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Top IT Industry NAICS Codes and Spending Trends


For several years the information technology (IT) industry has modernized how the federal government does business. When examining the White House FY 2022 Federal IT Budget, requests were higher than ever. Not only did this budget include improving the federal IT workforce, but it also included a $500 million increase in the Technology Modernization Fund (TMF). It’s very evident that today, more than ever before, IT modernization is a top priority for federal procurement. Because of this, it’s essential to look deeper into the top IT-North American Industry Classification (NAICS) Codes through the GSA Schedule.

If you are a current or prospective GSA Schedule Contractor, you will need to know how to find excellent opportunities for your company in order to be successful. Understanding what your NAICS codes are is the first step to finding your space in the federal contracting marketplace.

What are NAICS codes? 

The federal government uses NAICS codes to classify businesses according to their primary activities. There are over 1,000 different NAICS codes organized into 20 major sectors. Small businesses can use NAICS codes to research government contracting opportunities. Furthermore, NAICS codes can offer valuable insight into government spending.

Why are NAICS codes important?

Businesses use NAICS codes to identify themselves and their products or services for statistical purposes. Governments use NAICS codes to track and monitor the economy for tax purposes and procurement.

Business owners and operators also use NAICS codes to:

  • Determine which businesses are their competitors
  • Research markets
  • Identify potential customers
  • Identify businesses that may be interested in selling their products or services. 

To learn more about each NAICS Code and how they fit into the government procurement system, you can visit

Top 5 IT NAICS Code

1.NAICS Code 334111 – Electronic Computer Manufacturing  

This industry comprises establishments whose primary function is to manufacture electronic computers, including mainframes, desktop and laptop computers, and computer servers. This industry also includes establishments manufacturing portable computers, such as tablets and handhelds.

2. NAICS Code 54151 – Computer Systems Design and Related Services

This industry comprises establishments primarily engaged in planning and designing computer systems that integrate computer hardware, software, and communication technologies. The hardware and software components may be provided by this establishment or company as part of integration activity or may be provided by third parties. These establishments often install the system they designed. 

3. NAICS Code 51121 – Software Publishers

This industry comprises establishments primarily engaged in developing, producing, publishing, and distributing computer software for sale or license to end users. This industry includes in-house developed software, as well as custom software development. 

4. NAICS Code 541511 – Custom Computer Programming Services

This industry comprises establishments primarily engaged in writing, modifying, testing, and supporting software to meet the needs of a particular customer. Programming services may be performed using proprietary or third-party software. 

5. NAICS Code 541519 – Other Computer-Related Services

This industry comprises establishments primarily engaged in computer-related services, such as computer systems design, managed IT services, cloud computing, and other computer-related services. 

Below are the top 5 IT NAICS codes, the total amount spent through the GSA Multiple Award Schedules (MAS) in the 2021 fiscal year, and the top government agencies doing business with these NAICS codes.

The IT industry is vital to the success of businesses and government agencies worldwide. By understanding the top 5 IT industry NAICS codes and their spending trends, companies will be better equipped to make informed decisions and capitalize on the right opportunities.

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Cybersecurity for Government Contractors

Cybersecurity has become one of the most important concerns for companies of all sizes, and for good reason. A data breach can not only be financially devastating but can also damage your organization’s reputation. However, there is an additional risk for government contractors, as sensitive government data is often involved. Therefore, contractors must take extra precautions to ensure that their cybersecurity protocols are up to date.

The General Services Administration (GSA) manages numerous  IT security programs, which help government agencies implement IT policies. These policies promote public safety and enhance the resiliency of the government’s systems and networks. Also, several federal agencies, including the Department of Defense (DoD) and the National Aeronautics and Space Administration (NASA), have issued acquisition regulations that impose new cybersecurity requirements on contractors. Below are the top five requirements with which your organization should be familiar: 

1. FAR 52.204-21 – Basic Safeguarding of Covered Contractor Information Systems 

2. DFARS 252.204-7012 – Safeguarding Covered Defense Information and Cyber Incident Reporting 

3. NIST 800-171 – Protection of Controlled Unclassified Information 

4. CMMC Model – Cybersecurity Maturity Model Certification 

5. Executive Order (EO) 13800 – Strengthening the Cybersecurity of Federal Networks and Critical Infrastructure 

Each of these requirements is discussed in more detail below: 

1. FAR 52.204-21 – Basic Safeguarding of Covered Contractor Information Systems 

The FAR 52.204-21 regulation requires contractors to put basic security measures in place to protect the confidentiality, integrity, and availability of Controlled Unclassified Information (CUI)/Covered Defense Information (CDI) stored on their information systems. Some security measures include multi-factor authentication, least privilege principles, and physical security controls. 

2. DFARS 252.204-7012 – Safeguarding Covered Defense Information and Cyber Incident Reporting 

The DFAR Clause 252.204.7012 regulation requires contractors to take additional steps to safeguard CUI/CDI, including implementing a plan for detecting, reporting, and responding to cybersecurity incidents. This regulation also requires contractors to have a written information security program that includes specific security measures and procedures. 

3. NIST 800-171 – Protection of Controlled Unclassified Information 

The NIST 800-171 regulation is a set of security standards that contractors must meet to protect CUI/CDI. These standards cover access control, incident response, and system documentation. 

4. CMMC Model – Cybersecurity Maturity Model Certification 

The Cybersecurity Maturity Model Certification (CMMC) is a new cybersecurity framework that will soon be required for all DoD contractors. This framework consists of five levels of maturity, each with its own set of requirements. Contractors must earn certification at the appropriate level to bid on specific contracts. 

5. Executive Order (EO) 13800 – Strengthening the Cybersecurity of Federal Networks and Critical Infrastructure 

EO 13800 requires federal agencies to improve the cybersecurity of their networks and critical infrastructure. This includes risk assessments, incident response plans, and cyber threat information sharing. While this Executive Order does not directly apply to contractors, it is vital to be aware as it will likely indirectly impact how contractors do business with the government. 

Tips for Meeting Contractor Cybersecurity Requirements

  • Get certified and accredited. Certification is essential in demonstrating to the government that your organization is serious about cybersecurity. The most common certification for contractors is the ISO 27001 standard. 
  • Limit access to those with a need-to-know. One of the best ways to protect CUI/CDI is to limit its access. Make sure that only those who absolutely need access to CUI/CDI have it and only have access to the specific information they need. 
  • Implement strong security controls. Strong security controls are essential for protecting CUI/CDI. This includes multi-factor authentication, least privilege principles, and physical security controls. 
  • Have a plan for incident response. In the event of a cybersecurity incident, it is crucial to have a plan in place for how to respond. This plan should include containment, eradication, recovery, and communication steps. 
  • Stay up to date on new requirements. The landscape of contractor cybersecurity is constantly changing, so it is essential to stay current on new requirements. One way to do this is to sign up for updates from the Center for Internet Security (CIS).

As a government contractor, cybersecurity should be one of your top priorities. If sensitive government data falls into the wrong hands, the consequences could be disastrous – not just for your business, but also for national security. By ensuring your systems are certified and accredited, that access is strictly limited to those with a need-to-know, and that vulnerabilities are promptly remediated, you can help protect yourself against cyberattacks and maintain compliance with government regulations.

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8 Things Contractors Need to Know About the Government Contractor Defense

There are several unique defenses available to government contractors facing product liability lawsuits. One of the most common defenses is the “government contractor defense,” which protects private contractors from specific liability claims when they do business with the U.S. government. The two primary forms of defense are a common law defense and a statutory defense, also known as the SAFETY Act. 

1. Components of defense.   

In the landmark case Boyle v. United Technologies Corp., 487 U.S. 500, 512 (1988), the Court recognized the following three components of the government contractor defense: (1) the United States approved reasonably precise specifications for the product being supplied; (2) the product conformed to those specifications; and (3) the supplier warned the United States about any dangers in use of the product known to the supplier but not known to the United States. 

Typically, the government contractor defense applies to design-defect claims, failure to warn claims, and breach of warranty claims. However, it generally does not apply to manufacturing defect claims. How state law defines a suit determines whether the defense can be used. 

2. Other claims in which the government contractor defense may be applied. 

Although many courts uphold that the government contractor defense can be applied to contracts for both military and nonmilitary equipment, some courts rule that defense only applies to cases involving military equipment. Additionally, courts have applied defense to claims about supply contracts, subcontracts, and service contracts. 

3. There are similar defenses for state and local procurement. 

While Boyle does not recognize cases involving an underlying state or local government contract, some jurisdictions have applied similar defenses to product liability claims. 

4. The government contractor defense can provide an independent basis for removal. 

One valuable benefit of claiming the defense is that it can provide an independent basis for removing a case to the federal government.   

5. Develop the defense before litigation.

Before any litigation arises, contractors should lay the groundwork for the defense. Start by reviewing the contracts to ensure that the functions and aspects of the designs are accurately noted within the contract documents. Furthermore, when establishing a defense, it is vital to understand that the extent to which the government was involved in approving specifications will play a huge role. 

When possible, obtain written confirmation from the government that the final product (or service) conforms with the government’s specifications. Lastly, contractors should always document their efforts to warn the government of any identified hazards or dangers associated with the product.

6. Establishing the defense may lead to requests for discovery. 

Asserting the government contract defense requires an in-depth analysis of contract specifications and the government’s role in the approval process of such specifications. This evaluation may elicit unique concerns for discovery. During the Rule 26(f) discovery conference, all issues should be discussed in the appropriate protective order.

7. Establishing the defense could mean going to trial. 

Because facts intensely drive the defense, it typically does not fit the qualifications for a dispositive motion. It is treated as a liability defense rather than an “immunity.”

8. There are other defenses available to government contractors.

Contractors may access other defenses, including Westfall immunity, the combatant activities exception, the political question doctrine, and various potential statutory defenses. 


  1. 63A Am. Jur. 2d Products Liability §§ 1347-1389 (2018).
  2. 6 CFR Part 25. Regulations Implementing the Support Anti-terrorism by Fostering Effective Technologies Act of 2002. (the SAFETY Act).
  3. Boyle v. United Technologies Corp., 487 U.S. 500 (1988). 9 September, 2018.
  4. Brian Sheppard, Annotation, The Government Contractor Defense to State Products-Liability Claims, 53 A.L.R.5th 535 (2018).
  5. Department of Homeland Security. Safety Act for Liability Protection. DHS, Washington, DC: 2016.
  6. National Contract Management Association. 2016 Annual Review of Government Contracting. NCMA, Ashburn, VA: 2017.

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CategoriesGeneralIndustry Insights

The Future of Work: Closing the Skills Gap

In this Q&A, Tony Holmes, Practice Lead for Solutions Architects Public Sector at Pluralsight, discusses how Federal government agencies can better understand their skills gaps to enable better workforce development.

Sponsored by:

How are government agencies taking new and innovative approaches to retraining and upskilling their existing workforce?

Agencies are dealing with a skills gap that has been a problem for some time, and COVID has made this problem even more complex. Agencies are having to rethink how they execute on their strategies and close the skill gaps without having as much in-person training.

More and more, agencies are seeking tech skills platforms like Pluralsight for virtual learning. One of the benefits to this model is that Pluralsight has the ability to benchmark skills and create individualized learning paths.

How can agencies create programs around skills development, and why should they invest in skills development programs?

One of the best ways is to create a culture of learning. This means giving employees permission to learn. The traditional approach has been to keep training separate from the actual job. Forward-thinking organizations realize that technologists’ training needs to be a part of their day-to-day jobs. It is one thing when the boss says, “Go and take a little time to do some learning,” but it is absolutely another thing when the CIO says, “I expect our technologists to learn as part of their jobs.” Making time for learning has always been a struggle within government, but agencies need to move away from
the idea that people cannot afford to take time away from their jobs to learn new skills.

How can an agency most effectively assess the technical skill levels of their staff?

In the past agency leaders would typically call an auditor or consultancy. They would spend months evaluating peoples’ skills and write a report based on the agency’s objectives. The whole process might take six months or more, by which time the mission priorities might have changed.

Pluralsight uses tools like artificial intelligence and machine learning to perform a skills gap analysis in real time. Executives go into the analytics within the platform to get a real-time view of where they are at that point in terms of skills. The data is always up to date. We also provide suggestions of content that can help agencies easily provide additional training. One of the biggest obstacles we have as learners is that we don’t know what we don’t know; we don’t know what we need to learn.

What is involved in implementing a workforce development strategy?

Our customers gain a huge amount of success from using data and analytics tools. The data drives the transformation of programs, and you need the right tools to address the problems you have encountered with workforce development. They also need that culture of learning within the organization to help sharpen employees’ skills.

One successful example is Utah’s Department of Technology Services (DTS). DTS wanted to leverage tools to help its employees build new skills and identify areas where additional training could help the agency adapt to the sea change in how the state does business.

With more than 7,000 online courses across more than 850 technologies, Pluralsight’s web-based Skills
platform offered a range of training and tools for DTS employees. DTS managers also worked with Pluralsight to create “channels” of aggregated training content.

At the same time, DTS used Pluralsight’s Flow platform to help managers take a closer look at ongoing projects for potential skills gaps. By analyzing code from projects in progress, managers have targeted additional skill-building for their teams based on the efficiency of the work being done.

Pluralsight is the leading technology workforce development company that helps companies and teams build better products by developing critical skills, improving processes and gaining insights through data, and providing strategic skills consulting. Trusted by forward-thinking companies of every size in every industry, Pluralsight helps individuals and businesses transform with technology. Pluralsight Skills helps enterprises build technology skills at scale with expert-authored courses on today’s most important technologies, including cloud, artificial intelligence and machine learning, data science, and security, among others. For more information about Pluralsight visit

CategoriesGovernment Contracting 101

3 Ways to Improve Your Company’s Online Presence

A GSA schedule can grant access to a vast network of federal, state, and local agencies looking to buy products and services. But with great opportunity comes fierce competition. Even within this unique pool of contractors, you still need to compete for business and be proactive in promoting your solutions to government agencies. However, if you have a basic understanding of government marketing, your chances of successfully selling through a GSA schedule will be much greater. Here are three ways you can improve your company’s presence in the federal marketplace.

1. Understand your Value 

First, implement a marketing strategy geared toward your target audience. After all, a GSA Schedule doesn’t guarantee consistent orders will automatically come knocking on your door. Without a doubt, you have to actively market your business to government customers.

Start by examining the values of the specific government agencies you’re seeking. Then, address the following questions to understand what value your company adds.

  • Which agencies within the government require the type of products and services you offer?
  • How can your products or services help meet their needs and solve their problems?
  • Does your company support the agency’s mission?
  • Is there a niche you can target to sell your products or services?

Also, research the government agencies and become knowledgeable on ways to cater to their needs. This will help position your company as a valuable government contractor. In addition, consider the following:

  • Why would a government agency choose you over your competitors?
  • Can your company meet the demands of the government agency, or will you need to acquire outside resources to complete the work?

2. Strengthen your Online Presence

In today’s ever-evolving technological world, optimizing your online presence is critical. Prospective customers should be able to go directly to your site and quickly recognize the government-focused products or services you offer. This section of your company website should include:

  • Past performance
  • Core competencies
  • Differentiators
  • Downloadable case studies or whitepapers
  • Contact information
  • Downloadable government capabilities statements
  • Corporate data
  • Contact information
  • Links to your GSA eLibrary and GSA Advantage! Pages
  • Supported agency logos

3. Develop a Capabilities Statement

Similar to applying for a new job, you typically have one opportunity to entice someone before they decide whether or not to invite you to take the next step. When you present a concise one-page resume, you effectively highlight your experience and the skills that set you apart from others. 

Drafting a capabilities statement for your government customers is no different. A capabilities statement is a brief single-page document that outlines the fundamental competencies of your business and is often the first piece of information a potential buyer will read about your company. Its purpose is to introduce your offerings to government buyers and illustrate how your solutions fit their needs. Therefore, making a great first impression and using this document to differentiate yourself from your competition is essential. Like a cover letter, your capabilities statement is a living document tailored to address each individual targeted agency. A knowledgeable contractor knows to directly address each agency’s mission and goals within their capabilities statement. 

Furthermore, a well-versed capabilities statement will cover the following five topics: 

  • Contact/Contract information 
  • Core competencies
  • Differentiators 
  • Past performance
  • Corporate data

Lastly, make sure to have your capabilities statement readily available for industry days or networking events, to send to potential buyers, and post on your website. Also, add your capabilities statement to the bottom of your price list in GSA eLibrary and GSA Advantage!

When looking to improve your company’s presence in the government marketplace, it’s essential to understand your company’s scope and abilities, heighten your online presence, and develop a government-focused capabilities statement. Use this knowledge and these tools to achieve greater government sales from applicable agencies.

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GWACs: Why are they Important?

In an effort to acquire IT products and services more efficiently, the Federal Government has created Government-Wide Acquisition Contracts (GWAC). A GWAC is a contract between a commercial IT service or product vendor and the U.S. government that centralizes the procurement of IT solutions across multiple federal agencies. By consolidating the acquisition of IT services, GWACs enable agencies to take advantage of the government’s immense buying power. In turn, the government can pull from a pre-vetted qualified pool of contractors. There are currently ten GWACs managed by three agencies – the General Services Administration (GSA), the National Aeronautics and Space Agency (NASA), and the National Institutes of Health (NIH).

Beginning with a self-scoring evaluation system, federal contractors assess the products and services they provide and determine if they are eligible for a specific government contract. This system also allows agencies to compare prices and other factors before making an award. Those who meet the initial criteria get evaluated further to determine if they are qualified to get on the desired GWAC. This streamlined process saves agencies time and money, allowing for one in-depth evaluation rather than multiples for the same vendor.

There are three major types of GWACs: small business, set-aside, and industry. Small business GWACs are reserved for small businesses, as defined by the Small Business Administration (SBA). Set-aside GWACs are similar to small business GWACs, but they are specifically set aside for certain types of businesses, such as women-owned or veteran-owned businesses. Finally, industry GWACs are reserved for specific industries, such as information technology or healthcare. 

Benefits of Using a GWAC

There are many benefits to using a GWAC for both government agencies and contractors. Some of the most notable advantages include: 

  • Access to a larger pool of contractors: Since a GWAC is a master contract pre-vetted by the government, it gives agencies access to a larger pool of qualified contractors. This can be extremely helpful when an agency is looking for a specific type of IT service or product. 
  • Faster procurement process: The pre-vetted nature of a GWAC also means that the procurement process is much faster. Agencies can save significant time using a GWAC instead of going through the traditional RFP process. 
  • Increased competition: By using a GWAC, agencies can increase competition among contractors. This is because a GWAC allows multiple contractors to compete for the same contract. 
  • Greater flexibility: GWACs also offer agencies greater flexibility when procuring IT services and products. This is because a GWAC can be used to procure a wide variety of IT services and products. 

Why Do GWACs Matter?

When federal agencies need IT products and services, GWACs are the best-in-class contracts. Different than GSA schedules, GWACs don’t remain open for new vendors. Once the vetting process has closed, it stays closed for roughly a decade. This gives contractors on a GWAC a compelling advantage because they exist in a smaller pool of competition compared to the large number of contractors on 

However, GWACs do not guarantee a straight path to success. GWACs are an extremely competitive niche; winning a contract is even more challenging. After spending countless hours and resources toward qualifying to be on a GWAC, success is determined by a contractor’s post-award processes.

Types of GWACs 

The government spent roughly 2.68 billion dollars on contracting through GWACs in 2011. This number rose to 2.68 billion dollars in 2021, proving that amount of GWAC contracts has increased.

  • 8(a) STARS III – A small business set-aside contract that provides flexible access to customized IT solutions from a large, diverse pool of 8(a) industry partners.
  • Alliant 2 – Offers artificial intelligence (AI), distributed ledger technology (DLT), robotic process automation (RPA), and other types of emerging technologies. It provides best-value IT solutions to federal agencies while strengthening chances in federal contracting for small businesses through subcontracting.
  • VETS 2 – The only GWAC set aside exclusively for Service-Disabled, Veteran-Owned Small Businesses (SDVOSB). Designed to meet diverse agency IT services requirements, including new and emerging technologies.
  • CIO-SP3 and CIO-SP4 – CIO-SP3 helps small businesses sell their IT products and services to the Department of Health and Human Services. This GWAC ran for ten years and had a $20 billion contract holder. CIO-SP4 is in the onboarding phase and plans to roll out in 2023. 
  • Polaris – New to the GWAC family, Polaris will be a small business governmentwide acquisition contract (GWAC) for acquiring customized information technology (IT) services and IT services-based solutions. Centered predominantly around small businesses. 

Why GWACs Are Important for Your Success

GWACs are a vital part of the government contracting process. They allow federal agencies to quickly and easily navigate the procurement process and enable federal contractors a more seamless route to sell their products and services to the government efficiently. This streamlined acquisition is unique to GWACs and remains an attractive alternative to federal agencies. Therefore, understanding GWACs is critical to your success if you’re a government contractor. By learning about GWACs and how they work, you can ensure that your business is positioned to take advantage of these essential contracting opportunities. 

Over the years, GWACs have become essential to any contractor’s portfolio. Soon, sustainable growth for IT contractors will require success on a GWAC. For contractors that lack the resources, partners, or consultants to compete for contract vehicles, a highly competitive market brings much more complication once their customers consider transitioning to a GWAC.

This is why research is so valuable and crucial for federal contractors. Contractors can spend months to years chasing unwinnable opportunities when inaccurate data is followed. If contractors are equipped with accurate information and insights from the start, they can save time and resources pursuing opportunities and contract vehicles that can actually result in a win.

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8 Reasons Why Most Contractors Fail

Almost every businessperson aspires to one day secure a federal government contract. After all, the federal government is the world’s largest purchaser of goods and services. Securing a piece of this pie would be a major accomplishment. But unfortunately, most businesses that contract with the federal government fail. In fact, according to recent reports, approximately 50% of all small businesses that contract with the federal government will go out of business within the first two years. So what’s the reason for this high failure rate? And more importantly, what can you do to avoid it? This blog post will explore the top 8 reasons federal contractors fail and how you can prevent them.

NAICS Codes Mixups

One of the most common reasons a small business fails as federal contractor is because they mix up their North American Industry Classification System (NAICS) codes. The government uses NAICS codes to classify companies according to their size and work type.

If you want to contract with the government successfully, you must ensure you’re using the correct NAICS code for your business. The proper NAICS code is vital because the government uses it to determine whether or not your business is eligible for specific contracts. If you use the wrong code, you could be inadvertently excluded from bidding on particular contracts.

To avoid this mistake, take the time to research the correct NAICS code for your business and make sure you’re using it correctly. Generally, a primary NAICS code with secondary ones can be applied. You can use the SBA’s NAICS Code Lookup tool to find the correct code for your business. Furthermore, obtaining an accurate primary NAICS code is vital because it can significantly affect the amount of money you make over the next three years.

Misunderstanding of the RFP Process

Another common reason federal contractors fail is that they misunderstand the Request for Proposal (RFP) process. The RFP process is when the government solicits bids from contractors and selects a contractor to award a contract.

Contrary to popular belief, the RFP process is not a “race to the bottom.” In other words, the government is not necessarily looking for the lowest bid. Instead, they are looking for the best value. Therefore, the government will evaluate all proposals based on several factors, including price, technical approach, and experience. To increase your chances of success, you must take the time to understand the RFP process and what the government is looking for.

Many contractors see the dollars set to be awarded rather than paying attention to the scope of the work. For example, if the government is only willing to pay $500,000 for a project, but your company requires $750,000 to complete it, then you need to re-evaluate whether or not bidding on the contract is a wise decision. Pursuing high-value contracts can only benefit if a contractor can win and perform. 

Lack of Past Performance

One other common reason federal contractors fail is that they lack past performance. Past performance is “the extent to which a contractor has satisfactorily performed similar work on previous contracts.” In other words, it’s a way for the government to gauge whether or not a contractor is likely to complete a project.

The government puts a lot of emphasis on past performance when awarding contracts. As a result, many government agencies will not even consider contractors with no past performance. There are a few ways you can overcome this obstacle. First, you can team up with another contractor with relevant past performance. This will increase your chances of being awarded the contract. Second, you can offer to do the work on a time-and-materials basis. This means that you will only be paid for the work you complete. Once you start winning contracts and building up your past performance, you’ll be in a much better position to win larger contracts.

Not Focusing on the Customer’s Needs

When it comes to federal contracting, the customer is always the government. So to be successful, you need to focus on your customers’ needs and ensure that you’re meeting their requirements.

One common mistake contractors make is assuming they know what the government wants. This can lead to a lot of problems down the road. Therefore, it’s essential to take the time to understand the customer’s needs and ensure that you can meet them.

Not Following up After the Submission of a Proposal

After you submit a proposal, it’s important to follow up with the government. This is often done through what’s called a debrief. A debrief is when the government sits down with you and tells you why you didn’t win the contract.

It’s necessary to take the time to attend these debriefs. They can be beneficial in understanding what the government is looking for and how you can improve your proposal for future opportunities.

Additionally, it’s crucial to maintain contact with the government even if you don’t win the contract. These contacts can be handy down the road when trying to win future contracts.

Failing to Understand the Acquisition Process

The federal contracting process is very complex, and there are a lot of rules and regulations that you need to follow. If you don’t understand the acquisition process, it will be challenging to win a contract.

One way to overcome this is by working with a professional who understands the acquisition process. They can help you navigate the complexities of the process and increase your chances of winning a contract.

Another way to learn about the acquisition process is by reading the Federal Acquisition Regulation (FAR). The FAR is a document that outlines all the rules and regulations that you need to follow when contracting with the government.

Not Having a Solid Marketing Strategy

To be successful in federal contracting, you need to have a solid marketing strategy. This strategy should include various methods for marketing your company to the government.

Some standard methods for marketing your company include attending trade shows, exhibiting at conferences, and writing articles for trade publications. Additionally, you can also create a website that’s specifically designed for government contracting.

If you don’t have a solid marketing strategy, it will be tough to win contracts. You must ensure you’re doing everything possible to market your company and get your name out there.

Failing to Manage Expectations

When it comes to federal contracting, it’s essential to manage expectations. This means setting realistic goals for your company and understanding what the government is looking for.

If you set unrealistic goals, it’s going to be very difficult to meet them. This can lead to a lot of problems down the road. So it’s important to sit down and realistically assess your company’s capabilities before setting any goals. Additionally, it would be best to understand what the government is looking for. This way, you can ensure that you meet their requirements and give them what they want.

These are just a few of the most common reasons federal contractors fail. If you can avoid making these mistakes, you’ll be in a much better position to win contracts.

Do you have any other tips for federal contractors? Share your thoughts in the comments below. 

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CategoriesBusiness DevelopmentCaptureGeneralProposal

How to Apply Design Thinking Principles to Your RFP Response Process

Businesses must review their RFP processes every so often. Even those companies that are consistently successful at winning government contracts should conduct reviews, searching for ways to improve their response strategies. Once most companies have a standard RFP response process in place, they tend to merely modify a template to meet the specific requirements of a client. However, private enterprises, public companies, and the government each require a unique approach, and therefore businesses should not have the same process for every RFP response. 

There are a plethora of RFP response examples available online. Unfortunately, many of these tend to be generic. When you are dealing with a government department or agency, you cannot use a generic RFP response process or a generic template. 

Customize your RFP Response Process

Federal government agencies and their officials are not looking for ingenious creativity in how you present the proposal. They are more interested in what you present. Most of the government officials who will review your submission are career bureaucrats. Their priority is the set of bottom lines laid out in the RFP. How your proposal serves these fundamentals shall influence the evaluation. 

You can refer to as many RFP response examples as you wish. However, each template should be customized to accomplish two objectives:

  1. The RFP response examples should be modified to highlight your strengths in the context of each contract opportunity. 
  2. The RFP response process must be adapted to fit the specific government department and the type of contract on which you are bidding. 

It’s important to note here that most government RFPs and RFQs have strict requirements regarding how the proposal should be organized, what fonts are acceptable, etc., which is another reason not to use a generic template. Design thinking principles can be beneficial and consequential in your RFP response process. 

What are Design Thinking Principles?

Design Thinking entails a comprehensive set of practices to develop the best solution for a specific problem. There are five Design Thinking principles: empathize, define, ideate, prototype, and test. These five principles are at the foundation of almost all Design Thinking processes. It is necessary to highlight that these are not five steps or phases of Design Thinking; they aren’t linear or chronological processes. Instead, the five principles determine the approach to Design Thinking. 

Design Thinking Principles in RFP Response Process

In the context of government contracts, you do not have the luxury to ideate from scratch, develop a prototype, and test a product or service. As a potential contractor, you are expected to be an expert in the niche. Unless a particular contract is specifically for research and development, creating a prototype of emerging technology, or testing a new type of product, these processes do not have any space in the ambit of an RFP. Yet, implications of Design Thinking principles can be used in an RFP response process. 

1. Empathize: Understand the Problems

The Federal, state, and local governments are mandated to invite bids for all their procurements of goods and services above the simplified acquisition threshold of $250,000. Every RFP comes with predetermined deliverables. It is natural for a particular government department to encounter problems in those deliverables. 

The problem could be related to the quality of a product, reliability or efficiency of any service, lack of or lapse in compliance, high price, and other factors. As a potential contractor, you should empathize and understand the problems and cite them in the proposal. 

Laying out the problems within the proposal conveys to the evaluators that you are familiar with the ground reality. Acknowledging the general issues is the first step toward averting them. 

You can use your experience in the industry to flag these problems. You can carry out extensive research to know more about the specific issues experienced by the government and its present contractors. You can also refer to data and reports published by government and subject matter experts to understand existing problems. 

2. Define: Present a Holistic Strategy to Avert or Solve the Problems

As a bidder, you should present a holistic strategy that displays the ability to solve or avert the problem. You can raise one concern at a time and address it, explaining how it can be prevented entirely or swiftly resolved. An RFP response process should include this crucial step. 

The purpose of using Design Thinking principles in an RFP response process is to set your proposal apart from your competitors. No government department wants to continue enduring the same problems. Therefore, the evaluators will take heed of a potential contractor who offers solutions. 

3. Ideate: Suggest Tactics and Solutions, Improve Deliverables

A problem may persist due to the sheer incompetence of a company. An issue may also be a direct or indirect effect of complacency as it’s not uncommon to encounter a lackadaisical element. Furthermore, some problems that occur are simply beyond human control. 

As a bidder, you must address these problems, cite solutions you already have, and suggest tactics to improve the deliverables. For example, a service provider may present their approach to reducing downtime. Likewise, a supplier of goods may explain their process, which reduces the turnaround time.

Quality and compliance-related hiccups are also common. This is because government agencies are stringent about the quality of goods and are also strict about service providers’ data security and privacy policies. 

If there is anything that you do better than your competitors, add it to your proposal. Likewise, if you have an idea that can improve any aspect of the deliverables, you should also describe that in your proposal. 

4. Prototype: Demonstrate your Proven System of Delivery

Government contracts are awarded to companies that have a proven track record. Therefore, you must demonstrate your proven delivery system, whether for goods or services, in the proposal without leaving any room for misconception. 

Your delivery system may be a little different from that with which a particular government department is familiar. Therefore, it would be best if you adapted to deliver per the department’s requirements and expectations. At the same time, you must also emphasize the benefits of your prototype. 

5. Test: Share Verifiable Success Stories of your Brand

A government department is not interested in test results while evaluating a proposal. Unless you are pioneering an unprecedented technology, the government is not interested in experimentation. However, the government is interested in proven and verifiable success stories that illustrate the benefits of your product or service.

As a potential contractor, you may have some secrets that are the driving force behind your success. Unfortunately, a government agency may not know this aspect of your operations; if you can share those secrets and convincingly demonstrate the superiority of what you can deliver and how then the evaluators will notice. 

Government officers or bureaucrats are usually resistant to change. As a result, most departments and agencies are comfortable with their protocols. However, there are instances when the system can be shaken up and stirred. If your RFP can prop up something that even the evaluators do not anticipate, you will gain an unmatched advantage and probably win the contract. 

How to Write a Proposal

A proposal must always be contextual. It should precisely address the critical requirements stipulated in the RFP. A few standard RFP best practices include providing a brief description of your business and your capabilities, backing up your claims with “proof points”—past performance citations that “prove” you have done similar work in the past. In addition, you should always cite relevant registrations and certifications and summarize what differentiates you from your competitors. 

These RFP best practices are widely followed, so you must do something more for your proposal to be unique. Ideally, you must focus on barriers or roadblocks that you can help break down for the client.

• Take the Bull by the Horns

An experienced business owner or professional knows what ails their industry. Government RFP evaluators know the same of their agencies and departments. Therefore, addressing the prevailing problems and your solution for managing them is always prudent. If you have an alternative that can improve the deliverables for the government, then you must harness the power of such a proposition in your RFP response process. If you can disrupt the status quo and deliver something better than the government is accustomed to, you must always lead with that in your proposal. Take the bull by the horns. 

• Bid to Win, Not to Compete

Following all the RFP best practices to write a proposal will enable you to tick every checkbox and compete with fellow bidders. However, such an RFP response process will not assure you a win. If you have to bid to win, you must decimate your competition. 

Predatory pricing is impossible for small to medium businesses. You cannot oversell or commit to what you cannot deliver. What you can do is highlight something that you can do impeccably. Use metrics, certifications, measurable and verifiable achievements, or anything uniquely relevant about your business to write a compelling proposal. 

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Capturing Federal Business

Successful businesses don’t just follow the request for proposal (RFP) process to win business. Marketing to government agencies, similar to marketing in the commercial sector, is all about building relationships. And just like in the commercial sector, government buyers purchase from people and companies they know and trust. 

Building a reputation as an expert in your industry, building relationships with potential customers and partners, and getting face time either at industry events or meetings are all as vital in government business as they are in private sector sales. First, however, it’s essential to recognize some of the rules and limitations you have due to acquisition regulations. 

Once an RFP is released, government communications and interactions with the industry are very restricted. One-on-one discussions with the government post-RFP are generally not possible, so it is critical to establish relationships and build trust long before a solicitation is released.

Writing Proposals 

When the federal government needs to acquire a new product or service or has an expiring contract for a product or service it intends to buy again, it will release an opportunity for a bid or a request for proposal (RFP). Therefore, understanding the bid or RFP and preparing to answer it are essential to proposal management. 

Proposal management is complex, but well-written, compliant proposals can help make small businesses competitive in federal contracting. 

Executing Contracts 

After winning contracts, businesses move into the contract execution stage. Program and project management principles are fundamental when executing government contracts. The government also uses these principles to prepare programs and initiatives. 

Compliance and Ethics 

Like in the private sector, public sector contracting is governed by an essential set of rules. The government and its contractors must follow numerous laws and regulations, such as the Federal Acquisition Regulation (FAR) and Procurement Integrity Act (PIA). 

The regulations that guide government agencies and contractors include the FAR, PIA, and Defense Contract Audit Agency (DCAA) cost accounting standards (CAS). The FAR consists of sets of regulations issued by federal agencies to manage the process by which the government purchases goods and services. 

Contractors must avoid conflicts of interest, improper influencing of contract awards or federal employees, and other improper appearances and actions. Small businesses must also follow these rules. In addition, general government ethics guidelines have historically called for a high degree of public trust, a high standard of conduct, complete impartiality, and a lack of preferential treatment.

Pre-Award Audits 

For certain types of contracts, agencies will require a company to have an adequate accounting system. “Adequate” in this case means capable of accounting for the direct and indirect costs associated with the contract and able to live up to the cost reimbursement requirements of Federal contracts. As a contractor, you can be audited at any time – even before a contract is awarded. To pass a pre-award audit, you must have an “operable” accounting system (although it does not currently have to be in use). In addition, you must be able to demonstrate this new system to the auditor and be ready to implement it before incurring any costs on the government contract. 

Here are some of the areas your accounting system will need to handle to pass a pre-award audit: 

» Segregation of direct, indirect, and unallowable costs 

» Job cost accounting

» Indirect cost pools and allocation bases

» Indirect rate computations 

» Timekeeping 

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Questions to Ask Before Making a Bid/No Bid Decision 

Before you make any decision, especially a major one with cost implications, you should know how your business will be affected. Below are seven questions to ask before making a bid/no-bid decision. 

Question 1: Are you the incumbent provider of the product or service requested in the RFP? 

If you are, you should know what to say in the RFP and how to say it to keep the business.

Question 2: (If you’re not the incumbent) Is the customer happy with the incumbent’s performance?

Determine if the customer is happy with the incumbent’s performance. This information will help you better understand your competition, and what the customer is looking for that you can provide at a higher level. 

Question 3: Do you have a strong relationship with the customer?

Have you done other business with this client? Are there particular champions within the organization who know you and your company? Are there people that could influence a closer look at you and your company and the services you provide? Relationships are essential in this business and cultivating them is extremely vital.

Question 4: Does this RFP play into your strengths?

It’s important to recognize whether or not the RFP aligns with your expertise. If you pretend that you are an expert and ultimately end up incapable of meeting the expectations, not only will you lose your client but your reputation will be affected.

Question 5: Is the RFP slanted toward a competitor?

If the RFP seems to favor the skills, services, and value propositions of one of your competitors, it may very well be a negotiation tactic and a waste of your time and resources. 

Question 6: How much time and money will be required to respond to this proposal?

First, quantify whether it will be worth your time, resources, and money to respond to the proposal. Estimate the hours your staff will spend on responding and take into account the total dollars that will be required to make it happen.

Question 7: Would winning this contract further your firm’s goals?

Make a list of both your long and short-term goals. Then decide if this contract has the potential to lead your company closer to accomplishing those goals.

Using this questionnaire in your RFP decision-making processes will give you a clear understanding of whether you should or should not submit a bid on the next RFP you receive.

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