How to Win the $5.6B DHS PACTS III Contract: A Guide for Small Businesses

Introduction

The Department of Homeland Security (DHS – Solicitation number 70SBUR23R00000016) is one of the largest and most complex federal agencies, with a mission to protect the nation from threats and disasters. To achieve this mission, DHS needs a wide range of non-information technology (non-IT) support services, such as program management, administrative, clerical, and technical services. These services are essential for the effective and efficient operation of DHS’s business and program units, as well as cross-organizational missions.

To procure these services, DHS has established a contract vehicle called PACTS III, which stands for Program Management, Administrative, Clerical, and Technical Services III. PACTS III is a multiple-award, indefinite-delivery, indefinite-quantity (IDIQ) contract that has a total ceiling value of $5.6 billion and a period of performance of 10 years. PACTS III is the third iteration of the PACTS program, which has been running since 2010.

PACTS III is a unique opportunity for small businesses to access a large and diverse customer base within DHS. PACTS III is exclusively reserved for small businesses in four socio-economic categories: Service-Disabled Veteran-Owned Small Businesses (SDVOSBs), Women-Owned Small Businesses (WOSBs), 8(a) Business Development Program Participants, and HUBZone Small Businesses. PACTS III has three functional categories (FCs) of services: FC1 – Program Management Services; FC2 – Administrative Services; and FC3 – Engineering Services.

In this article, we will provide you with a comprehensive guide on how to win PACTS III contracts. We will cover the historical background of the PACTS program, the RFP description and requirements, the uniqueness of the solicitation and who should participate, and the challenges and risks involved in pursuing PACTS III contracts. We will also introduce you to GDI Consulting, a professional capture and proposal services provider that can help you with every step of the process.

Historical Background

The PACTS program was initiated in 2010 as a result of Executive Order 13360, which directed federal agencies to increase contracting opportunities for SDVOSBs. The first iteration of PACTS was a 100% SDVOSB set-aside contract that had two FCs: FC1 – Program Management and Technical Services; and FC2 – Administrative and Operations Services. The contract had a ceiling value of $1.5 billion and a period of performance of five years.

The second iteration of PACTS was launched in 2016 as a follow-on to PACTS I. PACTS II was also a 100% SDVOSB set-aside contract that had the same two FCs as PACTS I. The contract had a ceiling value of $1.5 billion and a period of performance of seven years.

The third iteration of PACTS is currently in the pre-RFP stage. PACTS III is expected to be released in August or September 2023, with an award date in the first quarter of fiscal year 2025. PACTS III will expand the scope and size of the previous PACTS contracts by adding a third FC – Engineering Services – and by opening the competition to other socio-economic categories besides SDVOSBs. The contract will have a ceiling value of $5.6 billion and a period of performance of 10 years.

RFP Description

The RFP for PACTS III has not been released yet, but DHS has issued two draft RFPs to solicit feedback from industry. The first draft RFP was issued on January 5, 2023, and the second draft RFP was issued on June 22, 2023. DHS has also promised to hold an industry day in late July 2023 to provide more information and answer questions from potential offerors.

Based on the draft RFPs, we can summarize some of the key features and requirements of PACTS III as follows:

  • The contract will be divided into four pools based on the socio-economic categories: Pool A – SDVOSB; Pool B – WOSB; Pool C – 8(a); and Pool D – HUBZone.
  • Each pool will have three FCs: FC1 – Program Management Services; FC2 – Administrative Services; and FC3 – Engineering Services.
  • The NAICS codes for each FC are: FC1 – 541611 (Administrative Management and General Management Consulting Services); FC2 – 561110 (Office Administrative Services); and FC3 – 541330 (Engineering Services).
  • The size standards for each FC are: FC1 – $24.5 million; FC2 – $12.5 million; and FC3 – $25.5 million.
  • The competition type for each pool is targeted for set-aside, meaning that only small businesses in the respective socio-economic category can compete for that pool.
  • The contract will have a two-year base period and three one-year option periods, for a total of 10 years.
  • The contract type will be FFP, T&M, or Labor Hour, depending on the task order.
  • The contract will have a self-scoring methodology, meaning that offerors will assign points to themselves based on various factors, such as relevant experience, past performance, certifications, and clearances. The offerors with the highest scores will be selected for award.
  • The contract will have a limitation on subcontracting clause, meaning that at least 50% of the cost of contract performance incurred for personnel shall be expended for employees of the prime contractor or employees of other eligible small business concerns.
  • The contract will have a mentor-protégé program, meaning that large businesses can partner with small businesses to provide them with developmental assistance and subcontracting opportunities. However, at least 40% of the work under each task order must be performed by the protégé firm.

Uniqueness of the Solicitation and Who Should Participate

PACTS III is a unique solicitation for several reasons. First, it is one of the few contract vehicles that is exclusively reserved for small businesses in four socio-economic categories. This gives small businesses a competitive advantage over large businesses and an opportunity to showcase their capabilities and expertise to DHS. Second, it is one of the largest and most comprehensive non-IT services contracts in the federal market. It covers a wide range of services that are essential for DHS’s mission and operations. Third, it is one of the most flexible and adaptable contracts in terms of contract type, period of performance, and scope of work. It allows DHS to tailor the task orders to meet their specific needs and requirements.

Given the uniqueness and attractiveness of PACTS III, it is expected that many small businesses will be interested in participating in this solicitation. However, not all small businesses are eligible or qualified to compete for PACTS III. To be eligible, a small business must meet the following criteria:

  • It must be registered in SAM.gov and have an active DUNS number and CAGE code.
  • It must have a current and valid certification in the respective socio-economic category (SDVOSB, WOSB, 8(a), or HUBZone).
  • It must meet the size standards for the respective FC (FC1 – $24.5 million; FC2 – $12.5 million; or FC3 – $25.5 million).
  • It must have relevant experience and past performance in providing non-IT services to DHS or other federal agencies.
  • It must have adequate resources and capabilities to perform the work under PACTS III.
  • It must have a high self-scoring potential based on the scoring factors in the RFP.

To be qualified, a small business must also have a competitive edge over other offerors in terms of price, quality, innovation, and customer satisfaction. A small business must be able to demonstrate that it can provide value-added solutions that meet or exceed DHS’s expectations and requirements.

Challenges and Risks

Pursuing PACTS III contracts is not without challenges and risks. Some of the major challenges and risks that small businesses may face are:

  • The high level of competition among small businesses within each pool and FC. There are thousands of small businesses that are eligible to compete for PACTS III contracts, but only a limited number of awards will be made (DHS is projecting 60 awards across all pools and FCs). Therefore, small businesses will have to differentiate themselves from their competitors and prove their superiority in terms of experience, performance, quality, and price.
  • The complex and rigorous evaluation criteria that require extensive documentation and evidence of qualifications and experience. The RFP will have a self-scoring methodology that will assign points to offerors based on various factors, such as relevant experience, past performance, certifications, clearances, key personnel, facilities, equipment, subcontractors, etc. Offerors will have to provide detailed information and documentation to support their self-scoring claims. Any missing or inaccurate information may result in lower scores or disqualification.
  • The limited project opportunities for primes, SBA small business JVs (joint ventures), and SBA MPPs (mentor-protégé programs). The RFP will have a limitation on subcontracting clause that will require at least 50% of the cost of contract performance incurred for personnel to be expended for employees of the prime contractor or employees of other eligible small business concerns. Additionally, at least 40% of the work under each task order must be performed by the protégé firm if the prime contractor is participating in an SBA MPP. These requirements may limit the amount of work that primes can subcontract to other firms or perform themselves.

The requirement to maintain the socio-economic status throughout the life of the contract. The RFP will require offerors to certify their socio-economic status at the time of proposal submission and maintain it throughout the life of the contract. If an offeror loses its socio-economic status due to graduation, acquisition, or any other reason, it may lose its eligibility to compete for task orders or even its contract award. Therefore, offerors will have to monitor their socio-economic status and report any changes to DHS.

To learn more about how GDI Consulting can help you with PACTS III contracts, please visit our website www.gdicwins.com .