One important aspect that both Industry and Government need to understand about the Federal contracting arena is vendor development. In my experience, however, this concept takes several years of experience, or perhaps special circumstances, to truly comprehend and embrace. New contracting professionals in the government tend to focus on the job at hand – the current contracts they have and whatever requirements that are on the horizon. Moreover, larger contracting offices have a person or team, usually the Small Business Advisor and/or Competition Advocate, whose general duties include the nebulous concept of vendor development, so that function does not automatically occur to the typical contract specialist. On the Industry side, new businesses or recent entrants into the federal market often lack knowledge about how GovCon works and may even be a little intimidated about how to engage and interact with their government counterparts. Usually, this unfamiliarity on both sides takes several years, or at least business cycles, to fully overcome.
Let me start by clarifying exactly what I mean, because “vendor development” can seem like a broad and vague term. I’m talking about the process of identifying, cultivating, informing new and existing sources of supply. Basically, the idea is that the government is always on the lookout for new, viable companies to offer their goods and services. This dynamic market indicates healthy competition, which serves to reduce complacency, promote innovation, and perhaps most importantly, lower prices. If one vendor knows they are the only company the government will be soliciting for a product or service, then that company might easily rest on its laurels, forego developing new processes or improved products, and get too comfortable with their pricing. However, if the government makes it known that it will seek offers from multiple sources, then companies know they need to make their best effort in quality, service, and price, or they may not win the contract award.
The concept applies on the Industry side too, as many contracts feature a prime contractor with one or more subcontractors. Just as with the government, it is in the prime’s interest to have multiple sources of supply for its various goods and services, to provide the best solution at the lowest price. In fact, there is a growing trend in government contracting, at least within the Defense Department, where Contracting Officers are requiring the prime contractors to show how they competed their subcontracts among multiple vendors to maintain price reasonableness.
But just as important as the development of new sources, for government and industry, is the improvement and empowerment of existing sources. In any enterprise, there is a learning curve, and new market entrants often fail to gain new business, or make many costly mistakes in the initial phases of performance, until they establish proven systems and processes. So, while it is important to seek out and foster new competition for requirements, it is perhaps equally important to work with known, existing sources to improve their performance and reduce the friction generated by federal contracting regulations and procedures.
Of course, this aspect of vendor development must be impartial and open to all, as the government cannot show favoritism to any company. Contracting offices accomplish this development through industry days, pre-proposal conferences, and RFIs and Sources Sought notices, that involve Q&A procedures. Industry days can be focused on a requirement or Draft RFP, or can be general and informational regarding contracting policies, procedures and areas of interest. The important thing is that they are well-publicized and open to all. Pre-proposal conferences are tied to a specific RFP or Draft RFP, and provide a forum for the government to explain the requirement and entertain questions from the audience. And RFIs and Source Sought notices, almost invariably posted on FedBizOpps (www.fbo.gov), serve as a virtual industry day or pre-proposal conference by announcing government intentions and requirements, and opening the forum for potential offerors to comment, inquire, and suggest various thoughts. The government must publish all questions and responses to ensure full and open access to all and thereby prevent any suggestion of favoritism.
In conclusion, many new or relatively recent entrants into the GovCon arena do not grasp the significance of a diverse, dynamic vendor pool. Industry participants probably do not welcome the competition, and government professionals lack the experience and judgment to fully comprehend how multiple offerors can benefit the requirement. But seasoned Industry experts know how to engage with the government and are eager to seize every opportunity to do so. And experienced government professionals know that multiple offerors promote better solutions at better prices. So, both sides eventually learn to embrace the importance of vendor development.