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?

 

 

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

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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.

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.

 

Federal Network Security Incidents up 650% According to GAO

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Network security incidents at federal agencies have soared 650 percent during the past five years according to a just-released GAO report.

The most prevalent types of cyber events included infections from malicious code  (30 percent of incidents); violations of acceptable use policies; and intrusions into networks, applications and other data resources.  During the past five years, the number of reported events has grown from 5,503 in 2006 to 41,776 in 2010.

The main reason agency computers are vulnerable to contamination is departments have failed to implement security controls, according to the audit. Agencies do not always adequately train personnel responsible for system security, regularly monitor safeguards, successfully fix vulnerabilities or resolve incidents in a timely fashion.

No “I” in “Government Sales Team”: Creating High-Performance Selling Organizations

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For many years, we have worked with and studied companies that sell products and services to government agencies.  Some of these have been highly effective organizations.  Others never really understood how to win in the space.

Want to know one of the strongest indicators of government selling success?  Well, it’s not the sales team’s ability to make slick presentations.  It is not cutting-edge marketing campaigns or great search engine optimization strategies. It is not a huge price advantage or airtight patents that fend off competitors.

No, one of the single strongest predictors of government selling success is the organization’s aptitude for energizing a team of people around revenue generating opportunities.   Now the “team” we refer to here extends beyond the Sales department.  Of course, they bear the ultimate responsibility for winning the business.  However, in the world of government markets, salespeople simply cannot do it alone.  Find a company that consistently wins government business, and you’ll find a company that has succeeded in aligning a variety of resources and disciplines to support the deal capture process.

In consulting with companies seeking to generate more government business, we follow a process of examining several key resource areas.  Our ultimate goal is to provide insights on ways to better align various departments in order to provide the best chance at winning more business.

Here are some of the key functional areas we examine and just a few of the critical questions we attempt to answer during the discovery phase.

Marketing (for lead generation, branding and product development input)

  • Are lead generation processes in place, targeted, and effective?
  • Are results measured?
  • Are managers held accountable?
  • Is the relationship with Sales or other areas strong, or does conflict exist ? Why?
  • Is branding consistent with and supportive of strategic goals?
  • Do marketing tactics/materials align with the sales process (do the right materials exist for each step in the sales process)?
  • Are broad-market needs making their way into product development?

Sales (for customer relationship-building, pain identification and value portfolio definition)

  • Is a clearly defined sales process adopted and well understood?
  • Are incentive/compensation plans aligned with goals?
  • Do salespeople have the right skills/traits/motivations?
  • Do salespeople know how to effectively diagnose prospect pain/fear/motivations?
  • Do they know how to align company offerings with prospect needs?
  • Can they effectively manage and nurture the variety of required relationships?

Sales Engineers (for technical clarity and detailed customer need assessments)

  • Do sales engineers have the right skills/traits/motivations?
  • Can they effectively support customer relationship-building?
  • Can they translate complicated technical details into non-technical concepts?
  • Can they accurately assess problems and pose realistic solutions?

Proposal Writers (to document the translation of company solutions into customer benefits)

  • Can proposal writers dissect a complex RFP and grasp how to communicate value?
  • Do they write effectively with clarity and accuracy?
  • Are they detail-oriented and committed to error-free work?
  • Are they able to create effective visuals that help tell a complex story?
  • Can they manage tight deadlines and work well under pressure?

Partners (to access unattainable deals and vehicles)

  • Does the partner provide a more favorable conduit to a customer segment?
  • Are procurement vehicles and labor rates appropriate?
  • Are appropriate agreements in place to protect all parties?
  • Are financial terms appropriate and motivating?
  • Does the relationship create clear value for both partners and for the customer?
  • Does adequate support exist between the parties?

Management (to set priorities/policy that can hurt or help you)

  • Does management understand the unique complexities of selling to government?
  • Do they send conflicting or changing messages on priorities and goals?
  • Does the company’s organizational structure and resource allocation support success?
  • Are compensation programs appropriate and adequate?

Business Intelligence (to manage and gauge market feedback)

  • Are processes in place to capture market feedback?
  • Are technology tools deployed to house and analyze this feedback?
  • Is analysis routinely injected into decision-making and product design?

A high-performance car will be slower, less efficient and less desirable to drive if its wheels are not well aligned and properly balanced.  The same holds true with high-performance organizations.  If any of the functional components highlighted above are out of step with the others, the result will be a less than optimal revenue-generating machine.

If your government market-focused organization needs a diagnostic, a tuneup or even a complete realignment, Government Selling Solutions (GSS) can help.  For more information, visit www.govsellingsolutions.com.

How Will Federal Budget Cuts Impact Government Contractors?

The new Budget Control Act of 2011 launches with almost a trillion dollars in spending cuts.  Where are the cuts and what impact will these have on contractors?

It turns out this is not an easy question to answer.  First, let’s examine what we know (see article by CNN’s Jeanne Sahadi for additional detail).  The legislation caps domestic and defense spending, which results in $917 billion in reductions over a ten-year timeframe.  Of these, $350 billion is taken from the defense budget.

The framework then calls for more deficit reduction (between $1.2 trillion and $1.5 trillion worth) to be determined by the end of this year and enacted over 10 years.  This second round of deficit reductions would be set forth by a special bipartisan joint committee of Congress. The committee has until Thanksgiving to come up with its proposals.

If Congress approves between $1.2 trillion and $1.5 trillion in cuts, the debt ceiling will be increased dollar for dollar.

If the committee deadlocks or comes up with less than $1.2 trillion in cuts (or if Congress votes down the committee’s proposals) the debt ceiling will be raised by $1.2 trillion.

What does not appear to be open for additional cuts are the following:

  • The wars in Iraq or Afghanistan or “similar activities”
  • “Entitlement” programs, (Medicare, Medicaid, and Social Security)
  • Debt payments

So back to the question of what impact the deficit reduction legislation will have.  Here are a few thoughts:

Contractors will feel the pinch of budget reductions in areas of discretionary spending and Defense.  There will simply not be as much money to go around and certain programs will see significant reductions or be eliminated altogether.  As defense resources are withdrawn from the Middle East, expenditures will be reduced.

Long-term contractor planning will become even more difficult. Tying of budget reductions to increases in the debt ceiling will add even more uncertainty and complexity to the process, making long-term contractor planning a challenge.  Every year will be even more of a battle as the stakes are now even higher.

States will feel the cuts particularly in areas of public safety and homeland security.  These areas already took a hit in the 2011 budget and will likely receive continued scrutiny/attention.

Smaller service-oriented businesses may find new opportunities.  While smaller businesses on the manufacturing side may find it difficult to achieve cost advantages due to lower economies of scale, smaller businesses on the services side may actually leverage a cost advantage due to lower overhead and lower labor costs.

IT spending is expected to actually increase across the federal government.  This is one bright spot and will be particularly true where clear cost savings or efficiencies can be illustrated through the adoption of technology.

While there is little doubt contractors will feel the effects of this latest budget wrangling, there will still be massive opportunity to provide valuable goods and services to the nation’s largest single customer.  Sure it’s going to be more difficult, but when was the last time a government buyer DIDN’T talk about funds being a problem?  When was the buying process NOT complex?  Things will settle in, and contractors who can illustrate real value will thrive.  Staying focused on building relationships and relieving pain WILL get results even in times of change.

Lorin Bristow

Government Selling Solutions (GSS) helps government sales teams reach their full potential through sales training, sales and marketing consulting and capture team participation.

www.govsellingsolutions.com

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.