New Report Advises: Hitch Your Wagon to an IDIQ Multiple award IDIQ contracts account for the fastest-growing share of the federal market for professional services, according to a new study by the Center for Strategic and International Studies. The researchers said winning a place on governmentwide acquisition contracts and agencywide contracts such as DHS EAGLE and the Navy’s Seaport-e is a must for services contractors: “A company that fails to win a position in one of these broad overarching vehicles has increasingly limited opportunities to enter the market, except through mergers and acquisitions.” While orders on GSA schedules have been flat over the past two years and the number of new individual contracts awarded has declined, spending on multiple award contracts has grown at an annual rate of 163% since 1995, the study found. The trend presents new challenges to contractors. “The phenomenon of proliferating agency-, enterprise-, and government-wide contracting vehicles is actually raising transaction costs for industry as well as government,” CSIS said. “Furthermore, the competitive implications of the growth in GWAC and IDIQ contract types is that industry participants must now compete twice – once to qualify for the overarching contracting vehicle and again for each major task under these IDIQs.” Companies competing on task-order contracts “have to run pretty hard just to stay in place,” said the lead researcher, Pierre Chao. In addition to eighteen governmentwide acquisition contracts, there are about 240 multiagency and agency-wide multiple award contracts. While the Office of Federal Procurement Policy must approve GWACs, the other contracts are unregulated. “No interagency or intraagency review is undertaken when they are created, which often results in a duplication of efforts,” CSIS said. “For example, various departments and agencies have issued enterprise-wide contracts to procure IT services (rather than leveraging government-wide vehicles) despite the fact that most of these services are almost identical across all of government.” The Office of Federal Procurement Policy is currently surveying those contracts and may issue new guidelines for managing them. CSIS said the number of professional services contractors competing for federal work has more than doubled in the past five years, to 96,000 companies. The vast majority, 70,000, are small firms. More than half of the small businesses won no contract larger than $25,000 in 2005. Chao said, “The question becomes, Are they staying [in the federal market]?” The small business share of the professional services market has remained stable since 1995; in 2005 small companies received 21% of service contract dollars. Mid-sized firms – with revenues above small business size standards but below $1 billion – are being squeezed, especially in IT. Their market share fell to 33%, from 44% in 1995. Chao said the difficulties of those companies have spurred a sharp increase in mergers and acquisitions.