Money will start coming in for federal contractors

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2021 starts on a fast track for federal contractors. Soon that appropriated money will start flowing to agencies. And president-elect Biden has made a policy stand on, of all things, contract bundling. For what vendors ought to watch for, federal sales and marketing consultant Larry Allen joined Federal Drive with Tom Temin.

Interview transcript:

Tom Temin: Larry, let’s start with contract bundling. I guess, in the pantheon of issues like world peace and global warming and the pandemic, maybe contract bundling doesn’t quite bubble up to the very top. But it’s something the administration or the incoming administration has already talked about.

Larry Allen: Tom, it is. It was kind of a surprise to see the incoming Biden administration talking about this in late December. It was one of the topics that came up as the president-elect was being asked about small business issues and turned right to contract bundling, which is of course not a new issue, but it’s one that comes up every now and then. The outset, everybody needs to understand that small businesses should absolutely get a chance to participate fairly in the federal market. So none of this should be construed as being anti-small business. By the same token, there are lots of different small businesses. In fact, more small businesses participate in the market today as subcontractors than they do is primes. And if you’re looking at contract bundling, one of the things you have to consider is are you going to favor one set of small businesses potentially at the expense of another? So it was kind of a surprise to see this come up so early. Again, it’s not a new issue, but it’s one that is a little bit more nuanced than you might initially expect.

Tom Temin: And just for purposes of edification, maybe it’s a good time to define what contract bundling is under the Federal Acquisition Regulations.

Larry Allen: Right. Well current track bundling talks about the government tying together projects so that instead of having three or four smaller projects, you put it all together, roll it up into one project. The idea being that you get very strong price competition because you’re really leveraging the government’s collective buying power, and you’re putting it all out so that everybody knows you mean business and you track the type of attention. By the same token, there are already rules on the books that prevent agencies from bundling up procurements that have previously been standalone procurements for small businesses. So there are rules that say, hey look you’ve got to protect small businesses, you can’t just take three or four things that are previously been set asides and suddenly roll them all into one. If you’re going to do that, you’re going to have to give a series of justifications. So there are protections that already exist here. But that’s really the whole idea behind contract bundling. It’s a trade off, do we want to roll up and leverage many projects in one with the idea that we’re going to get a lower price and save taxpayer dollars potentially? Or do we want to unbundle projects and potentially pay higher pricing but at the same time, we’re serving a socioeconomic code of supporting prime contractors who are small businesses.

Tom Temin: I guess, years ago, this came up as a topic of hardware acquisition. Where did you want to buy your PCs and your printers from the same place, for example, which go together but not identical products. Now, it seems to be more in the realm of do you buy the products that might be required to support a service that you’re buying from a single vendor?

Larry Allen: Well, that’s right. The government has shifted, Tom, as a net buyer of services, even solutions in the IT market. So the question is, how are you going to buy those solutions? Are you going to buy them in big one off enterprise level acquisition or are you going to break them up into smaller pieces? How’s that going to work with interoperability? What’s the role of all types of contractors in serving the government market? Is there a good role for small businesses to do maintenance work, for example, to provide consumables things of that nature? Are there small businesses capable of running networks? And indeed there are. Those tend to be larger small businesses. But again, there are also a lot of smaller businesses, small businesses that either don’t want to be or don’t have the bandwidth to become a prime contractor. So they’re very happy working as a subcontractor to a larger business. And if you reduce the opportunities for those businesses, in turn, you’re hurting another set of small businesses.

Tom Temin: Sure, yeah. Always those trade offs. And just to tie this one off, there are lots of provisions in the FAR for how and when and when you cannot bundle already. So maybe this was just eyewash saying, we’re against bundling, like saying we’re against kicking your dog.

Larry Allen: Well, it certainly could have been something like that. I take it seriously that the incoming administration wants to protect small business. But we are so far away Tom from knowing exactly what this incoming administration might do. No names for office federal procurement policy, nor would you expect there to be. No names for GSA administrator, same thing. So we’re gonna have to wait and see what the details are on this one.

Tom Temin: And let’s talk about the budget, which like the NDAA somehow stumbled into being during a busy holiday season by the way, as Santa Claus was stocking the earth, so were some of these big bills. And when does the money start actually flowing? And what should contractors do now to get their share in the, what, nine months, less than nine months, we have left of the federal fiscal?

Larry Allen: Right. So Tom, on this front, I think contractors need to look at two things. First, the appropriations bill finally passed at the end of the year. So it’ll probably be the first part of February before each individual organization in different federal agencies get their pass back money for their specific budgets. But that’s coming. So we’re maybe a month away from agencies having that specific data. That in turn drives the second thing that I want to talk about, which is the type of discussion you as a contractor have with your federal customer now becomes more focused. It’s not a question of will you have the money, it’s not a question of when you have the money, we know that they are going to have a certain amount of money. We also have a pretty good idea of when it’s going to be there. So if you’re a contractor, and you’ve been having sort of those tree top level discussions with customers, and now they can become more specific, it’s time to flesh them out to work with your customer to try to put some real timelines around the project, see what the specificity is. You’re going to have some things that definitely shake out Tom, some ideas that while they were just ideas, but you’re also going to have some things that come into sharper focus, and that’s going to be the stuff that you want to focus on for the next few months.

Tom Temin: Larry Allen is the president of Allen Federal Business Partners. I guess we should say you want to sell a bundle but you don’t want to make a bundle or buy a bundle or something like that. I don’t know.

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