Buy Lines: Risks and rewards in due diligence

Bob Dickson

In recent years, the term due diligence has become part of the acquisition lexicon. Ideally, it describes the process and period during which competitors learn in detail about an agency's needs and practices before they propose solutions. It involves greater information sharing and more open communications by government agencies.

Some agencies and companies taking their first steps in this area are uncertain about the boundaries and concerned about the risks.

Due diligence typically includes agency site visits, interviews and research by companies in the competitive pool. Because it involves a significant commitment of resources by government and industry, it often works best following an "advisory down-select" or similar process, which produces a reasonable number of highly qualified competitors. The more those companies understand about the objectives, the better they can produce a winning solution and deliver results.

Agencies recognize that hosting due diligence sessions can cost time and money. It is important for them to provide access to the integrated solutions team, program staff and key information. The potential return on their investment could be significant.

All involved must understand that due diligence is not a pre-proposal conference. Potential offerers are not in the same room at the same time. Companies gain independent access to agencies, and their competitors are not present when solution-specific questions are raised. Neither their unique questions nor the related answers are to be shared with competitors.

A few simple rules will help all involved.

The Federal Acquisition Regulation provides the basis for exchanges between the government and contractors throughout the entire acquisition process. It also includes procurement integrity requirements, and requires that the contracting officer be the focal point of any information exchange. Therefore, the contracting officer should serve as the coordinator of all contractor meetings and visits.

The contracting officer should also brief participants on rules for the due-diligence process. Everyone involved must ensure that the results of any company's due diligence experience remain protected, and that any risk of leveling the solution is avoided.

As government and business expand their activities in performance-based acquisitions, we're increasingly likely to see the use of the due diligence in most competitive circumstances involving the advisory multistep process. Whether those companies adversely affected by the down-select process would care to admit it, their risks will be mitigated by their being informed that they are unlikely to be selected for award.

For those likely companies that continue to the due-diligence phase, they are assured their efforts and resources are well-placed.

We'll also be seeing due diligence at work in competitions conducted under Federal Supply Service multiple award schedules and governmentwide or multiagency contract vehicles.

In those cases, depending upon the scope and complexity of the project, the process should be tailored to the circumstances. On less complicated programs, the level of effort could involve hours instead of days or weeks.

The good news is that the rewards of the due-diligence process greatly exceed the risks. As agencies rely more on performance-based contracting and the attendant focus on objectives, outcomes and results, due diligence becomes a critical element of major successful acquisitions.

Companies seeking their business will be obligated to develop statements of work to include in their proposals. They also will develop related metrics and incentives.

Therefore, it becomes increasingly critical to provide due diligence opportunities, so that companies can better understand what agencies seek as well as their work load, processes and culture. The result should be more win-win situations with positively measured results, incentives achieved and missions accomplished. *

Bob Dickson is vice president of Acquisition Solutions Inc., Chantilly, Va. His e-mail address is

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