So what? How does the Professional Services National Procurement Strategy affect how I do business with the government?
In this post I try to hone in on the key items that vendors need to know about the Professional Services National Procurement Strategy (the “Strategy”) and the resulting impacts to how they do business with the government in the future.
Overall Impacts – Harmonization
The strategy is all about harmonizing the purchasing ecosystem (rules, governance, training, templates, e-portal) of professional services across areas of service, departments and agencies, and regions.
VENDOR IMPACT: You should expect some level of consistency and predictability in how the government buys services. It should become simpler and less effort intensive to understand and respond to bids.
Removal of PWGSC Rules
The government must follow all aspects of the Government Contracts Regulation, it is the law. Until recently, PWGSC added its own layer of rules on top of those required by law. As part of the Strategy, PWGSC is removing these rules and in doing so, removing an unnecessary layer of red tape
VENDOR IMPACT: Departments have more freedom in their purchasing decisions which will simplify the purchase of services under the NAFTA threshold. For example, sole sourcing becomes much easier for amounts less than $25,000 (see below).
Directed Contracts (Sole-Source) for Purchases under $25,000
In the past, even for low dollar value purchases under $25,000, clients could only sole source for one of a few reasons (e.g. national security, only one company can legally provide the service, only one company is capable of performing the service). These were PWGSC-introduced limitations. Clients can now justify sole sourcing if they feel that the costs of running a competitive process are greater than the potential savings.
However, the vendor must still be on one of the supply arrangements in order to obtain a contract. Based on how they are setting up the supply arrangements, this will mean ProServices in most cases.
VENDOR IMPACT: Isn’t it about time?!? This should significantly facilitate closing a deal with a client in a timely fashion. That said, the need to be on a supply arrangement is significant, and vendors should not delay applying to relevant supply arrangements in order to ensure that contracting is seamless when a client is ready to move forward.
Purchases under NAFTA Threshold (currently $78,500)
Again, thanks to the removal of PWGSC rules, Government Clients have more freedom in soliciting bids for purchases under $78,500. According to the ProServices presentation departments have the freedom to decide the number of bidders invited and the number of days to allow for the solicitation period. I have since confirmed with PWGSC that there has to be at least 2 vendors, otherwise it would be a sole-source bid. Once again, bidders have to be on the appropriate supply arrangement.
VENDOR IMPACT: Since clients don’t need to invite an artificially high number of vendors this will simplify and shorten the solicitation/contracting process. Again, you need to make sure you are on the necessary supply arrangements ahead of time.
Purchases over NAFTA Threshold
For purchases up to $2 Million, a minimum of 15 bidders will be invited (10 of the client’s choosing, and 5 random bidders) and it will remain open for a minimum of 15 days. For purchases over $2 Million, PWGSC will usually manage the solicitation.
VENDOR IMPACT: Vendors should be marketing to potential clients and making connections so that they get invited to bid on opportunities that apply to them.
This isn’t a huge deviation from most current practices, though it currently varies depending on the supply arrangement used. This should help ensure 10 companies able to do the work are invited, while giving a chance for other companies that may not be known to the client to also be invited. Clients can invite many more than 15 bidders if they choose.
Supply Arrangements and Standing Offers are Mandatory
While PWGSC is removing some red tape, the requirement to hold a supply arrangement and/or standing offer in order to supply professional services remains mandatory.
VENDOR IMPACT: Ensure that if you have any interest in contracting directly with the government that you hold supply arrangements (emphasis on qualifications and skills) and/or standing offers (emphasis on price) in your field.
Supply Arrangements will be valid indefinitely
Any vendor who receives a supply arrangement will not need to re-apply again, until the government decides that the supply arrangement is no longer needed or no longer appropriate.
VENDOR IMPACT: Once you are on, you are on. While you may have to resubmit certifications periodically, and take other steps to maintain your supply arrangement in good standing, your initial investment in getting on the supply arrangement will be long-lasting.
Supply Arrangements will be perpetually refreshed
Any new vendor, or existing vendor who wishes to apply for new categories, will be able to submit a proposal at any time. It will be posted to MERX indefinitely and bids will be accepted at any time, with evaluations performed on a quarterly basis.
VENDOR IMPACT: You can submit a bid as soon as you meet the requirements of the solicitation, when you are in a slow-work period, or at any other time of your choosing. Vendors who never considered government work can decide at any time to submit their application. Note that this only goes into effect after the first refresh of that particular supply arrangement since the release of the Strategy (Fall 2011). Only PASS SA, TEMS SA, TSPS Solutions-Based SA, and SBIPS SA are currently open perpetually.
Supply Arrangements will not Evaluate Pricing at Stage 1
A fundamental change in how supply arrangement will be set-up is that they will no longer qualify (or rather, disqualify) companies based on pricing. All technically compliant vendors will receive an SA. An evaluation including technical and financial components will form part of any RFPs for specific projects.
VENDOR IMPACT: Vendors that provide high-end, unique, and rare resources who command a premium rate will be able to qualify for Supply Arrangements, and most importantly, when the government needs these types of resources, they will be able to source them through the supply arrangements in a competitive process.
Changes to Standing Offers
Standing Offers can be used for requirements up to $250,000 (GST/HST included), and are most often used to obtain qualified resources at lowest cost. Work is allocated through call-ups, to the highest ranked (lowest-priced) vendor who can provide a qualified resource within the required timeframe. Clients can now also choose to select any company on the standing offer for requirements under $25,000, provided they can justify why it was not cost-effective to select a company on a Right of First Refusal basis.
VENDOR IMPACT: Not a lot of vendors are in a position to benefit from the Right of First Refusal methodology, but those who are, can do quite well. I am not convinced that there will be many acceptable justifications for deviating from the Right of First Refusal methodology, and vendors who don’t compete on price are probably best served engaging with the client through a supply arrangement.
While it is a goal of the Strategy to automate the reporting process through the Centralized Professional Services System, until that happens, there will be a need for all supply arrangement and standing offer holders to report their contracting, even if it is nil.
VENDOR IMPACT: Unfortunately until the CPSS system automates this process, you must submit your reports.
I believe there will be a benefit to all suppliers, including small and medium sized business. Certainly for projects under $78,500, the burden of selling to government will be significantly reduced (as will the process for government clients to buy those services). The key message for companies of all sizes, hoping to land contracts of any size (including under $25k), is to secure supply arrangements in your fields of expertise. Once you have that, you should be in a good position to market yourself and potentially close sales when the opportunities arise.
Do you have any questions or comments about selling professional services to the government? Please let me know by leaving a comment below or sending me an email.