Staying Ahead With Tech Initiatives and Trends

Templeton:

I'm pleased to welcome to the Speed to Contract podcast today Kevin Plexico. Mr. Plexico currently serves as Deltek's senior vice president for information solutions. Deltek's information solutions products provides industry-leading content to government contractors and architecture, engineering, and construction firms. Their products include GovWin IQ, an industry-leading government market intelligence offering, and AIA's MasterSpec, providing the industry's standard for construction specification content and tools.

On a day-to-day basis, Mr. Plexico is responsible for leading the industry's largest team of analysts focused on the one-trillion government contracting industry. Kevin graduated from James Madison University with a major in economics, and earned his MBA at the University of Maryland's Robert H. Smith's School of Business. Kevin, welcome to the Speed to Contract podcast.

Plexico:

Thank you, Tim. It's good to be with you today. I'm looking forward to the conversation.

Templeton:

Great. Well, as you know, in some of our prior conversations that we've had, this whole conversation, Kevin, is coming from leaders like yourself. With your experience in government contracting, you have many years, certainly with Deltek, and a great body of work to share with our listeners, what in the past has really ... You've witnessed, you've been involved, your products have been involved, of seeing great efficiencies in speed to contract or speed to market to arm our warfighters. And so, as we look back and get your insights on that and what the differences are and what you've seen on these great efficiencies in the past, specifically with technology, obviously that's Deltek's sweet spot, going forward, the big question is, what are the things we could do to improve it even further?

So with that said, maybe give us a little bit of background on specifically Deltek, and start talking about your experience of these years with Deltek, where your company, your products, have brought these great efficiencies to the market.

Plexico:

Sure, sure. Tim, again, thanks for letting us join you, and I'm looking forward to the conversation today. I'll just give the briefest of introductions to Deltek. I mean, Deltek is really a company that is built around the servicing of companies that are project-based businesses. So, think of companies that are delivering construction projects, professional services projects, technology projects, and that's kind of our lifeblood is how do we help, through software and tools, companies that have the project and the success of the project as their lifeblood. Obviously in the government contracting space, that's the majority of what government agencies are buying from the contracting community.

They have problems that are, as we talked about, very unique. The missions of a government agency are about as different from what a commercial company does than any other kind of difference you could think of, protecting the nation, protecting our borders. The warfighters obviously have unique needs in terms of the capabilities and weapons systems that they need to support and provide to the warfighter to be successful, in our wars overseas as well as protecting our nation. So, our focus is really at Deltek around, how do we make the companies that are delivering projects successful in that project execution, so that the companies or agencies, in this case, that they're working with can be successful with their missions? And that's essentially what Deltek does.

Templeton:

Well, give me, in terms of ... And it's interesting. By the way, when I read on your bio, "the one-trillion government contracting industry," I don't care whose yardstick you're using, a trillion dollars is a lot of money on a regular basis. And so with the years that Deltek has had, and if a company that's in government contracting right now isn't using your product, just talk about some of the efficiencies right now for the people that utilize Deltek. Or what happens if they don't? Or what are the other options that are out there in terms of this whole savings of time and efficiencies and money at the end of the day?

Plexico:

Yeah, sure. And so I think the easiest way to describe that is, when someone ... I'll take a company that is really good at what they do, have some really unique capabilities and strengths, whatever it is that they build, if it's software, if it's services they provide, they might be really, really good at it. But if they don't understand the unique requirements and processes that government agencies impose, through law, on the way that a contractor has to work with them, they could provide the best widget or the best service in the world, and they would still fall down doing work with a government agency. And I think that's the unique aspect of the government market, in particular, the federal market, is that they just have such a unique way of doing business, everything from the federal acquisition regulations that dictate how they buy to regulations around that might affect their company's human resource management. It might affect their financial operations, it might affect their information security practices and policies.

So, for a company that wants to do business in a government agency, you really need to be prepared to take on the requirements that that agency is going to put upon you if you sign that contract. I always say that your first government contract is probably going to be the most expensive contract you ever win, because of all the foundation-laying that you have to do in order to be able to support that contract. And it's not like the government buyer or the General and the Department of Defense is doing this to be difficult. It's just they're a public agency. They serve the public. They're funded by taxpayer dollars, so as a public steward of funds, they have to make sure that the way they go about their business is above board and rigorous and effectively using the resources that are available to them. And that's where lawmakers come in to define what those requirements are, so they can't go and make a procurement.

If I'm a small business, I can go buy whatever I want, whenever, any way I want. I don't have to compete it. I can just pick somebody. I don't have to care about how they manage it. I can just say, "Hey, we'll just pay this, as long as you fulfill the mission." Just government buyers don't have that latitude. They have rules, regulations, and processes that are intended to be there for the fact that they are public servants and public stewards.

That's typically the biggest obstacle for a company that's coming into the market is, hey, they think they're really good at what they do, and they don't necessarily always understand why these requirements are in place. And they kind of have to get past that to acceptance that if you want to do business with a government agency, it comes with those kinds of additional challenges. But the benefits of it are you will, in all likelihood, if you do good work, you'll have customers for life, and it will open up opportunities for you to do business with a lot of other agencies that might have similar or complimentary missions. And you've now figured out how to navigate those requirements and can replicate them relatively easily for that next time you're engaging with another customer who might have a similar requirement or complimentary kind of capability that you can fulfill.

Templeton:

One of the things, Kevin, that's interesting, we interviewed Michael Weaver, ProPricer, and of course, Deltek and ProPricer, we're partnered together in the marketplace with ProPricer being on the front end to win the contract, Deltek to then deliver the contract. And we are investing as partners with Deltek on an API between our products. So, when someone takes a contract and submits a proposal, they win the proposal, then you have a very neat API and a handshake between ProPricer and then Deltek to start the contract. And isn't a matter of saying, "All right, we've got to figure it out, take everything down, upload it into Deltek." It's done really with a keystroke after the APIs are finished.

What do you see in the marketplace for companies that don't have APIs? I mean, obviously, Deltek's working with a lot of companies that, I mean, we're spending a lot of money together to go through that process so that the two products do have a handshake. What happens for companies that are out there that are using their own products right now, or perhaps they win the bid? I mean, what kind of time is there in general that's added to it, if they're not utilizing technology at the point that they should be with these type of handshakes or APIs that are available?

Plexico:

Yeah, I mean, this is an easy answer. I mean, as we talked about the complexity of doing business with a government agency, it affects every element of a company's operations and functions, and this is one of the reasons we're really excited for the relationship with ProPricer. If you think about the journey of a company for identifying an opportunity or procurement, bidding on it, and then executing against it, there's a lot of systems that would be involved in that simple process that sounds simple to describe. I described it in a sentence, but to unpack that in terms of all its complexity is a totally different challenge.

I'll take our GovWin product, which is designed to be a market intelligence solution that's intended to help companies that have good capabilities and good strengths get into an agency early in the buying cycle, so that they have an opportunity to influence how the solution is composed. Once a government agency gets to the point where they're announcing a procurement, they've made a lot of decisions about the way they're going to go about that procurement. And if you weren't in their minds with the fresh ideas that you might be able to bring to it, you're not going to have much opportunity at that point to influence the way that solution is developed. It's already done.

So, we help companies get in there early in order to help shape those requirements, educate the buyer before the procurement officer gets their clutches into the solicitation and the process, so that there's really an opportunity for them to help influence what comes out in the solicitation process. Once they decide the price and once they decide to bid, obviously, you're drawing extensively on your financial information. And we at Deltek have a cost point, our flagship ERP solution and financial management system for the government contracting space, that is really purpose-built for a government contractor that has that string attached of, if I bid on a contract, I'm going to be audited, and subject to audit by an agency that's going to verify I've accounted for the costs on that contract correctly. And that's a major input into that pricing decision. What are their overhead rates? What are their costs, their cost structure?

The makeup of their price is kind of like two points. It's like you need the price to win the contract, but also the price that still allows the company to make a profit and be successful financially on that project. Most companies are not charitable organizations. They're profit-seeking organizations.

Templeton:

Sure.

Plexico:

And so I think that's where for us, being able to bring those three capabilities together and seamlessly tie them together through an API or an exchange of data, allows a company to get the best of the three solutions. In that particular case, three solutions. There's obviously many more we could talk about. And have them talk to each other so that they're not taking data from one, reentering into another system, drawing inputs from that, and reentering that into yet another system and all the back and forth that can go into that. If they're tied together and the right information is exchanged, then that's literally saving somebody weeks of work, and probably allowing them to deliver a much higher-quality proposal and price proposal in that process.

Templeton:

Yup. As they say, a single source of truth that you can depend on. When we interviewed Michael Weaver from ProPricer, he was talking about one client that because they didn't have a single source of truth, they made a $12 million mistake on the contract, which they ate, obviously, and that was just based on human error of not being able to utilize technology to its best efficiencies like what we're talking about.

Plexico:

Yeah, and a related point on that, a misplaced digit in a price in a proposal can be a very expensive error to make. And if you can mitigate some of those types of errors that ... Human nature, I make typos all the time sending emails. Make a typo in a proposal and a price, then it's an expensive problem.

Templeton:

Yeah, absolutely. Goes on all the time. It's interesting. At a macro level, we talked about the $1 trillion industry, it's a kind of a question off the top. I mean, how many contracts would that ... What would be the thumbnail on the tens of thousands of contracts that are out that makes up that $1 trillion a year government industry that we're talking about?

Plexico:

Yeah. I mean, it's literally hundreds of thousands of contracts. If you think about commodity purchases, which probably is not either one of us where we're bringing strength, if they're buying furniture or paint or office supplies, there's literally thousands and thousands of those kinds of transactions that happen every day. But when you talk about in the defense department, some of the largest contracts in the world are with government agencies and defense agencies, where they might be buying an aircraft carrier or fighter jets or some kind of navy ship, or something that's literally a decade-long planning process and building process that is billions and billions of dollars of investment for a single contract. So, you have this kind of very broad gamut of contract types and sizes, depending on what they're buying. If they're buying something that's rudimentary, and you can go down to Office Depot and buy it, that's one thing. But if you're building something that's really unique and that's probably not being built by anybody else in the world, that's a totally different problem and a totally different challenge.

Templeton:

Well, when you think about, because you mentioned hundreds of hours and I mentioned the $12 million mistake, you multiply every one of those contracts, whether they're small or large, and you're going through and you have that chance for error or you're stretching that time factor out, it gets monumental. I mean, we start talking, but we can see where things get plugged up to begin with.

Going forward, I had an interesting interview with Elliot Branch, a former undersecretary for the Navy, very much involved with Triton military systems, and was talking about it ... At one point, he got involved to set up middleware for the government to better communicate with the contractors so that they just had a more transparent view on what was going on an annual basis, and it was a game changer for Elliot and his department. That's something where the government stepped in and actually said, "All right, we're going to change up how we're accepting and we're looking through a technology medium," if you will, "through a middleware platform."

Going forward, I mean, if we just give you a blank canvas like we've given others, and we start looking about the complexities, and we know oversight is here forever. Regulation and change is slow, but it can happen. But big insights, big insights and movements and technology going forward. What are the big things that are either coming down the road, or from your opinion, could change the game moving forward, when we start looking at things that we can physically do to speed up speed to contract, speed to market to arm our warfighters?

Plexico:

Yeah. I mean, one of the biggest trends that we've seen is the move of government agencies from buying things through what I would describe as the traditional RFP process, to drawing on the benefits of, I'll use the term IDIQ. If you're not in the government market, that won't mean much to you, but think of it as like you've got a master contract that already has a lot of the terms and conditions negotiated, which is the heavy lift oftentimes for the government agency to implement. And then, once you have that in place, then the work comes. I've got a statement of work for a specific discrete piece of work that I need to have fulfilled, and once I have that master contract in place, I can award that piece of work much more quickly.

I know when I entered this industry, it was not uncommon to have technology buys that were three and four years long. And what they wanted to buy at the beginning of the acquisition process and what ended they ended with four years later was totally antiquated technology, and you'd be like, "Why are you even buying this?" But it was too late. That was the process and the cycle that the government market was, even in the defense industry.

So I think things like transparency are a really important way for government agencies and industry to make sure they're collaborating and sharing information that can get to the best solution possible faster. I know that government agencies are risk averse. They're concerned about fairness and equity in competitions, and they're literally afraid to share information that might be viewed as like you shared it with one company but not another, and therefore you put one company in an advantage. But there's a lot of ways around that. I think it's getting over that risk aversion in some cases that still allows for a level playing field, but allows transparency in the solutioning process so that the best ideas can be pulled together. And I think IDIQ contracts or those types of framework contracts also allow for the acquisition process to be accelerated so that those solutions can be bought, and by the time they're implemented, they're not antiquated. They're still current technology, and still the key thing and the best solution that's going to help the government agency be successful.

Templeton:

It's interesting. Again, we're just projecting out, right? These are opinions on what we could, to make a change or to suggest change going forward. What do you see in terms of AI and other types of technology that are out there in terms of in our space that's coming out? What do you see on the horizon? Is it just steady as she goes in terms of technology and where we're at, or moving to better APIs? Or what's on the horizon that we might be able to look to, or our listeners should start looking at, that could make a definite change for efficiencies in contracts?

Plexico:

Yeah. Yeah. I mean, I think that the government has a reputation, which in fairness is not unwell-deserved, we'll say, of being behind in technology. That gets to the risk aversion, and the fact that a lot of the systems that are built to support government agencies are really unique systems, that it's not easy to buy certain things off the shelf or in a commoditized way for certain requirements in the government. So, I think that the challenge for government agencies is, in that speed to market, how do they modernize their technologies and stay fresh?

And I think that's where initiatives and trends, like cloud computing, that allow them to start to separate some of the uniqueness of their mission from the uniqueness of their systems and the flexibility of modern systems ... I think about platform as a service, infrastructure as a service, obviously as a service in cloud computing is certainly a major opportunity for government that's still forming. And it certainly has obstacles around things like cybersecurity that we have a lot of opportunity in the government agencies for them to embrace cloud computing as a way of fostering and enabling their technology modernizations.

When I think about other modern technologies like artificial intelligence and machine learning, machine learning really depends on a lot of data for training a model to be an effective and predictive model, from an algorithm point of view. If you're a small company and you only have a small sampling of data, it's not easy for machine learning to be applicable to your business. But if you're a large agency, you think about things like Medicare and Medicaid transactions, or geographic information, and in battlefield environments or complex environments of ... Think about just in Ukraine, like tanks, aircraft, missiles, all kinds of things that are happening kind of simultaneously and in real time, the ability to bring artificial intelligence and machine learning to bear is, I think, there's probably no better place and no better market where that can have an impact than in the government market, because of the nature of the scale and data that they have available at their disposal.

So I expect that those kinds of technologies are going to be really transformational technologies, and that the government that we look at 10, 15 years from now is going to be remarkably different than the one it is today. I mean, they still might be slower than we see in the commercial world, but I think as a public citizen or as a citizen, do you really want your government agency experimenting with the latest and greatest technology that might not be hardened and tried, and as a result spend billions or trillions of dollars unnecessarily? I think we want reliable technology, but we do want modern technology in our government.

Templeton:

Yeah, that's really good. One of the things that was interesting, because you talked about technology at three to four years, and by the time it comes to the market, it's now antiquated. And then for the product, that's where this whole conversation started, because as Joy White in her keynote at the last GPS Summit, she was talking 13 years. When we take major systems and we have to go through a prototype and a process, it's 13 years from the start of the conversation to actually delivering. And that's three times longer, three plus times longer, than the four years that you've outlined, and we could imagine how things get behind.

What everybody shared, all of our leaders from the different aspects of the industry have shared, is obviously during wartime, there's no one better than the United States, right? I mean, we know how to come to market quickly. We know how to rally in times of warfare when the heat is really on. What we're talking about here, though, is why wait? Specifically the 2026 threat, which could happen earlier, what are the things that we could do to get ahead of that so we don't have to try to react in wartime when it's in front of us, so going forward?

So as we bring this to a close, Kevin, I mean, in terms of what Jim Collins in his age-old book called BHAGs, right, big hairy audacious goals for the industry, as an exec, as a senior analyst, and looking at this, what would be your big ask on the industry that people should be looking at that they could definitely speed up? Not only their contracts or acquisitions, but delivery to the market? What would be either some of the big ask or a big insight that you would share for that contractor that's out there that can definitely improve their business today? And it's all right if it's self-serving in terms of Deltek products, but really, get one chance to hear someone with your body of work share that insight, that would be great to finish on that note.

Plexico:

Yeah. Well, certainly as companies are looking to grow their business with government agencies, I have the advantage of being able to be self-serving and honest at the same time, which is a great thing. The procurements that come out today have more compliance requirements than ever, because things like, obviously, you've always had concerns around financial compliance. You think about the movement around diversity, equity, and inclusion and how that impacts HR policies. You think about the government's emphasis on small business contracting and engaging small businesses for economic developments, so that comes with a challenge for a large prime to make sure they've got diversity in their supply chain. And then you think about cybersecurity threats and the information threats that I think the government is just a great, great target for foreign countries that might not be our friends and allies, and they might be looking to exploit things. They're looking for ways to exploit us, and so the government has to raise the bar and be at the forefront of those kinds of compliance requirements and information security practices.

So, for a company that wants to be successful, you have to plan ahead. You cannot wait for a solicitation that comes out that is right up your alley, and then look at all the other things that go into that RFP in terms of compliance requirements that you haven't thought about to prepare yourself to be able to be a viable bidder. Again, you could have the best solution in the world, but if you can't satisfy some of those requirements that are going to be in that RFP that are independent of the government agency's sort of mission requirement or application, you're not going to be viable for them. You're just not. And so getting ahead of that.

In fact, a lot of the procurements that we see coming out these days, the large government-wide acquisition contracts where they're buying big technology buys, they're literally putting in the evaluation criteria things like, "Do you have an approved financial management system? Do you have approved estimating systems? Do you have subcontractor management systems? Tell us about your supply chain management processes." I mean, they ask about those things and score them. And what they're basically telling you when they give 20% to 30% of the score value on your ability to comply with those things, independent of the work they're going to buy, is if you don't have these capabilities, please don't bother bidding. You're not going to be successful.

So I think planning ahead is probably not different in any other industry, but in the government market, certainly it's important to plan ahead so that you can be available to the government agency to bring that capability that might be really unique and valuable to them, and still satisfy the requirements that they're going to have that maybe not be related to your specific solution, but it just sort of comes with the territory.

Templeton:

Yeah, that's great. Well, that's great. I certainly appreciate that insight along with the rest of your experience, Kevin. Again, it's great having someone from the industry that's, I mean, you're down in the trenches right now on a day-to-day basis making it happen and helping companies become more efficient going forward for speed to contract, and ultimately speed to market to arm our warfighters. So Kevin Plexico from Deltek, we want to thank you very much for your time. And look forward to continue the conversation, because coming up at the next summit in June, we're going to continue this roundtable of specific people that have an interest from, again, different backgrounds that they can bring their insights for speed to contract, to open up new ideas and new pathways of thought for our listeners so that we can help move our country and our allies forward. So again, Kevin, thank you very much for your time. We appreciate it.

Plexico:

Okay, and thanks, Tim. I just would like to close with, we're really excited about the partnership with you, and I think that we have some great opportunities as we build out the connective tissue between our solutions to really bring a lot of value to our shared customers. So, we're excited for the relationship, and excited for the future and working with you and your customers as part of that.

Templeton:

Great. Good stuff. All right. Thank you very much. Take care.

Plexico:

Thank you.