New Analysis of Federal IT Contracting Trends by Deltek GovWin

Deltek GovWin’s Federal Market Analysis team has published a new report that shows nearly 80% of total information technology prime contract dollars are competed. This data is one of many insights delivered in the FMA team’s new report entitled Insights and Observations: Federal IT Contract Award Environment.

The Deltek team identified the following additional trends:

• Agency use of Government-Wide Acquisition Contracts (GWACs) and agency-specific Indefinite Delivery, Indefinite Quantity (IDIQ) contracts continues to dominate overall spending on IT, representing 36% of all IT contracting in fiscal 2015.

• Agencies continue to prefer awarding fixed price contracts. Use of these contracts is driven largely by IT professional services work.

• The average value of awarded task orders in fiscal 2015 was around $440,000. More than 70% of awarded task order contracts, however, were valued at less than $250,000.

• Competition for task orders is quite high, even considering agencies’ preference for them and the competition of requirements in closed acquisition environments. Nearly 20% of all task orders competed received at least 6 bids from participating vendors.

• Agencies received only 1 bid for 25% of all IT obligations competed on the open market, but 3 to 5 bids on most task orders.

• An analysis of 20 next-generation (i.e., follow-on) contract vehicles revealed that agencies tend to increase the size of vendor pools, either by awarding a higher number of contracts or by providing on-ramping opportunities.

The Deltek GovWin team also examined executive policies and congressional legislation shaping the federal IT acquisition landscape. This analysis revealed an acquisition environment that is becoming increasingly complex thanks to the growing number of guidelines and regulations with which agencies must comply. Agencies are struggling to accommodate the new guidance, a factor that is likely contributing to the award of smaller contracts with more limited scopes of work and lower values (i.e., modular contracting).

Agency use of modular contracting is also in part a response to new guidance like the Defense Department’s Better Buying Power initiative, a policy that explicitly directs agencies to adopt modular procurement as a best practice.

In addition, the Deltek GovWin team found that agencies are struggling to address deficiencies in the IT acquisition workforce. Not only is growth of this workforce flat over the last several years, the demands on it to learn new contracting methodologies and understand technical requirements are placing strain on the system.

Deltek’s Federal Market Analysis team believes that this pressure has contributed to growth in the use of lowest price, technically acceptable (LPTA) proposal evaluations, as contracting officials unfamiliar with technical requirements resort to employing the simplest bottom line methodology for awarding contracts. Government entities from departmental leadership at the DoD to members of Congress have responded by attempting to place policy and legal restrictions on the use of LPTA evaluations. These restrictions should curb the use of LPTA evaluations for IT services requirements. However, the FMA team believes that LPTA evaluations will still become standard practice for the procurement of commodity IT by government agencies.

For the data supporting these conclusions and a plethora of other valuable analysis of the federal IT contracting landscape, purchase a copy of Deltek GovWin’s Insights and Observations: Federal IT Contract Award Environment report.