Category: Government Contracting 101

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Top IT Industry NAICS Codes and Spending Trends

Posted on October 11, 2022

 

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.

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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CategoriesGovernment Contracting 101

3 Ways to Improve Your Company’s Online Presence

Posted on August 31, 2022

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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Capturing Federal Business

Posted on August 19, 2022

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 

Posted on August 16, 2022

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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CategoriesGovernment Contracting 101

How to Ensure Your Company is Poised for Success in the Federal Marketplace

Posted on July 27, 2022
Team celebration for winning a government contract award

The Federal Government spends an average of $500B a year on products and services, providing business owners with the fuel and opportunity they need to make a difference in this country. However, many companies enter unchartered territory when they step into the Federal marketplace, ill-equipped to work in the arena of Government contracting. Many businesses are not prepared to enter the government contracting space because the Federal Government is very different from typical commercial customers. The Federal marketplace is unique and can be intimidating for business owners unfamiliar with the complex set of regulations and processes. However, once a company has navigated its way into the market, it can be a highly lucrative and reliable revenue stream. 

After your business has registered for an account on SAM.gov, acquired a UEI number, and identified relevant NAICs codes, here are five tips to further expand your business into Government contracting:

1. KNOW WHAT YOU OFFER

It is vital to pinpoint your business’s unique expertise, and understand how the Federal Government refers to your company’s products or services. Discovering the keywords and terminology used in the industry will help you establish communication tools such as a marketing plan, which will include your business’s solution offering and a capability statement. These tools will accurately inform Federal customers how your products or services will be a solution to their needs.

2. TRACK OPPORTUNITIES

The Federal Government sales cycle is slow, and therefore it’s best not to make your company’s sole focus one specific opportunity. Successful Government contractors target and pursue multiple potential contract opportunities and buyer relationships. This also helps your organization discover and shape the best options for your company. Your company should maintain a consistent pipeline that tracks all relevant contract information and changes. Government contract leads are available on several paid subscription services, but for those who are just getting started, visit SAM.gov, the official source for federal contracts worth more than $250,000.00 

3. CONNECT WITH CUSTOMERS

In the Federal marketplace, making reoccurring contact with decision-makers in your potential Federal customer base is a best practice. Therefore, it is essential to be knowledgeable of all the key players and know the best way to contact them. Once you have this information, research, research, research! Knowing what your Federal customers buy and how they buy will enable you to connect your product or services to their needs directly. With persistence, this information will help you refine your company’s messaging to grab the attention of decision-makers.

4. EXPLORE SUBCONTRACTING OPPORTUNITIES

It’s not easy to get your foot in the door, but one viable avenue worth consideration is subcontracting. Companies can indirectly serve the government by partnering with prime contractors. Not only is subcontracting a way to connect with a Federal agency you may not have previously worked with, but it is also a great way to expand your portfolio of past performance. One way to effectively pitch yourself as a subcontractor is to offer a cost-saving solution. Pinpointing a niche need your service can fill is also an excellent way to earn a subcontracting role. Once you find a prime contractor that needs what you have to offer, reach out and sell them on your capabilities!

5. DEVELOP A COMPETITIVE BID

Understanding the bid-proposal process is vital to your success as a government contractor, and even more important is having the resources in place to execute it. Build your bid-proposal team and distribute tasks that complement specific skill sets to achieve your overall goal. Once the proper resources are in place, stay compliant with the proposal requirements and bid a cost-competitive proposal. 

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CategoriesGovernment Contracting 101

GSA Schedule – The Basics

Posted on July 22, 2022

U.S.-based businesses have many government contracting options to explore across various domains, including federal, state, local, and tribal. Of course, the Federal Government represents the largest of these domains, given that it’s the world’s largest procurer of goods and services. Furthermore, there are numerous agencies within the Federal Government to contract with, one of the largest being the General Services Administration, or GSA.

What is the GSA?

The GSA is a federal agency that facilitates government-wide contracting. Essentially, they centralize the contracting requirements and deliverables for many federal government agencies. GSA accomplishes this via the Public Building Service (PBS) and the Federal Acquisition Service (FAS). The Public Building Service is often referred to as the landlord of the government. All federal real estate assets are managed through the PBS. On the other hand, the FAS facilitates the acquisition of goods and services.

What are GSA Schedules?

GSA Schedules are long-term contracts under the GSA’s Multiple Award Schedule (MAS) program. A GSA Schedule contract is a time-bound agreement between the federal government and a contractor or an association of vendors. 

The objective of the GSA Schedule program is to simplify acquisition processes to ensure that each designated federal department or agency gets requisite goods and services delivered as per the preset terms. The program provides certainty for the federal government and all its departments that essential goods and services are always available. It’s also designed to ensure acquisitions are executed at fair and reasonable prices. 

List of GSA Schedules

GSA Schedules are not about one-time acquisitions. The deliverables, as decided and agreed upon at the outset, are sequenced over a period of time. Some GSA Schedules may span several years. Currently, there are more than thirty distinct Federal Supply Schedules. 

The most significant Federal Supply Schedules are:

  • financial services
  • professional engineering services
  • travel services
  • logistics
  • information technology, including equipment, software, and services
  • transportation, delivery, and relocation
  • hardware supply
  • office administration, including documents management and imaging
  • professional services
  • scientific equipment and services
  • human capital management
  • office supplies
  • furniture supply and management
  • law enforcement and disaster management, including emergency response
  • facilities management and maintenance
  • automobiles and automotive supplies
  • shipping and packaging, including supplies
  • temporary staffing
  • food services and hospitality
  • buildings, including the procurement of materials

There are many other Federal Supply Schedules. The GSA Schedules program complies with the Federal Acquisition Regulations (FAR). All federal government departments and every eligible contractor must adhere to the FAR to uphold competition requirements, labor laws, socioeconomic requirements, federal trade agreement prerequisites, and other compliance standards. 

GSA Schedule Contract Eligibility

Only eligible businesses can participate in GSA Schedules. The GSA has stipulated minimum requirements for eligibility. The general eligibility criteria for a GSA contract include a minimum of two years in business with financial statements for the same period, measurable and verifiable past performance, and compliance with the Trade Agreement Act, Service Contract Act, and Buy American Act. A business must also be able to abide by current wage rates, approved ordering processes, and required administrative and reporting procedures. 

GSA Schedule Contract Benefits

Relative to other kinds of government contracts, a GSA Schedule Contract can be more lucrative due to the following factors:

  • Federal Supply Schedules are rarely for a short period of time. A typical GSA contract spans months, often years. This provides medium to long-term orders for a business. Hence, a GSA Schedule contract can facilitate business viability and financial sustainability for the contractor. 
  • Only those part of a Federal Supply Schedule can bid for a GSA contract. This implies that you will be competing with businesses like yours, which are already schedule holders. This means that the chances of an unknown contractor outbidding everyone are considerably less. 
  • As a contractor participating in the GSA Schedules Program, you can access many opportunities relevant to your business. You can expand your portfolio as your eligibility permits. There is ample scope for expansion and growth for ambitious enterprises.
  • The GSA Schedules Program represents an additional avenue for expansion and growth for firms already faring well in government contracting or the private sector. 
  • GSA contract management is quite stringent. While GSA vendor support exists, the steep compliance and regulatory requirements can test a contractor’s mettle. As a result, most businesses witness a transformative enhancement in the efficiency and efficacy of their routine operations. 

GSA Schedule Contract Challenges

All business deals have their fair share of benefits and challenges. As such, the GSA Schedules Program, and more broadly, government contracting, is not always an ideal pursuit. Companies must weigh the benefits against the challenges likely to be encountered.

  • Eligibility is a significant hindrance. The number of years in business and financial statements are only a part of the process. Particular GSA contracts may require relevant certifications, which may be costly and time-consuming to obtain. These certifications are typically required for compliance to maintain an acceptable quality of goods or services. 
  • The GSA Schedules Program necessitates various administrative formalities. For instance, firms must prove their past performance. Most contractors do so using the Dun and Bradstreet Open Ratings system. A GSA contract also requires proof of cash flow. Financially unstable businesses, such as those deemed at risk of bankruptcy, are not eligible for the Federal Supply Schedules. 
  • GSA contract management is a considerable commitment. Contractors must deliver as per the terms of the contract and remain in compliance with universal standards for ordering, delivering, administration, and reporting. GSA contract management can be arduous for firms unprepared to deal with the additional administrative burden. 

GSA Schedule contracts are awarded to the best bidder. Every new opportunity must be won. 

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Types of Federal Contracts

Posted on June 23, 2022

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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How to Decipher Federal RFP Terminology – A Beginner’s Guide

Posted on June 23, 2022

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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