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The Inside Guide to the Federal IT Market

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Unlock the Door to the Federal IT Marketplace
Here's your key to selling IT goods and services to the government. David Perera and Steve Charles present the ins and outs of successfully competing for—and winning—a share of the tens of billions of dollars the federal government spends each year on IT. Getting a piece of that business is not easy—it takes accurate knowledge of systems and procedures, as well as sharp insight into the structure and details of government procurement.
The Inside Guide to the Federal IT Market penetrates the haze of jargon and apparent complexity to reveal the inner workings of the IT contracting process. Whether you're just setting out or seek a bigger share, this comprehensive book provides valuable information you can put to immediate use. The Inside Guide to the Federal IT Market covers:
• Technology standards
• Basic contracting concepts
• Advanced contracting concepts, such as getting on and staying on the GSA schedules
• The effect of the federal budget process on the sales cycle
• What you need to know about ethics to earn business fairly, without avoidable delays and hassle
This book's focus on the IT market makes it a unique reference on federal procurement for private companies. Government procurement personnel will also find the depth and breadth of coverage useful in reviewing and evaluating IT offerings.

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Chapter 1 The Ecosystem

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You first need to know that there’s no such thing as selling to “the government,” despite our own promiscuous use of the phrase. Most market verticals that exist within the commercial world similarly exist within the public sector, including healthcare, finance, logistics, and real estate. The main organizing principle of the federal government isn’t function, however. Ask most federal officials to describe their work, and they’ll begin with their department or agency. The only civil servants who when asked just say they work for “the government” invariably work in the intelligence community.

Just as federal workers identify themselves by the cross-coordinates of function and agency, so must you. The entire federal government is too big to treat as a single entity, and its technical environments are too diverse to presume that every agency is a potential customer. Even the giants of federal contracting break themselves down into smaller divisions (although their constant reorganizing suggests there exists no perfect solution to the problem of encompassing both agency and function within a single logical unit).

 

Chapter 2 Strictly Business

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Just as the government is divisible into constituent parts, so is the process by which it buys goods and services. In this chapter, we segment the steps as defined in governmentwide regulation and policy and discuss ways business development can make use of these processes. We end with a section on marketing.

Companies that do well in the federal information technology market understand what business they are in: that of satisfying federal requirements. Every federal procurement results from a set of requirements that guide what needs to be bought from the private sector, whether products or services. That’s how the government thinks.

Thriving in this market is a matter of understanding and becoming involved in the acquisition process. See Figure 2-1 for a process template.

Of necessity, our template implies a slightly simplistic, idealized world not always representative of the real one. It suggests that agency vision/need is the clear motivator of the rest of the process—which it is, except that an agency’s vision or need may have been articulated at a very high level three years ago, and now funding is the true driver and sometimes even the main motivator. (“If we don’t spend all of our budget this year, they’ll give us less the next.”) Market research is often cursory. Requirements definition is difficult to do, and plenty of procurements occur without a clear set.

 

Chapter 3 The Basics

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We switch here from the overarching high-level perspective of previous chapters to a discussion of the details of online tools, specialized terms, and information technology standards necessary to understand before doing business with the government. Although we don’t shirk from delving into the nitty-gritty—eventually it has to happen—we also introduce fundamental concepts of federal contracting, such as NAICS and commercial items. Our intent is to guide you through the first concrete steps you’ll have to take to start selling to the government.

As we write this, the government intends to further consolidate some of the standalone systems we discuss in this chapter into a single system known as System for Award Management, or SAM.

Contractors must already go to SAM to register their business with the government and upload representations and certifications, and contracting officers use it to make sure companies or individuals haven’t been suspended or debarred from the federal market. (Each of those three functions until recently was the function of a standalone system.)

 

Chapter 4 Hoops and Hurdles

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Information technology vendors face a number of obligatory, or practically obligatory, technology standards when selling to the government. They also must contend with a particular environment created by policy directives. We’ve broken out the most important unique prerequisites that companies likely will come across, while also including a section for open source vendors. How many of these hurdles you’ll jump over—or through—depends on the nature of your federal business. Possibly you won’t need to go through FedRAMP, or you’re not required to deal with Section 508. No matter—concentrate on the imperatives most relevant to you, although passing knowledge of all can come in handy.

Security for government networks, data, end user devices—all of which fit under the umbrella term of cybersecurity, as used in government circles—has skyrocketed to prominence. Government systems face constant challenges ranging from script kiddies to state-sponsored advanced persistent threats. What follows is an overview of how the government manages its cybersecurity problem and the security standards it uses.

 

Chapter 5 The Best Relationships Are Based on Contracts

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How the government chooses what it buys is often not a function of what’s best, but of how easily it can be bought. “There were a lot of times we won business simply because we were on the right contract vehicle and our software was good enough,” one salesman told us.

The contractual process in the federal government isn’t a mere means to an end. The process influences outcomes, and companies can be battered or buoyed by it depending on their understanding of the mechanics involved.

We’ve dedicated this entire chapter to the fundamentals of government contracting. Make no mistake—although it’s on the technical side, without this knowledge, winning information technology business from the government will be tough.

A constant tension exists in government contracting between getting things done quickly and ensuring the widest competition possible. The government strives simultaneously for both, and the result is a convoluted arrangement that seeks to reconcile the irreconcilable.

 

Chapter 6 Sign with Caution

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Opportunities for disagreements with the government during the proposal, contract formation, and administration stages are many. This happens in great part due to different sets of expectations. Decades-long efforts to get the government to contract more like the private sector have been frustrated by inertia, suspicion, and a layering on of management controls that would make it difficult for the government to do so even if there were a strong will.

This chapter takes a look at some of the common reasons for misunderstandings and their remedies.

The government respects the private sector’s right to control proprietary information and keep ahold of its intellectual property, with the caveat that the onus is on companies to mark what’s proprietary and what’s not, and that accepting federal development dollars can radically alter company rights.

Confidentiality in proposals is guaranteed by two main laws: The Trade Secrets Act, which makes it a firing offense and a misdemeanor for a government employee to divulge trade secrets, and the Procurement Integrity Act, which prevents government employees from further distributing proposal information to unauthorized personnel.1

 

Chapter 7 Keep Your Nose Clean

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The rules on ethics are extensive and vary somewhat depending on business size. Most of this chapter is dedicated to laying them out. But before we get into the specifics of what constitutes unethical behavior, let’s tackle the cheery subject of consequences.

Unethical or irresponsible behavior can get you personally, or your company, or both, banned from doing federal business—either temporarily (suspension) or for a fixed period up to permanent exclusion (debarment).

Each agency has a suspension and debarment official within the office of general counsel or the office of the chief acquisition officer. Offenses that grab debarment officials’ attention are criminal convictions or civil judgments for bad behavior connected to obtaining a contract or subcontract or during performance, serious violations of the terms of a government contract or subcontract (including a history of failure to perform, or of unsatisfactory performance), or indeed anything at all, provided that it’s of a “serious and compelling” nature.1

 

Chapter 8 When You Lose

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To have loved and lost is better than never to have loved at all, but to have spent company money chasing an opportunity and then to lose—that stings.

Since even the best of companies lose, oftentimes there’s little you can do except cope. The first step is to request a debrief, if you’re entitled to one. And if you’re entitled to one, ask for it; on the rare occasions the government volunteers feedback, you should want to hear it. But if there’s reason to believe that the government was prejudiced against you, there’s recourse through the protest process.

Companies competing in a negotiated procurement are entitled to a debrief. You have three days to request one, in writing, after the day on which you get notification either that you’ve been eliminated from the competitive range or that the award went to another company.1

Companies eliminated from the competitive range in a negotiated procurement have a choice: request a debrief immediately, or ask for it to be postponed until after the award. If you wait, chances are you won’t be able to file a protest to the Government Accountability Office (GAO) because you’ll have missed the GAO’s deadline for doing so (more about protest filing deadlines later in this chapter).

 

Chapter 9 Import with Care

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America’s mixed sentiments about economic globalization are fully reflected in the complex set of rules that control the federal government’s procurement of foreign products or services.

The law with greatest relevance to information technology companies is the Trade Agreements Act and thankfully not the Buy American Act.1 Buy American is a Great Depression legacy—it became law in 1933—and it would eviscerate the federal IT market if not for the fact that it’s pretty much been neutralized.

Under the Buy American Act (BAA), the government favors the purchase of domestic end products, defined as goods that result from a manufacturing process occurring in the United States and outlying areas and of which more than 50 percent of the component value also originates in the United States and outlying areas.2 The component test doesn’t apply to commercial-off-the-shelf items.3 Buy American doesn’t apply to procurements below the micro-purchase threshold, nor to products bought for use outside the United States.4

 

Chapter 10 Getting On a GSA Schedule

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Doubtless you’ve already heard the oft-proclaimed notion that the path to government contracting riches is paved with a General Services Administration (GSA) multiple-award schedule (MAS) contract, also known as a Federal Supply Schedule contract.

But while it’s true schedules hold advantages for sellers and buyers alike, they also offer a far rockier road toward government business than you might expect—and there’s a chance of inadvertently being sucked into a sinkhole of spiraling price reductions along the way. Nor is there any guarantee that the road will end with you rolling in money: of the 5,400-odd companies in possession of a schedule contract for information technology products and services during federal fiscal year 2010, about 39 percent did no schedule business whatsoever. Another 17 percent didn’t do business worth more than $100,000.

Getting a schedule is no rote decision, in other words. You need to consider what you are as a company, your position in both the private- and public-sector marketplaces, and your plans for the next five years in both sectors before making decisions about your go-to-market strategy and the role of a GSA schedule contract within that strategy.

 

Chapter 11 Let’s Get Small

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The idea of small businesses as an engine of economic growth and innovation is a bedrock one in federal procurement. The belief that the federal government should specifically encourage small business participation in federal contracting is also a long-held one, dating back to the Great Depression. In the decades since, it’s become enshrined in policy that small businesses should have “maximum practicable opportunities” to compete for prime contracts and subcontract awards.1 What the federal government, large federal contractors, and you must do to translate that into action is what this chapter is about.

Government policy is to set aside for small businesses standalone procurements of commercial items worth between the micro-purchase threshold and the simplified acquisition threshold.2 In addition, the government operates under a mandate to award 23 percent of all federal prime contract dollars to small businesses, with subpercentages dedicated to particular socioeconomic groups, such as service-disabled veteran owners of small businesses. See Figure 11-1 for a breakdown.

 

Chapter 12 The Root of All Money

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Washington, D.C., is well-stocked with budget wonks who make federal budgeting the stuff of lifelong study. You need not join their ranks in order to enjoy success in the federal information technology market. But an awareness of the seasonal rhythms of the federal fiscal year and the concurrent budgets under consideration within the cycle is vital.

On a typical first Monday of every February, the president delivers to Congress an annual budget request to fund the federal government for the next fiscal year, which starts on October 1. (The budget request is expected to be late when a change of administration occurs.)

Behind the budget request lies at least nine months’ worth of work: federal agencies put together their particular budget proposals; the Office of Management and Budget (OMB) reviewed them and sent them back to agencies, a process called passback; and the request assumed its final shape.

The transfer of responsibility for the budget to Congress is the separation of powers between the branches of government in action. Although Congress legally requires the executive branch—what we’ve been calling in this book “the government”—to prepare an annual budget for Congress to consider, only the legislative branch is constitutionally empowered to pass laws that appropriate public money for federal operations. In short, “the president proposes, Congress disposes.”

 

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