Key Trends in Government Contracting Unaffected by the Election

A technology client recently asked us to summarize our opinions on key trends in federal government contracting.  We were happy to do so…and share the benefits of this with you.  Here are several key trends we’re seeing in government contracting:

  • More emphasis on shared technology and infrastructure (i.e. cloud computing)
  • More  justification that the chosen procurement vehicle is the best approach of all available contracts
  • More firm fixed-price (FFP) contracts
  • Greater emphasis mobility and working from home (teleworking)
  • Greater focus on IT security given more mobility and teleworking

Technology is driving many of these things as access, sharing, mobility, security, and other related trends converge.  We also don’t believe the election outcome will change the trajectory of any of these trends in a significant way.

What do you think?  What trends are you seeing that support or contradict this list?




Becoming a Star: Listening & Value Translation Skills

In our consulting practice, we’re often asked what individual qualities best predict success in government sales and business development.  In our research (and practical experience over the years) we’ve actually identified seven personal traits that contribute to effective selling within the complex government environment.  For a discussion of all of these, feel free to request our free white paper, “Seven Key Traits of Star Government Salespeople” (see the link on the right).  For now, let’s examine the strongest predictor of success:  listening and value translation.  We’ll break this down into smaller bites in order to better understand this vital factor.

First, star salespeople are perceived to be good listeners by their prospects.  No surprises here.  Buyers want their problems and needs to be truly heard.  Of course, listening means more than hearing.  Good listeners know what questions to ask to get to the core of prospects’ stated (or unstated) needs.  They listen for clues regarding the decision-making chain, and they effectively discern non-verbal cues.

Second, star sales people are able to translate prospect problems into meaningful customer “answers”.  Hearing is one thing.  Being able to diagnose problems, align needs with company offerings, and provide real solutions (an unfortunately overused term) is another.  Being “consultative” is a part of the equation, but only a part.  Persuasion is also a valid part of the value translation process.  We often see salespeople who, in striving to be consultative, fail because they get mired in prospect “wish lists” and details they don’t know how to address.  They are unable to persuade the prospect to adopt new ways of thinking (ways that are more aligned with their company’s offerings).  Star government salespeople don’t fall into this trap.

Third, star salespeople have learned to adapt their listening and value translation skills to the structured process of government selling.  While other salespeople might be turned off by the rigid procedures involved in government procurement, star government salespeople utilize this to their advantage.  They are comfortable with the playing field (and frankly know how to work the system within bounds).

A government salesperson’s ability to listen empathetically, and then translate products or service features into clear value for the buyer is essential for long-term success.  If you’re sitting around waiting for RFPs to be released before you begin selling, you’re too late.  Commit to getting in front of the RFP, building relationships, listening effectively, then translating prospect problems into solutions your company can provide.  You’ll find yourself with “star” status before long.

President Obama Proposes Merging Agencies and Elevating SBA Head to Cabinet Position

Seal of the U.S. government's Small Business A...

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Today, President Obama proposed merging six trade and commerce agencies into a single agency, while elevating the head of the Small Business Administration to a cabinet level position.  The plans would affect the Commerce Department, the Small Business Administration, the Office of the U.S. Trade Representative, the Export-Import Bank, the Overseas Private Investment Corporation and the Trade and Development Agency, according to an article in the Wall Street Journal.

The president can’t make the change on his own, so he will ask Congress for authority to undertake the reorganization quickly.

According to the Journal article, “the president appears to be seeking to show that he is looking out for a part of the business sector that Republicans say is the main engine of job growth, and one that other Obama policies have hurt.”

At this point it is unclear whether Congress will give President Obama what he seeks. Reorganizations are tricky in Congress because they impact certain committees’ oversight structure.  At least, however, discussion and focus are being placed on Small Business–a key engine for economic growth.

Federal IT Market to Remain Flat According to New Survey

The federal IT market will remain flat or decline slightly during the next five years according to a new survey from the TechAmerica Foundation.  IT spending is forecasted to increase from $81.2 billion in fiscal 2012 to $85.7 billion in 2017, for a compound annual growth rate of just 1.1 percent over five years.

Civilian agencies’ IT spending will largely remain flat at $42.7 billion in fiscal 2012, increasing during the next five years to $46.8 billion (a 1.9 percent growth rate).  Defense Department IT spending will hit $38 billion in fiscal 2012 and then decline to $35 billion by FY 2017.

The survey involved more than 200 senior industry experts from 90 companies and more than 300 meetings with key government executives, think tank experts and congressional staff.

“Although IT will be leveraged to streamline government operations, increase productivity and achieve cost-savings, upward pressure on IT spending will be counteracted by cost containment strategies and strategic sourcing,” the survey said.

TechAmerica Foundation spokesman Dan Heinemeier said debt reduction politics is dominating the federal spending debate.

Heinemeier said four budget scenarios were developed for the forecast; the most likely one being congressional agreement on a $2.1 trillion in deficit reduction.

Obama Administration Looks to Reduce Contractors’ Senior Executive Salary Reimbursements

According to Washington Technology, the Obama administration has proposed changing how the government sets limits on the reimbursement of salaries for senior executives of government contractors.  The current formula for reimbursement sets the cap using a survey of general commercial compensation, but the administration wants to tie the cap  to the salaries of senior federal officials which currently pays $200,000 a year.

In 2010, the Office of Federal Procurement Policy allowed reimbursements for a contractors’ top five executives to reach a total of $693,951. The Obama administration now is concerned that, based on surveys, reimbursements could reach $750,000 in 2011.

Congress will have to pass new legislation to make the change.

New Labor Rule Requires Winning Contractor to Offer Jobs to Incumbent Contractor’s Employees

Just snatch a new federal services contract away from a competitor?  A new Department of Labor rule says you will have to offer your competitor’s employees a job prior to hiring workers elsewhere.  According to an article in Washington Technology, Labor Department officials have released a new policy mandating that federal service contracts require winning contractors to offer positions to the previous contractor’s employees (whose jobs would end as a result of the new award).  Essentially, incumbent employees will have a right of first refusal for employment.

The thought behind the rule is such a policy would make the transition between contract awards smoother for the government.  However, comments to the ruling offer troubling questions such as:

  • What if the previous contractor lost because of poor performance in general?
  • What if the employee is not up to standard?  Does sufficient documentation exist to determine poor individual employee performance?
  • If I’m a losing contractor, do I really want my employees easily whisked away (taking my company secrets)?
  • How do winning contractors fulfill the cost and quality obligations?
In the article, Stan Soloway, president and CEO of the council, indicated the rule is inappropriate and even counterintuitive.
“While experience shows that companies often hire as many qualified incumbents as possible to avoid the costs of training new employees, this rule denies those companies, who have full responsibility for performance under the contract, their ability to select a workforce they believe is best suited to meeting the contract requirements,” Soloway said.

The official date of when the rule will take effect has not been released, but will be published in a subsequent notice once the starting date has been decided.

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.