The opportunities for public-sector, third party building management are growing on a daily basis. Since the Carter Administration, the U.S. General Services Administration (GSA) has been reducing in-house staffs in response to lower appropriations and has outsourced for property management.
This trend in outsourcing has continued throughout the '90s. Today, of the $2 billion that the GSA spends annually on its building operations, about $1.3 billion is spent purchasing services from the private sector. Services that the government purchases range from managing such large installations as military bases with hundreds of buildings down to a stand alone federal building under 50,000 square feet. Altogether, the building operations (owned or leased) of the GSA represent over 270 million square feet in 11 regional offices.
Despite the opportunities, recent history illustrates that the public-sector market is a challenging environment in which to perform. There are still many hazards on the road to obtaining public-sector work.
Through its various procurement offices, the public sector is restricted in its ability to contract out. The restrictions are many times self-imposed through internal agency regulations, mandated through federal acquisition regulations, and further enhanced by a stream of laws and regulations that make the public sector a very difficult place to pursue business.
Several veteran service providers are even now trying to exit the market because it requires higher marketing expenses and offers lower margins than similar work for private institutions. However, as the GSA continues to contract out services there are golden needles in the haystack of red tape for bidders who are up to the challenge and willing to devote their resources to obtaining contracts.
Where to Find Opportunities
Suppose you are looking for an opportunity to bring your company's historical knowledge and experience to the public sector. The first step would be to review the Commerce Business Daily, also known as the CBD. The CBD is published by the U.S. Government Printing Office and is the prime resource on the opportunities and services the public sector is procuring each day. The CBD is also made available over the Internet by Patriot Systems (e-mail: email@example.com).
Using the CBD, you would begin to define the arena and select the contract that makes sense for your company. In the area of third-party property management, the government routinely contracts out for commercial facilities-management services, mechanical services, engineering services, fee-developer services, leasing, and custodial services.
Among the CBD offerings, there are trends both in favor of your company and against. For example, there is the Small Business Administration's 8(A) program, which has offerings for "small and disadvantaged business," such as minority-owned firms.
There are also small-business set asides, where the solicitation is restricted to those who qualify. This program has many opportunities for companies whose revenues are below a designated three-year average, depending upon the service that is being procured. The definition is tricky and can eliminate historical third-party managers who may earn $20 million annually - averaged over the last three years - from rent rolls.
Finally, there is open competition in which procurements are not just restricted to small business or other set asides. This unrestricted arena attracts publicly held companies who can approach procurements with a deeper arsenal of financial resources, employees, bona fide commercial agents, copyright attorneys, government contract attorneys, and consultants than an entrepreneurial property manager may wish to devote to the pursuit of a single contract.
In analyzing each procurement, a great deal of time needs to be put into understanding the nature of the procurement and if it is a match for your company. …