OMB Issues Procurement Guidance for Federal Agencies

This week the Office of Management & Budget (OMB) issued more guidance related to reform of government procurement processes. The OMB memo provides further meat to goals for reducing acquisition costs set out by President Obama earlier in the year.

For 2010, federal agencies must reduce by at least 10 percent the share of dollars obligated through new contracts that are awarded non-competitively (or receive only one bid), or are based on cost-reimbursement or time and materials. The new memo provides guidelines for procurement managers to use for evaluating the competitiveness of their agency’s purchasing practices.

The memo points to the need for purchasing officers to answer three key questions:

(1) How is the agency maximizing the effective use of competition and choosing the best contract type for the acquisition?
(2) How is the agency mitigating risk when non-competitive, cost-reimbursement, or T&M contracts are used?
(3) How is the agency creating opportunities to transition to more competitive and lower risk contracts?

Recommendations provided surrounding these questions are varied, but highlights include concepts such as:

Better planning.  To promote competition effectively, agencies must provide sufficient information in the statement of work and sufficient time for response.  They must understand how the industry works (distribution channels, etc) and what drives costs.

Focus on results.  Agencies should focus on outcomes, rather than detailing how work is to be performed . This will allow vendors to offer more innovative solutions and open possibilities for off-the-shelf solutions.

Use the appropriate contract types.  Agencies should scrutinize projects and only use cost-reimbursement or T&M contracts under specific conditions.

 Limit contract terms and regularly assess contractor performance.  Shorter terms and scrutinized vendors will drive better performance and lower costs.

Engage the market.  Actively pursue the market’s ideas on ways to reduce costs and structure contracts.

These are good suggestions overall, with positive impact on competitiveness–at least in theory.  Contractors should continue to focus on value-creation and service quality, realizing long-term, non-competitive contracts could dry up.  Doing so will ensure companies don’t get lazy in their offerings and taxpayers receive a good return on their investments.

-LBB 

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Government Contracts: A Strategy?

We heard from quite a few people on our blog recently, “Rule You Can Break:  The GSA Schedule“.   Responses generally came from two sources:  (1) companies-wanting-help with the GSA (General Services Administration) process, and (2) consultants-wanting-to-help companies with the GSA contracting process.  The companies-wanting-help generally cited concern over the time involved working through a confusing process.  The consultants-wanting-to-help generally cited their ability to bring insight and speed (relatively speaking) to a time-consuming and difficult process.

I thought about these comments as I sat in the doctor’s office this morning awaiting treatment for the inevitable high blood pressure that comes with selling to the government.  I  did some searching on my mobile device and ran across the Wiki section on Contracting with the United States Government.  Wow, what a nice write-up…very comprehensive and well-written with lots of insight.  Some of the important take-aways, outside of significant detail on how the federal contracting process works:

  • Federal government contracts are governed by law…not a commercial lawyer or procurement person’s idea of what would generate the best value for a company.  That makes the process significantly different when dealing with government vs commercial sales and contracting.  (There can be no procurement unless there’s a law somewhere somehow authorizing it.)
  • Federal acquisitions begin with identification of a requirement, then acquisition planning.   (This is an important one, the one where our company focuses its efforts.)
  •  “Contracting is all about risk allocation and minimizing risk.”  (It would be a good idea to read that one a few times.)
  •  “Proposal writers should bear in mind that the first thing they must do in their proposal is focus on what the Government wants to see in the proposal – namely information directly related to the specifics of the solicitation”.  (In other words, beware of “fluff”.)

Reading Wiki (or anything for that matter) won’t teach you how to win business through the government.  There’s a lot involved.  Time and time again, we see companies naively thinking getting on a government contract is a strategy.  (Get on the contract, and orders will come in.)  It’s not a strategy, just one tactic that needs a solid strategy around it.  If you’re intent on getting on the GSA or other government contracts, first read the Wiki post referenced above.  Then, find a good consultant who specializes in helping companies with the GSA schedule.  Don’t tackle this alone.  If you can’t find one, contact us and we’ll give you some suggestions.

All the best,

Rick

The Creative Government Buyer & Seller

I was asked an interesting question the other day. It was whether I consider selling government frustrating because government buyers don’t think creatively and openly. It’s an oft-asked question and I’m sure the answer many would give is “yes”.

Trying to win government contracts can, indeed, be frustrating. But, the frustration should not come from a lack of creative thinking by government buyers. I think the frustration often rests at the feet of the vendor.  It results from failure to adequately identify and encourage potential sources of creative thought.

In an earlier post, we discussed the fact that there are three types of government buyers:  Procurers, Influencers, and End-Users.  Through our years of helping companies win government contracts, we can cite dozens and dozens of stories where the Procurers, Influencers, and End-Users we worked with showed clear signs of creative thinking and creative problem-solving.  However, it often took nudging from vendors to release the creativity.  (Creative problem-solving, in any circumstance, fares better with a nudge.)

So, when your frustration reaches its peak, look inside and take responsibility.  Don’t think that just because you’re selling to the government, you are helpless.  Yes, there are rules you must follow, but don’t let those rules be your excuse. 

All the best,

Rick

Three Types of Buyers in Government Agencies

I was reading through a publication produced by the GSA offering business owners advice on how to market to the government.  While most of this document covered typical ground such as RFP databases and the benefits of GSA, one section was particularly good for those new to government procurement (or at least those, like me, who benefit from occasional reminders).  This section highlighted the three types of government buyers within an organization:  procurers, influencers and end-users.  Understanding the role each of these plays is important to successful government marketing, so let’s look at each of these a bit closer.

Procurers

Procurers are the professionals (often referred to as “contracting officers”) charged with managing the purchasing process for any given good or service.  They serve as filters and gatekeepers between contractors and program managers or end-users.  They are experts in the process details and, depending on the product or service being purchased, generally have insight into appropriate costs/value.  Though most of your selling efforts will not fall here, it is important not to forget these key folks.  Even though they are process experts, they can still benefit from creative or alternative purchasing vehicle ideas.  And, make sure you follow their rules.  They can either be a partner in your sale, or an absolute nightmarish obstacle–much depending on how you approach them.  Kissing up won’t work, but genuine concern for helping them do their job will.

Influencers

These are the program managers and key decision-makers regarding the purchased product or service.  The term “influencer” may seem a bit light as many of these carry considerable if not near-exclusive power over decisions.  However, the term does reinforce the complex nature of government sales–multiple stars must align before a contract is signed.  With this group, a first consideration is meeting the specifications they set. Check that box, then prove to them you’re easy to work with.  Reinforce you know the rules and won’t cause headaches.  Finally, hammer home you’re a safe bet.  The more influencers feel you won’t embarrass them down the road (or they’ll look like geniuses), the more likely you’ll be to get the contract.

End-Users

End-users are typically specialists in their job.  They may not have the broad strategic perspective of a program manager, but they know the details and inner workings of their world better than anyone.  That doesn’t mean they understand the ins and outs of procurement.  They really don’t care as long they get the relief they seek from the vendor’s product or service.  They can certainly impact the contracting decision up front, and will most definitely hold significant sway over whether or not your contract is renewed.  Selling messages with this group relate to features and functions of your solution, but only in a targeted fashion aimed at how these features will resolve pain for those using the product and service on a daily basis.

Selling and marketing is most effective when well targeted.  Remember the three types of government buyers, and tailor your approach to each.  The payoff may be a loyal, long-term client that you never have to worry about paying their bills.

-Lorin

Rule You Can Break: The GSA Schedule

If you want to sell to the federal government, you’ve got to first be on the GSA (General Services Administration) schedule…true or false?

Most would say “true”.  Most would be wrong. 

Not that there’s anything wrong with being on the GSA schedule; it’s just not required to make government sales and win government contracts.  This is a good thing.  Getting listed on the GSA contract schedule is time-consuming and expensive.

Now, don’t get us wrong.  To be successful, you’ve got to figure out how to make it as easy as possible for federal customers to buy from you.  Being on the GSA schedule certainly is one approach.  But, there are other buying schedules that work just as well…some of them better, depending on what you’re selling.  (Many state and local governments don’t use the GSA schedule.)

There is another route – partnering with someone who’s already on the GSA schedule (or another appropriate contract).  You won’t get off scott-free.  You’ll likely pay the partner a portion of the sale.  And, you’ll still need to follow the rules of the contract and the FAR (Federal Acquisition Regulation). 

Yes, plan on getting on the right contracts…but, don’t consider getting on GSA or other contracts as your federal contracting strategy.  You won’t make these arrangements, then see orders magically come in.  You’ve still got to make your value propositions to the right people at the right time.  The contracts should be only one element of the strategy.

NTIA Awards First Four Broadband Mapping Grants

According to the National Telecommunications and Information Administration (NTIA), four entities have been awarded the first state broadband mapping grants, with more to follow soon.  The awardees are:

  • The California Public Utilities Commission (CPUC)–awarded approximately $1.8 million
  • The Indiana Office of Technology (IOT) –awarded approximately $1.3 million
  • The Rural Economic Development Center, Inc. (e-NC Authority)–awarded approximately $1.6 million
  • The Vermont Center for Geographic Information (VCGI) –awarded approximately $1.2 million

The primary thrusts of these grants are to support  the collection and verification of the availability, speed, and location of broadband across these states. This work will be conducted on a semi-annual basis between 2009 and 2011, with initial data becoming available in November 2009 to help guide broadband policy efforts. 

NTIA received applications representing all 50 states, 5 territories, and the District of Columbia. The agency is currently reviewing the remaining 52 applications and expects to continue announcing awards throughout the fall.  The NTIA praised these applicants for submitting strong proposals, covering keys areas of data collection, verification and collaboration. 

The national broadband map, when complete, will display the geographic areas where broadband service is available; the type of technology used to provide the service; access speed and other variables. 

-LBB

Is Economic Stimulus Finally Stimulating?

I’m in the middle of several weeks of travel, in part to see government contractors and prospects for clients. By golly, I believe I’m hearing something different than I did on similar trips a couple of months ago. Several times this week, I was told by government officials that they’re being told that their “wish list” projects for economic stimulus are being dusted off, with word of funding coming soon. On my last similar road trip, I mostly heard disbelief that economic stimulus was going to help move government initiatives forward.

A government communications business development consultant I know told me that, just this week, he heard that two of his dormant projects were about to move forward. And, our company this week heard the first peep we’ve heard in months from a federal government project we have been pursuing.

I don’t have quantitative evidence to prove my point…but, it sure seems like there are interesting things buzzing around. (I confess to being pleased that I’m not trying to make a living in the private sector these days.)

All the best,

Rick