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?

 

 

Government with its Head in the Cloud

Cloud computing icon

Image via Wikipedia

Michael Koploy,  e-Procurement Software Analyst for Software Advice, writes a solid article on cloud computing in the public sector in his State of the Union: Public Sector and the Cloud.  He makes a good case that the key to government movement toward cloud services is, and will continue to be, cost reduction.  With huge debt and significant budget cuts, government IT managers will no doubt be drawn to cloud services as a lower cost approach to on-site management.

So why aren’t government IT managers flying full speed into the cloud?  Michael says threats to security, and a loss of ownership are key barriers.  It only takes a couple of well-publicized security breaches to make IT decision makers in the government squeamish.  Recent hacking incidents raise questions about just how safe the data is when it’s “outside the walls.”

From our perspective, we continue to be bullish on contractor cloud opportunities.  The commercial world is embracing it dramatically, and, like other trends, government will lag behind, but follow.

It goes back to one of our key principles related to selling to government buyers:  they don’t like risk.  IT contractors will need to double efforts at securing networks, data, etc. (and double efforts at convincing buyers).

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.

New Report Reveals Trends in Federal Contracting for Small Business

Despite, current procurement tracking methods at the federal level, it’s not easy to get a real picture of how small business fares within government contracting.  However, a new report, Trends in Federal Contracting for Small Businesses, published by American Express OPEN’s Victory in Procurement (VIP) program provides some unique and interesting insights.  For this study, 740 “active small business federal contractors” were polled during the months of October and November.  Here are a few key findings from the first of four publicly-released summary reports:

  • Small businesses spent more chasing federal contracts. Over the past year, the amount of time and money that active small business contractors have invested in seeking federal contracts averaged $103,827, an increase of 21 percent over previous year figures.
  • Small businesses bid less frequently on contracts. Even as the average investment has risen over the past year, bidding activity has declined by nearly half.  This includes both prime and subcontracting bidding activity. In addition, the average success rate for small business contractors (in both prime and subcontracting) has declined, indicating a more competitive environment.
  • Try, and try again. Active small business contractors reported they had to submit an average of 4.4 bids before they won their first prime federal contract. Two-thirds of active small business contractors have performed on more than one federal contract, and, on average, it took them just under a year to win their second contract.
  • Experience pays. Contractors with ten or more years experience have success rates of 53% on average.  This compares to contractors with three or less years experience who have success rates of 20% on average.

Overall, the study highlights the fact that government contracting is not an easy, short-term strategy for small business.  It takes commitment, work, and investment to succeed.  On the other hand, for small businesses who know what they’re doing and/or are willing to make the effort, it is also clear government contracting can be a smart, highly lucrative pursuit.

Five Government Procurement Rules that Stifle Innovation

Government procurement is often no picnic.  If you’ve been involved in selling to government for any length of time, you know the myriad of rules, regulations and hoops you must jump through in order to successfully compete.  Of course, these rules are required to a degree to protect us, the American taxpayer and promote fair business practices.  Yet, many times these formalities have detrimental unintended consequences.  This is particularly true in the rapidly changing world of technology.

The linked article, Five Government Procurement Practices that Stifle Innovation, by Justine Brown in Public CIO magazine brings up some great points about how procurement rules can stifle technology (and what some agencies are doing to make things better).  It’s well worth a quick read.

 

Finding Business Opportunities within Federal IT

A new survey by the immixGroup (highlighted in Washington Technology) says federal agencies are emphasizing value measurement, process improvement, elimination of redundancy, and the adoption of new technologies to improve operations.  Buying trends expected to emphasize cybersecurity, cloud computing/virtualization and telework/mobile computing.

The 2012 Federal IT budget request is approximately $80.9 billion up slightly from the $78.8 billion IT budget in 2011.  For 2012, 52 percent of the request is for the civilian sector and 48 percent is for defense.

Some 75 percent of civilian agencies are expected to be utilizing cloud technology in some capacity by the end of 2012, the immixGroup survey said.

Teleworking and mobile computing are also among the most important new initiatives being considered by the federal government, with mobile Internet and e-mail usage surpassing desktop Internet and e-mail by 2014.

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.