling come the end of this fiscal year. USASpending.gov stated over a year ago that more than 50% of government procurement is now moving to multiple award contracts. Once bidders are qualified for the IDIQ vehicle, the award could take just a couple months instead of the normal 6-18 months. It streamlines competition, reduces protests, and provides the government with better buying power and greater efficiencies.
The government itself doesn’t know how many IDIQs it has across all the agencies, but it has been trying to keep the number down. There are rumors on the street that some large ones that people already have bid on might be cancelled, with the work moved to the existing vehicles.
Obviously, all of this has implications for your bid and proposal strategy. Most players in the federal contracting arena see IDIQ contracts as a main strategic element of their revenue growth, even in this shrinking market. Those who are nimble enough to adapt will navigate through this environment successfully. Those who fail to adapt may be beyond life support shortly.
The first reaction may be to bid on more IDIQs. “Collecting” IDIQs is only half the battle, and it won’t help you much, especially if you are not the prime on a vehicle. It certainly adds flexibility and portability for different contracts, but doesn’t guarantee revenues.
The secret is not only to have enough IDIQ and schedule vehicles (or all the right vehicles in your industry), but also to leverage them to the maximum extent possible. Although the ceiling value of each IDIQ often reaches hundreds of millions or a few billion, you need to “crack the code” of each vehicle to make actual money.
Every IDIQ is different. It has its own personality, patterns, and ways of getting ahead. It takes thorough preparation with a passionate and well-calculated approach to each task order. Unfortunately, many companies fail to crack this code.
Here are some of the mistakes many companies make:
What have you observed as trends? Do you agree with my assessment? Have you experienced any of these pitfalls at your own company?
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