WT Business Beat

By Nick Wakeman

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Nick Wakeman

GWAC's biggest competitors aren't other GWACs

It is easy to look at the major government-wide acquisition contracts and see them as rivals and fierce competitors fighting to take market share away from each other.

That notion is also very wrong.

Our WT Power Breakfast on GWACs last week featured the officials in charge of NASA SEWP, NIH NITAAC, Army CHESS and GSA contracts such as Alliant 2 and the Schedules.

NASA SEWP’s Joanne Woytek proudly talked about how her contract has grown by about 20 percent per year for the last six years. SEWP hit $6.5 billion in sales for fiscal year 2019.

Glynnis Fisher, deputy director of NIH IT Acquisition and Assessment Center, also touted how NITAAC contracts CIO-SP and CIO-CS have among the lowest fees in the market.

But as the acknowledge, they all have low fees -- commonly under 1 percent with caps on how much a government customer can spend to use the contracts.

So I asked during the panel discussion: “You aren’t competing on price but you are competing on the types of services and support you provide?”

That’s when Woytek corrected me.

“We aren’t competitors. We might grow 20 percent but I’m not growing by taking business from them,” she said.

Instead, the GWACs are targeting government customers who are still issuing single award contracts for their IT needs and agency--specific IDIQs, Woytek said. Others nodded in agreement.

Data presented at the event by Deltek Senior Vice President Kevin Plexico supported their position.

Agency-specific IDIQs have plummeted from capturing 31 percent of the government IT spend in fiscal 2015 to 20 percent in fiscal 2019. During this time, many agencies have let their own contracts expire and shifted their needs to the major GWACs.

GWACs have grown from 12 percent of the spend in fiscal 2015 to 20 percent in fiscal 2019.

Single-award contracts are still huge, being used for 47 percent of the IT spend in fiscal 2019, up from 43 percent in fiscal 2015.

The growth for the GWACs has come at the expense of the agency IDIQs, but the single-award contracts represent a huge growth opportunity.

Agencies will feel pressure to move away from their single-award contracts and instead use contracts that fall into the “Best in Class” category that primarily are the GWACs.

In a way, it makes sense because the so-called BIC contracts can bring greater buying power because of volume, better pricing information and improved data for tracking where agencies spend their IT dollars.

It is remarkable how many vehicles such as SEWP are more than 20 years old, yet continue to innovate how they provide services to both the government buyer and the prime contractors.

All of the vehicles have added the capability to buy as-a-service offerings and more managed service offerings are in the works. There also is increased emphasis on cybersecurity and supply chain security.

It is hard to argue that they haven’t improved government procurement but is there a cost. Are agencies losing their ability to effectively manage their own procurements? Is it a good or bad thing that they are turning to GSA and others for assisted acquisition services?

We’ll have to watch for signs, especially as the GWACs start to chip away at the dominance of single-award IT contracts.

Posted by Nick Wakeman on Dec 18, 2019 at 9:59 AM

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