Is “Lowest Price, Technically Acceptable” really the best way?

The government has embraced the idea of “Lowest Price, Technically Acceptable” (LPTA) for procurement. The idea behind the phrase is simply this; when the government procures whatever it may need, they will look at the lowest price first and then continue to work their way up the price ladder until a technically acceptable option is achieved. Theoretically, this gives the government the lowest possible price for the best level of quality for products or services that they need.

According to Deltek, between fiscal year 2009-2014 the use of LPTA for purchasing grew 55% in civilian agencies and 24% within the DoD, so we know that the government is utilizing this option more and more. What kind of pressure does that put on vendors’ bottom line who are constantly competing for the government business? For example, if a service company is bidding on and wins a LPTA bid, the first cuts they typically make to meet their bidding price are salaries and benefits for those working on the project. With service companies’ margins getting tighter and tighter, some are deciding to exit the federal market altogether.

However, LPTA might potentially be on its way out as the main purchasing format due to the extra cost of restructuring contracts if services are not up to par at the low price that was accepted. Those kinds of changes cost the US government time and money, making it more frugal to start off with a slightly higher price in exchange for much better quality and technical acceptability.

It’s also important to note that total federal dollars spent on contracting is actually dropping. In 2008, total contracts awarded was at $541.3 billion, falling to $445.4 billion in fiscal 2014 and ending up (year to date FY 2015, which ends on October 1) at only $329 billion (USAspending.gov). Unfortunately, these figures don’t tell whether the government is really buying everything cheaper utilizing LPTA or just buying less.

In both products and services areas, contractors coming up against LPTA should focus on their technical acceptability and quality as factor number one of proposals. Your technical capabilities are what make your company unique and what really make you stand out. Once the government reaches the “Technically acceptable level, they will look for the highest return at that price point. Also, doing pricing research on your main government competitors and seeing where your pricing falls is quite important. Putting those two pieces of information together will put you on the path to conquering the LPTA proposal with success.

Government Cyber-Safety at Risk

The government seems to be consistently behind the curve of Information Technology purchasing. Is that because they are slow to adopt or do they have other difficulties in acquiring the newest and the best?

Being so far behind the curve of IT purchasing not only wastes taxpayers money, it also leaves the government extremely vulnerable to cyber-attacks. Earlier this year, millions of current and former federal workers’ data was stolen from the Office of Personnel Management. Prior to that attack, security clearance information was stolen from the same office. Software used by the government, sometimes even including infrastructure, is not able to repel determined cyber-attacks and hacks.

All these problems result from the government’s old and difficult ways of purchasing. The best and brightest of the information technology world, centered in Silicon Valley, are not open to working with the government due to purchasing methods that are old and outdated. Some government agencies will not even consider purchasing a product that has not been on the market for at least 2 years. With how quickly technology moves, this leaves the government vulnerable and open to attack.

Around June of 2015, the United States Navy signed a $9 million dollar contract to continue providing security patches for the Windows XP operating system, which had an original release date of October of 2001. Microsoft stopped support for the system in April 2014, but the US government is paying $9 million dollars to continue the support of the system. Reason being? The latest operating system, which is more secure for the government to use, has not been on the market long enough, according to government procurement rules, to be considered.

Looking forward, The National Defense Authorization Act for fiscal year 2016 is being debated in Congress at this time and within it are acquisition reform provisions; including  some procurement rules that could potential be repealed. At the top of that list is easing restrictions on Information Technology Purchases, which will entice startups and the “best and brightest” of Silicon Valley to help the government upgrade to better and, more importantly, safer hardware and software.

Sources:

http://www.nytimes.com/2015/07/10/us/office-of-personnel-management-hackers-got-data-of-millions.html?_r=0

https://www.congress.gov/bill/114th-congress/house-bill/1735?q=%7B%22search%22%3A%5B%22%5C%22hr1735%5C%22%22%5D%7D&resultIndex=1

http://fortune.com/2015/06/24/navy-microsoft-windows-xp/

8a stars

Among the many different contract vehicles the government offers for purchasing a variety of products and service, 8(a) STARS II is a small business dream- for information technology firms. This Government-Wide Acquisition Contract (GWAC) provides a large and diverse pool IT contractors for the government to award direct task orders for up to $4 million dollars. Imagine, shortening or even avoiding the bidding and proposal process all together.

Contractors must fall under the one or more of the following functional areas to be considered:

1.       Customer computer programming services (NAICS 541511)

2.       Computer systems design services (NAICS 541512)

3.       Computer facilities management services (NAICS 541513)

4.       Other computer related services (NAICS 541519)

There’s a broad spectrum to choose from!

Federal agencies are continually being encouraged to utilize 8(a) business and the DoD has called out 8(a) Stars by name as a great way for agencies to meet small business goals while obtaining the necessary information technology services. The program has a $10 billion dollar ceiling and is available to all agencies.

The process for applying to be on the 8(a) Stars GWAC contains quite a bit of paperwork and information that will need to be submitted. Those contractors who have GSA schedules know what we are talking. You’ll need to provide pricing data, company information, understand all the terms and conditions, as well as proving your company’s technical expertise and experience.

The 8(a) Stars II GWAC is set to be released in the spring of 2015 and will be open for application. You can check out the original contract on FBO (see link below) and start planning ahead. The open season will start at the release of the new solicitation and make sure you check out our other social media for the exact release date! We’ll let you know when it’s available.

FBO link to original 8(a) Stars: https://www.fbo.gov/?s=opportunity&mode=form&id=db6d7c2fcc7d3be50ebcdedefa1139eb&tab=core&_cview=1

GSA 8(a) Stars Info:

http://www.gsa.gov/portal/content/105243

More information on functional areas:

http://www.gsa.gov/portal/content/208177#fa1

Have you made the most of the first quarter?

You’ve finished your warm ups and the National Anthem has been played, its game time. The first quarter is when you need to set the stage for the rest of the game. How is the next three quarters going to work out, do you know when you need to put your bench players in? Have you planned out what your attack strategy is? You want to know as much about the game that is being played and your opponent as possible.  

Unlike a basketball game when there are off days and an off season we don’t have that luxury so we use our first quarter for planning and answering as many questions as we can. Although there are a lot of variables that go into government purchasing being prepared as you can makes all the difference in the world. If you have not started planning it’s not too late.

You can start by answering the following questions:

• ·         What agencies purchase what you sell?
• ·         Who are your top competitors and what types of contracts do they hold?
• ·         What opportunities are being forecasted in your industry?

Those three questions will take some work to find the answer to but they will give you a good picture of your season and allows you to formulate your attack plan. 

“If you fail to plan, you are planning to fail!"

― Benjamin Franklin

Forecasting for Fiscal Year 2015 has begun!

With the fiscal year starting up, contractors should be on the lookout for procurement forecasts for fiscal year 2015. Major federal agencies are posting procurement forecasts that can help your business plan for bids and proposals for FY15. www.Acquisition.gov is a great place to start when looking for forecasts. You can search by agency forecast or by business opportunities to find what your business should be anticipating.

Forecasting is also a great opportunity to be reach out to contracting officers who are working on opportunities that are of interest to you. Reaching out to contracting officers is one of the best ways to connect with the people who will be advising end-users and making decisions about proposal requirements. Contracting officers are always aware that specialized contractors have knowledge on subjects they may not and will require help writing overly technical solicitation if know a competent contractor who can help.  Take a look at our webinar: Contracting Officer Best Practices.

Forecasts offer a wealth of information for potential contractors. You can learn about the method of procurement, possible ceiling values, and incumbents. Method of procurement is vital knowledge when building an approach since if the opportunity is going through GSA, you have a wealth knowledge about pricing and competition at your disposal. Ceiling values are important factors, showing you an acceptable range to price your bid. If you are over the ceiling value, most likely you won’t win and it gives you time to adjust. Incumbents are a huge source of information as well. Your business can find out details about the work and the agency by getting in touch with the incumbent and learning about how they performed the work.

Most importantly, the key to good forecasting strategy is follow up, follow up, follow up! Some opportunities will be listed for the end of fiscal year 2015 or even the start of fiscal year 2016. The sure-fire trick is to keep your businesses’ name fresh in the mind of contracting officers. Follow up every couple months. Find out how you can help. Inquire whether any other opportunities are coming up last minute.

Procurement forecasts are a great (and often underutilized) tool in the contractor toolbox. Use it to its full advantage.

Who's Spending Money?

Do you know who the biggest spenders are in the Federal Government?

From the desk of Brian Purgert, President

Back in 1985 when Government Contract Services was conceived, there was a lot less “red tape” built around government sales. My brother Bob and I knew that helping businesses sell to the government was a tough job, but we had the knowledge to do it right. As a small company with less than a dozen people, we managed millions of dollars’ worth of federal contracts with ease. Our clients were educated and successful. We had it made – the feds never stopped spending, so we had a lifelong customer at our fingertips!

Over the years, we began to realize how truly important our knowledge was. It quickly became a lifeline for businesses in need of a constant revenue stream, a way to keep their workers employed, and a way to put food on the table for their families. Now more than ever, the significance of our expertise is used to help companies with integrity generate honest revenue. 

My team and I are dedicated to creating jobs and improving the economy in this country. If we can help businesses understand the “red tape” involved in selling to Uncle Sam and build their organization around quality products/services, we can increase their government sales. If we can help align organizations with fair market prices and top-notch service, we can encouraging long-term cost savings for the government. If we all do our part to promote healthy business ethics, we can drastically improve the future of our government and our economy. 

GSA Offer Best Practices, Volume 4

Working with the Government should be a piece of cake, right? Wrong! It takes a great deal of time and dedication to sell to the Government. To become a premier contractor under the GSA Schedule, you have to know what the “sticking points” are when dealing with Government representatives.

·         Turnaround Times: These are extremely important. Missing a deadline by one minute could mean getting your offer rejected by the GSA – or worse, losing a bid! The Contracting Officers are not going to wait until you decide to give them the information they’ve requested. You must live by their deadlines!

·         Read and Research: Yes, Contracting Officers are there to assist you – but do them a favor and do your own homework. You are responsible for reading the requirements of the Schedule and filling out the documentation properly. They will help, but they will not do it for you! Don’t waste their time, because they can sense when a contractor is going to be difficult to work with. You should be trying to make things easier for them. They talk, and word of mouth goes a long way.

·         Your Tone: Be mindful of the way you speak to Contracting Officers. Being overly pushy isn’t the way to handle things. There is a fine balance between asking for updates and demanding that they move the process along. The latter isn’t going to get you anywhere.

·         Straight Answers: Don’t beat around the bush. If you try to hide or disguise business practices, it only makes more work for you in the long run. It could even mean fines and penalties! Be open and honest about your company and how it operates. The Contracting Officers will appreciate your integrity and respond positively.

If you want to be really successful in the Government marketplace, make it a priority to understand how the GSA works and how your Contracting Officers operate. Just like any other customer they want to be respected. Become an organization that thrives on learning the ropes of Government contracting. It takes time, energy, and resources. You can’t cut corners here!

Steph Gowin

General Manager

Government Contract Services, Inc.

Two Ways That Small Businesses Can Simplify Their Government Purchases

Among America’s small businesses—especially those with 20 employees or less-- that seek government contracts, many are too resource strapped to handle the burdensome paperwork involved.  Recognizing this, the federal government has at least two programs that significantly reduce the red tape. 

One involves federal contracts that meet the Simplified Acquisition threshold which involves most government purchases of less than $150,000.  The paperwork for such contracts is less onerous. 

A second way is with micro-purchases.  These purchases typically are under $3,500 but can range up to $15,000 with some government purchasing officers who have an extra allotment of SmartPay credits.  The benefit of micro-purchases is that small companies can make these without having to register on www.FedBizOpps.com.   To find out more, read paragraphs 1 and 2 of 3 Easy Ways For Small Businesses to Wind Government Contracts According to US Federal Contractor Registration.  Just click on the following link:  http://www.itbusinessnet.com/article/3-Easy-Ways.    

Are you registered in SAM (System for Award Management)?

SAM, or System for Award Management, is the combined U.S. Government system of CCR/FedReg, ORCA, and EPLS. SAM is completely free of charge for registrants and users. Current and potential government vendors are required to register in SAM if they wish to have a contract with the government. If your organization is applying for the GSA must be fully registered in SAM in order to be awarded

The registration can take anywhere from 15 minutes to one hour, depending on if the information requested is readily available. A vendor must provide basic information relevant to procurement and financial transactions. A SAM registration is good for one year and must be updated annually.

Before registering for SAM a company must have the following:

·         DUNS or D-U-N-S Number

o    Data Universal Numbering System

o    A proprietary system developed and regulated by Dun & Bradstreet (D&B) that assigns a unique numeric identifier to a single business entity

·         TIN

o    Taxpayer Identification Number and then name associated with that TIN

·         CAGE CODE

o    Commercial and Government Entity code is a five-character ID number that is used extensively within the federal government.

o    If the organization is migrating over from any old systems (CCR, ORCA, etc.) than it will already have this code. If not the organization will be assigned one once you are fully registered in SAM

·         EFT Information

o    Electronic Funds Transfer information such as the ABA Routing Number and bank account number

SAM also allows Government agencies and contractors to search for your organizations based on your ability, size, location, experience, and more. Since SAM incorporated the ORCA system agencies and other companies can see if a firm meets certain Federal requirements (ex: complies with equal opportunity legislation).

Government Contract Services specializes in SAM registrations and updates. Please look for the Government Contract Services SAM eBook which will contain helpful step by step instructions on how to efficiently and successfully register your company in SAM.