Dec 31 2009

Marriage of Necessity

With millions of contracting dollars on the line, agencies and vendors alike work hard to create relationships—not just business deals—with one another.

Photo: James B. Gardner
CDW•G's Jim Shanks, Bill Rico and Robert Skillman with SAIC'S Kristine Petka

During any given week, government systems and acquisition officials spend dozens of hours tending to contractors—companies big and small that help agencies provide systems and services to thousands of users. To get an idea of the scope of this work, consider the General Services Administration, which manages 30,000 IT contracts annually.

Robert Suda, assistant commissioner for information technology solutions at GSA's Federal Technology Service, describes his agency's relationships with its vendors and suppliers as "pretty good."

But maintaining those partnerships is hard work. "We sit down with the vendors for in-process performance reviews on a monthly basis for a majority of our projects," Suda says. "There's always that communication between us and our contractors."

Now consider the relationships from the perspective of a pair of vendors: systems integrator Science Applications International Corp. and IT services provider SRA International.

SAIC juggles more than 6,000 government contracts. In 2004, this San Diego company ranked fifth among all its federal prime contractors and rang up $2.86 billion in revenue from government business.

"We want the best and the brightest, and we want highly technically skilled individuals. But we also need to complement their knowledge with other skills" to help them navigate the government and its unique processes, says Kristine Petka, associate vice president and director of strategic supplier alliances for SAIC.

No Mystery

SRA, a midsize IT services company, racked up $615 million in total revenue last year. The Fairfax, Va., company is rehired 95 percent of the time for follow-on contracts.

"Never wrap mystery around what you're doing," says Renato "Renny" DiPentima, SRA's president and CEO. "We try to stay in daily contact with our customers."

"I don't think a lot of
contractors truly understand
performance-based contracting."
— GSA's Robert Suda

The lowest bid doesn't always seal the deal when agencies hire vendors. Company executives say that support from program managers, contracting officers and technical representatives weighs more than being on schedule and under budget. The feds look to industry for creativity, expertise and business acumen—the "it" factors that can make or break a procurement deal.

Moreover, government is no longer the management backwater it once was and is still too often perceived as being, says Kathy O'Hara, vice president of contracts and procurement for IT services vendor SI International of Reston, Va.

"I think the government is much more savvy on commercial-item procurement and letting go of some of the specifications they would normally impose," she points out. "They're really streamlining the processes."

But there's always room for improvement. Here are five pointers to help you to kindle—or keep—the magic in those agency/ vendor partnerships.

1. Focus on Performance

For the government, efficiency can be achieved by performance-based contracting, GSA's Suda says.

FTS plans to award at least half of all new contracts as performance-based deals this year. These contracts set fixed prices for specific tasks and tie incentives and penalties to performance levels. This type of arrangement allows for more creativity and flexibility in contracts, according to Suda.

"I don't think a lot of contractors truly understand performance-based contracting," he says. "They want to get back to the individual requirements. It's easier for them to just do what needs to be done. I don't believe they think outside the box as much as they should."

SRA's DiPentima knows firsthand how creativity plays into a performance-based model. He recalled advising an agency customer that its program management contract could be handled more efficiently using a fixed-price contract. When the agency rebid the contract, SRA lowered its price by $3 million and still added new tools, teams and procedures to its offer.

"There are a variety of ways that fixed-price deals can be more efficient than cost-plus, particularly when you understand the customer's problem," DiPentima says.

2. Know the Rules

Although GSA is trying to make its contracts more flexible, a multitude of regulations limits what can and can't be done and often requires vendors to provide reams of information for periodic contract updates.

"In each contract there are at least 30 regulations initially required of the prime contractor," says SAIC's Petka. The requirements vary by agency, but the more common requirements are reporting on small-business subcontracts, adhering to federal cost accounting standards and complying with truth-in-negotiation rules.

Government requirements are often complex, but many contractors welcome them. "The regulations are tough to keep track of, but they create a systematic playing field where you know what to expect and how to play the game," adds SI International's O'Hara. "I'd rather have that structure than surprises."

3. Communicate Face to Face

Feds and vendors both note that the most basic rule of relationship management—in-person communication—has suffered with the onset of the Internet age.

"The biggest issue I run into is lack of communication," says GSA's Suda. "Instead of putting people face to face in a meeting, people like to do e-mails."

At SRA, DiPentima meets in person with agency officials immediately after the company wins a contract. "Sometimes a lot of discussion is needed around what was really meant in a statement of work and a proposal of response."

Once the details are ironed out, SRA program managers meet regularly with the agency team.

4. Reinforce Your People Skills

If your government job requires frequent interaction with contractors, it pays to develop interpersonal skills. Agencies should take the same approach that vendors do and sign up employees for training courses.

At SAIC, employees can take courses such as "Dealing with Government" and "Intellectual Property and How to Manage IT." SAIC University also offers classroom and online courses.

SI International's O'Hara adds that there's no substitute for old-fashioned apprenticeships. "To really learn to negotiate well, I don't care how many courses you have taken; you need a good mentor to sit down with at the table."

5. Be Flexible

From a government perspective, GSA's Suda recommends that corporate managers of highly technical programs allow their teams more flexibility in carrying out tasks for their government customers.

"You've got to let them be entrepreneurial in what they have to get done. You can't be controlling," he says. "When you're too technical, you want to get into the details of the project more than you really need to. I think that hurts a lot of projects."