MARKET RESEARCH

Market research is the process of collecting and analyzing information about commercial capabilities and practices to determine the capability of the marketplace to satisfy agency needs. Generally, market research is conducted before developing new requirements documents and soliciting offers for acquisitions in excess of the simplified acquisition threshold of $150,000, and for acquisitions of less than $150,000 when adequate information is not available and the circumstances justify the cost. Market research may also be conducted on an ongoing basis within a segment of industry. This is done to keep up with changes in the marketplace that might affect future agency requirements and not as part of a specific acquisition plan.

It is important that all market research activity be documented and maintained in the acquisition file. Agencies should document the results of market research in a manner that is appropriate to the size and complexity of the acquisition being performed. This will permit easy access when planning future acquisitions and by other agency personnel with similar acquisition requirements.

Market research is most effective when conducted after the agency has made an initial determination of what it needs, when it needs it, how the agency will define contract success, and roughly how much it might cost. This information provides direction to the researchers regarding what to look for in the marketplace. Generally, market research is done during the initial stages of acquisition planning or, if this is not possible, at least before a final statement of work or performance work statement is developed.

Market research is conducted to obtain information about what the marketplace has to offer—its capabilities, practices, and pricing policies. The results of market research are used to enhance the final description of the agency requirement.

When acquiring equipment or supplies, market research information includes who manufactures or can otherwise provide the required items, if there have been technological or other changes in how the items are manufactured or utilized, and if such changes would affect how the current requirements are described. It may also indicate that the current items are obsolete and that something new or different would better serve to meet current requirements.

When acquiring services, the key concerns are how the same or similar commercial services are organized and staffed, the work outputs or products, performance indicators, performance standards, acceptable quality levels, and if technological advances and other innovations have changed how the services are performed.

The first step, however, is to conduct a desk audit, which is essentially a review of the information available in-house, and a literature search of appropriate trade publications and contractor marketing literature. A request for information (RFI) or a sources-sought synopsis may also be used in conjunction with the initial market research.

It is not unusual for an agency to revise its initial description of the requirement as a result of market research. Effective use of market research will allow the planners to meld agency requirements with industry capabilities and practices to produce a statement of work or performance work statement that permits industry the greatest flexibility to provide innovative solutions to meet the agency’s requirements.

The FAR does not address who should conduct market research. While technical and program personnel continually do informal market research through their professional reading and contacts with their industry counterparts, this information is rarely recorded and much of its value as market research is typically lost. Successful market research requires that the information be recorded and made available to others. This is why market research should be conducted as part of acquisition planning and based on the contributions and participation of the pertinent planning team members.

For example, the technical or program personnel need to know about the technical aspects of how industry goes about providing the goods or services in question, such as technological advances, innovative processes or practices, and performance metrics and measurements. Contracting personnel need to know about pricing, warranties, and other commercial terms and conditions that might affect how the goods or services are to be procured. Users will have their own set of concerns related to the practical use of the goods or services. These varying concerns must be coordinated as part of the planning process before actually conducting the market research so that all members of the acquisition planning team understand what the market research is to accomplish.

FAR 10.002(b)(2) suggests how market research might be conducted, identifying the following techniques:

Contacting knowledgeable individuals in government and industry regarding market capabilities to meet requirements

Reviewing the results of recent market research undertaken to meet similar or identical requirements

Publishing formal requests for information in appropriate technical or scientific journals or business publications

Querying government databases that provide information relevant to agency acquisition

Participating in interactive, online communications among industry, acquisition personnel, and customers

Obtaining source lists of similar items from other contracting activities or agencies, trade associations, or other sources

Reviewing catalogs and other generally available product literature published by manufacturers, distributors, and dealers or available online

Conducting interchange meetings or holding presolicitation conferences to involve potential offerors early in the acquisition process.

FAR Part 10 is not the only reference to market research techniques. FAR 5.205(a) addresses the use of R&D advance notices (“Research and Development Sources Sought”) to obtain information about the capabilities of R&D firms, and FAR 5.205(c) states that contracting officers may transmit to the government-wide point of entry (GPE) special notices of procurement matters such as business fairs, long-range procurement estimates, pre-bid or pre-proposal conferences, meetings, and the availability of draft solicitations or draft specifications for review.

In addition, FAR 15.201(c) identifies the following techniques to promote early exchange of information:

Industry or small business conferences

Public hearings

Market research, as described in Part 10

One-on-one meetings with potential offerors

Presolicitation notices

Draft RFPs

RFIs

Presolicitation or preproposal conferences

Site visits.

These techniques should all be considered, used as appropriate, and documented as market research. There is no single way to conduct market research. It is a continuing process, starting during acquisition planning and continuing until the solicitation is released.

After conducting a desk audit and literature search, the next step is to do basic research about the marketplace related to your requirement (e.g., who are the likely sources and what is known about their capabilities) using a combination of the techniques listed in FAR 10.002(b)(2). Then contact the likely sources to request information about their capabilities to meet your requirements.

Keep in mind that market research is a presolicitation activity. Your requirement is not yet defined sufficiently to begin the solicitation process. Market research can be conducted through telephone calls, letters, questionnaires, and personal contacts, as appropriate. Develop a list of questions to be asked before making any contacts and document the answers received.

When your likely sources are contacted, the requirement should be described in general terms, such as a need to improve the capabilities of a particular piece of equipment or services to accomplish certain types of tasks. The description should provide enough information for the sources to decide if they are interested in pursuing the matter. Your initial query (generally by letter) should ask for an expression of interest and identification of the respondent’s capabilities to meet the requirements. Depending on the responses, you may want to pursue more information using some of the techniques identified in FAR 15.201(c).

The most effective method to elicit information about a firm’s capabilities is through one-on-one meetings between the agency’s technical or program personnel and their counterparts in the firm (marketing or sales personnel not included). This can be done after an initial contact has established that the firm is interested and has the capabilities to meet the requirement. The primary purpose of these meetings is to discuss the firm’s capabilities to meet the requirements as outlined in the initial contact letter and to learn more about the firm’s procedures, processes, and policies.

Later, more definitive information can be obtained by using a draft SOW or RFP where the firm is asked to comment on the draft with the assurance that its comments will not be made available to other firms. These methods are effective because they ensure confidentiality; thus, the firm is free to talk about its technical and business practices without fear of compromising its market position. When using a draft SOW or RFP, ensure that respondents are told that the draft is subject to change and that comments on different or innovative approaches are encouraged.

Techniques such as presolicitation or preproposal conferences, or any other meeting where a number of firms will be attending, are less effective because participants will be reluctant to talk about their firm’s innovations or unique capabilities due to the presence of their competitors. Such meetings do, however, tend to reveal weaknesses in the agency’s description of its requirements because the participants are not reluctant to point out such problems (unless they plan to take advantage of the weaknesses if they receive the contract award).

Chapter 4 addresses market research as it relates to the use of a statement of objectives (SOO). That discussion also applies to all market research, particularly with respect to information exchanges with industry before the receipt of proposals.