I do not know how it is June already, but for those of us who sell to the Federal Government, June means we are in the home stretch of the fiscal year (the Federal Fiscal year is October 1st -September 30th.) We have spent the past 9 months positioning, marketing, specifying, bidding and it all comes down to what happens over these next 3 months. We get to see if the past 9 months of strategies and pivots pay off or not. There have been some anomalies this year and some interesting changes happening especially when it comes to furniture contracting so I thought we could dedicate our time to looking at the new federal landscape from budgets and spending to GSA contracts.
First, let us look at the anomaly- the budget situation. In a perfect scenario the budget would be approved prior to the new year starting in October which hardly ever happens so normally we see the budget approved by December or January. Since the budget was not approved until late March and a lot of the funds did not funnel down to the divisions within the agencies until April, we are facing a compressed buying cycle. The bright side to all of this is that there is WAY more money to be spent this year than there was in fiscal 2021(congress passed a $1.5 trillion spending bill for fiscal 2022.) The possible downside, experts are suggesting that the agencies may not be able to spend all their money in time. To you and me that may not sound like a bad thing, but for the government it is a use it or lose it scenario so they may not get the same amount of money next year if they do not spend it all this year.
As with anything, in Federal we follow the money and there were some interesting allocations of the monies when we look at which agencies were funded. The big winners from a percentage increase were Department of Defense, Agriculture, Commerce (NIST and NOAA), Homeland Security and VA Medical research. A great article I found to help you understand where the money is can be found at https://cen.acs.org/policy/research-funding/US-Congress-finalizes-2022-spending-bill/100/i10
All the forecasts can be found at each agencies website if you want to data dive and develop a target list as these agencies will most likely be receiving increased funds for the next couple of years.
Another change in Federal Government is the Buy American Act (BAA) , not to be confused with the Buy America Act (for more info on the differences see https://www.mbpce.com/blog/buy-american-vs-buy-america-a-simple-guide-to-successfully-navigating-the-differences/ ) The Buy American Act is the one that comes into play for furniture. The BAA was originally passed in 1933 under President Hoover and has been emphasized or de-emphasized and changed throughout history as President’s change. What impact this will truly have on furniture is yet to be seen as not everyone agrees if and how it applies to sales on GSA specifically.
Within the furniture industry specifically there were some interesting changes announced. The biggest was changes to the Packaged Office Contract (POC. )This is pretty detailed so if this topic interests you I would suggest going to GSAs site https://www.gsa.gov/buying-selling/purchasing-programs/gsa-multiple-award-schedule/gsa-schedule-offerings/mas-categories/furniture-furnishing-category/industry-guidance-and-resources/packaged-furniture-program-industry-guidance-and-resources where you can find all the information, recordings of the call in March where they reviewed all the changes with the industry and any other information you would like. In summary, POC holders will not be required to have services on their contract, submit Commercial Sales Practices (CSP) for these services, and move to a Teaming Agreement (CTA) vs Letter of Supply (LOS) partnership with their partners. Due to this change, the sales numbers you are used to seeing under the POC will decrease dramatically and the sales of the manufacturers will increase simply due to the change from using and LOS to a CTA. This should be a win for the small business manufacturers as many POC holders have been using their small business status to pull through large manufacturers under the LOS, but under teaming they will need to adhere to the rules for small business set asides which in most cases is a minimum of 51% small business manufacturers.
The other big announcement this fiscal year was that the NAVY would be sunsetting their Spiral 3 BPA in September instead of rebidding it. NAVY will then be purchasing off the standard GSA contract. For as long as I have been focused on government sales there has been a NAVY BPA, so this came as a surprise. The BPA has allowed for the NAVY to buy at better than GSA pricing and since not everyone had the BPA it cut down on the number of bidders. Additionally, all branches of the DOD were able to use this BPA. With this going away, it will allow for manufacturers who have been shut out in the past to have visibility and opportunity to pursue business with the NAVY.
As we look into the future there are some other big IDIQs out there that will be up for renewal or rebid in the next year and there are rumors of new BPAs on the horizon.
One thing we can say about this year that we don’t normally say in Federal sales is that it appears change is in the air!
MICHELLE WARREN
Founder, President Catalyst Consulting Group
Michelle Warren is President of Catalyst Consulting Group, a firm specializing in providing strategic solutions to the commercial furniture industry to enhance their sales, positioning, and distribution.
With 25 years of industry experience on the dealer and manufacturer side of the industry, Michelle has been recognized as an innovator in selling to the Federal Government, State/Local Government, Higher Education and Cooperative Purchasing. Her expertise includes: sales strategies, strategic planning, 3-5 year road mapping, targeted marketing plans, distribution development, hiring reps, and training for reps and/or dealers.
Michelle is known as a “serial networker” in the furniture industry and enjoys meeting people and making connections happen. If you’re interested in connecting - reach out at:
[email protected], connect on LinkedIn or visit
www.strategic-catalyst.com to learn more about her work.
As seen in Delve | June 2022 V.27