By Guy Timberlake on September 11, 2020
If you’re reading this piece it means you likely know or know of the wonderful Courtney Fairchild and the team at Global Services. Courtney has been my friend and colleague for over twenty years and she is the best of the best. I am blessed to have her, the Global Services team, and so many others, as part of my GovCon family. Now, here’s an update about my favorite purchasing method, Simplified Acquisitions!
There is so much information flying about regarding how agencies buy, how they are changing how they buy, how you can get access to how they buy, and more. Here’s what you need to know for this particular conversation.
Good Opportunity Opportunities
Purchases made by agencies, boards, and commissions of the U.S. Government when they use the Simplified Acquisition Procedures (SAPs), continue to be a source of viable opportunity for all companies, especially small business concerns.
Growing and Growing and Growing and…
Obligations are the dollars allocated by agencies using a specific procurement method to a specific vendor. Simplified Acquisition dollars obligated by agencies since fiscal year 2009 (that’s eleven completed fiscal years ago) have increased an average of one billion dollars each fiscal year. For FY2020, that cadence will continue and the average will increase.
To be very specific, the Government reported just under $13 billion in obligations made via Simplified Acquisitions in FY2009. That number was $25.5 billion in FY2019.
The One
Buys made by agencies using SAPs represent the most consistent and significant area of spending growth for any purchasing method. Period.
With One Arm Tied Behind My Back
Now, let’s compare SAP spending to GSA Schedule spending. The delta between them (in favor of the Schedules) in FY2009 was $27 billion. In FY2019, the delta was reduced to $7.5 billion. The significance of this is the fact that buys made under the Federal Supply Schedules (FSS) do not have thresholds, whereas Simplified Acquisitions do. In fact, it was only recently that the Simplified Acquisition Threshold (SAT) was increased to $250K per contract action.
Outer Limits, SAP Style
But agencies routinely spend more than that with each contract. How, you may ask? One of the misnomers of these types of buys is the spend limit per contract. The SAT applies to contract actions which means, if an agency awarded you a Blanket Purchase Agreement or Indefinite Delivery Contract based on FAR Part 13, each order over the course of one (1) year or ten (10) years, could be at the $250K threshold. Each order represents a different action. Do the math based on one order per month, per week, or per day.
There’s also an exception for Commercial Items that allows buyers to adjust the threshold to $7 million per contract action. And in the case of a national emergency, humanitarian relief effort or terrorist attack, the heads of agencies can increase the SAT to $13 million. That’s where we are currently. Of the $18 billion in SAP obligations reported for FY2020, $1 billion of it is specific to COVID-19 efforts based on agencies referencing the National Interest Code tied to these transactions.
Let’s do a wrap so you can give me a jingle for more information.
The Big Finish
With the exception of two (2) very small independent agencies, every agency reporting contracting and/or funding actions in FY2019 executed purchases using SAPs. They buy everything under the sun (goods and services) and touched more than 65,000 small business concerns in the process. Nearly half of those companies were awarded at least $50K in SAP orders and some did over $5 million by dipping their ladles in a bucket of spending that represents about five (5%) percent of the total fiscal spend.
Did I mention the part about many of these buys taking an average of thirty (30) days or less? What about the fact 70% of the dollars are obligated to standalone contracts instead of contract vehicles?
I’ll discuss all this and more when I join my dear friend, Courtney Fairchild on the next installment of The New Normal in Government Contracting!
Be well and stay well!
Go-To-Guy Timberlake, Chief Visionary
If your business is looking for trusted insights and intelligence in acquisitions, reach out to Guy Timberlake today!
If your business needs assistance obtaining federal contracts, reach out to the GovCon experts at Global Services today!
About Guy Timberlake
Go-To-Guy Timberlake™ is Chief Visionary of SCIIF and an accomplished veteran of federal contracting with over 30 years of experience, knowledge, and relationships acquired supporting civilian, defense, and intelligence agency programs, starting with Operation Desert Shield. He’s called ‘Edutainer’ for his ability to make mundane discussions about business essential topics interesting (like finding and winning federal contracts and subcontracts!) and facilitates each learning opportunity based on his practical experience and the wisdom of the mavens and mentors who helped him grow.