This, the third and final article in the series, " In Pursuit of Federal A/E Contracts," continues to discuss the problem of inequitable distribution of federal A/E contracts, which was introduced in the second article, and makes suggestions as to how a more equitable system might be achieved.
Federal A/E Contracts: If Ignorance Is Bliss...
by Barrie Creedon and George T. Manos
Statistics published in the 1994 Architecture Factbook show that the typical American architectural practice has nine or fewer employees. So, you might expect that the federal government would award most of its A/E contracts to firms having from one to nine employees. However, our research suggests that the federal goverment awards A/E contracts primarily to atypical firms -- those with ten or more employees -- which comprise only about 14% of the profession.
We believe this situation is largely the result of being uninformed (both contracting personnel and architects), as well as an unfortunate tendency on the part of federal agencies to view themselves as somehow needing more attention from their architectural consultants than do other types of clients - public or private. The answers below from contracting people in response to the question: "Why do you tend to award contracts to the larger firms?" reflect some of the attitudes perpetuating the problem:
- "We need a certain amount of capability." In contracting-ese, being "capable" is not synonymous with being qualified. To a contracting specialist, a firm's capability is measured solely in terms of how many people it has in-house. The bigger your staff, the more "capable" you are. While this definition would seem to make sense for huge projects, or for Indefinite Delivery/Indefinite Quantity (ID/IQ) contracts for which a very large volume of work is anticipated, we found that most contracts for even small projects also went to firms with higher-than-average "capability."
Some of the people to whom we spoke said they'd had "bad experiences" with smaller firms; others expressed doubt that a small firm could provide the required level of service, especially on ID/IQ contracts.
One problem with this argument is that "small firms" (i.e. firms smaller than those to which contracting personnel are accustomed to awarding work) are the norm in the profession. If the average building project -- public or private -- simply could not be successfully designed and serviced by a firm with fewer than fifteen employees, then it stands to reason that the average architectural practice would have at least that many personnel. But most firms get along with far fewer, and somehow, buildings get built, renovated, etc., usually to the owners' satisfaction.
Another problem is that, outside of the federal sector, most multi-facility owners -- colleges, universities, retailers, hospitals, banks, hotel and restaurant chains, etc. -- have a pool of firms they work with. It is not expected, nor it is desirable, that a single firm be put on retainer to do all their work. Our research turned up only one agency which consistently handled ID/IQ work the way it's handled in the private sector, i.e. by awarding multiple contracts: the U.S. Postal Service. Other agencies seemed to employ the "winner take all" approach.
- "We don't need brokers." Translation: We want firms offering a variety of disciplines in-house. Most of the people we spoke to wanted the convenience of dealing with a single firm, rather than with a prime consultant and subconsultants, which some felt was a time-consuming and inefficient way to manage a project. However, certain private sector multi-facility owners expressed the opinion that services provided by large, multi-discipline firms tend to cost more than those provided by teams of independent professionals. They stated unanimously that experience and "customized service" (including a high level of project management ability) were the most important qualities they looked for in evaluating an architectural firm, and that these attributes could be found -- or be absent -- in firms of all sizes.
- "We just do." Unfortunately, politics does often play a role in who gets federal work, although in not-so-obvious ways. One contracting specialist told us that "the people here are just really in tune with large firms, and I don't know what you could do to break that mindset." He confided to us that a certain large firm with a number of ex-military personnel in high-level positions consistently gets work from his agency. Regarding one of that firm's representatives, "We hated the guy but... we had to give them the contract."
As mentioned, both federal contracting personnel and architects need to develop a better understanding of one another. Contracting people have little idea of either the size or capability (we're using the common meaning here) of the average architectural practice; most are blissfully unaware that current federal contracting practices effectively limit competition for contracts to only the very largest firms. On the other hand, most architects don't realize that they're being discriminated against either. Many have little understanding of the basics of the process: i.e. how to present their firms in the SF 254 and SF 255, or how their paperwork will be evaluated.
It is up to the architectural community to educate itself about the whole process as well as to educate the federal government about the realities of the profession. The first step to educating yourself is to find out who handles A/E contracting for the government agencies in your area. (Your local chapter of the AIA should be able to point you in the right direction.) Most contracting people are more than happy to explain how solicitation responses are reviewed, and to give you advice on how to improve your responses. Keep in mind that agency standards and guidelines vary, so what a person from the Army Corps of Engineers tells you may not apply to how things are done by the Department of the Interior.
Educating federal contracting personnel will take organization, and should start with your congressional representatives. (Contracting people can't make policy, they can only carry it out.) Letters, face-to-face meetings, and presentations can help get the message across. The more your colleagues get involved, the better. Some points to consider addressing include:
- Currently, the federal government considers an A/E firm a "small business" (SB) if and only if it has posted $2.5 million or less in average annual earnings over the past three years. An "emerging small business" (ESB) is one whose average annual earnings did not exceed $1.25 million over the same period. In the government's view, this gives small firms the chance they've been looking for. Wrong. This definition of "small business" allows even the very largest architectural practices, those with more than twenty employees, which comprise only 6% of the profession, to qualify for small business set-aside contracts so long as the maximum income figures are not exceeded. Of the ten ESB set-aside contracts included in our research, 70% of these were awarded to firms having 10-19 employees, which comprise only 8% of the profession. Of 26 SB set-asides, 42% percent went to firms in 10-19 employee bracket, and 38% went to firms with more than twenty employees. In effect, these set-aside contracts are benefitting all but truly small practices.
- Consider requiring Commerce Business Daily (CBD) solicitation announcements for A/E services to include a hard number for the manpower an agency believes is necessary to carry out the work of the project(s) being advertised. So far, the goverment has been unwilling to discourage any qualified firm from responding to a solicitation, no matter what its size. This attitude does a double disservice to the 86% of the profession with nine or fewer employees. First, until things change, these firms have little chance of securing a contract at all, and secondly, the time and resources spent to formulate a response are disproportionately higher for small firms than for large firms.
- The practice of awarding ID/IQ contracts to a single source versus awarding multiple contracts should be re-evaluated. Other than convenience, what are its benefits? What are the drawbacks for federal goverment? For taxpayers?
- The performance of multi-discipline firms and prime consultant/subconsultant teams on federal projects should be compared and evaluated. The over-reliance on multi-discipline firms should be justified, not only in terms of performance, but also in terms of cost to the taxpayer.
Originally, we undertook this research project only to learn for ourselves what types of firms tend to get federal work, and how our firm measured up in comparison. While we assumed all along that large firms get more than their share, we were astounded at how much more than their fair share they receive. Being a six-person firm (at present), we found this somewhat discouraging, but we are continuing in our efforts to improve our paperwork, to learn what the various agencies are looking for, to increase our "capability" by joint-venturing, and to seek subconsulting opportunities with larger firms. We invite you to share with us your experiences with federal contracting.
Data used in this article comes from the 1994 edition of the Architecture Factbook published by the American Institute of Architects; Profile, an on-line directory provided by the American Institute of Architects, and the Commerce Business Daily published by the U.S. Department of Commerce and the U.S. Government Printing Office.
To view our statistical findings...