Government Opens to Midmarket Tech Vendors

For decades now, midmarket companies have been mired in a government contracting sinkhole. There are government programs and set-asides for small businesses. For large enterprises, there are sole source and other no-bid contracts plus the ever-popular bundled contracts.

Not much is left in the middle. But that may be changing. For the first time in years, midmarket companies may get a better shot at some big government bucks.

Government requests for proposals and bid status postings can now be found on FedBizOpps, a government Website designed to assist companies in bidding for the work across several federal agencies. The site's electronic interface allows midmarket companies to submit and guides them on any follow-up processes.

"There has been an increase in electronic submission of bids to government proposals," says Larry Northington, president of Northington Consulting and a retired Major General from the U.S. Air Force. "But this is not proceeding as fast as could be done, given technology today."

Northington, who consults businesses on submitting bids to the government, says that proposals for smaller Federal contracts are largely submitted by electronic means. Small contracts are generally defined as under $5 million in value, although this may vary across various government departments, and certainly there are exceptions.

"This $5 million figure may sound like a small number in the Federal sector, but remember that there are literally tens of thousands of these solicitations submitted monthly for everything from technical services contracts, IT software development and hardware, manufactured metal products, medical supplies, administrative services, office furniture, advanced engineering analysis, strategic planning, and everything in between," he says.

Larger government contracts may include several volumes and thousands of pages. As a general rule, these are submitted in hard copy as well as CD, according to Northington.

The Internet is also aiding communications with federal contracting officers for firms that have limited travel budgets or that need clarifications in a hurry in order to meet bid deadlines.

"Communications is vital during the long lead times leading up to a bid release, and the Internet provides quick access to the source," says (Ret.) Colonel Staff Ouderkirk, president of Teksouth, a midmarket defense contractor. "The contracts are more complicated and demanding, requiring the speed and efficiency of Internet exchanges to clarify requirements, timing, performance factors, and cost buildups."

It's no secret that big business spends a ton of money in lobbying for sole source, no-bid, and bundled contracts, thereby tying up opportunities before they even come up for bid. Buddy deals between individual government acquisition officers and big business bidders are also standard operating procedure. However, changes are afoot -- beginning with a presidential memo last March that promised to disrupt the status quo.

In late October, the Obama administration issued new contracting guidelines in an effort to reform government contracting and reduce waste by adding more contracting officers as overseers. The addition of new officers will likely be a kink in the "buddy deal" chain, and even break it in some places. That means there will be more contact points -- presumably free of competitor predispositions -- for midmarkets to pitch and befriend.

The U.S. Office of Management and Budget (OMB) has moved ahead on requiring acquisition workers to develop strategies to open government contracts to more competition. The OMB also encourages agencies to focus more on long-term strategies rather than short-term needs.

Lessons here: Move aggressively to establish relationships with acquisition officers and to meet GAO and other requirements so you will be in position to reap current and upcoming government contracts.

But continue to build relationships and partnering opportunities with big businesses as well. For newcomers, such relationships are your best bet in getting your first federal contract.

"It is not an easy market to break into as a prime contractor if you don't have the past performance," says Ouderkirk. "The best avenue is to join with large companies and compete on indefinite delivery/indefinite quantity [IDIQ] contracts. This expands your 'wingspread.' "

There is another trend in Federal contracting worth mentioning: the proliferation of very large IDIQ multiyear contracts. "These contracts generally select qualified teams of vendors to provide goods or services over a five-year contract life," explains Northington. "Generally, only selected vendor teams may bid on individual task orders as they are released by the government."

And as Northington notes, this represents a good opportunity for midtier companies to seek an entry to the federal acquisition process.

— Pam Baker is the author of eight books and a freelance writer whose articles have appeared in CIO.com, NetworkWorld, ComputerWorld, IT World, and other magazines.