As a key pillar of their initiative to increase equity in Federal contracting, the White House announced an ambitious goal to increase the share of contracts going to small disadvantaged businesses by 50% over the next three years. Here are three steps agencies can take to meet this objective and attract innovative, capable small businesses.
Be intentional and judicious about market research
Before a contract opportunity is released, agency procurement teams conduct market research. They collect information about the capabilities of small businesses and evaluate their suitability for the work. This is usually done through a request for information, or RFI, and too often, RFIs require extensive and nebulous written responses from resource-constrained small businesses.
Agency procurement teams should use the market research process to ask specific questions that will have a direct impact on how the solicitation is crafted and request succinct, page or character-limited responses. The resulting submissions will be more useful to the procurement team and less taxing on small businesses. A truly useful RFI will ask prospective bidders to describe their proposed approach to the contract objectives as well as the make-up of the team they are proposing. Examples and tips can be derived from the Sources Sought Tool in the TechFar Hub and Five Procurement Strategies for Diverse Digital Services on Digital.gov.
Default to open
Small businesses cannot bid on opportunities they don’t know about. Market research becomes a “check the box” when contract officers only send solicitations to a slate of known businesses instead of posting them publicly. Agency procurement teams employ this technique to limit the number of proposals they have to review, but “closed” competitions will not attract new businesses, ensure competition, or spur innovation. Agency procurement leadership might consider setting distinct limits on how many solicitations may go unposted and “default to open” as a guiding principle.
Develop informed and realistic cost estimates
Government cost estimates and their underlying labor rates must keep pace with the cost of labor in a competitive market. Small businesses must be able to pay competitive salaries, attract skilled talent and reinvest in their businesses. Budgets are always finite, but agency procurement teams can support small businesses by developing informed and realistic cost estimates.
For example, procurement teams will look at historical rates when they develop a cost estimate, but they must make the new estimate a realistic reflection of today’s market, especially in a rapidly growing industry like technology. In addition, 2022’s high rate of inflation as well as the high cost of labor should be considered.
Quality begets quality
Quality contractors will plan for enough margin in their bids to cover future salary increases and retain skilled employees. That practice, along with consistent contract staff, will result in better contract delivery for agencies. In addition, agencies will benefit when companies model good employer practices like investing in employee professional development.
Low government cost estimates that lead to below-market bidding will cause quality small businesses to gravitate away from government contracting. Fewer bidders and reduced competition will result in poor contract performance and limited innovation.
Low government cost estimates that lead to below-market bidding will cause quality small businesses to gravitate away from government contracting.
Small businesses are what we need right now
Small businesses are infused with entrepreneurial spirit and drive. They are not afraid to try new approaches and can easily pivot when something is not working. Agencies that know how to attract and support small businesses will meet the ambitious goals set by the Biden Administration and realize the long-term benefits of small business innovation.
Mary Lazzeri is a former technology advisor and bureaucracy hacker at the U.S. Department of Health and Human Services, Office of the Federal CIO and United States Digital Service. She now serves as Head of Acquisition for Bloom Works, a public benefit corporation and woman-owned digital services consultancy. She received a Bachelor of Communications from Boston University and a Master of Public Administration from Baruch College in New York. A native of Bethesda, Maryland, she now lives in Chicago with her husband and two daughters.
