What is a contract vehicle?

what-isChris Wiedemann_65 x 85By Chris Wiedemann, consultant

Last month, I began our “What is…?” series by looking at the very basics of government contracting. However, that information can only get you so far – knowing the size of the market doesn’t tell you how to capture any of it.

To that end, today’s post is going to look at one of the building blocks of selling technology – or anything else – to the federal government: contract vehicles.

Contract vehicles are the basic mechanism through which government buys products and services. Although it’s possible for an agency to buy things on the open market, for reasons beyond the scope of this blog, it’s difficult and time-consuming. Because of that, almost all government purchasing is done against existing contracts that narrow the pool of possible vendors for a given product or service.

Think of it like this: A contract vehicle is a hunting license for industry and a menu for our customers. It’s a piece of paper that allows us to sell to government. It also gives agencies a defined list of products, services and prices to choose from. In this metaphor, the only real difference between the types of contract vehicles is the number of companies that have the license and the number of options on the menu.

With that in mind, let’s take a look at three common types of contract vehicles in the federal IT space: GSA Schedule contracts, ID/IQ contracts, and GWACs.

The first of these vehicles, and by far the most common, is called a GSA Schedule. In 2017, holding a GSA Schedule is really table stakes for doing business with the government. This is a contract vehicle managed by the General Services Administration that effectively creates a price list for a category of products that government customers can buy from.

I mention categories because there’s a GSA Schedule for everything the government would ever want to buy, from office supplies to weapons and ammunition. The category we’re concerned with is Schedule 70, which covers IT hardware and software. Unlike most other vehicles, GSA schedules aren’t competed – any company that wants one can have one, as long as they’re willing to do all the maintenance and compliance work that’s required.

Because of the wide range of contractors and products represented on GSA Schedules, they’re usually used by agencies that want to buy a standalone product or service. However, they aren’t really designed for complex services or major system integration projects – for those, government customers will usually use an indefinite delivery/indefinite quantity (ID/IQ) vehicle.

Generally speaking, an ID/IQ is used to contract out the development of major mission systems to a large systems integrator. They’re closely competed, often awarded to one or (at most) a handful of companies, and include many complex requirements that cannot be captured in a schedule solicitation. If you work in the private sector, ID/IQs matter mostly as a way of identifying another customer group. Often, the lead companies (primes) on those contracts will buy software from tech firms or their partners and plug it into the larger system they’re developing.

Last but not least is a type of ID/IQ that you may be familiar with – a government-wide acquisition contract (GWAC), which basically functions like a competed GSA schedule. These are contracts that are managed by one agency but made available to the entire government, for the purpose of creating a short list of vendors that can meet common product or service requirements. The best-known example in IT is NASA’s System for Enterprise-Wide Procurement or SEWP. GWACs are increasingly popular among customers because the initial competition creates a much smaller pool of companies for them to deal with.

Want to learn more about selling IT to the federal government? Sign up for my one-day class in McLean, Va. on April 19.

There’s an (extremely!) quick overview of government contracting vehicles. Want more information? Check out my latest webinar on capturing more IT business from HHS in FY18

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One Response to What is a contract vehicle?

  1. John Frey says:

    Interesting article for the reader who has little background. I believe it’s important to delineate the difference between MACs (Multiple Award Contracts -as issued by individual agencies and DoD elements) from the Governmentwide Acquisition Vehicles. (GWACs). To this point, your readers need to know that the Office of Management and Budget (OMB) is the authority under which the government contracts are overseen and managed – and that there are only three authorized GWACs: GSA, NASA, and NIH. NIH’s GWACs performing with the greatest growth with their CIO-SP3, SP3 for small business, and CIO-CS.

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