Obama Administration Wants to Require Contractor Companies and Individual Managers to List Political Contributions

The Obama administration has been circulating a draft Executive order that would require contractors/bidders to say what political candidates and other causes they have supported with political contributions over the past two years. In addition to company contributions, the order would require information from companies’ executives and managers on whom they supported personally.

Last week, Sen. Susan Collins (R-Maine) told President Obama’s top procurement policy official the Executive Order was a bad idea for general competition and small-business.  “If you want more competition, there should not be an executive order that will be doing the exact opposite,” Collins said during a hearing (she is the ranking member of the Homeland Security and Governmental Affairs Committee).

Many actual details would be left up to the Federal Acquisition Regulatory (FAR) Council.  However current draft language spells out the desires of the administration according to an article in Federal Computer Week:

• All contributions or expenditures to federal candidates, parties or party committees made by the company, its directors, or any affiliates or subsidiaries it controls.
• Any contributions made to a third party with the intent to use those contributions to make independent expenditures or election advertisements.

Companies would be required to disclose the information if the total amount exceeded $5,000 in a year. Further, the Obama administration wants the data made public through an online database.

The debate over this issue is heating up.  On the one hand, transparency in government is a good idea.  On the other hand, there seems to be little trust that the information will not be used negatively, either through favoring current administration supporters or disfavoring opponents.  And, delving into private contributions of individuals seems far reaching to many of those who are opposed.

Ultimately, most agree procurement decisions should be made on which solution provides the greatest overall value to the taxpayer.  How this is best achieved will clearly be the topic of ongoing debate.

Communication Key to Curbing Increase in Bid Protests

Bid protests are on the rise in the federal space.  According to the GAO, last year marked the third year in a row bid protests for federal contract awards grew by more than 15%.

Reasons for More Bid Protests

In an article in Federal Times, several reasons were cited for this growth in disputed awards.  First, the trend of consolidating multiple procurements into a single contract means the overall stakes are higher as a single contract decision can decide the fate of the contractor with that particular agency for a lengthy period of time.

Second, contracts appear to be increasing in complexity (particularly for things such as multi-year technology contracts).  This increased complexity creates room for more mistakes and expanded opportunities for legitimate complaints.

Third, in 2008, Congress began allowing contractors to protest not just entire contracts, but also individual task orders within larger contracts.  According to the article, about half the growth in protests can be attributed to disputes on contract task orders worth more than $10 million.

Finally, poor communication with contractors contributes to increased protests.  Dan Gordon, administrator of the Office of Federal Procurement Policy, has been telling agencies to break up some of their larger contracts and to stop trying to write “protest-proof” procurements. However his strongest advice to agencies has been to communicate more with businesses.

Not Just a Federal Problem

The latter issue is a problem throughout government procurement at all levels, not just federal buying.   While communicating with competing vendors after an award shouldn’t be a time-consuming and expensive process on the part of the buying agency, all too often it is outright ignored.  Significant time, effort and money goes into responding to RFPs by vendors.  They should at least have access to information as to why their solution didn’t make the cut.

What the Risk-averse Government Buyer Really Wants

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Government purchasers go out of their way to make their procurement process appear to be rational and objective, solely focused on a measurable end result.

In reality, the process is largely meant to assuage the many fears that bedevil the government buyer – fear of being criticized by bosses, peers, the minority party, the special interest groups. Fear of being blamed for lost votes. Fear of losing their job. If you’re high up the government agency food chain, your day can go from really good to really bad with a single phone call from the media.

So if you’re making a career in government, your likely M.O. is playing it safe. If you’re a buyer, you may be much more interested in NOT making a bad decision than in making a radically, exuberantly right decision.

When you’re selling to government, a big part of your job is to make sure you understand the fears that are your prospect’s strongest drivers. Of course, you’re going to be hampered in doing this by the fact that admitting to fears of any kind is the last thing your prospect is going to do.

Surfacing and scoring the hidden government buyer fears

In our book, Seven Myths of Selling to Government, we introduce the Value Portfolio concept as the way to think through, rank and then finally determine how to neutralize these fears.

We based our Value Portfolio on the common notion of an investment portfolio. An individual’s investment portfolio will likely be made up of stocks, bonds, mutual funds, maybe some gold, art, antiques, real estate, etc. (all dependent on assessment of return and risk). The government buyer’s Value Portfolio will be made up of all the requirements and experiences involved in a purchase.

An investment advisor’s job is to balance what’s in the portfolio to give the investor an acceptable mix of risk and reward.

In our Value Portfolio, we’re loading in all the requirements and, for each, thinking about what our prospect’s potential risk and reward are – as they see them.

For example, for a software product, the buyer’s stated requirement may be “I want a low initial price.” What he’s afraid of (but not saying) is, “I’m afraid I’ll exceed my budget and be seen as a poor manager.” He also sees a potential upside: “We’ll be able to acquire the software and I’ll be seen as a tough negotiator.”

As you construct the Value Portfolio, you think through every requirement this way. You probe for the perceived up-side and down-side – but your main goal is to uncover the hidden fears and determine which fears are strongest.

With our software buyer, we used price as the example. But he may be much more worried about how real your 24/7 service guarantee is, because he fears his boss’s wrath if the system goes down when she’s catching up on paperwork Sunday mornings.

We’d like to point out that being motivated by fear is not a unique trait of the government buyer. Any corporate buyer these days, especially a buyer of technology – is wading into unknown waters. If you can learn to minimize the fear in the buying process, you’ll be golden with purchasers in any organization.

“Hard Times” for Government Contractors? Where’s the Opportunity?

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In an article in Washington Technology, columnist Nick Wakeman points out certain federal budget numbers that on the surface could cause some government contractors to get nervous.

Based on FedSource’s annual budget analysis, the addressable Federal market for contractors stands at $819.1 billion for FY 2011.  It will be $752.1 billion in FY 2012 (an 8.2% drop). Compared to 2010’s $773 billion market, the 2012 figure is about a 2.7% decline.

Specifically, here are some areas that will take the hardest hits:

• 10.6 percent less for contractors at the Army.
• 10.6 percent less at the Energy Department.
• 9.5 percent less at the General Services Administration.
• 5.1 percent less at Homeland Security.

So, is there any good news for contractors here?

Well, investments are actually growing in areas such as technology and innovation. The Education Department is expecting to increase spending on technology, program development and student loan processing. And, the delay in the 2011 budget has likely created some pent-up demand.

The best opportunities will come for contractors who can help agencies operate more efficiently and effectively.  In fact, this is a fundamental requirement anyway considering “cost savings” is often the most tangible ROI factor that can be illustrated in a government setting.

$752.1 billion is still a pretty hefty pie.  And, don’t forget the vast opportunity within state and local governments who will see their tax bases begin to bounce back as the economy improves.

Cuts are inevitable in the cycle of government procurement.  Focusing on strong value creation and relationship-building will help overcome these dangers.

By the way, if you missed our live online webinar entitled, “Seven Myths of Selling to Government” you can still benefit from the information (we talk a lot about value creation, relationships, and even pie).  Following the link to the right and registering allows you to experience the webinar just as if you were there.  We hope you enjoy and benefit.