Government Contract Vehicles
From GOVSALESWIKI
Installment [ 51 ] Government Contract Vehicles By Richard White
A "contract vehicle" is a broad term meaning different things to different people. We define the term in its broadest sense -it is a method under which a company may pursue and close a sale. For the sake of this discussion, contract vehicles include:
- GSA schedule contracts
- Any multiple award schedule contract held by you or one of your partners
- Any contract held by your business partner under which subcontracting is an option
- A sole source, credit card purchase (usually under $2,500) by a government buyer
- An open market, small purchase (under $25,000)
- Any program giving preferences to a defined class including small businesses, small disadvantaged businesses, women-owned businesses, veteran-owned businesses, businesses located within a HUB zone, etc.
- A public procurement contract (the least preferred route)
The best way to explain contract vehicles is to compare disparate businesses. Our discussion will center on two very different federal market players, (i) a small business new to the federal market, and (ii) a large prime contractor pursuing worldwide federal sales opportunities.
The Small Business
Assume a small business, ABC, Inc., has established a relationship with an end user at a nearby military base. The military base’s end user needs to procure approximately $200,000.00 in information technology equipment. ABC, Inc., which is relatively new to federal sales, does not have any contracting vehicles. The base’s end user, who is convinced that ABC, Inc. can produce the needed equipment, has several options available to ensure that she works with ABC, Inc. Those options are as follows:
- The end user can decide to have ABC, Inc. work as a subcontractor under the prime contractor presently working at the base (probably the quickest and most practical alternative).
- The end user may award the contract to ABC, Inc. under a sole source procurement. Under the federal regulations, solicitations may be limited to one source only if the contracting officer has determined that the vendor at issue is the only source reasonably available. If only one source is solicited, the official order file must be documented to explain the absence of competition. The sole source route isn’t really viable in the situation described above.
- The end user may announce the opportunity as a public bid. In doing so, the procurement would be opened up to competition and the actual award will be delayed for months on end (the least likely option).
Although the "prime contractor vehicle" described above is likely to be chosen as the most practical avenue, it has two major disadvantages as far as ABC, Inc. is concerned. The base’s prime contractor will take a fee for managing the subcontract (as well it should). ABC, Inc. will also be under the thumb of the prime contractor and may well be insulated from its customer. Under this scenario, a GSA schedule would have been an ideal vehicle. However, like most small businesses new to the federal market, ABC, Inc. doesn’t have a GSA schedule contract.
The Large Prime Contractors
In contrast, experienced prime contractors have every vehicle known to man. If a business truly wants to succeed in the federal market, it needs to align itself with as many vehicles as possible. In lining up contract vehicles, prime contractors acquire not only federal contracts (such as GSA schedule contracts) but they also build strong business relationships with small and disadvantaged businesses. In fact, using a small business as a conduit for federal sales is encouraged under the federal procurement regulations as long as the small business is the controlling party in the partnership. Those vehicles held by large prime contractors include:
- A GSA schedule for every line of products or services that company offers
- Multiple award schedule contracts
- On demand partnerships with small businesses of all types (the prime contractor forms alliances with several businesses in each small business preference category)
Prime contractors, like any other vendor or government buyer, will avoid public procurements like the plague. Every prime contractor’s goal is to win the business as quickly as possible and with as little competition as possible. Therefore, the primes use their other vehicles to win the business. Nonetheless, situations exist in which the public procurement route is the only method available.