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Transformation in Government Contracting

I think we can all agree that the year 2020 was fundamentally disruptive for both people and business. Much has been, and will continue to be written on it; I suggest this McKinsey survey for a wide view on the scope of the transformation. Even the typically circumspect Federal contracting industry has not escaped the acceleration into new modes of thinking. Beyond pandemic factors, a new administration and the implementation of long-term initiatives like the Cybersecurity Maturation Model Certification (CMMC) are also having a major effect on the contracting landscape. Below are a few of the changes to look out for in 2021 and beyond:

  1. The Executive Order on America’s Supply Chain

This is new as of late February, and I expect to have a deeper look in the coming months, but this has the potential to transform how the government purchases in fundamental ways. There are already several statutory preferences for acquiring domestic products like the Buy American and Buy America Acts, but those laws don’t extend to the production of those products. This executive order builds on several others by directing agencies to submit capability reports that detail current production capacity, gaps, and recommendations for building resilience in their supply chains. It is likely that those reports will be directive for both agency interpretation of the FAR in the short-term, and potentially for Congressional action in the long-term.

  1. The Rule of Two

While small businesses are eligible to bid on most open market solicitations, the government recognizes that the reality of unrestricted competition may reduce access for small business concerns. To protect the diversity of the contracting pool, set-aside programs mandate acquisitions from small or diverse businesses. These programs are balanced by exceptions that allow the government to make awards when small businesses cannot fulfill certain requirements, as determined by market research. One commonly used test in the research process is called the Rule of Two: For contracts under a certain threshold, the government must utilize a set-aside if there are at least two small businesses who could reasonably bid and offer a fair market price.

Recently, the discretion to apply the rule of two was litigated in the U.S. Court of Federal Claims, with the COFC ruling that it is required when set-aside obligations apply. This decision provides significant clarity for small businesses, and is expected to have wide-ranging implications for contracts under $250,000.

  1. Adoption of Commercial Business Practices

Less visible is the general adoption of commercial business practices across government acquisition practices and operations. In the Department of Defense especially, public/private partnerships have resulted in significant efficiency increases and cost reductions via trial programs. The visible success of these efforts within DoD and other agencies will likely fuel further exploration of contractor integration “inside the fence”. In these scenarios, contractors often become responsible for performance goals rather than specific requirements, allowing the government more access to best-in-class commercial processes and technology. As these programs continue to develop, look for more opportunities through industry day connections and other networking events.

Separately, each of these have the potential to shape industry outlooks, combined with the underlying push toward a more digital economy they will have outsize impact on contracting for 2021 and beyond.

Semi trucks in loading dock

Behind the Scenes: Logistics

Want to learn more about how our team thinks and operates? If so, you’ve come to the right place. Welcome to the first edition of our “Behind the Scenes” blog post series. Today, we’ll be talking to Adam Lewak, Operations Manager at JetCo Federal, and will be diving into the details of how our logistics team operates.

Adam Lewak, Operations Manager at JetCo Federal

Vanessa: Can you tell me a little bit about what you do in your role at JetCo Federal?

  • Adam: As the Operations Manager, I monitor all orders in production and consolidate the shipments that go to the same area. Once I have a shipment consolidated and built, I generate government-specific labels, provide the required paperwork, and source a carrier to haul the shipment. Sourcing a carrier requires daily spot negotiations. Once a carrier is secured, I schedule and monitor the shipment, making sure it is picked up and delivered on time.

Vanessa: We often talk about our team tackling complex projects daily and how we don’t shy away from a challenge. Can you talk a little bit more about the approach the logistics team takes to their work?

  • Adam: Our team keeps a daily watch on production and due dates. If there are multiple orders to one area, we typically wait to ship and consolidate those to ride together on the same truck. We utilize as much trailer space as possible, thus lowering freight costs. If due dates do not allow us to wait on production, we make sure to ship via the most effective cost option available. Our team performs in-transit check calls to verify that everything is going smoothly, and our team is always ready to jump into problem-solving mode as soon as we know of any issue.

Vanessa: There is a lot of planning, coordination, and attention to detail to make logistics run smoothly. Part of our logistics team’s role is to ensure our shipments won’t be rejected. Can you talk a little bit about why shipments are rejected, and about what happens when an order is rejected?

  • Adam: Shipments are typically rejected when the primary carrier does not have capacity. This means that the primary carrier does not have any drivers available at that specific date and time, or that there has been a change in national rates and the carrier can get a better pay moving different freight out of the same area. When an order is rejected by the primary first, then it is tendered to the secondary. If the secondary rejects the order, it is offered to the backup carriers on the lane. If it is still rejected, then it will typically end up on a spot market board where approved carriers and brokers can then bid on the shipment. The spot market’s lowest bid wins the shipment.

Vanessa: Another integral part of ensuring our products are delivered on time, every time is the carriers we use. Can you go in-depth on the strict requirements we have for our carriers?

  • Adam: Most of the freight JetCo Federal moves is delivered to U.S. military bases.  For a driver to get onto a base to deliver, he must be a U.S. Citizen carrying a Real ID – a driver’s license with a star in the top right corner, signifying it is accepted as a federal form of identification. The driver must also have a clean background with no criminal history or warrants, a clean driving record, and must have strong attention to detail as delivering to U.S. military bases can have complicated paperwork. Most military bases perform a background check upon arrival, and all of these requirements are in place due to national security.

Since our inception, government agencies have relied on JetCo Federal for the distribution of critically timed, urgent product.  To learn more about JetCo Federal’s logistics services, please visit our logistics and warehousing page.