Discussions during the year often rely on assumptions taken for granted, but which are not necessarily true. Thus, it’s always healthy to review the actual data to understand the situation and then develop and/or reorient any arguments. Here are some interesting facts—some surprising, some not, but most of which may generate conversation.
(Note: All of the following figures come from the NCMA/Bloomberg Annual Review of Government Contracting, 2015 Edition.)
Procurement spending at the federal level is down by 31 percent since 2009! That’s a big drop, but not as severe when considering it has returned to the levels of 2005. The number of federal contractors winning awards has dropped by 25 percent since 2012, while small business dollar awards, on the other hand, are up.
The mid-Atlantic region gets the vast majority of procurement dollars, with California following closely behind (about half as much as the mid-Atlantic region). Department of Defense spending dwarfs that of all other federal government agencies combined. Almost 70 percent of contracting dollars were competed last year, which has held consistent over past years. There were no particular trends either up or down in competition, yet more requests for proposals were posted on FedBizOpps, even though contract dollars have fallen. The use of fixed-price contracts, where the government theoretically has the least risk when compared to cost-reimbursement contracts, has held steady over time as well.
Despite concern regarding their use, the use of multiple-award contracts continues to increase, as do governmentwide acquisition contracts and protests, which are up over 10 percent since 2010. Another interesting statistic reveals 43 percent of protests result in either voluntary corrective action by the agency or the Government Accountability Office sustaining it. Interesting also is the fall of incumbent awards in civilian agencies, but not in DOD. The use of General Services Administration Schedules is also down by more than 17 percent since 2010.
So, what to make of this? Clearly, federal business is way down from the recent past, and consistent with the past, doesn’t look ripe for overall growth. Winning that business is tricky, since getting a place on a GSA Schedule offers no promise of future business.
Being an incumbent is no sure advantage either, and given the rise of protests, many firms don’t see that as a bar to a successful relationship with customers. While being close to the nation’s capital fosters greater business, many other areas of the country aren’t as wedded to federal business. Small businesses have a better chance of winning awards than before; however, maintaining that business over time can prove tricky. While data to prove it one way or the other doesn’t exist, the government’s increased emphasis on price in some instances is probably saving money and may or may not be affecting product or service quality. Nevertheless, it is part of the current environment.
Regarding the rules of the game, various parts of acquisition reform are still under consideration, but no one is sure where it may lead. However, a wholesale change of the rules by which acquisition is conducted seems remote. All the traditional concerns of today’s process remain, but no one has a lock on a clear path to improvement or where the current environment may lead. This year could prove significant. There is talk again of sequester within Congress, so that will certainly provide considerable drama and real pain if it occurs, but we won’t know until the inevitable showdown that has become the norm in recent years.
Meanwhile, many firms are trying to diversify their customer base when they can, including looking at other companies with complementary business models. Certainly, delivering a superior product, being innovative when possible, and understanding your customer’s mission and near-term contracting requirements are as important as ever.
Along with this, however, must be added the ability to navigate the always choppy waters of government acquisition (even during times of certainty), taking into account executive and congressional political priorities, finicky funding streams, decentralized agency policies and processes, and the often individual-focused priorities and personalities of program managers and contracting officers.
Government contracting is always challenging. Thus, the need to keep the lines of clear communication open is more important than ever. There must be open agendas and understanding between the public and private sectors in today’s environment. That is the one area we all can agree with.
Adding data to the discussion
