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Category Management—Streamlining Government Acquisitions

Business category report

We all know federal contracting can be a bit disorganized. Between delays, duplicate contracts, and a tedious process, at times, we are all left scratching our heads, thinking, “There has to be a better way to do this!” That is where category management comes in. The Federal Government has made a push for agencies to begin categorizing their procurement efforts to do their best to prevent contracting issues.

What is category management? Category management enables a government agency to categorize buying groups. By creating these groups, the agencies can eliminate redundancies, increase efficiency, and deliver more value and savings from the government acquisition programs. The keys to the success of category management are to identify core areas of spending, collectively developing levels of expertise, leverage shared best practices to provide acquisition, supply, and demand management solutions. In short, by categorizing acquisitions to deliver more savings, value, and efficiencies to federal agencies.

It is a relatively newer process being implemented by the Department of Defense to buy goods and services. The Army began utilizing this approach in 2019. They created 19 categories, 10 of which are profession and service focused, and the other nine are related to weapons and ammunition, electronic and communication equipment, and R&D focused. By grouping buying efforts in similar categories, the Army can use the data for other procurements in its category to make better decisions when it comes to consolidating contracts negotiating price and what the state of the industrial base they are looking into. Category management is not only making the process more repeatable and efficient. It is saving valuable time and money. The Army alone saved $1.2 billion or 9% in 2019, and they are looking to save an additional 5% in 2020. Category management is being utilized across the Department of Defense. The Air Force has also saved $1.5 billion by using this approach.

What does this mean for us in the industry? It is quite simple; contracts are going to become more organized and repeatable. That means researching contracts and understanding the category they are coming out of will give us more insight into what the customer is looking for, their requirements, and budget. Not only is the category management approach giving the customer more data to understand the industry, it is also giving us in industry data to understand the customer.

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Other Transactional Agreements – Something the Federal Government Can Agree On

Businessmen making a transactional agreement

Even though Other Transactional Agreements, “OTAs,” have been around for decades, they have gained popularity in the last few years. A big driver was the National Defense Authorization Act of 2016, which permanently allowed for DoD, military construction, and the national security programs of DoE to award OTA contracts for research, prototype, and production purposes. Ever since the NDAA passed in 2016, OTA headlines have appeared to pop up more frequently all over Government contracting news. There is something the Government can agree on: OTAs speed up the acquisition process by removing a lot of the red tape of traditional procurement.

Why have OTAs increased in popularity? It is quite simple; our armed forces are undergoing a sizeable modernization effort. As warfighting strategies change and our adversaries have more access to modern technology, we needed to transform the assets of our armed forces. The Army even created a new Program Executive Office (PEO), Army Futures Command, to solely focus their modernization efforts. The Army alone accounts for 63% of OTA contracting dollars since 2016. The Army’s modernization efforts span from the Next Generation Squad Weapon, which will replace the current M4A1 and M249 squad automatic rifles, to the Future Vertical Lift Program, through which the Army is looking to replace its Blackhawk and various other helicopters with a modern solution.

OTAs have allowed for DoD to tap into the resources industry has to offer much faster. They are an excellent vehicle for prototyping new technology to modernize or replace a current vehicle, weapon, aircraft, etc., but they are not just for prototyping. OTAs can speed up the procurement of a non-developmental item to undergo testing and production at a much quicker pace. For example, the Army is looking to replace its current towed howitzers. The howitzers (M777A2) have not undergone any major redesign since their creation in 1999. The Army is looking to replace the M777A2 with a new, wheeled, self-propelled solution, but the Army is not requesting a prototype. The Army called for contractors to provide a non-developmental solution that is ready to be tested and fielded by troops. Instead of going through the standard RFP processes, the Army released the specs of what they are looking for industry to provide. Contractors then take those specs and propose their mature solution that best fits the Army’s needs. By using an OTA to procure a howitzer replacement, the Army could begin testing and integrating the modern alternative in months rather than years.

Over the next few years, we will see all kinds of new technology reaching our armed forces rapidly because of the efficiency of OTAs. The Government can agree that OTAs provides our troops with the best-modernized resources at a much faster rate.

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Organizational Change Management

How to keep your business moving in the face of organizational change and uncertainty

Whether it’s a Government shutdown, company re-structuring or consolidation through M&A, change can have a negative impact on your organization if the accompanying periods of uncertainty and downtime are not properly managed.

In business development, an environment filled with uncertainty can create a breeding ground for lost talent, new business and even a company’s core work – recompetes.  Employees haunted by the thought of layoffs, loss of productivity due to unknown budget allocations and operational stand stills resulting from a lack of direction are just a few examples of how change can have an adverse effect on your business if not addressed.

Here are a few guidelines and tips to consider when managing change within Business Development:

Understand the past

It takes both time and money to prepare a proposal, which is why every bid – win or loss – deserves a thorough post-award analysis and lessons learned to carry forward.

To ensure maximum utility of B&P dollars spent, it is important to understand the who, what, when, where, why and how behind every award. A comprehensive look at the past will help build this story.

1. Prepare win/loss analysis for every competitive bid awarded over past three years

  • Collect and document:
    • Contract details (type, primary NAICS and major elements of cost)
    • Basis of award (from Section M of the RFP to the customer award debrief)
    • Customer (from the highest level of budget authority down to the end user)
    • Competitors (from pre-submission assumptions to post-award knowns)
  • Analyze:
    • Technical (non-cost) scores vs awardee
    • Bid price vs award price
    • Proposal strengths and weaknesses identified on customer award debrief
  • Ask:
    • Was the actual award outcome consistent with Section M of RFP?
    • Did the customer award to the lowest price offer, highest technical rated offer or both – lowest price and highest technical offer?
    • Did we win/lose on price, technical or both?
    • How accurate was our pre-submission assessment of the competitive landscape? Did we model the competitors accurately? How competitive was our bid price?

Keep moving at present

Regardless of the circumstances, business development should never reach a dormant state. There is always work to be done.

To ensure maximum utility of future B&P spending, it is important to ensure that lessons learned from the past do not become lost in translation as an organization undergoes change. Understanding your past will help you thrive at present.

2. Complete deep dive assessment on past wins/losses

  • Collect and document:
    • All prior solicitation packages
    • Technical and pricing requirements
  • Analyze
    • For losses, reverse price engineer average bid rates
    • For wins, compare bid vs current FTE, personnel qualifications and salary
  • Ask:
    • For new business, can we compete against prior average bid rates?
    • For recompetes, to what extent have we deviated from our prior bid? Does the customer intend to adopt this deviation on recompete solicitation?

Prepare for the future

In business development, your opportunity pipeline is your lifeline. While some aspects may become hazy in times of change, there should never be complete lack of certainty with regards to what opportunities your organization will pursue.

Protecting your core work is critical and recompete efforts should be considered automatic to your pipeline and preparation should never cease to exist.

Use present momentum to refine and shape your pipeline around opportunities with the highest pwin.

3. Solidify new business opportunity pipeline using past and present takeaways

  • Use win/loss analysis to identify key customers, competitors, contract types and basis of award that proved most/least successful on past bids
  • Use deep dive assessments to determine if position has improved or worsened since the last bid to determine classification on pipeline

Conclusion

While there is no “one size fits all” when it comes to the specific actions an organization can take to effectively manage change, there is one overarching guideline that applies to all – keep moving.

“He who controls the past controls the future. He who controls the present controls the past.”

– George Orwell, 1984