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Federal spending decline slows, contractors merge, and DoD keeps cutting

April 20, 2016 By Andrew Smith

2016 Federal ScorecardAccording to the 2016 Federal Scorecard, which highlights key federal agency spending trends and top government contractors in FY15, overall agency spending fell by two percent (the smallest annual decline since FY11) — and half of all federal agencies increased spending.

The third-annual ranking of agency spending and contractor performance reveals several insights into the shifting federal market landscape:

  • Shifts in Defense Priorities. The Navy was the only Defense agency to increase its contract obligations, through recapitalization of major weapon system programs, including the F-35 and Virginia-class submarines, which emphasizes the U.S. pivot to Asia. In FY15, the Navy spent 55 percent more on aircraft than on ships and landing vessels, with aircraft contract awards totaling almost $15 billion.
  • Demand Still Strong for Services. Federal agencies were still heavily reliant on professional services, with the top two services categories holding steady with a combined $32 billion in awards. “What we saw was a major restructuring of industry in response to past LPTA measures rather than a disappearance of services contracting,” added Gillespie.
  • Impact of Services Consolidation on Competitive Landscape.Several contractors jumped in rank thanks to M&A (mergers & acquisitions) activity. For example, at the Department of Veterans Affairs (VA), newly formed CSRA jumped six spots in rank to join the top ten vendors with $106 million in capture.
  • Prescription Drug Spending Spikes. Prescription drugs are a growing cost across agencies, with Drugs and Biologicals purchases up 27 percent over the three year average. McKesson gained the most ground with capture, growing by 36 percent to $6 billion at Health & Human Services (HHS) and the VA.

The 2016 Federal Scorecard is published by Govini, a business intelligence provider for companies selling to the public sector.  The full Scorecard report can be downloaded here.

Filed Under: Contracting News Tagged With: budget cuts, consolication, DoD, mergers & acquisitions, spending

Big trends in federal contracting for 2016

January 27, 2016 By Andrew Smith

The coming year in the federal contracting market highlights an interesting tension between the opportunities that new technology and big data bring, and the challenges of budget uncertainty and industry consolidation.

Big data and cybersecurity are fundamentally changing the way both agencies and contractors do business.

The landscape is further complicated by agency use of Lowest Priced Technically Acceptable awards and unprecedented merger and acquisition activity.

Cybersecurity spending will continue to climb, but in other areas, Govini predicts continued downward pressure on pure services businesses. [Editor’s Note: Govini is a business intelligence firm that provides a database of government spending and proprietary analytics to companies that sell to the public sector.]

Keep reading this article at: http://www.govexec.com/excellence/promising-practices/2016/01/big-trends-federal-contracting-2016/125230

Filed Under: Contracting Tips Tagged With: big data, budget, contracting opportunities, cyber, cybersecurity, lowest price technically acceptable, LPTA, M&A, mergers & acquisitions, technology

5 things contractors should care about in 2016

January 25, 2016 By Andrew Smith

Person drawing a graph

Calendar 2016 is in full swing and the fiscal year is nearly a third of the way through, but it’s not too late for government contractors to get ahead of the new year.

Recently, the Washington law firm Crowell & Moring hosted a webinar on topics ranging from acquisitions to intellectual property rights. Here’s a look at some of what contractors should keep their eyes on and ears turned to in 2016:

  1. An Election Year
  2. Labor and Employment
  3. Cybersecurity
  4. Intellectual Property and Data
  5. Mergers and Acquisitions

Keep reading this article at: http://federalnewsradio.com/industryassociations/2016/01/5-things-contractors-care-2016/ 

Filed Under: Contracting Tips Tagged With: cybersecurity, employment law, government trends, intellectual property, labor laws, mergers & acquisitions

Top 3 trends from 2014 to influence government contractors in 2015

February 11, 2015 By ei2admin

Federal government contractors, especially those in the manufacturing sector, continue to experience the economic impact of budget cuts, decreased federal spending, and increased regulatory requirements.

Nonetheless, the federal government continues to be one of the largest consumers in the country, spending more than $500 billion annually on procuring goods and services.

Here is a summary of the key trends in government contracting in the areas of cybersecurity and privacy, mergers and acquisitions, and bid protests from 2014 and how they are likely to impact government contractors in 2015.

Keep reading this article at: http://www.mondaq.com/article.asp?articleid=369514

Filed Under: Contracting Tips Tagged With: bid protest, cybersecurity, federal contracts, M&A, manuafacturing, mergers & acquisitions

Checklist for government contractors merging with or acquiring other contractors

January 20, 2015 By ei2admin

Click here to download a checklist for government contractors merging with or acquiring other contractors.

Filed Under: Contracting Tips Tagged With: mergers & acquisitions

How many big contractors are actually posing as small businesses?

August 25, 2014 By ei2admin

In the sixth of its annual studies, a small business advocacy group has again blasted the government for allegedly awarding contracts to major corporations when policy intends for them to go to legitimate small businesses. The Small Business Administration offered other possible explanations for the apparent discrepancies.

The Petaluma, Calif.-based American Small Business League’s new study of fiscal 2013 procurement data concluded that of the top 100 companies receiving the highest-valued small business federal contracts, “79 were large companies that exceeded the SBA’s small business size standards, five were anomalous and 16 were legitimate small businesses.”

The group’s annual studies also show that the number of top-100 contracting companies that are large firms has risen steadily, from 60 in fiscal 2009 to 84 in fiscal 2013.

The large corporations that received the contracts in question in fiscal 2013 included Lockheed Martin Corp., General Dynamics Corp., Boeing Co., General Electric, Oracle Corp., Apple Inc., Verizon, Bank of America Corp., Citigroup Inc., PepsiCo, Comcast Corp., Intel Corp., John Deere Co. and many more, said the league, which published brief company-by-company profiles.

Keep reading this article at: http://www.govexec.com/contracting/2014/08/how-many-big-contractors-are-actually-posing-small-businesses/91694 

Filed Under: Contracting News Tagged With: FPDS, fraud, mergers & acquisitions, SBA, size standards, small business, small business goals

6 keys — and a caveat — to winning bigger contracts

July 22, 2011 By ei2admin

In sports parlance, it’s known as going for the gold. The term also applies in government contracting, as more and more companies are seeking the gold to be found in the large federal indefinite-delivery, indefinite-quantity contract vehicles.

“Come July and August, the IDIQs light up like Christmas trees,” said Paul Strasser, senior vice president and general manager of Dynamics Research Corp.’s federal group. “There are task orders going out like crazy because, with the continuing  resolutions, agencies are trying to spend the money they have allocated. The IDIQ has become by far the vehicle of choice. So you have to prepare.”

“The smarter smaller companies are looking at the vehicles earlier and seeing what resources it’s going to take to win,” said Mark Amtower, co-founder of the Government Market Master certificate program at the George Mason University School of Management and a Washington Technology contributor. “The large companies have two avenues. They can buy a company that owns the IDIQ or wait until the recompete and try to win it. However, there are no guarantees for the recompete.”

1. Consider M&A to open doors

Paul Bell, president of Dell Inc.’s Global Public and Large Enterprise sector, makes no bones that Dell is taking the mergers and acquisitions route.

He said Dell is still in the early stages of its M&A activity even though the giant hardware and services company has acquired nine companies in just 18 months.

“We think this has been a really good approach for Dell,” Bell said. “Our integration of our very biggest platform, Perot Systems, is going incredibly well compared to a lot of people’s experience in that [government provider] space.”

Dell’s marketing strategy is to serve its federal clients with the unified face of one company, Bell said. “That won’t change even if we add 25 more companies, which is likely in the coming years,” he said but declined to go into specifics about future M&A targets.

DRC’s capture strategy always includes IDIQ contracts. “If you’re not playing on certain IDIQ contracts, you’re really left out in the cold,” Strasser said.

Next: Focus on key markets

2. Focus on key markets

Strasser said DRC has been successful because it concentrates on its five core market segments: homeland security, health, cybersecurity, intelligence and Defense Department strategic programs, and financial and regulatory agencies.

Its IDIQ wins include the Internal Revenue Service’s Total Information Processing Support Services contract, General Services Administration’s Alliant contract, the Army’s Program Management Support Services and Homeland Security Department’s Enterprise Acquisition Gateway for Leading Edge Solutions (EAGLE) contracts.

Strasser said DRC identifies new targets at twice-yearly strategic planning sessions during which the company determines the government’s needs and its funding levels.

Company executives also attend independent analysis sessions and participate in a number of industry associations.

“We have people in key positions to not only be aware of changes in the industry, the legislation and how the money is being budgeted but also to sort of influence those [groups],” Strasser said.

DRC’s fastest-growing market is health care, an area in which the company had virtually no business just five years ago.

Next: Invest wisely in targeted sectors

3. Invest wisely in targeted sectors

Strategic investment discussions, off-site company assessments and peer reviews that began about five years ago led to action plans for DRC to target federal health care contracts.

“Today in the federal group that I manage, we’re going to do over $30 million this year in health-related services and solutions,” Strasser said.

As an example, he cited the $19 million Tricare Evaluation, Analysis, Management and Support, a Military Health System Category 2 acquisition contract that DRC won last year thanks to its management consulting expertise. DRC is helping the Walter Reed Army Medical Center manage its Base Realignment and Closure movement.

“We identified that [opportunity] three or four years ago,” Strasser said. “We said we’re committed to that market. We identified a vehicle we thought we had an opportunity to win. We put resources and investments against that to identify the capture of that vehicle. Once we won that vehicle we invested additional resources to pursue task order opportunities there.”

Although DRC does not have a chief medical officer, its staffing does include clinicians and doctors.

Next: Plan ahead

4. Plan ahead

About a year ago, American Systems Corp., which historically sought smaller contracting vehicles, introduced a plan to create a business development system and pursue some of the larger prime contacts, including IDIQs, President and CEO Bill Hoover said. “And the good news is we’ve actually followed through on that plan.”

Hoover said that after he joined the company in 2006, ASC instituted an infrastructure investment plan to strengthen its five key market targets: command, control, communications, computers, intelligence, surveillance and reconnaissance; acquisition and logistics; readiness; homeland security; and national intelligence.

“We also expanded our recruiting function significantly as well because we knew that was going to be important, too,” Hoover said.

“I would say that probably our back office, which really is the infrastructure side of the business, was probably about 60 or 70 people. And we’ve probably increased that by about 50 percent or so,” he said.

Another goal was to strengthen ASC’s capture management program and establish a project management office to oversee the company’s IDIQ contracts and meet the needed quick turnaround on task orders.

“Although the bulk of the investment was probably back in the 2006-2007 time frame, we continue to invest in our infrastructure to make sure that we can be as responsive as we can possibly be on these opportunities,” Hoover said.

Next: Hire the right people

5. Hire the right people

In addition, ASC is aggressively expanding its pipeline of individuals “so that we have a living and breathing database of candidates for a variety of opportunities in the focused business opportunity areas that we’re interested in pursuing,” he said.

ASC uses that database to strengthen its proposals whether it is pursuing an IDIQ or a large single-award prime contract. To keep the database current and growing, executives attend job fairs and conduct informational seminars.

“We have that database of [potential contract and current] employees that we can very quickly pull together because, on the IDIQ side, you have a very rapid turnaround of proposals, and we can then provide the résumés to go after those faster-turnaround opportunities,” Hoover said.

“We’re constantly looking for individuals with the requisite experience, the requisite customer focus, the requisite capabilities,” he said, adding that this is particularly true when going after an IDIQ or task order from the intelligence community in which background checks and security clearances are critical.

“The name of the game has changed with the government predominantly using some of the larger vehicles,” said Shiv Krishnan, chairman and CEO of Indus Corp., who recently hired Terry Fitzpatrick as vice president to oversee business development and growth.

Next: Build your infrastructure

6. Build your infrastructure

Indus emerged from the small-business program about 10 years ago and positioned itself to go after large contracts, including governmentwide acquisition contracts, known as GWACs, he said.

“If you do not bid on these GWACs, then you’re shut out of opportunities coming through those [awards] and those [represent] billions of dollars of opportunities for the next seven or 10 years,” Krishnan said.

Indus set up the infrastructure to compete for GWACs by meeting government requirements, such as having an earned value management system, a government-approved purchasing system, Capability Maturity Model Integration certification, and positive past-performance evaluations.

“You need to be positioned; you need to be close to the customer,” he said. That’s what Fitzpatrick’s business development team does two to three years in advance, Krishnan added.

Indus was successful in 2009 when it bid for a spot on the 10-year, $50 billion Alliant contract. “That was a feather in our cap and the beginning of our [capture] strategy,” Krishnan said.

For several years Indus tracked the planned EAGLE II, Network Centric Solutions II and National Institutes of Health’s 10-year, $20 billion Chief Information Officer — Solutions and Partners 3 awards. When they finally were announced in 2010, the company was ready to bid on all three, Krishnan said. The company also is adding health IT capabilities.

GWACs and agency-specific enterprisewide acquisition contracts have been popular, he said, because the government does the upfront work of selecting qualified contractors, and the competition to perform the task orders is limited only to those companies.

Next: A word of caution

A word of caution

However, Kevin Plexico, vice president of research and analysis services at Deltek Input., a market research and intelligence firm, cautions against relying too heavily on GWACs, including Alliant and NASA’s Solutions for Enterprise-Wide Procurement.

“We haven’t seen them trend up in five years,” he told a gathering of contracting executives last month. “They’ve been relatively flat while those agency-specific task order-based contracts have been taking off.”

“What we’re seeing is larger agencies are establishing their own task-order based contracts,” he said. “We see that all the military branches have moved this way.”

That trend is expected to continue, effectively reducing the number of prime contract opportunities, Plexico said.

For example, he said, about half of DHS’ IT services go through the EAGLE contract.

“If you don’t have a position on EAGLE, you can effectively think about your opportunity inside DHS as being limited to the other 50 percent that’s outside the EAGLE contract,” Plexico said.

In addition, the growth of task orders has greatly reduced the time frame in which to pursue them compared to the traditional 30-, 60- or 90-day response time for traditional requests for proposals.

Plexico said a Deltek Input study of about 11,000 task orders from 18 contract vehicles found that more than half of them required contractors to respond in less than two weeks.

“So this will challenge even the most agile of contracting and bid proposal organizations to respond,” he said. “This is fundamentally changing how companies are organizing their proposal organizations.”

— About the Author: David Hubler is the associate editor of Washington Technology.  Published July 1, 2011 at http://washingtontechnology.com/articles/2011/07/05/cover-steps-to-big-contract-wins.aspx?s=wtdaily_050711

Filed Under: Contracting Tips Tagged With: DoD, EAGLE, GWAC, IDIQ, IRS, marketing, mergers & acquisitions, NASA, task orders

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