FedSubK Feature: Subcontracting - Best Practices, Pitfalls, and Frequently Asked Questions
Everyone is always talking about the big wins – getting that first PRIME contract. But you don’t have to be a prime to make a difference by providing much needed products and services to support agency missions and get a pie of the Federal marketplace pie. In this FedSubK Feature, I’ll share a few best practices, pitfalls, and frequently asked questions I get about Subcontracting.
When we talk about best practices, we are coming from the perspective of the business looking for subcontracting opportunities, but primes can also benefit from these tips as well when thinking about it from their perspective.
BEST PRACTICE #1 – BUILD A NETWORK OF PRIME CONTRACTORS
Let me tell you a story from when I was a CO/KO. I had a subcontractor come to me one day after a prime they had worked with on our site for about seven years had failed to win the follow-on award for the work. The sub said, “I’m not sure what we’ll do now. This is our bread and butter.” I asked about other prime contractors they had subcontracts with and what work they did commercially. The sub said, “Well, this job was so big, we put all our eggs in this basket. We thought we’d be here a long time.”
My advice is don’t put all your subcontract eggs in one prime contractor’s basket. There is too much at risk to think that one lucrative contract with a prime with continue in perpetuity just because things are great now. Why? Because of the reliance on a process where you don’t control – that being the prime’s relationship with the agency, the prime’s submission of an offer, and the Government’s evaluation of it as a winning proposal.
You must build a network of prime contractors that allows you to spread your exposure and income from Federal work across several subcontracts so that one prime losing a contract does not become a catastrophic event to YOUR business. I’ll cover below how to find Federal prime contractors.
BEST PRACTICE #2 – READ THE SUBCONTRACT AGREEMENT
There are several things outside of the work that subcontractors need to focus on in the Federal space, more so than in the commercial sector. You must read (and understand) the subcontract agreement between you and the prime. That includes:
- The scope of the effort the prime is having you perform or support,
- Payment terms,
- Non-disclosure agreements,
- Non-compete clauses,
- The flow down of government terms and conditions from the prime contract,
- How changes in performance will be handled,
- Disputes / termination / cancellation / closeout, and many other terms.
Your agreement is what it is. And it can change based on changes in Federal regulations, policies, and procedures that impact the Prime’s contract at any point of performance.
Know it and get very familiar with it. Make sure you agree with it before you sign. Subcontractors can ask the prime to clarify processes, communication, and terms before signing. But understand that some terms will flow down from the Government. More on that in a minute.
You must also understand privity of contract between the prime and the Government, meaning the prime and Government have a contractual relationship for the work. Subs do not have privity of contract with the Government…your relationship is with the prime only (or higher tier sub). There is no coming directly to the Government with a complaint about your subcontract or the terms it contains, except for very few special circumstances. I’ll also address one of those below.
BEST PRACTICE #3 - UNDERSTAND FEDERAL REQUIREMENTS
Have you heard of the legal principle that says, “Ignorance of the law is no excuse”? Thomas Jefferson said that if ignorance of the law was an excuse, laws would lose their effect. In the case of Federal contracting, even at the subcontractor level, this still holds true.
It is important as a subcontractor to understand the specific Federal requirements called out within your subcontract terms and conditions that flow down from the prime’s contract to yours. Failure to comply can lead to fines or penalties for you and your prime contractor.
The “flow downs” are Federal requirements set forth through a number of avenues that culminate in your subcontract as mandatory for compliance by both the prime and you as a subcontractor.
- Set by statute -- such as compliance with prevailing Department of Labor wage determinations
- Regulatory -- such as what is found in the Federal Acquisition Regulation (FAR) or set forth in agency supplements to the FAR)
- Technical Performance – such as compliance with a specific method of performance (like as in environmental cleanups or handling hazardous waste) set forth in policies or compliance with security requirements like security checks for employees or badging for access to government facilities
- Procedural – such as upwards reporting requirements
If you oversee a lower tier sub, these requirements may also have to be flowed down to all lower tiers, as indicated in your subcontract.
Specific requirements to be aware of where ignorance does not excuse a lack of compliance includes, but is not limited to:
- Regulatory compliances with agencies outside of the agency for whom the work is performed (i.e., Fish and Wildlife Service, Department of Homeland Security, etc.)
- Pricing (depending on the type of prime contract, subcontractors can be subject to certified cost or pricing data) – your prime will indicate this in the subcontract.
- Prevailing wages – Dept of Labor Wage Determinations – provided by prime
- Data Rights
- Acquisition, Handling, and Treatment of Government Furnished or Contractor Acquired Property
- Security & Facilities Access
- Safety
- Section 889 Prohibition on Contracting with entities using certain telecommunications and video surveillance service or equipment from made by five specific Chinese companies and their subsidiaries, affiliates, and successor organizations. (Search on “Section 889 prohibited companies” for a list).
- Prohibition on the use of any hardware, software, or service developed or provided by Kaspersky Lab to include any successor, any company that is controlled by or under common control with Kaspersky Lab, or any company with which Kaspersky has a majority ownership.
- Prohibition on ByteDance applications (aka Tik Tok) related to the use of any equipment used in the performance of work to acquire, store, analyze, evaluate, manipulate, manage, move, control, display, switch, exchange, transmit, or receive data or info under a contract with an executive agency….including computers, peripherals, telephones, hardware, software, firmware, etc. The Contractor is prohibited from having or using a covered application on any information technology owned or managed by the Government, or on any information technology used or provided by the Contractor under this contract, including equipment provided by the Contractor’s employees.
- Cybersecurity
- Reporting
- Other Compliance (Gratuities, Code of Ethics, etc.)
As mentioned, many of these impact lower-tiered subs you may manage on the work, and they must be flowed down to them as well in your agreements.
BEST PRACTICE #4 - CREATE A COMMUNICATION & COORDINATION CADENCE
To avoid disagreements and other pitfalls we will talk about later, you must insist that your prime engage in a regular communication and coordination cadence.
This spells out--
- Who do you contact in specific instances. This will likely be the Prime in all instances but who at the Prime is important and having an open line of communication.
- How will you communicate? Phone, email, text, WhatsApp? Etc. and as we will talk about next, keeping records of those communications – particularly if they impact the scope, cost, schedule, or other key aspects of the project.
- When do you communicate? Set a cadence for regular communication – a check in at the very least or more formal status meetings weekly or biweekly, particularly on long terms projects. Have an agenda and an understanding of the critical elements or the prime that require your immediate communication (i.e., security or safety incident, departure of an employee deemed “key personnel”, etc.)
- How will conflicts or disputes be handled? Determine an escalation chain so conflicts and disputes can be resolved quickly. On large projects with multiple subs, the Government does want to know that lost time / effort is minimized in these situations.
As the sub, you may have to be proactive to engage your prime and not wait for them to contact you. You likely aren’t their only sub or this isn’t their only contract.
You must also your best judgement and err on the side of caution when it comes to notifying your prime during performance of potential or actual issues. It could save you a lot of grief later.
BEST PRACTICE #5 - ESTABLISH A RECORDKEEPING SYSTEM
Establishing a recordkeeping system for your Federal work is a good idea. In it you should include:
- Project Library – summaries of the work you’ve performed and outcomes for future use with other primes or stretching into becoming a prime contractor yourself one day.
- Pricing / Rates – maintain a record of your prices and labor rates and how they were substantiated so you withstand any future questions or the rare possibility of an audit.
- Payroll / Accounting – particularly when Department of Labor prevailing wages are involved, you must keep detailed records of the wages, fringes, and benefits paid to those employees and how they were calculated. The DOL Wage and Hour Division has amazing guides on how to do all that correctly so you don’t find yourself on the receiving end of a not-so-great outcome should they get a compliant and do an audit.
- Organized and segregated – make sure records are organized and segregated by contract, project code, or other method.
- Retention after performance – make sure you retain all records for the required minimum time after the end of contract performance (which should be called out in your subcontract agreement)
- Available for audit – if required, be sure you can make all records available for audit by the prime or Government.
Too many subs think about these things too late and then play catch up once they are in the middle of performance.
COMMON PITFALL #1 - FAILURE TO MAINTAIN RELATIONSHIPS
If you aren’t leveraging relationships with prime, suppliers, and Government contacts for future opportunities, you are missing out on future opportunities both as a subcontractor but possibly as a prime. Even as a subcontractor, you will build valuable relationships with the Government through business name recognition and performance. You can use that to further your relationships with agencies, primes, and other team members to create and grow in the type of sizes of Federal opportunities you participate in and the roles you hold.
Letting these relationships die on the vine shows a lack of interest in future opportunities. Never “check out” of a relationship with an agency or prime without completing the work. It can come back to haunt you on future opportunities.
Avoid incumbent-itis and the thought only you can do what you do as a sub. Trust me, there is another sub waiting in the wings to do the work if you aren’t or don’t maintain the relationships that matter to keep yourself as a person who is “in” with the prime or Government.
COMMON PITFALL #2 - AMBIGUOUS TERMS & CONDITIONS
We talked about a best practice being reading your subcontract agreement. But you also need to understand it. If you aren’t sure, ask the prime to clarify or explain early and “GET IT IN WRITING” to avoid assumptions, misinterpretations, and other disputes that can be costly to you in performance.
Clearly understand—
- Scope
- Payment Terms
- Prevailing wages
- Compliance
- Reporting
- Communications (who and when)
- And limits of your authority within the project, with the prime, and with the Government
Don’t let things get glossed over to your detriment.
COMMON PITFALL #3 - FLOW DOWN FAILURES
We talked earlier about clauses that flow down from the prime contract to the subcontract. It is the prime’s responsibility to ensure that all applicable contract clauses are flowed down to subcontractors. Primes will often flow down as much as possible as a means of risk mitigation, even when a flow down is not required by the clause itself.
It’s important to do your due diligence to understand the clauses that should flow down from the contract as a course of business on Federal contracts as well as understand the clauses that should NOT flow down. And it’s important from two perspectives. You want to be sure you are not being held to a requirement not required for performance AND you want to be sure any mandatory requirement is not left out of your subcontract.
If a flow down is not required, subcontractors can negotiate with the prime using the applicability language in the clause and the prescription for its use as found in the FAR to have it removed from the subcontract agreement. Easy enough.
But…what happens when the prime fails to correctly flow down a clause that is required to be in its subcontracts. And what happens to you -- the subcontractor -- when that occurs?
Some say the Christian Doctrine could potentially apply. The Christian Doctrine is a principle stating that if a contract clause is required by either statute (i.e., law), regulation, or Executive Order the required clause is automatically incorporated by operation of the law into any existing contract. This could imply that a clause in the prime contract that states it should flow down to the subcontract in its language is still binding on the subcontractor. However, that can depend on the nature of the clause.
At present there is no direct precedent where the Christian Doctrine has been explicitly used to hold a subcontractor responsible solely due to the prime contractor’s failure to include a required FAR clause. However, s subcontractor may find itself subject to certain obligations even if those were not explicitly stated in the subcontract, especially if the clauses involve important regulatory or statutory requirements; one example being payment of prevailing wages or a federal minimum wage to subcontractor employees. This this case, a subcontractor could face legal risk if it is assumed that it is not bound by certain FAR clauses simply because they weren’t included in the subcontract. Courts could still enforce these clauses based on underlying public policy.
While the prime contractor is ultimately held accountable for any failure to comply with contract terms and conditions, The prime contractor can amend the subcontract to include the missing clause. Subcontractors may need to negotiate with the prime for any changes such as increased costs, should that occur.
I highly recommend that you have an attorney you can contact who is versed in Federal contract law to review your subcontracts – particularly if you are new to Federal subcontracting – and advise you of your responsibilities so you operate within the law.
COMMON PITFALL #4 - COMMITMENT VS DELIVERY
A prime has asked you if you are available for some subcontract work. You’ve got several other commercial jobs and a few other subcontracts with other primes. You don’t want to miss the opportunity so you decide to try to make it work and agree to the prime’s schedule even though it will be tight. A few weeks later, you realize you can’t meet the prime’s schedule. You reach out to the prime and try to work out a schedule delay so you can finish the work.
When it comes to Federal work never ever EVER over commit and under deliver. It is the fastest way to get a bad reputation, and it not only impacts you but every other subcontractor on the job, your client (the prime), and the Government as well as the end user, which could be military members, veterans, or the public.
If you can’t meet a schedule, take a pass or negotiate a longer schedule up front. Build in contingency time and/or have a “Plan B” for not if, but when, delays occur and take you off your timeline and take the project off the critical path.
I highly suggest that subcontractors, like primes, create surge capability so that if another opportunity hits or a project delay occurs you can flex without fear of failure. This gives you practice for moving into prime contractor opportunities and builds a network of reliable subcontractors for yourself when that time comes.
COMMON PITFALL #5 - POOR MANAGEMENT & RECORDKEEPING
We talked about a best practice being the creation of a communication and coordination cadence with your prime. Projects can suffer from a lack of proactive management. And it can occur at any level. And management includes compliance with contract requirements from both a technical and operational perspective.
The same with recordkeeping. Most reporting subcontractors do on Federal contracts flows up through the subcontracting tiers to the prime. Waiting on the records of your lower-tier subcontractor or having the prime wait on you isn’t good.
You can perform the work well on a contract and may think that’s enough. But if you can’t manage your lower-tier subs well enough and/or keep accurate, complete, and organized records, it will leave the Government doubting your capabilities to one day migrate from subcontractor to prime. And they will remember you…but not in a good way
Now let’s go over five frequently asked questions I receive about subcontracting.
WHERE CAN I FIND A LIST OF FEDERAL PRIME CONTRACTORS?
There are a few great places to find this information (links at underlines):
- SBA Directory of Federal Government Prime Contractors with a Subcontracting Plan -- List of all Federal prime contractors with a subcontracting plan requirement.
- GSA Subcontracting Directory
- DoT Subcontracting Directory
- FAA Subcontracting Directory
- DHS Prime Contractors List
- GSA eLibrary -- Subcontractors can use this resource to identify potential prime contractors who may need subcontracting partners for GSA Schedule contracts.
WHERE CAN I FIND SUBCONTRACTING OPPORTUNITIES?
- SAM.gov -- While it's mainly used by prime contractors to find federal opportunities, subcontractors can also use it to identify potential prime contracts that may require subcontracting. By searching for opportunities by NAICS codes, keywords, or specific agencies, subcontractors can identify prime contractors who might be looking for subcontractors.
- SBA SubNet -- Is a database of subcontracting opportunities posted by prime contractors. This platform is particularly useful for small businesses looking to partner with larger primes on federal contracts.
- APEX Accelerators (formerly Procurement Technical Assistance Centers (PTAC)) -- free or low-cost assistance to businesses seeking to compete in the government marketplace. They provide guidance on finding subcontracting opportunities and can connect subcontractors with prime contractors.
- Direct outreach to Prime Contractors -- Large Federal Prime Contractors sometimes have their supplier portals, under which you can register for possible subcontract opportunities. Lockheed Martin, Northrop Grumman, Raytheon Technologies, Boeing, General Dynamics, BAE Systems, Leidos, L3Harris Technologies, SAIC, and Huntington Ingalls Industries are a few of the large contractors in the Federal marketplace with such portals
DO I NEED TO BE REGISTERED IN THE SYSTEM FOR AWARD MANAGEMENT (SAM.GOV) TO BE A SUBCONTRACTOR?
No. However, primes often use SAM to find a list of potential subcontractors. Being registered builds credibility since your business is vetted through the IRS TIN Match and the SAM Exclusions match processes. Registration gives you visibility to prime contractors, access to SBA SubNet, allows you to respond to critical FAR clauses such as choosing your business type (small, WOSB, SDVOSB, etc.), and representing and certifying to certain critical FAR flow down clauses like some we talked about (Section 889, etc.).
WHAT SHOULD I DO IF I HAVE AN ISSUE OR DISPUTE WITH THE PRIME?
Follow your subcontract agreement and the procedures outlined within it. Working within the bounds of agreed to dispute resolution through escalation chains, mediation, and arbitration before litigation, when possible.
Do not call the Contracting Officer or Federal Government to complain about your prime contractor. Without privity of contract, the Government has no authority or ability to pursue any recourse on the subcontractor’s behalf.
For example, if you have a claim against the prime and the prime is not willing to settle it, if it chooses the prime can sponsor the subcontractor’s claim to the Government for consideration. But it is not required that the prime sponsor the claim and the sub cannot present its own claim to the Government. Again, it gets back to that privity of contract thing.
There is one exception, however, to the don't-call-the-CO/KO guidance...
WHAT IF I HAVEN'T BEEN PAID BY THE PRIME?
If the prime contractor has failed to make timely payments and there is no resolution with the prime after multiple attempts, subcontractors can document the communications made (in detail) and, after seeking legal assistance, the matter can be reported to the Contracting Officer for assistance in resolving payment disputes (FAR 32.112-1).
The role of the subcontractor is vital in providing products and services to the Government. Primes can’t do it all. They rely heavily on subcontractors and an overwhelming majority of those subcontractors are small businesses.
Want to learn more about the role of the subcontractor? Check out our FedSubK Feature “Prime or Subcontractor: What to Know About Each Role” at https://www.fedsubk.com/post/prime-or-subcontractor-what-to-know-about-each-role.
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How Early is "Early"? (Weatherly the RFO - Part 5)
"We need to engage the agency early."
It's hard to argue with that.
But what does "early" mean, actually? I mean – in Government terms and from their viewpoint.
Most companies are going to say “early” means before the solicitation is released. A lot of GovCons on LinkedIn talk all about getting in there while acquisition planning is going on. They say that’s the window when key decisions are made about contract types, competition pools, and evaluation factors. Others say it has to be well before acquisition planning.
Listen to those people!
They are the ones in industry that “get it”!
The best market research – and industry’s best opportunity to help inform the discussion – happens before acquisition planning formally begins.
Reading through the Revolutionary FAR Overhaul (RFO), and as a former KO/CO, I had hoped it would catch up and understand that “early" is too narrowly defined. Maybe I get it now from being out here in industry for a number of years fully immersed in the talk of capture and pipeline development.
Knowing the federal marketplace should be an ongoing acquisition competency, not an activity tied to a single procurement.
Technically, FAR Part 10 is gone but experienced contracting officers understand that market research and acquisition planning belong together. They influence each other constantly. From that perspective, integrating the regulatory text of FAR Part 10 into Part 7 recognizes that connection.
But putting market research in Part 7 may reinforce another problem; treating it as something that begins when acquisition planning begins. Market knowledge should lead acquisition planning, not begin with it.
A good requirement starts with knowing the market well. It’s when your Program Manager starts talking to you a good six months before the purchase request hits that a project is coming, prepping you for the drop. They give you intel on who the major players are, how commercial buying might fit, and outside influences like economic conditions or materials shortages.
From there, I can start talking to the Small Business Specialist and looking at the likely small business pool. I can talk with the estimator about likely dollar values and start thinking about contract type, pricing structure, clauses, and ways to streamline the procurement.
Right there.
Did you see that?
I’m already thinking about the competition pool, contract type, and pricing structure and there isn’t any talk about a purchase request or acquisition strategy yet. That’s what EARLY is. And when contracting is included in programmatic budget discussions, those wheels turn even earlier. And even with that six-month head start, it’s only useful if I’m not starting from zero.
And one thing the RFO is telling us very clearly now is that there is no requirement to conduct market research using a specific method or set of methods. There is no mandate to issue a Sources Sought or Request for Information (RFI).
The RFO doesn’t prescribe a method. It tells the acquisition team to conduct market research appropriate to the circumstances under certain scenarios, and to engage in responsible and constructive exchanges without creating an unfair competitive advantage or violating procurement integrity requirements. (Proposed rule RFO 7.201(b)).
The method isn’t the point anymore. The quality of the information and the judgment applied to it is.
With that I think a mindset shift needs to take place for the RFO to be successful. And when the FAR prescribes less about how to get that information, what the acquisition team already knows becomes more important, not less.
Look at market research as continuous learning, not a one-time action.
Industry watches markets continuously because it has to. Government acquisition teams tend to examine them one procurement at a time. Hopefully it's not just me that sees how that creates an information gap about the market before acquisition planning ever begins.
The market research contracting personnel are all familiar with is done to support an individual acquisition. It informs the strategy, contract type, commerciality determination, competition pool, pricing approach, and documentation supporting those decisions.
Continuous market learning does something different. It builds knowledge before there is an acquisition that demands it. It means understanding how an industry, its suppliers, technologies, pricing practices, and commercial business models are changing before a requirement forces us to ask.
So let’s get back to that word – “Early”
Earlier and more continuous engagement raises the obvious question about how does the Government keep it fair? The answer hasn’t changed. Engage ethically, document, protect procurement integrity, and don’t give individual firms an unfair competitive advantage.
Continuous market learning should never become continuous market favoritism.
In fact, broader and more continuous market awareness should make acquisition teams less dependent on what they learn from the handful of vendors who happen to show up for a particular procurement.
From the Contracting Officer's Chair
Using continuous market learning would create a focused ongoing procurement effort to understand industries, technologies, suppliers, and commercial business practices, whether or not an active procurement is immediately on the horizon.
Because of lumbering procurement timelines, many believe starting market research two years out is ample time to adjust to the market changes.
Yeah, I’ve fallen into that trap. It doesn’t work like that. Continuous market learning moves some of that discovery upstream, before changing direction becomes an acquisition problem. Or, as we call it in Contracting -- our problem.
Well-seasoned COs and KOs know instinctively continuous market learning is a much-needed best practice, but they aren’t always allowed to go to key industry events (because no travel funds), they don’t have time to meet with vendors (because of an end of fiscal year that goes on for an entire quarter), and they don’t have access to trade publications (because the Government won’t buy them a subscription). They try to pay attention to how markets are changing. But by the time the acquisition team discovers how much the market has changed, changing course can mean rethinking the solicitation, evaluation approach, competition strategy, and/or pricing structure. And anyone who has sat in the CO/KO chair knows the lift required to make those changes on an already compressed schedule.
The RFO’s FAR Companion says that “…acquisition teams should approach market research as an incremental process that builds understanding step-by-step.” That’s still looking at market research tied to an individual acquisition. The RFO writers had an opportunity to take the next step and distinguish procurement specific market research from continuous market learning. And they didn’t.
Ugh – heartbreaking!
But by integrating market research into acquisition planning in the text, and by relying more heavily on professional judgment, it creates space for the acquisition workforce to -- themselves -- think beyond procurement specific research to the possibility of continuous market learning. That gives agencies and programmatic teams within agencies a lot of leeway to create their own best practices.
If / how that happens is something to watch. BUT…
What the RFO Missed
RFO writers put their confidence in the acquisition workforce. Less prescription in process = more reliance on professional judgment. But judgment doesn't develop automatically with a new reg; I’ve been doing this long enough to know and live that. It comes from trusted and experienced leaders across the acquisition workforce – and by workforce I mean Contract Specialists (CS), COs, KOs, Contracting Officer’s Representatives (CORs), PMs, and Small Business Specialists. Those leaders step up and teach newer team members how to ask better questions, recognize bias, separate market understanding from vendor preference, and remain curious without compromising fairness in their research and engagements.
But the tools the RFO FAR Companion suggests aren’t starting points, not market knowledge. SAM.gov, CPARS.gov, FPDS.gov (which is now SAM Contract Awards and SAM Data Bank Reports), SBS, and other tools and datasets on Acquisition.gov and the GSA Acquisition Gateway don’t fully hit the mark. Talking to counterparts in other agencies, reviewing existing contract databases, reading industry publications, and examining vendor websites or online product literature are sources of information. They aren’t a substitute for market knowledge.
Useful? Absolutely. Enough? Not even close.
Tools provide data. Engagement provides information. Experience turns both into market knowledge.
A couple of things…
The question “Have we conducted market research yet?" isn't the same as "What do we know about the current market?"
The first asks whether an acquisition step has been completed. The second asks whether the acquisition team is informed.
The first is a report. The second can change an acquisition.
See the difference?
One of the unintended consequences of organizing market research as a separate FAR part was that it became easy to think of it as another acquisition milestone. Complete the market research, write it up, and move on and don't think about the market until the next buy.
The RFO has created an opportunity to break that habit. If we do break it, acquisition teams can begin acquisition planning informed by the market instead of using the start of acquisition planning to begin learning about it.
But, will we?
Acquisition Leaders – you have a challenge!
Five years from now, should market research still be something we conduct for an acquisition or will market knowledge finally be treated as a continuous learning acquisition workforce competency?
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Author: Shauna Weatherly, President, Federal Subcontract Solutions LLC(dba FedSubK). Shauna is a small business advocate and owner of FedSubK. FedSubK exists to simplify federal contracting, empowering small businesses with practical, understandable resources. We bring first-hand experiences in Federal contracting from multiple perspectives derived from roles held both in and out of Government over almost four decades of Federal service.
Visit us at fedsubk.com to learn more about--
Getting Started in Federal Contracting: fedsubk.com/begin-your-journey-here
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Market Research Isn't About Checking A Box (Weathering the RFO - Part 4)
"I guess FAR Part 10 is gone."
I've seen statements like that in a few posts floating around LinkedIn. And yes, on the surface that's true.
But in practice, market research just became more important and has moved upstairs to live with FAR Part 7 where it belonged all along, in acquisition planning. It's now woven directly in there and no longer seen as a separate activity. I mean, as a Contracting Officer, this is how we have approached it for decades. Good acquisition planning always depends on good market research. You can't develop a sound acquisition strategy without understanding the marketplace you're buying from.
From my perspective, that's not a bad thing.
While acquisition planning encompassing market research is a change in structure, we really need to take it a step further and look at...Why did the Revolutionary FAR Overhaul (RFO) bring them together while simultaneously reducing much of the prescriptive language that historically guided how market research was conducted and documented?
For years, we taught acquisition planning and market research as two separate FAR parts. But they never really lived separately, though industry might think that:
“First, the Government conducts market research then it plans the acquisition.”
Not so quick.
If you’ve been around the inside of the Federal acquisition lifecycle as a member of the acquisition team – the requiring activity, the small business specialist, the end user, or in contracting – you know that's not how good acquisitions worked for real. Planning never stops once a need is put into the budget. It only ramps up on a trajectory that gets faster and steeper the closer to you to either the need date or the end of fiscal year. That trajectory includes market research throughout the pre-solicitation phase.
We used market research to shape, then adjust the acquisition strategy and acquisition plan with what we learned. And that learning didn’t always come in the form of an RFI. We refined requirements, reconsidered contract types, identified capable small businesses we hadn't previously considered, discovered commercial solutions that changed the direction of the procurement, and poured through acquisition history in our agency and others.
In other words, market research isn't one step.
It is always on your mind as the budget becomes known, the requirements start to materialize, and the opportunity becomes known to industry.
The RFO recognizes that reality by integrating market research now into FAR Part 7. That's a positive evolution. It reflects how acquisition professionals do the work.
But something else changed, too.
The rewritten framework is noticeably less prescriptive…intentionally. The FAR Council has been very clear that one of the objectives of the FAR re-write is to reduce unnecessary procedural requirements, simplify the regulation, and place greater reliance on professional judgment.
I understand that objective and I support it. BUT… I keep thinking about the fact that federal contracting isn't just about making good business decisions. It's about making decisions that are FAIR.
And those two things aren't always the same.
When people outside Government hear the word “process”, they often think “bureaucracy”. Federal employees like little hamsters on wheels running the cogs of a system where they are looking for ways to slow down, do less, take up more time, eat up more industry dollars, and short cut the system.
As a Contracting Officer, “process” to me meant “fairness”. And it provides certain tests you have to meet.
Could another company look at this acquisition and conclude it had a fair opportunity to compete?
Could GAO understand why we selected this acquisition strategy?
Could an Inspector General reconstruct our thinking?
Could my supervisor understand my rationale for this acquisition strategy?
Could I defend this decision six months from now if someone challenged it?
THAT STILL MATTERS.
Those questions are part of what makes federal procurement DIFFERENT from commercial buying, EVEN WHEN the Government's version of commercial processes are used.
It’s precisely why market research evolved into more than simply learning about the marketplace.
It also became one of the ways agencies demonstrated that acquisition decisions were informed, deliberate, and fair.
Not perfect, but fair.
From the Contracting Officer's Chair
One of the themes you'll continue to see throughout Weathering the RFO is a simple question: Why was this process or procedure there in the first place? That's very different from asking whether it was statutory.
Many of the historical procedures surrounding market research weren't created simply to generate more documentation. They evolved because they promoted thoughtful decision-making, encouraged agencies to explore commercial solutions, supported small business participation, and helped acquisition teams avoid unnecessarily restrictive requirements.
And most importantly, they created a record explaining how the Government arrived at its acquisition decisions.
Understanding why they evolved in the first place is equally important as putting process and procedure through a woodchipper. Because we all know – because it’s been said – that this is all about clearing perceived dead wood. But dead wood holds history. Trees grow through resilience. Every ring a year; a set of seasons that tested its endurance. The nonstatutory language shifted out of FAR holds years of lessons learned, protest wins and losses, shifting markets, and economic and national crises. While some may still be in the FAR Companion and Practitioners' Albums, they no longer carry the same weight.
It should carry some weight. It must inform judgement -- good judgement.
"Trust the acquisition workforce" is now basically what the RFO says.
The rewritten framework relies more heavily on judgment – but not professional experience, education, business acumen, and common sense.
Just less prescriptive lingo and little to no instruction.
Experienced Contracting Officers are capable of not missing a beat and exercising that good judgment. Many do daily. The larger question is how we develop that judgment across the workforce. Judgment doesn't appear because regulations shrink. It comes from experience, mentoring, training, discussion, successes, mistakes, and protests.
If we reduce regulatory prescription, we need equally strong investments in developing professional judgment. They go hand in hand.
As a Chief, I never just asked, “Did you complete your market research?"
This list of questions were almost always asked to at least one project manager in our Advanced Acquisition Planning Boards (AAPBs) in USACE and FAA.
“What do we know about the differences in the market between this procurement and the last.”
“Who is in the market now and who has left? Who is emerging?”
“What economic factors could change this acquisition throughout its lifecycle?”
“What are current trends and market indicators in this industry telling us?”
“What don’t we know and how are we getting that information?”
If the answer was, "Nothing," I usually wasn't encouraged but I also didn’t just let it slide because good judgement and due diligence demands these questions be asked and the answers found and considered.
Good market research should occasionally prove us wrong. It should challenge assumptions. It should make us rethink a requirement, reconsider a contract type, or discover capability we didn't know existed.
If market research never changes the acquisition strategy, we need to ask ourselves if we are really studying the right marketplace or simply documenting decisions we've already made to fit a solution we already know we want.
The VALUE of market research is that the "THINKING" piece of it MADE ACQUISITIONS BETTER. The report you spit out to check a box is not the value.
What I see working through the RFO is that there is strength in integrating market research into acquisition planning. However…we need to pay close attention is the corresponding reduction in prescriptive procedures. Those procedures didn’t only historically tell contracting officers what to do. They promoted consistency, transparency, and fairness in how acquisition decisions were made and documented.
The question isn't whether procedures should remain. It’s whether acquisition teams will continue to approach market research with the same discipline now that the RFO has created a less prescriptive process.
If acquisition teams can maintain discipline, consistency, transparency, and fairness, then the RFO changes have real potential to improve acquisition planning. But if market research becomes something we document after the important decisions have already been made, we'll have missed the opportunity the RFO, I believe, intended to create.
Ultimately, success won’t be measured by deleting FAR Part 10 and shifting it to FAR Part 7 to say we eliminated redundancy for some quick Administration win. It needs to be measured by whether acquisition planning becomes more informed because market research is fully integrated into it and not treated as a compliance exercise that happens alongside it.
Some measures of RFO success related to market research include assessing if:
• Agencies create ways to encourage thoughtful market research while reducing costs for industry. No more RFIs that are mini-RFPs.
• Tools, training, and leadership develop the critical thinking skills needed for newer contracting professionals in a less prescriptive market research environment. Moving beyond checklists to business acumen.
• Agency acquisition strategies demonstrate fairness and consistency.
• Market research is integrated into acquisition planning earlier, resulting in more meaningful engagement -- and new methods for that engagement -- with industry.
• Five years from now, acquisition professionals aren’t viewing market research as a report but an innate requirement for good acquisition planning.
It’s up to industry and Government to keep market research fair and real versus it being relegated to a claim of less pages or a shorter FAR.
What’s Coming Next -- When Judgment Carries More Weight
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Author: Shauna Weatherly, President, Federal Subcontract Solutions LLC (dba FedSubK). Shauna is a small business advocate and owner of FedSubK. FedSubK exists to simplify federal contracting, empowering small businesses with practical, understandable resources. We bring first-hand experiences in Federal contracting from multiple perspectives derived from roles held both in and out of Government over almost four decades of Federal service.
Visit us at fedsubk.com to learn more about--
Getting Started in Federal Contracting: fedsubk.com/begin-your-journey-here
Solutions and Our Trusted Support Provider Network: fedsubk.com/solutions-services
Insights from a Contracting Officer: fedsubk.com/insights
Free Webinars and Resources: fedsubk.com/webinars-training
Where Good Procurements Really Begin (Weatherly the RFO - Part 3)
Before I got my first warrant (required to sign contracts), I was a Contract Specialist writing my first acquisition plan. It was for a large Total Environmental Restoration Contract (TERC) that included A-E, Services, and Construction terms and conditions. I was told, "follow FAR Part 7." I thought, "Okay, looks like I'll be doing a lot of these in the coming years. Figure it out." With a few years under my belt, I learned quickly that acquisition planning is the foundation for every successful procurement.
When I moved into leadership roles, we built acquisition planning into our entire program and project lifecycle. We implemented Advanced Acquisition Planning Boards (AAPBs) before writing lengthy acquisition strategy and planning documents. We invited stakeholders like Contracting to attend the budget request preparation meetings for the next FY. We started shaping an understanding and a plan of action months and years in advance of analyses and research.
Anyone who has spent time around acquisitions in the Federal space knows that most procurement problems begin at the beginning, before any procurement forecast goes into Acquisition Gateway or on the agency’s small business page, or any Sources Sought notice is issued in SAM. Long before a solicitation is issued and proposals arrive. And long before anyone files a protest.
You can almost always pin-point where, if you are going to have a problem, it will begin.
When an agency hasn't fully thought through what it's buying, why it's buying it, how the requirement should be structured, who might be capable of performing it, or what risks need to be managed before the acquisition ever reaches the marketplace.
Acquisition planning is preparation. If that’s not what we’re doing, we’re already creating problems for every acquisition phase that follows.
And that's why this topic in federal acquisition and the proposed RFO rules deserves attention, especially now that FAR Part 10, Market Research, has been combined with FAR Part 7, Acquisition Planning. Combining acquisition planning and market research recognizes something practitioners have known for years -- they're inseparable.
But it also means that changes to planning now ripple directly into how agencies understand the marketplace before they ever write a solicitation.
Congress never cared whether agencies produced acquisition plans. Congress cared whether agencies made good acquisition decisions. They care about competition, stewardship of taxpayer dollars, thoughtful use of small businesses, commercial buying, performance-based acquisitions, and risk management.
Those are the objectives.
Acquisition planning has been the primary tool for achieving them. But the plan itself was never the goal. The effort behind the plan was. Acquisition planning is simply one of the first steps in the procurement process. It is the place where the most important decisions have already been made.
Consider the examples I gave above about the discussions in the AAPB and budget request preparation. All of that is well before anything was put into writing. And heck, by the time the RFI was released (if we released one), just about every big question was already answered.
• Will this be a small business set-aside?
• Have commercial solutions been considered?
• Should the requirement be bundled?
• What's the acquisition strategy?
• What contract type makes the most sense?
• How will proposals be evaluated?
• How much performance risk is acceptable?
Those decisions are a product of discussions very early in acquisition planning. By the time industry reads the solicitation, many of the biggest decisions have already been made. The solicitation simply makes those decisions visible. So that begs the question…
…If acquisition planning changes, doesn’t everything downstream change, too?
I have a ton of notes in the margins of my electronic copies of the RFO parts issued so far. Most center around... Where is the acquisition leadership expecting contracting specialists and contracting officers to learn how to think through these decisions? I'm not talking training sessions, listening sessions, leadership briefings, webinars, the FAR Companion, Practitioners' Albums.
We are overwhelmed by data these days -- there is no shortage. Collection of data isn't the issue. it's what to do with it once we have it. What is meaningful and what isn't? That's a legitimate concern from the perspective of a contract specialist working different types of contracts in their cradle-to-grave office set-up. Or the specialist or contracting officer moved as a result of agency realignments and now buying something new, with no training whatsoever.
With the FAR Council is intentionally moving away from detailed procedural direction in favor of shorter regulations supported by guidance outside the FAR, we have to acknowledge that, historically, the FAR didn't just tell contracting officers what it needed to comply with, but often explained how to ensure compliance and answered questions about how to get it done.
From the Contracting Officer's Chair
Let’s start with a discussion about curiosity. Bring me a purchase requestion and I would have a list of questions ready for you. I know from experience that my answers and how this action continues hinges on what those answers are. That includes everything that goes right and wrong, long before I use any AI tool and ask questions.
• What problem(s) are we trying to solve?
• Is there another way to buy this?
• Has it been purchased before?
• Who in industry might already be doing it and how is it procured?
• What risks are we creating and mitigating?
• What opportunities are we overlooking and creating?
• What is it that we don’t know yet but need answers for?
And then the standard "dollar value", "when do you need it", and "do you have money yet" questions.
Every profession has it and the contracting craft is no different. Knowing what questions to ask is part of the craft. Also part of the craft is learning how best to pass information from one experienced professional to the next. The RFO is forcing us to reconsider where and how that institutional knowledge should live going forward. And, how we preserve it in market research and acquisition planning.
Written acquisition plans preserve all discussion and decisions points. It is the ultimate fallback for the building of the solicitation and the justifications of what we are doing and why in the pre-award phase leading to the solicitation. It is never seen by industry but relied upon by acquisition. Making preservation discretionary means documentation practices could vary significantly across agencies, depending on each agency's implementation decisions and tolerance for risk.
What gets lost are rationales, alternatives considered, risk discussions, disagreements, lessons learned, why things changed from the last procurement, and what outside influences impacted current decisions. Acquisition plans in their written form allow that information to be inherited by future acquisition teams. This deserves more attention than it's receiving in the RFO.
The RFO made the changes in FAR Part 7 about the laundry list of what had to go in the plan.
Wrong argument.
It is ALL about careful consideration of facts and circumstances before acting. How much consideration is required to make informed decisions, preserve those decisions so we have them as a guide moving forward, and actually use them to improve and streamline the process. Contracting officers know that their judgment can't be regulated. They stop relying on checklists and start recognizing patterns. They know the questions to ask end users, requiring activities, legal counsel, budget, and small business specialists because seeing the patterns for a poor acquisition form. That's because most know where acquisitions tend to go off track from living through it.
If the FAR is going to become shorter, the acquisition workforce needs a deliberate and consistent strategy across the board for preserving the judgment, rationale, and historical knowledge that good acquisition planning has always provided.
Otherwise, while we simplify the rulebook, it will -- for now -- make the profession harder to master.
What’s Coming Next -- Article Four: Market Research Isn't About Checking a Box
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Author: Shauna Weatherly, President, Federal Subcontract Solutions LLC (dba FedSubK). Shauna is a small business advocate and owner of FedSubK. FedSubK exists to simplify federal contracting, empowering small businesses with practical, understandable resources. We bring first-hand experiences in Federal contracting from multiple perspectives derived from roles held both in and out of Government over almost four decades of Federal service.
Visit us at fedsubk.com to learn more about--
Getting Started in Federal Contracting: fedsubk.com/begin-your-journey-here
Solutions and Our Trusted Support Provider Network: fedsubk.com/solutions-services
Insights from a Contracting Officer: fedsubk.com/insights
Free Webinars and Resources: fedsubk.com/webinars-training
