Market research isn’t just a necessity for companies to make their business decisions, it’s also a crucial process during government acquisitions. For the U.S. government, market research is required to gather preliminary information needed for acquisition of commercial items.
Market research is the first step in any acquisition. This includes:
- Developing new requirement documents
- Soliciting offers over the Simplified Acquisition Threshold
- Soliciting offers under the Simplified Acquisition Threshold only when adequate information is not available and cost is justified
With that in mind, it’s important for government contractors to remember why they are using market research. In the Federal Acquisition Streamlining Act of 1994 market research is required for developing new specifications for a procurement and before soliciting any bids or proposals for a contract. Depending on the type of acquisition, whether it is real estate or business, market research can provide contractors with the information necessary to make decisions. Or, as the Act says,
"Contractors can use “results of market research to determine whether there are commercial items or, to the extent that commercial items suitable to meet the agency’s needs are not available, nondevelopmental items other than commercially available that-- (A) meet the agency’s requirements; (B) could be modified to meet the agency’ requirements; or (C) could meet the agency’s requirements if those requirements were modified to a reasonable extent.”
Market research is the foundation for finding information to effectively build a business plan. This includes creating a solicitation plan and a successful contract. Market research should be done before developing any new requirement documents, either for specifications or standards. This means that contractors should find the information needed to forecast the requirements for an acquisition. Research can provide contractors with details on suitable commercial items, product and industry information, existing systems or technology that will be needed, and answers to any other questions that are presented.
The overall goal of market research in an acquisition is to determine the most suitable approach to acquiring, distributing, and supporting supplies and services. This also includes finding out whether or not there is a match between the commercial sources and commercial items with the current requirements of the agency.
For government agencies, thorough market research will provide information on the following:
- Capable sources, including small businesses
- Commercial practices
- Competitive market forces
- Current laws and regulations
- Existing products
- Generalized pricing information
- Successful acquisition practices of other organizations
- Support capabilities
- Varying levels of product performance and quality
After market research has been concluded, and the information is understood by the agency, it’s important that they provide documentation of all the findings. The records of essential agency needs, source list searches, and market information, should be available for easy incorporation into the research report.
If needed, the following are all recommended for a report or presentation on your findings:
- Description and explanation of acquisition’s background, including purpose.
- Identification of market research team.
- Description of agency needs
- Summary of sources and the information gathered from each.
- Summary of industry sources.
- Summary of commercial terms, provisions, and conditions, including payment, freight delivery, acceptance, and warranties.
- Identification of the price ranges discovered, possible reasons for variations, and the potential for determining a fair market price.
To learn more about how market research can help you with your biggest business decisions, check out our free white paper.
Thanks for reading!