Stumbling out of the gate

COMMITS NexGen, the anticipated sequel to a successful small-biz GWAC, is off to a slow start

The Commerce Department performed an experiment in 1999 when it awarded the Commerce Information Technology Solutions (COMMITS) contract to small businesses. The experiment could only be called a success. COMMITS was the first governmentwide acquisition contract exclusively for small businesses. Orders placed through the contract hit its $1.5 billion ceiling well before the end of its five-year period, a performance that went a long way toward erasing the doubts that many government contract users had about the performance of small businesses. It also created a great deal of buzz around the successor contract, COMMITS NexGen, awarded in January 2005.

The successor, however, is off to a slow start that has some experts scratching their heads.

“It has been a little puzzling to me that Commerce has been so slow off the block to get [NexGen] moving, particularly given the fact that the procedures involved shouldn’t have been too different from the previous contract,” said Ray Bjorklund, senior vice president and chief knowledge officer at Federal Sources.

When the first COMMITS contract was awarded, the government’s use of small businesses was declining. Many agencies seemed convinced that the small players could not do the exacting work that government required, federal acquisition observers said at the time.

But that first contract opened many eyes, attracting orders that eventually went well beyond Commerce agencies to include the Defense Department, the Agriculture Department, the Environmental Protection Agency, the State Department and the General Services Administration. The Energy Department issued one task order through COMMITS that was worth more than $400 million, and it did more than $500 million in business through the contract overall.

With that success pushing it forward, Commerce awarded COMMITS NexGen to 55 small businesses. The contract’s terms show the high hopes Commerce had for it. The contract is open to all federal agencies, and it will span 10 years with an order ceiling of $8 billion for a broad range of IT services and solutions.

“You really have to applaud Commerce for stepping up and creating a GWAC like this,” Bjorklund said. Even though other programs offer some of the same opportunities, for small businesses, “NexGen pretty much is still it,” he said.

Just how slow the start has been is hard to gauge, because precise numbers are not available. But observers say they already see fewer orders and less indication that agencies outside Commerce are using NexGen than they did with its predecessor. Apogen Technologies, a NexGen contract holder, was one company that had strong expectations for the program, basing its ambitions on its success with the previous COMMITS contract.

Apogen put a great deal of effort into its NexGen bid, said Robin Gardner, the company’s vice president of business development for the federal civilian market.

“Our expectation was that we would pick up other customers such as the Census Bureau, which hadn’t used the old COMMITS contract that much, plus we would get a better chance with other areas of Commerce” that had used COMMITS since its early days, she said.

Census is a particularly inviting target for many of the NexGen contractors. As it prepares for the next decennial census, the bureau is expected to be a big spender and use NexGen to meet many of its needs.

In an acquisition plan published in April 2005, the bureau explained that the IT resources it uses were acquired through the IT Solutions contract vehicle, which COMMITS NexGen supplanted.

To make sure the services it uses will not be disrupted, Census said it would transfer those tasks to NexGen by awarding more than 50 task orders through the new contract.

Although Census has begun to follow through on its plans to use NexGen, its activity has been less than expected, Gardner said.

“We expected recompetes on around four contracts a month, and it’s only been averaging two a month so far,” she said. “Also we had been expecting more activity through [the National Oceanic and Atmospheric Administration, part of Commerce], but there’s also been a definite slowness there.”

Gardner thinks that is mainly because the COMMITS NexGen program office wants to fine-tune every detail before it moves forward on issuing orders through the contract. Once the program office declares itself happy with the details of a task order, things tend to move more quickly, and the process from then on is smooth, she said.

Helen Hurcombe, director of NOAA’s acquisition division, said the original COMMITS contract was always a preferred acquisition mechanism for her organization because its features, including the pre-qualification of vendors and restricted competition, produced a more streamlined acquisition process. Now the performance-based aspects of the statements of objectives and work used in NexGen mean contracting officers don’t have to tell anyone how to do the job, she said.

Hurcombe said that although NOAA has not used NexGen much yet, “things are in motion.” NOAA recently received a delegation of authority to enable it to directly place awards under NexGen instead of going through the COMMITS contracting office, she said.

“The NexGen office has limited resources, and this [delegation] makes it easier for us to set priorities,” Hurcombe said. “If we are swamped, we can give the job to them, and if they are swamped we can take it on ourselves. It’s a matter of workload balancing.”

An issue affecting the contract is understaffing at the NexGen office. NexGen contractors complain that the program office has vacancies in important positions that are affecting the office’s efficiency. That has limited the speed at which the vehicle is operating and Commerce’s ability to persuade other agencies to use it.

The staffing issue is a major concern because much of the success of the old COMMITS contract has been attributed to the ability of the program office to form partnerships with vendors and help them get the most out of the contract.

So far, NexGen contracting officer Patti Stang and her associates have been supportive, said David Gardner, senior vice president of business development at RS Information Systems (RSIS). They don’t play favorites and have been open to sharing information, but more staff members are needed, he said.

Gardner said the office needs more people for the contract’s operation, which would let Stang leave the office to market NexGen to other agencies.

One of the strengths of the old COMMITS contract was its heavy use by non-Commerce agencies. RSIS benefited from that and collected more than $500 million in COMMITS orders, including a single $409 million task order from DOE.

It’s unclear, however, whether other agencies will continue that tradition with NexGen. Although vendors say they are hearing of interest in NexGen from agencies such as the Transportation and State departments, so far there has been no rush to the contract by outside agencies.

Gardner said previous COMMITS users seem to be increasingly turning to their own contracts to satisfy small-business requirements. “It’s a maturing of the market,” he said. “Many of the other agencies are catching on to what Commerce is doing with NexGen and have established their own contracts. Now it’s down to marketing to decide which will be the most successful.”

Once Stang brings in the necessary employees and starts to market NexGen, the contract will become more successful, Gardner said.

But because the early high expectations for NexGen were not met, some people are migrating small-business work to other contracts, such as the GSA Millennia Lite and 8(a) Streamlined Technology Acquisition Resources for Services vehicles, Bjorklund said.

Those contracts have received mixed reviews, he said, but they still focus on small business and could compete with NexGen.

Bjorklund said agencies such as DOD see more opportunity to buy from small businesses using their own contracts.

However, he expects NexGen activity to eventually pick up, particularly as business from Commerce agencies, including Census, replaces some of the business lost from outside organizations.

“I don’t think [NexGen] will be as wildly successful as the original COMMITS,” Bjorklund said. “But, eventually, I do think that it could be almost as successful.”

The tracks of NexGen’s tiersThe Commerce Information Technology Solutions Next Generation (COMMITS NexGen) contract arranges the 55 small-business contract holders in tiers according to size, which limits who can bid for what.

Tier I companies are the smallest of the lot, with annual revenues of as much as $12.5 million. Tier II companies have revenues of as much as $21 million or a workforce of no more than 500 employees. Tier III companies can have as many as 1,500 employees.

Any task order with a life cycle value of $5 million or less is reserved for Tier I companies. Tier II companies are limited to orders of $5 million to $40 million. Tier III companies can compete for task orders valued at more than $40 million.

Tier I and Tier II companies can bid upward into the higher ranges if they wish, although no company can compete for awards in lower ranges.

The contract designer created that arrangement in response to one of the few major complaints about how the government handled the first COMMITS contract. Many of that contract’s smaller companies complained about the size of the awards and that they were being won by larger companies that ranked as small at the beginning of the contract but were pushing the limits of that definition by the end of it.

In NexGen, six companies are ranked as Tier III — RS Information Systems, NCI Information Systems, QSS Group, SI International, Science Systems and Applications, and STG.

The arrangement creates a ramp for moving companies that outgrow their size classification into a higher tier or off the contract entirely. The companies that have outgrown their size classification will keep task orders they have already earned, but they won’t be able to compete for new business. Those in the top tier will be removed from the contract and replaced with other companies.

The tier-system also stimulates more potential work for smaller businesses because they can also bid for task orders in the higher ranges. Ultimately, however, that may not prove to be successful.

“Tier III has not been as effective as we might have hoped,” said Robin Gardner, vice president of business development for the federal civilian market at Apogen Technologies, a Tier II company. “There have only been seven orders made at that level so far, while Tier II has already seen 15 released,” she said.

— Brian Robinson

NexGen drives competitors togetherThe Commerce Information Technology Solutions Next Generation (COMMITS NexGen) contract is expected to stimulate extensive teaming among companies inside and outside the COMMITS program. Many task orders will require products and services that one company can’t provide alone.

Teaming gives a chance for larger companies to get at least a bite of orders on which they can’t bid directly because the contract is exclusively set aside for small businesses. But it also gives smaller companies a realistic chance of winning bigger orders because they can pull together the expertise they otherwise couldn’t provide on their own.

Because collaboration is essential to being competitive, it’s proving to be one of the more positive outcomes of NexGen’s structure, said Allen Hockenbury, vice president of Global Science and Technology, a contractor in NexGen’s Tier I of smallest businesses. “It’s been a stimulation to relationship-building among companies,” Hockenbury said. “When you team up and down the tiers, people remember you later.”

Apogen Technologies is looking to team with vendors in all the tiers, said Robin Gardner, the company’s vice president of business development for the federal civilian market. She said she believes the arrangement leads to better responses to agency task-order requirements.

“Knowing that Tier II companies can team with a Tier I company, for example, gives you a better understanding of the requirements because there is a greater sharing of information,” she said. That collaboration is promoting camaraderie on the NexGen vehicle, she added.

— Brian Robinson

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