|
Federal Market Intelligence for Small Business |
|
|
|
|
Column: Observations on Recent Trends in Small Business Federal ContractingBy Tom Johnson, publisher, Set-Aside AlertSmall business managers and executives need to be continually assessing the market and responding to new trends. The federal market is unique but it is also just another group of customers in the B2B/B2G world. To be successful, management always must be monitoring the environment and retooling to face new challenges. Several topics in particular should be watched continually for changes impacting the federal market climate. Best-in-Class Category Management Best-in-Class is the government’s recent effort to designate certain contracts as the preferred and “best” means of procuring certain supplies and services, particularly in the information technology field but also in others. Category Management as a philosophy and Best-in-Class as a procedural tool limit the ability of small and large businesses to participate in a substantial portion of federal purchasing. The U.S. Women’s Chamber of Commerce recently published a report identifying the negative impact these two efforts have had in reducing the number of small businesses selling to Uncle Sam (see July 2, 2021 issue of Set-Aside Alert). Rise of Amazon and e-Commerce Amazon, Walmart, Lowe’s and other large businesses have made it extremely easy for agency buyers to quickly and easily order commonly-used, “off-the-shelf” commodity-type items via their computers. Combined with the use of credit cards (see next section), buyers believe they can save time, effort and paperwork by placing orders online. Market research requirements for many purchases are satisfied by looking up prices on just two sources, without any kind of written quote or documentation. Government Purchase Cards Both industry and government have jumped on the bandwagon in use of credit cards (Government Purchase Cards) for making purchases. Suppliers like them as well for their quick payment terms. Consequently the days of GSA fulfilling orders from its GSA-operated stores are gone, and agencies are free to purchase locally or globally. The government market may be less attractive to some companies that operate in marketplaces with substantial credit card usage. In those cases, relying on normal consumer and B2B marketing practices is dominant. For automotive supplies and services, for example, a competent and competitive local supplier or service company wins business the old-fashioned way– meeting customers, offering discounts, providing excellent service and responding to customer needs. There is no need to chase an RFP or wade through numerous FAR clauses to win the bid. And purchase limits on credit cards have grown quite large for certain levels of contracting warrants. 8(a), SDV, Woman-Owned and HUBZone Certification Rates We saw a distinct decline in the number of small businesses being certified as participants in the SBA 8(a) Business Development Program over the last five years. That seems to be reversing course now. I reviewed Dynamic Small Business Search Data over the last 7 months, which showed that more than 525 firms were added to the 8(a) program in that period. That is about 8% of the current list of participants. There are several ways to interpret this activity. It could mean that the new entrants are responding to President Joe Biden’s stated goal of putting more emphasis on contracting with disadvantaged small businesses. At the same time, more entrants also could present challenges by creating more competition among the 8(a) firms for a portion of the federal business. Another factor to keep in mind is that tribal and Alaska Native Corporations are able to win much larger set-aside contracts and to reorganize and extend the term of their 8(a) program participation beyond the normal 9 years (currently 10 due to COVID allowances). These award-holders are able to build a greater depth of past performance and agency relationships, enabling them to be more competitive but also to win more sole source non-competitive awards, advantages that other 8(a) companies do not have. Increasing Dependence on GWACs It is true that small businesses have won a substantial portion of the GSA (44%) and CIO-SP3 (45%) spending dollars (see the July 2, 2020 issue of Set-Aside Alert). That $40 billion is welcome spending, but it has occurred over the last 10 years – an average of $4 billion a year. Meanwhile the GSA Multiple Award Schedule program does an average of $35 billion a year. Furthermore, the number of small firms awarded GWAC contracts (For STARS III, about 425 vendors; VETS 2, 68 vendors; CIO-SP3, 293 vendors; and Alliant SB, 81 vendors) is only a small percentage of those seeking contracts, and there is no significant revenue guarantee for the awardees. Similarly, past GSA BPA awards for OS-4 Office Supplies include only 63 awardees, of which 59 are small businesses. It seems likely that the large businesses on the contract--including Staples, Office Depot, TRI Industries, NFP and LC Industries--will win a substantial portion of the orders under the BPA. Unfilled Acquisition Workforce Posts Over the last decade, retirements, hiring freezes, shutdowns, COVID and other conditions have reduced the number of contracting personnel across agencies. Failure to fill openings and apparently low recognition of the acquisition workforce’s value have impeded the government’s ability to plan and execute procurements. The result seems to have been to consolidate several buying requirements into mega-contracts, making it more difficult for small businesses to bid and win more appropriately sized contracts. A more robust staffing level for contracting officers, specialists and other procurement staff is needed to effectively support small and large businesses throughout the acquisition cycle. Tom Johnson is the publisher of Set-Aside Alert. He can be reached at tjohnson@setasidealert.com.
|
Washington Insider:
|
Copyright © 2021 Business Research Services Inc. All rights reserved.