Selling To The Government: Contracting Methods

In this installment of our ongoing series on selling to the government, we'll look at fundamentals of government contracting. We'll tackle contracting methods in general order of apparent competitiveness, starting with the most price competitive and ending with the most limited.

Sealed Bidding

Sealed bidding works like this: Agencies describe exactly what they want to buy in a solicitation called an invitation for bid (IFB). Companies submit secret bids to provide it. The award goes to the company that is considered to be the "lowest responsive, responsible bidder."

"Responsive" means the bid conforms exactly to the solicitation's specifications; "responsible" means the government makes a determination that the winning company can deliver on its offer. Anybody who proposes to deliver items that differ even slightly from the spec is disqualified from the competition, no matter how much better that alternative may be.

Reverse Auctions

Old-school sealed bidding is rare today within the federal government for IT procurements, but it lives on in mutated form: online reverse auctions, in which companies publicly underbid each other, with the lowest bidder winning the business.

Reverse auctions have yet to capture a significant portion of federal IT contracting. Reverse auctions are a method for buying commodity items, often small quantities of brand-specific part numbers. A handful of agencies use them to conduct quarterly or semi-annual procurements of products from approved vendors for predetermined configurations and quantities of office machines such as desktops, laptops and printers, but few manage to have the discipline necessary to aggregate requirements and pool money like that.

Negotiated Procurement (RFPs)

Contracting by negotiation is the underlying premise of a solicitation issued as a request for proposals (RFP). After companies submit proposals, federal source selection teams can ask for clarification and hold discussions with companies. It isn't much less competitive than sealed bidding, but it's much more complex.

Like sealed bidding, this approach is full and open. It's slightly less price-competitive than sealed bidding because an award may hinge on factors other than price, giving an advantage to companies that understand the wider context and intent of the procurement. Also, especially in large procurements, agencies can exclude companies from the original round of consideration based on the quality of companies' proposals, whereas the point of sealed bidding is to examine every bid for the absolutely lowest price.

NEXT: RFP Tips Negotiated procurement is a more sophisticated acquisition tool than sealed bidding. Unlike an IFB, RFPs solicit good ideas, and price alone need not determine who wins. RFPs' great advantage is flexibility, for both the private and public sectors. The disadvantage is that they often lead to a protracted and expensive engagement without certainty of consummation.

RFPs hit the street in a standard format with a lot of boilerplate written into them. Reading them start to finish is mind-numbing, and unnecessary.

The most important sections to look at first are:

* Section C: The requirements. If the statement of work (SOW) or statement of objectives (SOO) is lengthy, then the requirements will be an attachment. Section J lists all attachments.

* Section B: A listing of all supplies, data, and services or tasks the government wants to accomplish in support of what the SOW or SOO describes. The items listed in Section B are called contract line item numbers (CLINs). The government expects vendors to invoice according to CLIN.

* Section M: The evaluation criteria.

If you decide to proceed, make sure to follow the instructions in Section L, since if you don't structure your proposal according to them, your proposal may get tossed out as non-responsive.

Proposals are legally binding, unless formally withdrawn before award. If the government selects your proposal for contract award, you are now legally required to provide what you said you would at the prices you proposed in accordance with all the boilerplate terms of the RFP. The government won't consider company modifications to already submitted proposals unless the proposals are already "otherwise successful" and offer better terms to the government.

If you submit a proposal electronically, it's a good idea to do so by 5 p.m. one working day before the official deadline. Should your proposal somehow subsequently not make it to the correct hands by the deadline, having an early date and time stamp will prevent procurement staff from branding it as late.

This article was adapted and digested from the book "The Inside Guide to the Federal IT Market," published by Management Concepts Press. For more information, visit www.insideguidetofederalit.com.

Steve Charles is a co-founder of immixGroup, which helps technology companies do business with government. He is a frequent speaker and lecturer on technology and the federal procurement process. He can be reached at [email protected].

PUBLISHED JUNE 21, 2013