Getting government contracts: It’s who you know

If you want to get a fat, lucrative government contract, you’d better know someone in the purchasing government agency. Contractors use personal contacts in the government and insider information to help obtain government contracts, according to a report published Thursday.

Contractors also use the help of third-party acquisition services contractors to obtain those vital connections inside the government agencies they sell to, as well as occasionally lobby Congress, the report said.

Here are a few choice cuts.

In theory, government contracts are awarded based only on the merits of proposals — agencies select the vendor that offers the best value at the lowest price. In reality, the winners often are the companies that schmoozed agency executives during the early stages of the procurement process and helped shape the final solicitation, in the process gaining the trust and confidence of those with the power to award contracts. Introductions to those decision-makers and inside information about upcoming procurements are considered so valuable that contractors are willing to pay thousands of dollars to secure them. Consultants who offer those benefits, often packaged under the term “acquisition services,” say they are merely lubricating exchanges in a free market. — Government Executive

The article tells of one company who used insider contacts to obtain an advantage in bidding on Networx, “one of the largest government procurements in history.” Networx, which will provide telecommunications services to government agencies, is estimated to be worth $20 billion over a 10 year period.

It also tells of one of these acquisition services firms which claims to have 90 percent of government contractors as its clients.

If you’re smelling something fishy here, you’re right.

Critics, however, say the importance of inside knowledge and relationships are evidence of a corrupt system. “Those relationships have become infinitely more important than a contractor being able to show that they are the best person for the job. . . . It’s how the system is designed to work right now,” says Danielle Brian, executive director of the Project on Government Oversight, a Washington-based nonprofit that analyzes government contracting.

Christopher Yukins, associate professor of government contracting at The George Washington University Law School, says another problem is that no one really knows what’s going on behind the scenes. “I think it’s gone too far. We have a system that’s very heavily based on relationships without the transparency to make sure relationships are kept in check,” Yukins says.

The number of consultancies offering acquisition services to contractors has blossomed in the wake of Iraq reconstruction, when it became apparent that inside knowledge, especially on contracts awarded without competition, is essential to doing business with the government. Many consultants agree that there’s a line that shouldn’t be crossed; for example, writing a solicitation that subtly favors one company’s product when it is deemed to better suit the agency’s needs is OK, but giving information about an upcoming solicitation to one contractor and not others goes too far.

The exact location of that line is fuzzy. Acquisition regulations provide guidance, but even procurement professionals offer varied interpretations of the rules. Almost everyone agrees that personal connections and inside information about how decisions are made can mean the difference between winning and losing a contract. Whether or not you think that’s fair tends to depend on which side of the table you’re on. — Ibid.

This process is so endemic to government procurement that it’s considered the standard, accepted way of doing business.

“If you don’t have a relationship with folks who are the decision-makers, you don’t have a very good chance of being on the shortlist,” says Gloria Berthold, founder of TargetGov, an Elkridge, Md.-based consultancy that caters to small businesses. She tells her clients to join professional associations that count federal acquisition professionals among their members and to call procurement officials to arrange meetings. The only people who would suggest there is something wrong with relying on personal connections to win contracts, she says, “would be folks who have a problem with building relationships. . . . I don’t think that’s bias factor. It’s a trust factor.”

Attempting to shape an agency’s request for proposal is a standard business strategy, according to consultants and contractors. “I would hope we’re able to guide or influence how the agency is thinking about the RFP,” says Peter Kant, vice president of government affairs for Rapiscan Systems, a Hawthorne, Calif.-based security inspection systems company that provides screening equipment to the Transportation Security Administration and other agencies. His team closely reviews the appropriations bills and operational plans of agencies in order to anticipate and shape RFPs before they are officially released, especially to encourage them to include performance-based metrics, which fits with Rapiscan’s business approach.

“If we go after a deal, there’s a 100 percent chance we’ve been in before. The key is to get in early and influence the direction of the RFP. All credible businesses do that,” says Gary Labovich, a vice president at the McLean, Va.-based consultancy Booz Allen Hamilton. In addition to tracking trends and talking to senior officials, Labovich says his firm frequently submits white papers, or an analysis with recommendations on a particular issue, in the hope that some of those ideas will make their way into the request for proposal or formal bid solicitation. “Sometimes it looks like what we suggested,” he says of RFPs. — Ibid.

Now you know how the same few large companies get the huge contracts time after time, especially the defense contracts. They’re working the people they know in the government.

But the government buyers say these contractors don’t actually influence their decisions.

“I would never make a subjective determination as to whether a company is competent or not . . . I wouldn’t even know how to go about doing that, given the regimented nature of the process,” says John C. Johnson, assistant commissioner of GSA’s Federal Technology Service. . . . “If we thought there was a good idea that threaded into an actual goal, then we accepted it without placing judgment as to whether it was self-serving or not,” he says. . . .

Al Sligh, director of strategic sourcing and acquisition systems at the Homeland Security Department, says he frequently meets with companies, in large part to help his agency form better solicitations. “Sometimes our strategies are not on the money,” he says. The meetings, he adds, “help the procurements go faster” and help avoid costly cancellations. He says companies that he personally has met with do not have a better chance of winning contracts. — Ibid.

The article also documents contractors asking Congress to intervene on their behalf, which happens from time to time.

“Particularly with Networx being a large program, you have a lot of different communities of interest. . . . All of them make known their concerns, particularly to Congressman [Tom] Davis’ [R-Va.] committee, in hopes that they could bid or potentially be able to win some business,” says Anthony D’Agata, manager of Sprint’s government systems division. He says his company occasionally lobbies Congress with regard to upcoming procurements, but he doesn’t recall if he has done so for Networx, on which Sprint is bidding. Davis is chairman of the House Committee on Government Reform.

“It can be helpful. GSA certainly listens to the Hill,” D’Agata says.

Many contractors who say they meet with lawmakers in the hope it will help them win a competition appear to disagree with lawmakers and agencies on exactly how much influence Congress has. When asked whether legislators exert influence on procurement decisions, GSA’s Johnson says, “I’ve never had a member of Congress do that, and no, it wouldn’t have any effect. The process is very well-defined in terms of how we make selections. . . . It would be extremely difficult for anybody to influence something unilaterally.”

Contractors and congressional staff members say lawmakers often write generic letters of recommendation on behalf of contractors, but they generally avoid getting involved in individual competitions. — Ibid.

If you’re thinking about contracting services to the government, I wish you lots of luck and I hope you know somebody on the inside. If not, one of these acquisition services can almost certainly help you. Pretty soon you, too, could be the favored company for the next huge no-bid contract.

One thought on “Getting government contracts: It’s who you know

  • December 4, 2006 at 6:59 pm

    Very good article, I like to know the names of all the small business contracts in the Washington, D.C.

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