The government is changing the way it buys things. That much is clear. Multi-award contracts are in and prime contracts are out.
Brian Friel is the Federal Business Analyst at Bloomberg.
He told Chris Dorobek on the DorobekINSIDER program that there has been a bit shift in the last decade toward multi-award contracts, particularly in the tech space.
Multi-award contracts are a two step contract process. First vendors are pre-qualified and pre-selected to compete. The biggest technology mult-award contract out right now is the GSA run Alliant contract. There are currently 98 companies competing who can win up to $65 billion through 2019.
What Make Multi-Award Contracts Appealing?
- Consolidates contract work. You don't have to re-create the wheel every time. It saves money on the backend acquisition process.
- Gives you a corporate view of what you are buying so you can drive down prices because you have visibility into all the different technology services that are being bought.
- It is faster. You've pre-qualified companies so you don't have to through that process every time. Instead you are issuing task order and quickly awarding them based on a companies ability to fullfil requirements.
"There is a big push by the administration to break up what used to be big systems integration contracts. Those 10 year, $2 billion dollar contracts. Agencies are being encouraged to break them up. Award a million dollar contract for six months. Companies have to be prepared to handle the onslaught of task orders. An agency might put in a task order for $2 million and expect a proposal in two weeks," said Friel.
- There are some companies that are currently managing 140-160 task orders at a time.
- Those companies have set up central IDIQ offices that coordinate all the task order proposals that are coming in and they have systems and templates in place.
"There is a bill right now that the House Oversight and Reform Committee is considering that backs up the idea that by centralizing contract work the government could further drive down prices. Some estimates show the savings as much as half," said Friel.
"There is intense competition by vendors. There's not just 1 or 2 of these multi-award contracts there are over 100. If you are not on Allian it will be really hard for you to be a tech player in the next decade," said Friel.
"There is a trend for these multi-award contracts to be set aside for small businesses. For example there is Alliant small business which accounts for about 20% of the entire Alliant contract. Where small businesses really struggle in the completely open competitions," said Friel.
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