FEDERAL
SECTOR REPORT
September 2000
(c) P2C2 Group,
Inc.
Federal Acquisition Reform:
Commercial Practices & Their Impact on Contractor
Responsibility
COMMERCIAL PRACTICES
The
Federal Acquisition Regulation (FAR) Part 12 enables the
federal government to streamline the procurement process for
commercially-available goods and services. Examples of "commercial
items" include Commercial of-the-shelf (COTS) hardware and software,
contractor logistics support for COTS products, minor construction, and
common business services. Of course, contracts for medical research,
advanced military weapons systems, and other developmental projects
would not be "commercial items."
The
impact of acquisition reform's Commercial Practices is much broader
than simply buying computers and software licenses: Procurement
procedures are also being streamlined for such services as distance
learning, conference management support, network administration,
computer repair, database customization, off-the-shelf training
courses, web publishing, engineering services, janitorial services, and
trash removal. The skyrocketing use of GSA's
schedules for IT Professional Services and MOBIS are indicators that
the government is buying a wide range of professional, business, and
technical services as "commercial items."
What "Commercial Practices" Means to You
If you are marketing services to the federal
government, you need to pay attention to the changes caused by
acquisition reform:
-
Make certain that you are
visible to federal buyers. With the updated process for negotiated
source selection (FAR 15), the government only needs to assure a
reasonable degree of competition. The government is under no obligation
to find and contact your company. So increase your visibility through
trade shows, government-site presentations, catalogs, government
schedules, and a good web site (that is effective with web search
engines).
-
Package and catalogue your
services as "commercial items" that can be purchased "off the shelf"
whenever possible. There are many federal contract vehicles for selling
your commercial items through Government Wide Acquisition Contracts
(GWAC's), GSA's MOBIS (Management, Organization, and Business
Improvement Services), GSA IT Professional Services schedule, etc.
-
Structure your COTS service
packages so that your offerings are price-competitive. Sometimes you do
not need to cut your price--just structure your services so that they
fit the government's competitive range determinations. For
example, cutting a COTS training course from three days to two may put
you in the competitive price range, even when you do not drop the cost
per day. Also, unbundle extra costs like travel whenever possible ...
so that your prices are compared in the most favorable light possible.
-
Identify satisfied customers
for your COTS services. In selecting a contractor for commercial items,
the government usually places great weight on "past performance."
You've got to prove that you deliver quality services and results on a
consistent basis.
Good News, Maybe
When
the federal government goes commercial, there is often less paperwork.
For example, you will usually need to supply only "bottom line"
financial numbers, such as loaded hourly rates or total fixed price.
You may not need to reveal the break-out of your indirect costs ... and
possibly not your profit. Theoretically, you might include a 25 percent
profit ... if you can figure out how to do it and still be
price-competitive.
Of
course, you can get into trouble if you fail to exercise great care
with streamlined bidding procedures. One electrical contractor forgot
to include fringe benefits in its loaded hourly rate! The government's
response, of course, is "tough ... you did it; now live with it."
Contractor Responsibility
When
the government "goes commercial,” it invariably emphasizes functional
requirements, warranties, and results. One snow removal contract, for
example, simply made the contractor responsible for keeping snow
accumulation to less than 2 inches (even in blizzard conditions), with
unpleasant consequences if the contractor failed to perform. The same
is true for operation and maintenance of mission critical computer
systems, where the contractor must figure out how to achieve 100%
uptime for the systems.
When
bidding on commercial-style acquisitions, contractors need to exercise
due diligence:
- Read the penalty clauses and
take them seriously. If you don't have a workable risk management plan,
you may be eaten alive (by sharks, the government, your bank, and/or
your investors).
- You must deliver quality
services that meet all contract requirements. In advance of contract
award, figure out how you will comply with the contract.
- If you win the bid, do a
good job for the customer. Without favorable "past performance"
ratings, you're dead meat in today's federal marketplace.
Personal Happenings
This
week, I have returned from a Midwestern vacation. First, there was a
family reunion in Indianapolis with the Coleman (my mother's) side of
the family. All five of us cousins were there, plus nearly 20 spouses,
children, and grandchildren. Then my kids and I were tourists in
Chicago. Their favorite was a large urban "theme park" with interactive
virtual reality experiences.
Chicago
was quite an update for me. I was last in downtown Chicago 25
years ago while working on a joint proposal with a management
consulting firm (Donald R. Booz Associates). Colossal new buildings now
dominate the skyline.
