Government Acquisitions: 4 Ways to Increase Competition

In the commercial market, competition typically leads to lower costs and higher quality goods and services and creates incentives for innovation and improvement. The same holds true for government acquisition and procurement: Competition leads to better outcomes. 

It is in the best interest of the government to encourage competition, not only to attain the best prices and products but also to spur innovation to develop more advanced products. Competition also reduces fraud. When there are more bidders in a more open bidding process, there is less opportunity for favoritism, corruption, or other unethical practices in procurement.

Beyond improving procurement outcomes, the federal government also aims to increase competition to aid small businesses, including minority-owned, woman-owned, veteran-owned, and disadvantaged businesses. 

Here’s why: Of the roughly $665 billion in annual federal contracts, more than 75% are awarded to big businesses. And 59% of award winners are located in just a dozen states, largely concentrated on the east coast. Another troubling trend is the decline—by approximately 80% in the last 15 years—in the number of small businesses that are new or recent entrants to the federal marketplace.

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Meaningful competition is a requirement of the Federal Acquisition Regulation (FAR), the rulebook developed to optimize acquisitions at federal agencies. But while the federal government is working to level the playing field and promote a more diverse and inclusive business environment, broadening the number of players is not so simple. Despite the best efforts of program and contracting offices, several factors are curbing competition:

• Compliance complexity. Government contracts are detailed, complicated, and require strict adherence. Without expert guidance, it is difficult to put in a successful bid. This puts small businesses at a disadvantage, as they may not have the time and resources to devote to interpreting contracts and complying with the terms.
• Comfort level with proven suppliers. Project teams have grown comfortable with existing suppliers and are afraid that adding new suppliers will take too long or introduce unacceptable risk. 
• Risk avoidance due to lack of expertise. With the retirement of seasoned procurement professionals, many organizations lack the expertise or resources to write evaluation criteria and evaluate new suppliers and their products.
• Restrictive requirements. Sometimes project requirements are written in a way that makes it hard for other suppliers to participate or compete. They may be too strict or not clear enough, or they may be geared toward the capabilities of an existing supplier.
• Lack of awareness of federal contract opportunities. Many small businesses do not know that they qualify for federal contracts or even where to start looking for these types of opportunities.

If you are a program manager or contracting officer, there are steps you can take to increase competition. Consider these strategies to boost competition and promote and sustain a healthy, competitive industrial base that provides the best products and prices.

Conduct in-depth market research to identify potential new suppliers and solutions that can add value and inform your requirements. This will not only serve to increase competition among providers, but will also improve the requirements and ultimately, the procurement.

While you don’t want to limit yourself to the same pool of vendors for every procurement, the GSA schedule and SAM.gov are good sources worth exploring for federally approved suppliers. You may discover more sources you haven't talked to yet that you can contact instead of waiting for vendors to come to you.

Market research may indicate alternative sources of supply, at least for a portion of the acquisition. Adding new supplier information to the acquisition system increases the pool of suppliers in future procurements.

When market research indicates it’s feasible, use the Small Business Set-Aside authority to help meet your agency’s small business contracting goal.

Issue requests for information (RFIs), promote industry outreach, and frequently communicate about upcoming needs. For example, consider industry days, frequent forecasts to industry, reverse industry days, and sending push and pull notifications to vendors regarding new opportunities. 

As we know, the acquisition process is rigorous, and complying with the FAR is no easy task. Consider simplified procedures for certain commercial products to make the bidding process less daunting for new players, and use other transactions (OTs) to open the bidding to non-traditional contractors. 

Put out draft RFPs and allow vendors to provide feedback. Vendors may inform agencies of new technologies that can better meet their needs. Vendor feedback may also help broaden an unintentionally restrictive RFP and allow for more competition.

The government needs to invest in technology that lets vendors communicate with them in an intuitive user interface for an improved total experience. It also needs an easy way to inform vendors of new requirements that fit an area in which they provide goods and services. 

Requests for proposal (RFPs) should plainly state the requirements and criteria for determining an award decision, enabling vendors to understand precisely what is required to be successful. But poor planning results in poorly defined requirements. Improving collaboration between the program and contracting offices will result in a better requirements document that will make it easier for more vendors to compete.

Program and contracting offices can work together to increase competition in government acquisitions by collaborating to develop clear and specific requirements for the acquisition, advertising the acquisition widely to attract more bidders, and considering setting aside a portion of the federal contract for small businesses or other underrepresented groups. Finally, they can streamline the acquisition process to make it easier for potential suppliers to participate and offer their best solutions.

How can process automation software improve all five phases of the procurement process? Watch the on-demand webinar to learn from Appian and Deloitte how to successfully roll out acquisition software.