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Article | Government contractor solutions

Increased use of GWACs affects bid process for both large and small defense contractors

Federal agencies are increasing the use of Government-wide Acquisition Contracts (GWAC) and Multiple Award Contracts (MAC) when considering defense contract solicitations. These contract vehicles allow for faster acquisition via competitive pricing and pre-qualification of sellers. As part of the pre-qualification process, “scorecard” solicitations have increasingly become the preferred method for select federal agencies to eliminate offerors from competition that do not meet perceived agency needs. These scorecards weigh numerous evaluation factors necessary to secure contract awards, such as project experience, past performance ratings, certifications, clearances and increasingly in recent history, business systems. The table below contains some basic information about various active or upcoming GWACs; click on each to find out additional detailed information:

Contracts Issuing agency Ceiling amount Base period of performance Type of services / goods
Alliant 3 GSA No maximum (Estimated ~$75 billion) TBD – Expected 10 years Emerging technology focused complete and flexible IT solutions
OASIS+ GSA No maximum TBD- Expected 10 years Comprehensive suite of services-based solutions focusing on professional services including engineering and consulting
CIO-SP4 NITAAC $50 billion TBD – Expected 10 Years IT products and services to meet biomedical research and healthcare needs
8(a) STARS III GSA $50 billion
Expected July 2021 – July 2029 Small business set-aside for flexible IT solutions

What are business systems? 

The government defines six contractor business systems in the Defense Federal Acquisition Regulation Supplement (DFARS) clause 252.242-7005, with each referencing out to subsequent clauses and system criteria: 

  • Accounting system (at DFARS 252.242-7006) 
  • Earned value management system (EVMS) (at DFARS 252.234-7002) 
  • Estimating system (at DFARS 252.215-7002) 
  • Material management and accounting system (MMAS) (at DFARS 252.242-7004) 
  • Property management system (at DFARS 252.245-7003) 
  • Purchasing system (at DFARS 252.244-7001) 

The business system requirements included in GWAC scorecards often track closely, if not exactly, with the DFARS requirements. The requirements are not only focused on the technology that the system utilizes, but the individuals, policies, procedures, and processes that are followed and form the controls around the system. Ultimately, with these requirements the government is trying to ensure that contractors’ control environments protect the government’s interests. The same is true of their inclusion as an element of GWAC scorecards. 

In the past, only larger contractors or those with a higher inherent risk profile were subject to these requirements. With the proliferation of these GWAC vehicles, smaller contractors are increasingly forced to demonstrate approved business system status as table stakes for a share of the GWAC award.  

Who can evaluate a business system? 

Acceptable, adequate, or approved? All these words may be used interchangeably within a GWAC solicitation to describe a business system requirement. While they all get to a similar idea, the official language used in DFARS 252.242-7005 is “acceptable,” defined as contractor business systems that comply with the terms and conditions of the applicable business system clauses listed above. In some GWAC solicitations, words like “adequate” or “approved” have been used in addition to “acceptable,” often in combination with requirements pulled directly from DFARS. While word choice may seem like a minor detail, it is important for contractors to understand what the customer intends with the language and requirements used in the solicitation. In particular, when “approved” is used, it begs the next question — approved by whom

Business system evaluations for GWAC awards can typically be performed by two parties, the government or a third-party, often limited to a CPA firm. This requirement varies by solicitation and across different business systems. For example, the CIO-SP4 solicitation accepts a review performed by the government or a third party for the accounting and estimating system requirements but will only accept a review performed by the government for the purchasing system requirement. Government reviews must be performed by a government entity, typically an administrative agency like the Defense Contract Audit Agency (DCAA), Defense Contract Management Agency (DCMA), or another federal civilian audit agency. The government will typically only perform a review when a contract award triggers the applicable requirements and is within that agency’s purview and risk profile, making this level of review difficult to obtain for many contractors. Third-party reviews are typically quicker and easier to obtain but require the contractor to pay for the services provided. The table below shows the level of approval required for recent GWACs: 

Contracts Accounting Estimating Purchasing Property MMAS EVMS
Alliant 2 USG     Required by task order (if applicable)    
CIO-SP4 USG or third party USG or third party USG     Self-assessment
Polaris USG or third party   USG Required by task order (if applicable)    
8(a) STARS III USG          
Vets 2 USG (OCO may make exception)   USG (OCO may make exception) Required by task order (if applicable)    

The bigger picture 

While some companies may look at business system compliance and see administrative burden, others see opportunity. This opportunity also presents a challenge. Companies must go through the process of interpreting the various criteria, identifying existing gaps, and remediating those gaps through design and operational changes to reach a compliant state. The willingness to tackle this challenge rewards more than just a seat at the GWAC table; doing so demonstrates a level of organizational maturity, highlighting a dedication to the responsibility to protect the government’s interests that stands as a differentiator from competitors, especially for small and medium size contractors.

Organizations that take the time and spend the effort to establish these systems now are practicing good governance and are facilitating future growth, while setting themselves up for future RFPs. If you’re interested in getting a handle on your business system infrastructure and ability to meet system criteria, connect with one of our professionals that can help. 

Derek Boyd