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?

 

 

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Pentagon Unveils Reduced Spending Plan

Today, Secretary of Defense Leon Panetta unveiled a budget plan that cuts half a trillion dollars in spending increases over the next 10 years, ultimately illustrating how the Obama administration feels America’s military needs to change.  Cuts would begin in October 2013.

Panetta said he will request a total budget that is $33 billion less than the current budget.  To achieve this, Panetta said a new “flexible and agile” strategy was developed for the military of the future.  From examples provided, savings will come from reduced headcount, closing of European bases, and retiring of antiquated hardware.

Programs like the Special Operations Forces (e.g. Navy SEALs) and unmanned aerial vehicles will actually see increases in spending.

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.

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.

What to Do About Contracting Delays and the End of the Fiscal Year

If you sell to the federal government, you’re entering the last month of its fiscal year.  Statistics show September has two times the number of contract awards on average more than other months.  Yet, it appears this year, contract delays will be high, and for many of you, September may not be a strong finish.  In an article in Washington Technology, Dawn Jordan provides some statistics originally produced by Input on the current state of contracting as we finish up the fiscal year:

  • In year-over-year comparisons, the number of awards for each of the first six months in 2011 was down versus the same month every year dating back to 2005.
  • Using the total number of awards made in 2010 as a guide; in the first six months in 2011, 30 percent of awards had been made.
  • Both the civilian and defense sectors have slowed but the greater impact has been on defense.
  • In each of the past three years, over 80 percent of the RFPs issued were awarded in 12 months. Based on the first half of 2011, it appears the percentage of RFPs awarded within 12 months will be closer to 65 percent.

There are a variety of reasons behind this.  Contracting staffs appear to be smaller.  The whole budget debate and continuing resolution process seems to have had a significant impact.  And the number of protests have increased over the last few years, causing award delays.

So what is a contractor to do during times like these?

Pedal to the Metal

First, don’t let off the gas with existing prospects.  You have to keep pushing forward, building relationships and highlighting customer value.  Know what is happening in procurement and where your deal stands.  In many cases, the procurement process will eventually unstick and you’ll be ready to move rapidly.

Build a Pipeline

Second, now is a great time to pursue new prospect relationships and build your pipeline.  While you’re visiting a current prospect (and hearing about yet another delay), ask who tin other agencies or departments might also benefit from having a problem solved.  Sometimes, it just takes asking.

Make New Friends

Third, while we’re thinking about relationships, now is a good time to build relationships with current/potential partners.  Government selling is all about teaming, and finding the right partner can make the difference between success and failure.  Too many times, contractors don’t have partners on their radar until they are scrambling to plug a hole in an RFP response.  Build relationships before you’re under the pressure of a proposal deadline.

The last month of the year can be a frustrating, but exhilarating time of the year.  This year, don’t let contract delays and budget wranglings get you down.  Build for the future.

“Owning” the Government RFP

 

Selling starts long before the RFP

In government selling, you really only have two choices:  1) sit around and wait until an RFP is issued, then hope you put together a killer proposal, or 2) get in front of the RFP and influence the specifications—essentially owning the RFP.

It’s no stretch to say the latter is much preferred.  Influencing specifications—even creating sole source opportunities—is the holy grail of government selling.  But how do you achieve it?

We offer entire training seminars and have written a book to help sales teams do this, so covering it in a blog post is impossible.  However, here are a few things to keep in mind (and consider learning more about):

“Relationship” as a Key to Owning the RFP

It is nearly impossible to own the RFP unless the sales person/team has some sort of relationship with the buyer prior to an RFP release (by “buyer’ we mean the project owner not necessarily the procurement officer).  Typical schmoozing tactics will not work in government, and attempts to wine and dine are ill advised.  Instead, relentlessly pursue your network contacts to see if someone can make an introduction for you.  Find relevant content that will interest the buyer and send along on a regular basis as an “FYI.”  Deploy the Five Strategies for Building Commitment and Trust outlined in our book Seven Myths of Selling to Government available here on Amazon.com (I know—a shameless plug).

“Reputation” as a Key to Owning the RFP

Few things help “open doors” and ignite relationships better than a positive reputation.  And not just a company’s reputation either (though this is important).  Salespeople can create a reputation for themselves as someone who is “more than just a salesperson.”  Creating intentional, regular content designed to position oneself as a subject matter expert can soften otherwise hard-shelled prospects, and may even make the phone ring (a welcome relief from banging your head against the wall cold calling).  We cover this in our book, too (shameless plug number two).

“Right Fit” as a Key to Owning the RFP

Of course, even solid relationships and great reputations cannot overcome product or service offerings that are poorly aligned with prospect needs.  Getting ahead of an RFP can help you do one of two things: 1) create value propositions uniquely offered by your company (and maybe even unknown to the prospect), or 2) identify early your inability to win a deal (and move on so precious time and money isn’t wasted).  Obviously, option 1 is preferred.  “Right fit” covers a lot of ground and goes way deeper than simply meeting a set of published specifications.

By the way, in our book we show you how to construct a prospect Value Portfolio for your offering relative to your competitors, giving you insights on how to best position yourself early on (you knew it was coming).

Many salespeople we encounter have given up on trying to “own the RFP.”  For them, the passive strategy of waiting for the RFP is more comfortable, even though the results are mediocre at best.  Clearly, the methods we teach require a greater degree of effort and a long-term perspective of success building.  If it were easy, everyone would be doing it.  Yet for those star salespeople who are up for the challenge, the payoff can be huge.  We know because we’ve lived it.

By the way, did I mention we wrote a book about it?

Rick Wimberly and Lorin Bristow are principals in Government Selling Solutions (GSS) a division of Galain Solutions, Inc.  They are successful speakers, trainers and authors on government selling and securing government contracts.  The team offers a newly released book Seven Myths of Selling to Government, available on Amazon.com and other retailers.