Competition in new IT contract may take old path

The General Services Administration has squeezed 599 small businesses into four categories of business, but experts say, the orders still will go to a few aggressive companies and may even cause headaches for agencies.

Acquisition officials certainly will have their choice of companies when they place an order with the 8(a) Streamlined Technology Acquisition Resources for Services II (STARS II) Governmentwide Acquisition Contract (GWAC). It should boost the probability for competition. Nevertheless, competition is likely to remain at the same low level as with other GWACs and multiple-award contracts across the government.

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Despite all their choices, “you’ll end up with the same cast of characters,” said Jaime Gracia, president and CEO of Seville Government Consulting, a federal acquisition and program management consulting firm.

Larry Allen, president of Allen Federal Business Partners, said he expects a small number of businesses, as low as 5 percent, getting a significant amount of work on STARS II.

“Some companies that can write a good proposal and get an award have little, if any, ability to develop business or effectively compete for task orders,” he said.

Ray Bjorklund, senior vice president and chief knowledge officer at FedSources, compared the competition’s likelihood to the Navy’s major IT contract, Seaport-e. It had more than a thousand businesses on the contract, but only about 50 companies received a lot of work.

The 8(a) STARS II GWAC is a $10 billion, 10-year governmentwide IT contract, which is set aside only for small business. Agencies can buy IT helpdesk support, information assurance, cybersecurity, custom computer programming, and computer operations maintenance.

Under STARS II, GSA found it best to work with the four functional areas instead of the eight, based on its market research. GSA said it can meet customers' needs with those four.

Its predecessor, 8(a) STARS, has been a successful GWAC since it was awarded in 2004, experts say, with cumulative sales of $3.4 billion as of June.

“With 8(a) STARS II contracts going to businesses across the country, federal agencies can tap a new source of IT innovation and fresh ideas while truly supporting America’s small businesses,” said Steve Kempf, GSA’s Federal Acquisition Services Commissioner.

Bjorklund said there was no real disadvantage to having 599 businesses on STARS II. He called it a one-stop shop for meeting socio-economic small business goals.

STARS II has each type of small business, with the largest portion—35 percent—of awards going to woman-owned small businesses.

They’ve been vetted by GSA officials, who already made sure the companies are qualified. “They’ve received the stamp of approval,” he said.

Still, Gracia said he was surprised by the massive number of businesses that were given awards. Even so, the contract maximizes opportunities for both small businesses and the breadth of products and services agencies can buy. He also said it could increase competition per order.

If that’s the case though, officials run the risk of getting a lot of proposals for an order, Allen said. That risk has more potential of coming true too now that STARS II has only four functional areas. Every company in one of those areas must be given a fair opportunity to compete for a specific piece of business.

With the numbers and history of competition levels on multiple-award contracts though, officials may be expecting what will happen, Allen said.

“It would seem that GSA is betting that there will only be a small number of respondents per opportunity,” he said.

For now, GSA has made the awards and will publish the notice to proceed later this month.