Where have all the RFPs gone?

Normally the government ramps up the flow of large-dollar-value requests for proposals in March, and the number of these RFPs released peaks in June.

However, this year the bottom fell out of the RFP market as sequestration slammed the brakes on deal flow in the first half of the calendar year.

In fact, in the first six months of this year, the number of major RFPs released is down by 35 percent from previous years.

No wonder everyone is feeling the pinch. Here are the details.

Deal flow index

We monitor the number of large RFPs released each month by the government and use this as an index for federal procurement activity. The data in the index chart shows the number of RFPs released over the past 2.5 years for procurements in information technology (IT) and professional services that have an expected award value greater than $50 million.

We focus the index on procurements of interest to the majority of government contractors in the services market. Excluded from the index are procurements intended for the architecture, engineering, and construction industry.

We also excluded GSA schedule buys and task orders issued under government wide acquisition contracts (GWACs), multi-award contracts (MACs), and indefinite delivery, indefinite quantity (IDIQ) contracts. These are excluded because the RFPs are often not readily available.

Looking back at deal flow in 2011 and 2012

The index showed 496 large-value RFPs in 2011 with 55 percent of those RFPs released in the first six months of the calendar year, which is pretty typical. The government normally releases more large-value RFPs in January to June than it does in July through December.

We generally see the pace of contract awards increase as the government’s fiscal year comes to a close; however, the pace of large-value RFPs normally slows as the government’s fiscal year ends and the new fiscal year begins.

In 2012, federal procurement activity slowed marginally with the index showing the government releasing 462 large RFPs. This is down about 7 percent, which pretty well tracks with reductions in federal spending and increases in transactions moving to GWACs and MACs.

The index showed in 2012 that 61 percent of RFPs came out in the first half of the calendar year, which is consistent with the government trend to release more large-value RFPs in the January to June timeframe.

The percentage of RFPs released in the first half of calendar year 2012 was slightly more than in 2011 (61 percent in 2012 versus 55 percent in 2011).

RFPs hit the brakes in 2013

The wheels began to come off of the traditional deal flow in 2013. The year began with Congress gridlocked on the budget and sequestration looming large across the federal landscape.

February got off to a bad start with the first downturn in three years of the number of large-value RFPs released, with 35 RFPs, compared to 39 in February 2012 and 35 in February 2011

On March 1, sequestration became a reality, and the bottom fell out of the RFP market.

Large-value RFPs released in March hit a 3-year low with only 21 RFPs, compared to 49 in March 2012 and 51 in March 2011.

While the number of these RFPs increased somewhat in April and May, they remained well below historic levels for those months. For April, there were 27 RFPs compared to 54 in April 2012 and 40 in April 2011. May saw 40 RFPs compared to 55 in May last year and 47 in May 2011.

June brought another plunge: 30 in 2013 versus 56 in June 2012 and 63 in June 2011.

When everything settled out and we tallied the numbers for the first half of calendar year 2013, the number of large-value RFPs released was only 181, down 98 RFPs from the average historic level of 279 RFPs seen in 2011 and 2012.

This is a whopping decline of 35 percent. There is no doubt that sequestration has taken its toll on deal flow for federal contractors.

With fewer RFPs in play, new revenue will be hard to come by in the months ahead.

Looking forward

The big question is what will happen to RFPs in the second half of the calendar year. In order for large-value RFPs to catch up to historic levels in 2013, the government has to push out 298 RFPs in the next six months or an average of 50 RFPs per month compared to its historic average of only 30 RFPs per month.

This is a tall task, especially since the second half of the calendar year is when many government employees take off for summer vacations and December holidays. This year some agencies are furloughing workers which may put additional drag on deal flow.

What we know is there are a record number of procurements in the system with RFP release dates expected before the end of the fiscal year.

Will these pending releases make up for the slow release rate in the first half of the year and accelerate deals flow over the next 6 months?

Or—will many of the procurements vanish like a mirage in the desert as we get closer to year-end and establish a new trend with fewer large-value deals released by the government?

I’ve listened to experts argue both sides of this issue, and only time will tell which prediction is right. If you’re an optimist, you can look for a strong second half of the year.

But if you are more conservative, you can plan for the worst and hope for an upside surprise.