The Information Technology Competitive Coalition wants the General Services Administration to make four changes to the Alliant 3 solicitation so it will be more competitive and open to mid-size government contractors.
Several executive orders issued by multiple presidential administrations encourage improvements in federal IT modernization and cybersecurity.
But current acquisition plans for Alliant 3, a major governmentwide acquisition contract known as a GWAC will result in the federal government missing a key sector of the IT industrial base that would be invaluable to accomplishing these goals.
As it currently stands, the government will be unable to capitalize on a great opportunity to improve the IT capabilities of federal agencies and achieve greater cost savings by fostering greater competition in the IT services market.
We applaud the General Services Administration and the federal government for the continued focus on small businesses and other socio-economic categories that are contributing to a more diverse and innovative supply chain. The successful growth of small companies are the backbone of America’s economic growth.
At one time many of us in the IT Competitiveness Coalition (ITCC) benefitted and have moved on from that success. Today, mid-sized companies (those between $30 million and $500 million in annual revenues) account for $22 billion of federal contract spend and offer a unique blend of small and large business attributes, enabling delivery of large IT support services, innovative and leading edge technology with the speed and agility of a smaller firm.
We believe the federal government and GSA would benefit from the continued participation of mid-tier firms that have succeeded because of socio-economic programs.
Recognizing there is a keen interest in expanding the supplier base, enhancing competition and driving innovation, we believe mid-tier companies can contribute to those goals.
In reviewing the draft solicitation and associated requests for information, and having shared our thoughts with GSA during each of our listening sessions, we believe GSA is preparing a solicitation, although unintended, that may result in limiting the market and making the largest federal IT suppliers even larger, rather than offering federal buyers a robust set of qualified suppliers and strong competition.
We believe GSA has two significant opportunities for innovation and achieving greater competition as it plans for Alliant 3:
First, GSA should consider the flexibility from making a range of awards rather than a set cap.
Two, GSA could establish contract requirements based on historical task order information from the Alliant 2 GWAC rather than exceeding at the master contract level what has been typically procured most often by the agencies in their task order requirements.
Both of these actions will significantly enhance competition and provide the government the diverse, dynamic and resilient supplier base it needs.
We recommend GSA take the following four actions to support a timely award, ensure the long-term success of the Alliant 3 GWAC, spur healthy competition and improve outcomes per IT dollar spent.
1. Consider a Range of Awards, Rather Than the 60 Award Cap
The predecessor contract vehicle, Alliant 2, is currently delivering over $2 billion per month in IT services. With a planned cap of 60 awards for Alliant 3 and a proposed unlimited contract ceiling, a small number of large companies will stand to achieve very large revenues from agency task order awards.
Based on experience with Alliant 2, an even smaller number of awardees will get the lion’s share of the awards, which we are sure is not GSA’s intent.
The recommended idea of a range of awards would decrease this possibility through more robust competition and a larger supplier base.
Of the 61 firms that received an Alliant 2 award in 2017, only 41 firms remain active on the GWAC today. Given an awardee attrition of nearly 33%; it is not surprising that Alliant 2 is only receiving an average of 2.5 bids per task order.
We recommend GSA remove the award cap, establish a minimum point threshold, and award all firms achieving the minimum score an award. This approach, which is being used for OASIS+, allows the government to establish a standard for company performance, incent companies to work to achieve the standard, and increases the competition within the federal IT supply base.
2. Add an On Ramp for Alliant 3
Like Alliant 2, GSA has no identified plan to allow for an on-ramp to Alliant 3. We believe the combination of industry consolidation and the lack of an on-ramp has contributed to the decline in competition on Alliant 2. If the goal of GWACs is to provide good value to the taxpayer, the government needs to cast a wider net and provide a mechanism for replenishing the supplier pool as the market evolves.
A robust competitive pool stimulates competition for awards and provides opportunities for creating a “continuum of competition” that drives innovation and supplier expansion, NOT market consolidation.
We recommend GSA provide regular and more frequent on-ramps for new participants that can demonstrate achievement of the minimum point threshold.
3. Right size the Past Performance Requirements
The value of Alliant 3 means that hundreds of companies will compete for a place on the GWAC. Given the potential for a limited number of awards, this means that a successful company will need to achieve a nearly perfect score to receive an award.
To receive the maximum available 10,500 points for past performance, this means that a successful bidder will need to supply up to seven past performance projects each with a value equal to or greater than $275 million. This will limit competition and deny the government a dynamic supplier base.
Alliant 2 was based on a requirement of $100 million award standards. The average size of the 517 task orders under Alliant 2 is $84.4 million and 80% of the task orders are valued at less than $80 million.
The $275 million minimum is an unrealistic threshold that needlessly favors the largest companies around the beltway, while making it nearly impossible for mid-tier companies to receive an award.
We understand that past performance is often the best indicator of future success, and we recommend that GSA include this important consideration without disadvantaging emerging business, by establishing four award pools with appropriately sized past performance requirements: Under $50 million, $50 million to $150 million, $150 million to $250 million, and over $250 million.
4. Move Task Order Requirements to the Task Order Rather Than the Master Contract Level
Alliant 3 provides points for a number of requirements that may only be relevant at the task order level. For example, Alliant 3 has at least 5,500 points allocated to cost-reimbursement experience and experience providing services in foreign Locations.
These experiences are only relevant to the extent that the task order under which the work is performed requires the experience. Our research shows that to date only 17% of Alliant 2 task orders are cost-based.
All government contractors must have accounting systems able to meet federal timekeeping and invoicing requirements. However, only contractors that have had cost-reimbursed contracts with Defense Contract Audit Agency involvement have had the opportunity to receive a DCAA audit of their accounting system.
These requirements again seem targeted at limiting the award pool to the largest of companies rather than ensuring the long-term success of Alliant 3, creating more competition and increasing value for taxpayers.
We recommend that GSA move the DCAA-approved accounting system, and experience with projects in a foreign location requirements to the task order Level, allowing GSA the flexibility to receive bids from emerging companies with the innovation solutions needed to solve the Government’s requirements.
We believe these changes will help GSA provide access to a more diverse and inclusive field of companies and services, not only the largest.
Mid-Tier companies provide a unique blend of small and large business attributes, ably delivering large complex IT support services with agility; while also maintaining niche solutions, resulting in competitive offerings that deliver value to their clients.
Providing an opportunity for them to fairly compete for Alliant 3 work helps to expand and strengthen the IT supply base and delivers best results per IT taxpayer dollar spent.
Information Technology Competitiveness Coalition members:
Applied Information Sciences, Inc. (AIS)
Pyramid Systems, Inc.