Contracting Delays and the Procurement Waiting Game
Frustration is mounting amongst government contractors as an elongated procurement cycle, contract delays / cancellations, and bid protests become commonplace in chasing Federal contracts. The real dollar and opportunity cost impacts extend beyond frustrated business development (“BD”) departments by hindering a company’s ability to forecast performance, estimate cash flow needs, and allocate appropriate resources to target opportunities.
As agencies and contractors prepare for 2013 budget cuts, large-scale reductions may exacerbate delays and cancellations given (i) potential reductions in contracting personnel, (ii) funding reductions for existing / new programs, and (iii) additional protests due to heightened competition. Whether civilian or defense, contract or IDIQ, healthcare or intelligence – it seems the relative “safe-heaven” markets are becoming fewer.
Although government services buyers are slowly becoming more accustomed to the aforementioned bid and proposals (“B&P”) difficulties, these issues still have a negative impact on an M&A sale process. Most notably, they impact financial projections and forecasting credibility during a sale.
What can a contractor evaluating the potential, or in the midst, of a sale process do? The first box to check is ensuring BD and B&P teams are as strong as possible. In addition:
- Expand your pipeline. Even the highest probability recompetes and new opportunities can go a different direction. You can’t win what you don’t bid, and an unlikely award could backfill an unforeseen loss.
- Chase IDIQs. While vehicle procurements are not immune from delays, task orders seem to be tracking to faster timelines.
- Utilize conservative probabilities of win and start dates. Buyers are putting increased scrutiny on recompete / identified win rates and award timing given intensified competition and delays. Beyond maintaining credibility, this may encourage BD and B&P teams to drive growth.
Contributors: Marc Marlin and Robert Dowling