Budget reductions at government agencies can heighten competition for federal contracts. Old programs are discontinued; departments are restructured; experienced workers leave, jeopardizing existing relationships. What expertise do you offer potential agency partners, and what are the terms that will define how that partnership works? Understanding contract types can help you level the playing field for your business and aid you in winning contracts and developing business relationships that last.
A recent article published by the Department of Defense offers some great insights into pending budget cuts and restructuring. Moving forward, the government will be looking for specialists in smaller quantities. A contract with single-digit full time equivalents may not offer a high enough payout for large companies seeking scale and high price to offset their costs. The small and nimble company may be just what some agencies are looking for. Being nimble means you make it look easy — and making it look easy means you’ve done your homework.
Are you ready for the “road less traveled” of specialized, smaller-scale projects? Understanding contracting needs and procedures can get you running at top speed down this road.
Four Ways of Getting There
Companies like Viderity — agile, able to structure and execute projects with continuity, speed, and precision (and leap white marble buildings in a single bound!) — often top the list of competitors for government contracts. Let’s review a few contract types that we typically see:
- Firm Fixed Price
- Indefinite Delivery/Indefinite Quantity
- Professional and Administrative Services Support
- Time & Material
A Firm Fixed Price (FFP) contract provides stability for both parties. The government receives flexible expertise, while the vendor is assured of adequate money—which vendors tend to appreciate! All fees are rolled up into direct labor rates. Well-defined deliverables are advertised and may include Full Time Equivalents (FTEs) as part of the requirement. FTEs are sometimes used to determine the best price for a project; using FTEs also helps to calculate how many employees it would take to meet contract obligations. FFPs allow for adequate price competition, reasonable price comparisons, and realistic estimates. This type of contract can streamline the source selection process. FFPs are governed by Federal Acquisition Regulation Subpart 16.2.
The Indefinite Delivery/Indefinite Quantity (IDIQ) contract acts as a control for potential individual task orders. Details of the contract are specified by Technical Objectives for precise needs delivered during a defined period of time. This contract provides delivery control and is great for quick, short-suspense requirements. A Task Order (TO) can be derived from the IDIQ to support specific labor categories or specific services.
Professional and Administrative Services Support contracts set terms for program management and administration. Contractors are experts, highly skilled and knowledgeable in specific labor categories, e.g., IT Specialist, Program Manager, etc.
Time & Material (T&M) contracts assist requirement holders when they are uncertain of extent, duration of work, or costs involved. The default to use for cost projection would be the labor hour at a specific fixed hourly rate.
Who You’re Working For
As you navigate the details, it’s easy to lose sight of what this work is really all about. Get familiar with “The Basics of Government Contracting,” if you’re not already. Study the agency you’re hoping to work with. It’s surprising how many companies come in unprepared, focused only on their own needs and not on those of their potential partners.
It may sound old-fashioned, but government contractors are supposed to serve the public interest! Approach each contract as if it were your first, with the care and precision taxpayers deserve. For Viderity, on any road we’ve traveled, that has made all the difference.