If you're reading this piece it means you likely know or know of the wonderful Courtney Fairchild and the team at Global Services. Courtney has been my friend and colleague for over twenty years and she is the best of the best. I am blessed to have her, the Global Services team, and so many others, as part of my GovCon family. Now, here's an update about my favorite purchasing method, Simplified Acquisitions.
There is so much information flying about regarding how agencies buy, how they are changing how they buy, how you can get access to how they buy, and the list goes on. Here's what you need to know for this particular conversation.
Purchases made by agencies, boards and commissions of the U.S. Government when they use the Simplified Acquisition Procedures, continue to be a source of viable opportunity for all companies, especially small business concerns.
Obligations are the dollars allocated by agencies using a specific procurement method to a specific vendor. Simplified Acquisition dollars obligated by agencies since fiscal year 2009, that's twelve fiscal years ago, have increased an average of one billion dollars each fiscal year. For FY2020, that cadence will continue and the average will increase.
To be very specific, the Government reported just under $13 billion in obligations made via Simplified Acquisitions in FY2009. That number was $25.5 billion in FY2019.
Buys made by agencies using the Simplified Acquisition Procedures (SAP) represent the most consistent and significant area of spending growth for any purchasing method. Period.
Let's compare SAP spending to GSA Schedule spending. The delta between them (in favor of the schedules) in FY2009 was $25 billion. In FY2019, the delta was reduced to $7.5 billion. The significance of this is the fact buys made under the Federal Supply Schedules do not have thresholds, whereas Simplified Acquisitions do. In fact, it was only recently that the Simplified Acquisition Threshold (SAT) was increased to $250K per contract action.
But agencies routinely spend more than that with each contract. How, you may ask? One of the misnomers of these types of buys is the spend limit per contract. The SAT applies to contract actions which means, if an agency awarded you a Blanket Purchase Agreement or Indefinite Delivery Contract based on FAR Part 13, each order over the course of one year or ten years, could be at the $250K threshold. Each order represents a different action. Do the math based on one order per month, per week or per day.
There's also an exception for Commercial Items that allows buyers to adjust the threshold to $7 million per contract action. And in the case of a national emergency, humanitarian relief effort or terrorist attack, the heads of agencies can increase the SAT to $13 million. That's where we are currently. Of the $18 billion in SAP obligations reported for the current fiscal year, $1 billion of it is specific to COVID-19 efforts based on agencies referencing the National Interest Code tied to these transactions.
Let's do a wrap so you can give me a jingle for more information.
With the exception of two very small independent agencies, every agency reporting contracting and/or funding actions in FY2019 executed purchases using the Simplified Acquisition Procedures. They buy everything under the sun (goods and services) and touched more then 65,000 small business concerns in the process. Nearly half of those companies were awarded at least $50K in SAP orders and some did over $5 million by dipping their ladles in a bucket of spending that represents about five percent of the total fiscal spend.
Did I mention the part about many of these buys taking an average of thirty days or less? What about the fact 70% of the dollars are obligated to standalone contracts instead of contract vehicles? Guess we have to cover that next time.
Be well and stay well!
Go-To-Guy Timberlake, Chief Visionary