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 naics.com.
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.
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 Code541519 – 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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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:
The RFP response examples should be modified to highlight your strengths in the context of each contract opportunity.
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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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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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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Have you ever thought about how many decisions you make each day? From the clothes you choose to wear to what you eat for lunch or whether or not you feel like making it to the gym, each day requires us to make multiple decisions, and sometimes it can be exhausting to be caught between two very viable options. Luckily in those moments, choosing to get takeout or cooking the groceries from the fridge isn’t typically a big deal. However, when it comes to deciding whether or not to bid on a specific government contract, the stakes are much higher.
Businesses cannot afford to be indecisive when choosing which projects deserve the time and resources necessary to prepare a competitive bid properly. Many contractors aim to bid for every opportunity they can, but this is unwise. Instead, there should be a sense of proportionate balance, primarily depending upon your resources.
Given the free access to government bids, finding many available opportunities will not be a problem. The ultimate challenge is deciding which opportunities align and make sense to invest time, effort, and money. One or more team members will spend days, if not weeks, drafting a presentable proposal. Therefore, businesses should adhere to a focused approach when deciding on which government projects to bid. This guide to bidding lays out the specific issues you should prioritize to make an informed decision.
Assess the Eligibility Criteria
Search a government contracts database to find relevant opportunities. First, make a shortlist of those that you think are most lucrative and suitable for your business. Now, assess the eligibility criteria of each of these shortlisted opportunities.
1. Type of Business
It is not unusual for the government, Federal or local, to invite proposals from certain types of businesses. This may pertain to the kind of incorporation, nature of ownership, size of the enterprise, and a combination of several factors. Accordingly, the proposal issuer may declare a preference for specific types of businesses.
If you find that the type of business you own is not suitable for the contract, then it is pointless to pursue the opportunity any further; it should not find its way to your ultimate shortlist.
2. Company Profile
Government contracts may stipulate necessary experience or years in business, expertise or specializations, specific locations, and other company profile elements. Many opportunities require firms to operate certain types of facilities. This is not limited to factories and warehouses. Such criteria may also include stipulations regarding office spaces, logistics, supply chain, and transportation.
Your company profile should perfectly fit an opportunity and its requirements. If you’re missing any criteria, then bidding on that opportunity may not yield any gain. Remember, some of your competitors will fulfill and exceed the requirements, creating a scenario unsuitable for you to engage in competitive bidding.
3. Quality of Product or Service
You may have the most refined quality product or service, yet it may not be suitable for the government. Distinct government departments have their ways of assessing quality. If an RFP explicitly describes specifications or features you do not entirely satisfy, stop considering that contract and move on to the next available opportunity.
In some cases, you may be able to tweak your product or service to meet the quality requirements of the government. First, conduct a cost-benefit analysis to bring about such changes, and then decide if bidding for the opportunity is viable for you in the immediate or foreseeable future.
4. Deliverable Prerequisites
An RFP may necessitate a strict turnaround time, and the frequency of deliverables may not suit your operations. In addition, there may be other such prerequisites that you fail or may fail to fulfill. For example, the government might demand around-the-clock support for a service, and your company doesn’t provide this. Therefore, do not bid for the contract if you cannot meet the RFP, deliverable schedule, or terms.
Most businesses have to tweak their operations to some extent to be able to bid for government contracts. It would be best if you weighed the pros and cons of such adaptive measures. If the changes appear sustainable, you can undoubtedly modify them accordingly and bid for a lucrative project.
5. Compliance and Certifications
Scan any government contracts database, and you will find that most RFPs require at least a few certifications. Unfortunately, the compliance standards for government contracts can be steep and costly to uphold. However, every business interested in dealing with the Federal government must secure necessary certifications and should fulfill all compliance requirements.
Securing required certifications takes time. If you try to comply and get certified while your proposal is being drafted, you may miss the closing date. Deadlines for government contracts may get extended, but you cannot take that possibility for granted. Instead, choose government projects for which you are entirely eligible to bid.
Assess the Competition
You must assess your competition to know the odds of winning. It is not only about expertise, experience, production capacity, and service deliverability. For example, some businesses in your niche may be more familiar with government contracts. As a result, their RFP responses might be more compelling.
A great way to access the competition is through contract award information which enables you to comprehensively understand the bids that have been won recently. You can use this data to decide on an offer with a greater chance of winning. In addition, competitive intelligence can provide insight into the types of competitors with which you are likely to wrestle, their strengths and weaknesses, and their core expertise and experience.
Assess the Viability
Free access to government bids empowers all qualifying vendors; businesses can bid simultaneously for multiple projects. A contractor may spend enormous time, immense effort, and a lot of money during the bidding process. Failing to win the bids can result in a tremendous loss of resources. Winning a bid without considering the ramifications can also lead to a massive loss.
You should ascertain if your business can deliver what the government requires. Conduct a viability study based on how you run your business. Ask practical questions to assess the ground reality. Can you secure a sustainable profit with your bid? What changes will you have to invest in to deliver the goods or services? Does the contract complement your current business plan and company policies?
A thorough government bid search will lead you to various types of projects. Quite a few in your industry will have lenient prerequisites. Some contracts are not long-term. There could be one-off procurements of goods or services. You have to choose government projects on which to bid that are organically suitable for your business.
The Smart Approach to Choosing Government Projects to Bid
G2Xchange can help you to navigate the massive and complex federal marketplace. Utilize competitive intelligence and leverage contract award information to find facts that will help you showcase your brand as the most suitable vendor for the government. Then, prioritize these bids and direct all your extra resources to draft a winnable proposal.
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Federal contracts exist broadly between two categories: products/goods and services. The former includes almost everything from food to furniture and medicine to machinery. The latter includes professional services, research and development, management and administration, and consultancy. The majority of federal contracts, by dollar value, are awarded in the following sectors:
Facilities and construction, including real estate purchases and leases, building materials and services, etc.
Professional services, including financial, legal, public relations, marketing, and technical expertise.
Information technology, including hardware, software, consulting, telecommunications, and security, etc.
Transportation and logistics, including delivery, motor vehicles, support, and fuel, etc.
Medical, including health care services, pharmaceuticals, medical equipment, and consulting, etc.
Industrial products and services, including machinery, tools, and maintenance, etc.
Security, including state-of-the-art systems and real-time services, etc.
Human capital, including educational services and vocational training, etc.
Travel and lodging, including event management services and food and beverage supply, etc.
Office management and administration, including purchasing furniture and essential supplies, etc.
After classification based on industry sector, product, or service, there is further categorization depending on contract terms:
Fixed Price Federal Contracts
This type of contract is applicable for both goods and services. Open government contracts of this kind typically invite bids from eligible contractors or vendors. If it is a product, then a specific unit is preset for the pricing— such as by the carton, ton, or some other metric. For services, the pricing is typically per hour. It should be noted that fixed-price federal contracts may have specific clauses that could alter the calculation of billable amounts depending on relevant factors, such as quality or regulatory compliance.
Cost Reimbursement based Federal Contracts
Federal contracts for typical goods and services are usually fixed-price agreements. Cost reimbursement-based federal contracts are common when a fixed price is difficult to ascertain or predetermine. Research and development services, for example, are difficult to price at the outset. There are myriad variables in such contracts, especially in the deliverables. Hence, a cost-reimbursement policy is pragmatic for contractors and, to an extent, for the government.
Time and Materials based Federal Contracts
This type of contract is commonly used for services wherein select materials may be requisitioned for the deliverables. The service is billed hourly, and the cost of materials is added for the billable time. There is, of course, a price cap as agreed upon in the bid or proposal. Time and materials-based federal contracts are typical for tasks or operations spanning a relatively short period.
Incentive-based Federal Contracts
This should not be presumed as a contract that pays only incentives. Instead, it is labeled as an incentive-based federal contract due to a provision. Most incentive-based federal contracts are either fixed-price or cost-reimbursement agreements, with a bonus payable only if a certain quality and compliance standard or other criteria are met.
Delivery-based Federal Contracts
There are a few types of contracts wherein the deliverables are not precise or wholly defined. The variables in such cases may be time, materials, the type of product or service, and other factors. In these cases, it is practically impossible to have fixed price or cost reimbursement-based contracts. Hence, delivery-based federal contracts are the only feasible option.
Benefits of Federal Contracts
There are myriad advantages of federal contracts. The most noteworthy benefits are:
Financial reliability.
The potential for growth and expansion.
Enhanced brand value.
Long-term business viability.
Special advantages.
Financial Reliability
The federal government is a reliable paymaster. Unless there is something seriously wrong with the deliverables, the federal government generally does not delay payments and is consistent as per the billing cycles. Moreover, unlike private or public enterprises, the federal government is not vulnerable to a cash crunch or probable bankruptcy. Hence, companies know they will be paid for their products or services.
Potential for Growth and Expansion
A company can grow and develop its expertise by working on federal contracts. This is primarily due to the stringent regulatory and compliance standards that force businesses to take their business practices to the next level. As a result, most businesses emerge as more efficient organizations after working on a few government contracts. Business expansion also becomes easier when a company starts winning federal contracts due to the infusion of reliable capital.
Enhanced Brand Value
The importance of having the federal government as a client in a portfolio cannot be overstated. Every industry veteran knows the stringent regulations for federal contracts. If your company has won and delivered on a few federal contracts, your potential clients will be assured that you can and will live up to your commitments.
Long-Term Business Viability
The federal government is never going to be out of business. If your company continues to win federal contracts and deliver the products or services as per the terms, then your business will find its place in subsequent shortlists. The federal government alone can make a private or public business viable in the long term.
Special Advantages
There are federal contracts designed to give advantage to minority-owned enterprises, female entrepreneurs, and others who have been traditionally disadvantaged in various spheres of employment and business. These are called “set asides,” meaning the competition for that work is set aside for those businesses in that category.
Challenges of Federal Contracts
While you can gain financial viability and grow your business with federal contracts, government contracting is not without its fair share of challenges:
Stringent Rules
As a business, you are undoubtedly familiar with your industry’s regulations. These will be in full effect while working in the federal government space. Additionally, there can be additional regulations or compliance standards for specific government contracts. These rules are quite stringent. Any company vying for federal contracts should be prepared to deal with stringent regulations.
Stiff Competition
Competition is perhaps the most daunting of all challenges concerning open government contracts. You have to prepare well to gain an edge over your competitors. First, you need access to an up-to-date federal contracts database. It also helps to have insights into government procurement contracts to understand what it takes to submit a winning bid.
Red Tape and Bureaucracy
Red tape and bureaucracy have become more manageable in the last two decades. However, some bureaucrats will still slow down with paperwork, the various processes involved in doing business with the government. You must learn to endure the red tape and bureaucracy if you want to leverage federal contracts.
Intrusive Supervision
In most cases, the government is not unnecessarily intrusive, but businesses must learn to deal with supervision and oversight. On the other hand, intrusiveness can help companies improve their efficacy, efficiency, and compliance, so there is a silver lining.
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Identifying federal government contract opportunities can be daunting, especially given the alphabet soup of jargon out there.
The RFx Spectrum
A government opportunity search may lead you to find an RFP, RFA, RFB, RFI, or RFQ. You may even find an RFT, although the federal government rarely uses it (It’s more common in Europe). RFx is the collective term for the entire spectrum of these acronyms.
An RFP is a Request for Proposal; RFA, a Request for Application; RFB, a Request for Bid; RFI, a Request for Information; RFQ, a Request for Quotation; and RFT, a Request for Tender. RFPs, RFAs, RFBs, RFQs, and RFTs are all similar in that they are seeking proposals or bids. RFIs, on the other hand, are simply seeking information and do not include a bid element or financial quote.
Deciphering RFP Terminology
Once you discover an opportunity, you may find the proposal terminology confusing. However, understanding the jargon is key to creating a comprehensive, high-quality proposal response.
There are many terms and phrases used in proposals that are in keeping with their literal meanings. A few common examples are “agreement,” “bid,” “best value,” “period of performance,” “evaluation criteria,” “confidence ratings,” “past performance,” “compliance,” and “assumptions,” among others. However, other terms are not so clear – especially when there are a plethora of acronyms.
Proposal Acronyms
The government uses hundreds of acronyms for their various agencies and proposal types, instructions, pricing details, and performance ratings.
Once you get through the “alphabet soup” of acronyms, there is no shortage of other confusing terminology you need to understand to formulate your best proposal response. Here are a few common terms used in government proposals:
“Issuer” is the issuing authority. Proposals are not always issued by the agency or office seeking the product or service. For example, a government agency may appoint a particular department or outsource the proposal process.
“Set-Aside” is where the government limits competition for specific contracts to small businesses and certain types of small businesses, such as Woman-Owned Small Businesses (WOSBs), Veteran-Owned Small Businesses (VOSBs), Service-Disabled Veteran-Owned Small Businesses (SDVOSBs), 8(a), etc. Those contracts are called “small business set-asides,” and they help small businesses compete for and win federal contracts.
“Executive summary” is a brief overview highlighting the critical elements of a proposal. It is different from a cover letter because it contains a brief synopsis of the salient points in your proposal. Evaluators typically read the executive summary first, and will stop there if not incentivized to read further. Therefore, make it a compelling summary of what is to come in your proposal.
“Lifecycle cost” looks at the total expenditure for a product. It assesses the total cost of an asset over its life cycle, including initial capital, maintenance, and operating costs. A proposed product should have a lifecycle cost lower or up to the current expenditure of the current contract. Otherwise, a government department may prefer an existing contract renewal.
“Spend analysis” is an ongoing assessment analyzing all data related to the procurement. The objective is to enhance efficiency and ensure compliance. Spend analysis is a practice used by both the procurer and the contractor.
“Preference” is a set of project-specific advantages available to contractors in a specific location, offering a particular quality of product or service and/or possessing some special business classifications.
“Qualified bid” is a proposal response wherein a contractor explicitly exempts itself from the eligibility criteria or prerequisites. This limitation or condition may constitute grounds to disqualify the bid.
“Qualified vendor” is a contractor meeting all the prerequisites or eligibility criteria for an opportunity.
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