Zero dollar winning - Part 1

Let’s start by clearing up terminology and talking about where the money goes when agencies leverage zero dollar contracts.

First, zero dollar winning is what happens in federal contracting when you receive a multiple-award contract with no guaranteed money or work. The result is a zero dollar contract.

An agency-specific contract is one that allows purchases for just one particular organization, whether it's at the office, agency, or department level.

A multi-agency contract (MAC #1) is similar in the outcome to be achieved except it's available to two or more agencies. Think of it like HUD and VA joining forces on a Veterans Housing program and pooling their resources.

Then, there are governmentwide contracts. Again, the outcome is a common theme but these are available for any federal entity can use as if they had written it themselves, for their own use.

Finally, we have a multiple-award contract, or MAC #2. These can be issued as agency-specific, multi-agency, or governmentwide, and are awarded to two or more vendors.

Want to know about total spending on zero dollar contract vehicles? During fiscal year 2023 (from Oct 1, 2022 through Sep 30, 2023) multiple-award contract spending accounted for 25 percent of total fiscal obligations. This means for every dollar spent on zero dollar contracts, three dollars were spent on contracts that were not zero dollar vehicles. Another way of saying this is, of the recorded $760 billion in FY23 obligations,? $570 billion was obligated against single-award contract vehicles recorded as dollars to basic ordering agreements, blanket purchase agreements, and indefinite delivery contracts in the Federal Procurement Data System (FPDS). Also included in that tally are dollars to standalone awards recorded as definitive contracts and purchase orders. Those last ones are called standalone awards (or standalone contracts) because they are not used in conjunction with an indefinite delivery vehicle (IDV). They are awards that stand on their own. I'm leaving this here so you can refer to it later.

Let's briefly revisit MAC #2, multiple-award contracts. It's important to note that not all multiple-award contract vehicles are created equal, nor are the always easily recognizable. Typically, these MACs operate under "fair opportunity" guidelines, meaning that all awardees enter the contract with the understanding that they—and every other awardee—will have a chance to bid on each opportunity. This also depends on the contract structure that could be:

• one big award pool, or;
• multiple pools based on criteria like functional area, business size, or socioeconomic designation.

Some multiple-award contracts are what I like to call single/multiple-award contracts. These are a hybrid form of multiple-awards still in use today. Back when I was actively selling to Navy Fleet Industrial Supply Centers (FISC), I secured blanket purchase agreements (BPAs) with various centers, including those in Jacksonville, San Diego, Puget Sound, Norfolk, and several others. These BPAs appeared to be multiple-award contracts on the surface, but their actual structure told a different story. These were not bound by fair opportunity rules, and a quick search in FPDS showed them listed as single-award contracts. Most of us vendors, and our customers, knew that a number of companies had been awarded the same contract for identical goods and services. The approach used by the buyers resembled my high school round robin wrestling tournaments. Each awardee had a turn at an opportunity, when it was your turn. Those of us who were clued in and patiently waited our turn as these contracts were both active and lucrative. The key was to avoid any actions that might give the buyers a reason to offer your spot to another company. I see this tactic in use today across many agencies. Getting "kicked" out of line can happen simply by not responding often enough. Read your contracts and agreements.

Here’s the main takeaway. Be sure to understand what you're trying to win, because you just might get it. Now what? These zero dollar contract vehicles are procurement solutions looking for a customer requirement to resolve. Until a requisition is submitted to a contracting activity, zero dollar contract vehicles are pretty much twiddling their thumbs waiting on their next delivery or task order. They are the opposite of standalone awards and single-award contract vehicles that are created to address a specific program requirement. Zero dollar contract vehicles are broad in scope to address needs across a range of programs and customers. Don't get me wrong, use them if you've got them, just know they are not the only way, or even the primary way Uncle Sam is buying goods and services. If you're blinded by the glare of what often amounts to nothing more than shiny objects, you're missing opportunities not mapped for purchase through zero dollar contracts.

In Zero dollar winning - Part 2, I'll dive into fatal mistakes made by companies who succeed in getting the initial award, and not much else. Thanks for reading!

?

Peace, Health, and Thriving,

Go-To-Guy Timberlake