DELTEK

Eight trends rocking today's market

Government contracting just ain’t what it used to be. The “new normal” of budget constraints and fiscal austerity has forced contractors into a tough position.

At Deltek’s FedFocus event on Thursday, Deniece Peterson, director of the company's federal industry analysis highlighted eight trends in the federal task order contracting environment that have become “business as usual” for contractors today.

1. Increased reliance on IDIQ contracts. Over 50 percent of IT dollars are going through IDIQ contracts, Peterson said. “And we don’t see that changing, although the number of contracts that that represents could be changing as agencies try to consolidate dollars.”

2. Contract lifecycles are getting longer. Although not the only factor, bid protests are a big reason for why contract lifecycles are getting longer. “It’s almost status-quo at this point,” Peterson said. As one industry executive told Deltek in their report, protests do not cost contractors that much, and the rewards can be high. “In 40 percent of cases,” Peterson said, “protestors are going to get some kind of relief. It may not be what they want, but they’re going to be addressed in some positive way.”

3. Streamlining of contracts for easier management and cost savings. This is being done on two fronts, Peterson said. The first side is consolidation, where agencies with multiple contracts are rolling them together, and creating a single vehicle for a more straight-forward management process. On the other front, there is centralization, Peterson said, where agencies are establishing “these very large preferred contracts, but they’re trying to funnel the majority of the spending through that one contract,” like with the Homeland Security Department’s EAGLE II contract.

4. Shaping of contracts so that they are double- or triple-duty. Agencies are contemplating whether vehicles that are already established can also be used to invest in emerging technologies like cloud computing or be used to increase competition and small business numbers, Peterson said.

5. Increased emphasis placed on past performance. This is being done in a number of ways, Peterson said. First, contracting officers are looking at the two largest, most recent contracts that a company is working on and seeing how they are performing. In addition, Peterson said, contracting officers are looking at media sources through articles and publications to see how the company is doing. Along with media references, contracting officers may also review public sources and databases for business reviews, customer evaluations and contractor management reports.

Peterson said that contracting officers also are requesting references from a company’s public and commercial customers along with their partners, subcontractors and others. In some cases, contracting officers are asking for past performance information on subcontractors and other team members, Peterson said.

6. Increased risk due to contract structure.

  • Scope of work. Many contracts these days have very generalized requirements, Peterson said.
    "You have to be diligent about figuring out what lane are you going to take and figure out where you can position yourself that will get you the most task order work.”
  • Small business participation. Companies need to find out if there are set-asides and figure out if that fits into their strategy. Contractors have to decide whether it is wiser to team up with a small business to nab the set-aside work or just pursue the larger work, Peterson said.

  • Number of awards. According to an industry executive, Peterson said, the number of contract awards is so high these days that contractors almost wonder what they have won since you are competing again with a large number of other companies for task orders.

  • Evaluation method. LPTA has been affecting contractors’ decisions regarding where they are going to allot their shrinking bid and protest dollars, Peterson said.

  • Task order proposal requirements. As one industry executive told Peterson, “You spend a lot of money just competing to win the license to hunt, and then at the task order level, the rigor in terms of proposals is almost as rigorous as trying to win the contract.”

  • Response times are declining. ”It can be a week or two weeks that you have to respond to task orders, but they’re fairly complicated,” Peterson said.

7. Contracting workforce getting younger. “The challenge is that they come in being more enthusiastic, but the skills might not be there,” Peterson said.

8. Dicey relationship between contracting officers and program managers.

  • Too much power. Deltek found that the role of the contracting officer has evolved from support to decision maker. Program managers have less influence over acquisition than they used to, Peterson said.
  • Too little expertise. Contracting officers do not have the expertise to understand the increasingly complex requirements, and the impact of their decisions on execution success, Deltek said.

  • Too much focus on cost. LPTA is often leveraged incorrectly, impacting technology dominance in the long run, Peterson said.

  • Too little accountability. As one industry executive told Deltek, contracting officers are making procurement decisions, but they are not the ones accountable for the consequences for those decisions.

Going forward, contractors are stuck in a difficult place because many of these factors are out of their control; however, it is prudent for contractors to consider having relationships with small businesses since those can sometimes be a double-win, Peterson said. “You’re able to get access [to work], specifically if it is set-aside work, but also have a chance to team with those socioeconomic subgroups,” she said.

One other piece of advice is for contractors to be aware of things that they can control, such as internal processes, which can be leveraged to create a competitive advantage, Peterson said.

Contractors can also monitor how they identify opportunities, how they assess business processes, and simply knowing their customers and what their preferred vehicles are, she added.

About the Author

Mark Hoover is a senior staff writer with Washington Technology. You can contact him at mhoover@washingtontechnology.com, or connect with him on Twitter at @mhooverWT.

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