Shaping & Limiting competition

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Putting it all together

Shaping & Limiting competition How to shape Putting it all together

Overview

So far we have discussed the common ways that companies influence the government to have requirements put into (or removed from) solicitations to block other competitors, or to make themselves more likely to win.

So now lets see how it all comes together over the course of a hypothetical contract pursuit

Our hypothetical company

  1. The basics: For the purposes of this class we are:
    1. Janitorial services company
    2. Been in business 5 years
    3. Virginia based company
    4. Have averaged $5M/year over the last couple years
    5. Woman and Service Disabled Veteran owned small business
    6. Have the “Cleaning Industry Management Standard-Green Building Certification”
    7. One of our foremen took a one month course in cleaning practices to reduce the spread of viruses
  2. Our past performance: We have:
    1. 3 prime janitorial services contracts
      1. 2 in Norfolk VA with the Navy
      2. 1 in Quantico VA with the Marine Corps
      3. 1 at the Pentagon with Washington Headquarters Services
    2. 5 sub-contracts
    3. GSA schedule
    4. An IDV for cleaning services
      1. From the Navy
      2. So far we have not gotten any money through it
      3. There are 6 other companies on the IDV

Where it begins (RFP – 18 months)

  1. Opportunity identification: We see that a 5 year contract for janitorial services is expiring in about 2.5 years. Key data about the expiring contract:
    1. Is from the State Department (DOS)
    2. Is for $6M
    3. The period of performance is 5 years
    4. The place of performance is at State Dept HQ in Washington DC
    5. Is set aside for Woman Owned small businesses
  2. Opportunity research: We research the expiring contract and find:
    1. There was an Sources Sought issued
    2. The RFP for the expiring contract to understand the current scope of work
    3. The current contracting officer assigned to the expiring contract
    4. The current NAICS code is 561720 (Janitorial services) and the size standard is $19.5M
  3. Current vendor research: We research the company that currently has the contract and:
    1. They are a Minority and Woman owned small business
    2. They have been in business for 10 years and you estimate that they are make $12-15M a year
    3. All their other contracts are for janitorial services at EPA and SBA
  4. We rough out a timeline: If the contract expires in about 2.5 years, that means:
    1. The RFP is likely to come out in about 1.5 years
    2. The Sources Sought is likely to come out in about 1 year
  5. Our opportunities to shape
    1. We have 1 year to to advocate for big changes in the acquisitions approach (e.g. not putting out an RFP through SAM.gov)
    2. There is likely to be a Sources Sought if the government decides to put this contract out through SAM

Developing our shaping strategy

  1. Identify all the tools we can use to shape in our favor: We can advocate that the State Dept (DOS):
    1. Buy through our IDV
    2. Buy through the GSA schedule
    3. Set the contract aside for Veteran Owned small businesses
    4. Shift the NAICS code to:
      1. 561740 Carpet and Upholstery Cleaning Services ($7.5M size standard)
      2. 561790 Other Services to Buildings and Dwellings ($8M size standard)
    5. Require that bidders have our certification
    6. Require that the bidders project manager have our foreman’s certifications
    7. Require that bidders have experience working and staffing people in controlled areas (like military bases)
    8. Require that bidders have experience staffing in the mid-Atlantic
    9. Use a LPTA evaluation

Explore the case for each of our shaping tools

  1. Buy through our IDV: By buying through our IDV the DOS can:
    1. Accelerate their time to contract
    2. Reduce the effort to get on contract
    3. Safeguard the quality of the services they receive because of the vetting during the IDV application
    4. Ensure a fair price because there are six other companies who are likely to bid also
    5. BUT: This is a Navy IDV so the DOS is unlikely to be familiar with it/the DOS has their own janitorial IDVs, so why should they use this one?
  2. Buy through the GSA schedule: By buying through GSA schedule the DOS can:
    1. Accelerate their time to contract, reduce the effort to get on contract, ensure quality
    2. GSA rates are heavily vetted during the application so DOS can get a fair price
    3. DOS uses the GSA Schedule a lot so their buyers are familiar with it
    4. BUT: There are LOTS of janitorial services companies on GSA Schedule, so:
      1. There will be a lot of competition
      2. GSA squeezes vendors when they get onto the Schedule, so the margins on GSA schedule sales tends to be low
  3. Set the contract aside for Veteran Owned small businesses: By setting the contract aside for vets DOS can:
    1. The target for spending to Service disabled veterans is 3% and in the last published scorecard DOS hit 5.8% so it is will be hard to convince the DOS to shift this contract to Service Disabled Set-aside
    2. The target for spending to Woman Owned Small Businesses is 5% and in the last published scorecard DOS hit 5.06% so they just made it, so it should be easy to make the case that the DOS should keep it WOSB.
      1. This is fine, since we can still bid on WOSB contracts, but the current vendor is WOSB too, so this move won’t block them
  4. Shift the NAICS code to: It is hard to say what benefit the DOS gets from changing the NAICS code. So we will have to read the old RFP and look at the work and make the case that the work is more aligned with “Carpet and Upholstery Cleaning” or that there is a lot more than just janitorial services in the contract, so really should be classified as “Other Services to Buildings.”
    1. NOTE: If we can do this it is a HUGE win. The current bidder is not a small business under either of these NAICS codes so if the new version of the contract is still set-aside for small businesses, and the NAICS code shifts, the current vendor can’t bid
  5. Require that bidders have our certification (Green cleaning standards): This may or may not be important to the DOS. To figure out how to pitch this you will need to:
    1. Talk to the contracting and program officers to see if they care about green cleaning
    2. Read statements from DOS leadership to see if they have talked about going green
    3. Look for congressional or presidential directives to go green
    4. Find another hook to convince the DOS buyers that they are fulfilling their agency and administration mission by requiring a more green janitorial solution
  6. Require that the bidders project manager have our foreman’s certifications: This is similar to the Green cleaning certification. You need to learn what your customer cares about and see if they care about protecting against infection. Given that Covid is on everyone’s mind, and DOS has a mandate to keep their employees safe at work this should be a pretty compelling offering.
  7. Require that bidders have experience working and staffing people in controlled areas (like military bases): The DOS deals with a lot of classified materials, so even if this contract does not require cleaning in the spaces where classified documents are kept they may feel better knowing that the janitors in the non-secure areas have a secret clearance.
  8. Require that bidders have experience staffing in the mid-Atlantic: The labor market is really tight these days and your experience staffing janitors at the Pentagon and Quantico demonstrates that you can find people in the DC/VA area.
  9. Use a LPTA evaluation: You can make a compelling case that the DOS should use an LPTA evaluation:
    1. Janitorial services are not mission critical
    2. They are a bit of a commodity
    3. As a smaller vendor you probably have lower overhead rates than the current vendor so you have the edge in an LPTA evaluation

Assessing the strength of each option

When you talk to the customer you’re only going to have so much time, so what shaping tools should you focus on

  1. Buy through our IDV: This is a long shot, your IDV is from a different agency so they probably wont use it
  2. Buy through the GSA schedule: This is an easier sell, but the competition is still fierce on schedule
  3. Set the contract aside for Veteran Owned small businesses:
    1. DOS is already over performing on their Service Disabled veteran spending
    2. You will get a free “bite at this apple” when the Sources Sought comes out, so don’t waste your time now
  4. Shift the NAICS code to 561740 or 561790: This is a gamble (what’s in it for the DOS to change the NAICS code?) but it they do it blocks the current vendor and probably blocks a lot of other larger janitorial services companies, which is HUGE, so even though this is a long shot its probably worth it.
  5. Require that bidders have our certification: This seems like a good one to lean in on. Especially if the political leadership is talking about the importance of being green this should be an easy sell, and will block LOTS of other bidders (maybe even the current vendor)
  6. Require that the bidders project manager have viral/health oriented certifications: Same as the company certification, everyone cares about health, especially post Covid, This one seems like a good one to emphasize
  7. Require that bidders have experience working and staffing people in controlled areas (like military bases): This is quite compelling. No one gets in trouble for asking for more security and higher classifications, and given the number of hacks and spies that have been caught having a clearance should be interesting.
  8. Require that bidders have experience staffing in the mid-Atlantic: Conceptually this is interesting, but the current vendor also can make this claim, and there are so many contracting companies with experience staffing people around DC that this will not actually block many bidders.
  9. Use a LPTA evaluation: This one seems compelling and an easy sell:
    1. Janitorial services are a commodity so the government will want to get the best price possible
    2. As a very small business you should have a pricing advantage

Choose which ones to use before the Sources Sought is released

  1. Of all the options you can advocate for I think the ones that have the best chances of being adopted compared to the benefit to you are:
  2. Shifting the NAICS code to 561740 or 561790: It’s a long shot, but massively impactful if it happens
  3. Require that bidders have our certification: This seems like an easy sell, and can block lots of competitors
  4. Require that the bidders project manager have viral/health oriented certifications: This also seems like an easy sell, and can block lots of competitors
  5. Use a LPTA evaluation: This one should be an easy sell and gives you an edge in the evaluation

Getting your ideas in front of the government

  • A lot of people say that government contracting is all about relationships, and in general I think this is over emphasized, but there are a few times when it really is all about the relationship.
  • And this is one of those times
  • So at this point you have some compelling ideas about what the government should do, and a reasonable justification for why it is in the government’s interest to adopt your ideas, But how do you get those ideas in front of the people you need to meet? Well, the most common ways are
    • Set up a meeting: This is by far the best option because the government gets to meet you and you can wow them with you professionalism. The down side is that it can be really hard to get a meeting.
    • Go through the OSDBU: Every government agency has an office whose mission is to help new companies. If you go to them having done your homework, and clear ask (to meet the officers responsible for this contract) there’s a good chance they will help you.
    • White paper: Write a couple page paper about what you think they should do and why
      • Pros: Writing your ideas will help you refine your thinking, even if you get a meeting you want to leave the government with something to read so you might as well
      • Cons: If you just email a government officer a five page pitch for your ideas they probably wont read it

Influencing through the Sources Sought (RFP – 6 months)

  • The Sources Sought: Typically Sources Sought are short and formulaic documents. Basically you provide:
    • A capability statement demonstrating that you know what you are doing
    • And which set-asides you have
  • Why you should respond: The government can’t set a contract aside unless they have had at least two Sources Sought responses from companies with a given set-aside
  • Go ahead and add more: Even though it’s beyond the scope of a Source Sought response you might as well include your case for the updated NAICS code and other shaping options

What is the potential impact and what is the investment

  • The investment: As a new business owner you are incredibly busy, so how long does all this work take? Not a lot:
    • The research and planning your strategy usually takes 2-3 hours
    • A white paper might take 4 hours
    • The Sources Sought response might be 3 hours
    • Setting up a meeting with the government and attending the meeting might take 3 hours
    • So all in about a day an a half of work spread out over a year and a half
  • The impact: So what could the impact be of this investment? Well lets look at what happens if each option hits:
    • Responding to the Sources Sought: There is a 100% chance that the current vendor will respond, so if you also respond then the government will get two responses from woman owned businesses, and since the current contract is set-aside for WOSB, and because the State Dept is close on their WOSB spending there is a 99% chance that the RFP will come out WOSB set-aside, Which drops the potential pool of bidders from about 700,000 down to about 14,000 potential bidders. Which seriously improves your odds of winning
    • Shifting the NAICS code to 561740 or 561790: When there is a re-compete (like in this example) the company that already has the contract has about a 60% chance of winning. So if this happens:
      • You’ve blocked the lead horse
      • You’ve blocked any company that makes more than $8M/year, removing lots of competition
      • As a $5M/year company you are now one of the more established/large vendors that can bid
    • Require that bidders have our green certification: The impact here depends on:
      • How specific the government is: If the government requires your specific certification then it will block more competitors than if the government is open to multiple green certifications
      • How common the cert is: If every janitorial services company had the same idea and went green this might not help as much. If you are one of only a couple it could be a big blocker.
    • Require that the bidders project manager have viral/health oriented certifications: This is the same analysis as the company certifications.
    • Use a LPTA evaluation: The impact is impossible to quantify, but as a new vendor who doesn’t know the customer very well this is a big advantage
  • So what is the net impact: Its impossible to know, but each of these increases your chances of winning, and if experienced vendors look at the RFP and see that it is full of unusual requirements (because you got them added) they will realize that someone else is positioned to win and won’t even bid.
    • So the impact is HUGE
    • Remember, shaping is what made the big primes the big primes
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