New Agency Strategies that Make Proposals Profitable for Government

Whoever coined the phrase “time is our most valuable asset” didn’t create the government procurement process. It’s earned its reputation as a notoriously long and drawn-out affair.

That’s why agencies have formulated innovative ways to streamline their acquisition methods over the last few years, always with the goal of maximizing speed and value for the government. While Requests for Proposals (RFPs) remain fundamental to government contracting, new methodologies are emerging that often drive better outcomes. These contemporary approaches transform how agencies manage contract lifecycles.

The updated methods listed below are designed to do two things: 1.) eliminate time-consuming processes and 2.) mitigate financial risk for your government agency.

1. Streamline your Proposal Process through Negotiated Acquisition

Negotiated Acquisition is a significant departure from traditional sealed bidding processes. This approach proves particularly valuable when your agency faces limited vendor pools or your project has specialized requirements that don't align with conventional competitive procedures.

The method excels in complex procurements, particularly those involving technology. Basically, you leverage this process to evaluate technical merits by focusing on a contractor’s past performance metrics.

Real-world example: A federal agency recently used Negotiated Acquisition for a complex IT modernization project, reducing its procurement timeline by 45% while ensuring precision in meeting technical requirements.

2. Take advantage of Best Value Procurement

With Best Value Procurement (BVP), you're no longer bound by the constraints of price-based decision-making. Instead, you can consider a broader spectrum of factors contributing to long-term value. This approach allows you to look beyond the initial price tag and evaluate proposals based on their overall worth to your agency.

When you implement BVP, you're not just buying a product or service; you're investing in expertise, innovation and proven track records. This is particularly beneficial when you're dealing with complex procurements involving specialized services.

Here, you assess proposals based on technical merit, examining aspects such as solution architecture configuration and management system quality.

BVP also lets you factor in past performance. You can investigate a contractor's history of success with similar projects and consider client satisfaction ratings. This comprehensive evaluation helps you make more informed decisions that align with your agency's long-term goals.

One of BVP's unexpected benefits is its positive impact on small businesses. By considering factors beyond price, you're creating a more level playing field. This has increased participation from small, women-owned and minority-run companies in government contracting.

Now, you might wonder if there are still situations where the traditional low-bid system is preferable. Absolutely. For straightforward, commodity-type purchases, low-bid might still be your go-to. However, for complex projects where quality and expertise are crucial, BVP can help you potentially lower overall costs in the long run.

Real-world example: The Department of Energy (DOE) successfully used BVP in its cleanup of the Hanford Site, a decommissioned nuclear production complex. By prioritizing technical expertise and out-of-the-box approaches over lowest price, the DOE accelerated the cleanup process and improved overall project outcomes.

3. Make use of Share-in-Savings Contracting

Share-in-Savings (SiS) contracting is a forward-thinking approach that can transform how you manage project risk and motivate contractors. It's a performance-based method that aligns the interests of your agency with those of your contractors. Here's how it works: You can initiate projects with minimal upfront investment, and your contractor gets paid based on the savings or revenue generated from the project.

This approach is particularly beneficial if your agency is facing budget constraints. With SiS, you're minimizing your financial exposure while simultaneously creating a powerful incentive for contractors to work efficiently. Contractors are motivated to complete projects quickly and under budget because their compensation is directly tied to the project's success.

But SiS isn't only about saving money. It's about fostering a partnership between your agency and committed contractors. When contractors have a stake in the outcome, they're more likely to bring their best ideas to the table. This can lead to progressive solutions that might not have emerged under traditional contracting methods.

It's important to note that SiS isn't suitable for every project. It works best for initiatives where savings or revenue are clearly defined. You must establish a solid baseline and agree on performance metrics upfront. This requires careful planning, but the potential benefits can be substantial.

Real-world example: The Department of Education successfully used SiS contracting to modernize its student loan program. The chosen contractor developed a new backend service system and was paid from the savings generated by reduced loan defaults and improved collections. This resulted in significant cost savings for the government and an improved user experience for students.

4. Benefit from Reverse Auctions

Reverse auctions are turning the traditional bidding process upside down, and you'll want to embrace this change. Typically involving the Unison Marketplace platform, this unorthodox approach provides federal, state and local governments and educational institutions with an online solution to purchase goods and services.

Multiple vendors compete to win your contract by lowering their prices in real-time. It's like a regular auction, but in reverse—the lowest bid wins.

Reverse auctions bring transparency and competition to a whole new level. It’s not about receiving sealed bids and hoping for the best. Instead, it’s about witnessing a dynamic process where vendors can see competing offers and adjust their bids accordingly. This live competition often results in better pricing for your agency.

Reverse auctions can also significantly streamline your procurement process. Instead of spending weeks or months on traditional bidding, you can often complete a reverse auction in a matter of hours. Such efficiency can be a game-changer, especially when you're dealing with time-sensitive projects.

Reverse auctions can also help you expand your supplier base. Vendors who might have hesitated to engage in a lengthy traditional bidding process may be more inclined to participate in a quick, transparent reverse auction. This increased participation can lead to more diverse and competitive offers.

It's worth noting that reverse auctions aren't suitable for every procurement. They work best for standardized goods and services where price is the primary differentiator. When implemented correctly, reverse auctions can be a powerful tool in your procurement toolkit. They can help you achieve significant savings, increase efficiency and meet small business award goals. Just remember, like any tool, it's about using them strategically and in the right situations.

Real-world example: The Department of Defense has successfully used reverse auctions to procure IT hardware. In one instance, the Defense Logistics Agency saved over $2 million on a single purchase of computer equipment by using a reverse auction platform.

5. Leverage Performance-Based Acquisition

Performance-Based Acquisition (PBA) shifts the focus from prescriptive requirements to desired outcomes. This approach empowers contractors to innovate while ensuring you receive the results you need. PBA fosters a results-oriented partnership by clearly defining success metrics and aligning payment structures with performance.

With PBA, you don't dictate how a contractor should accomplish a task—you specify what needs to be achieved. This flexibility allows contractors to discover more efficient or cost-effective solutions. For example, instead of detailing exact specifications for a new IT system, you might outline performance goals like "99.9% uptime" or "ability to process X transactions per second."

PBA encourages continuous improvement and aligns contractor motivations with your agency's goals. By tying compensation to measurable results, you create a scenario that drives excellence as well as efficiency.

Real-world example: The Department of Energy successfully used PBA for environmental cleanup projects. By focusing on outcomes like “reducing the number of contamination sites” rather than on following specific cleanup methods, contractors felt incentivized to develop non-traditional approaches. This resulted in faster completion times and significant cost savings compared to traditional procurement methods.

6. Craft One Spending Lens through Category Management

Category Management transforms your procurement strategy by viewing spend through category-specific lenses. This approach enables you to leverage collective buying power while standardizing requirements across departments. You can dramatically improve value by consolidating similar purchases. 

Imagine you're managing IT hardware purchases. Instead of each department independently sourcing laptops, a category management approach would analyze total organizational needs and market trends. This holistic view would allow you to negotiate better terms, ensure consistency and potentially discover innovative solutions that meet multiple departmental needs.

Benefits extend beyond cost savings. Category Management fosters cross-functional collaboration and improves supplier relationships. It also provides valuable data insights that can inform broader strategic decisions.

Adopting Category Management requires a shift in mindset and often organizational structure. However, its potential for transformative improvements in procurement efficiency makes it a powerful strategy for forward-thinking agencies.

With it, you leverage collective buying power while standardizing requirements across departments.

Real-world example: The U.S. Air Force implemented category management for its professional services contracts. By consolidating requirements and leveraging data analytics, they achieved a 15% cost reduction ($1.4 billion in savings) while improving service quality and small business participation.

7. Take a Page from Software Development with Agile Procurement

Agile Procurement applies software development principles to your acquisition process. This iterative approach enables you to deploy solutions rapidly by breaking large procurements into smaller, manageable components. The result? Reduced risk and the ability to quickly adjust based on changing requirements.

Traditional procurement can be slow and rigid, often leading to outdated solutions by the time they're implemented. Agile Procurement, on the other hand, embraces dynamism and continuous improvement. You work closely with contractors in short "sprints," regularly evaluating progress and making course corrections as needed.

This approach is particularly valuable for evolving projects. Instead of committing to a massive, multi-year contract upfront, you can start with a minimal viable product (MVP) and build upon it. You benefit from early wins while refining your long-term strategy.

Real-world example: The U.S. Digital Service successfully applied Agile Procurement principles to modernize the Small Business Administration's certify.sba.gov portal. By breaking the project into smaller modules and using iterative development, they delivered a working prototype in just three months—a process that would have taken years under traditional methods.

Embracing Agile Procurement requires a cultural shift and new skill sets within your organization. However, the potential for faster, more responsive and ultimately more successful acquisitions makes it an increasingly popular approach in government procurement now.

Conclusion

The modern procurement landscape demands flexibility, frugality and, above all else, speed in contractor execution. Try one or more of the seven methodologies we’ve outlined. They’re potent tools for optimizing acquisition and ensuring taxpayer dollars are well-spent.