Buy Lines: GSA still attracts, but what does it take to succeed?
- By Steve Charles
- Feb 04, 2005
Each month, an average of 115 companies apply to the General Services Administration to join the ranks of the 4,000-plus Schedule 70 contractors. This means that each month, more than 100 companies ? mostly small businesses ? are taking the very first steps to enter the federal IT marketplace.
If all of the companies submitting an offer won a schedule contract, the number of contractors in GSA's IT 70 program would be growing at more than 30 percent. But this is not the case.
First, 25 percent or so of hopeful schedule contractors do not receive a schedule. Getting a contract for governmentwide use requires significant due diligence by the government as well as the company. Many of the concepts unique to federal contracting are difficult to grasp for a commercial company new to the market.
Second, because of the costs associated with contract administration, GSA retains the right to terminate a company's schedule if less than $25,000 of goods or services are purchased via the contract in a given year. Now that GSA is actively reviewing and auditing sales under each schedule contract, inactive contracts are purged systematically.
Third, mergers and acquisitions shrink the contractor pool. Like many markets, the technology segment within the public sector thrives on growth. As a contractor increases revenue and capability, it becomes eligible to compete at a higher level, taking on larger projects. To accelerate growth, many contractors acquire smaller companies or merge with equals, consolidating the number of contractors.
So even though the Schedule 70 commodity center receives more than 100 new offers each month, the total number of schedule contractors is growing at a much more manageable pace.
A related fact is that two-thirds of the business under Schedule 70 is done by the top 100 contractors.
Stated another way, 66 percent of the business is done by 2.5 percent of the contractors. Perhaps this is why I am constantly asked how a company can grow its federal business.
First, companies need to be specialized and demonstrate a solid record of past performance. Contracting officers sense risk when a company doesn't prove or, worse, overstates its capability.
Second, hire people who know how to find requirements that match your specialty. Penetrating the federal market is like opening up a foreign office: Someone needs to know the territory. In this case, "the territory" is funded programs and projects that require what you offer.
Third, retain government contracting expertise. Too many companies expect their sales and business development people to deal with both program people and contracting people at the same time. These salespeople often get played like ping-pong balls batted between the customer and the contracts shop.
Government policy separates these functions as a check and balance to the system, and companies do best when they emulate the model.
With the government's renewed focus on explicitly following acquisition rules, this third point has become critical. Over the past decade, both buyers and sellers got used to rather informal interpretations of the rules and procedures.
But today in many contracting shops, orders of more than $100,000 are subject to technical, legal, financial and contractual review before approval.
GSA's Get it Right Program means that those on the selling side need to learn what these reviews entail and what contracting officers are being taught. If they fail to do so, they risk being left behind as we enter a new environment with increasing competition, shrinking budgets and a new focus on following the rules.
Steve Charles is cofounder of immixGroup, a government business-consulting firm in McLean, Va. Steve welcomes you to send him your comments at Steve_Charles@immixgroup.com.