In the last two weeks, the Department of Homeland Security (DHS) dropped a bombshell on the GovCon community—canceling two major multiple-award contract vehicles, PACTS III and FirstSource III ITVAR, in rapid succession. Together, these were expected to deliver over $10 billion in task orders across a ten-year period and were central to the pipeline strategy of many small businesses.
For Capture Managers, Business Developers, and Proposal Teams—especially those who spent months (and tens of thousands of dollars) preparing for awards in September 2024—the sudden cancellations are more than a strategic detour. They’re a wake-up call.
Let’s unpack what this means and how to move forward.
🚨 What Just Happened?
FSIII ITVAR Cancelled
The FirstSource III ITVAR (Information Technology Value-Added Reseller) track was slated to be a cornerstone for DHS’ IT hardware procurement. With a $10B ceiling and a 10-year ordering period, it attracted intense interest from the small business community. Awards had already been announced across several categories:
- 3 in the 8(a) category
- 7 HUBZone firms
- 5 SDVOSBs
- 4 WOSBs
- 11 in the All Small Business category
Firms that had celebrated award notifications are now facing a complete reversal—and with it, the loss of a major source of projected revenue and growth.
PACTS III Also Axed
PACTS III, another DHS vehicle focused on professional services, was similarly expected to offer substantial opportunity to small and disadvantaged businesses across functional categories. Its cancellation in such close proximity to FSIII has added to the growing sense of uncertainty.
💸 The Cost of Pursuit
Many small businesses invested tens of thousands of dollars preparing these bids—assembling teams, engaging consultants, paying legal and proposal development costs, and more. For some, these contract vehicles were cornerstone pursuits for GFY24 and beyond.
This isn’t just about sunk costs. It’s about pipeline collapse. Companies were already forecasting task order work and hiring capture support based on assumed award timelines.
🤔 Why Did DHS Pull the Plug?
The official explanations are still emerging, but insiders point to a mix of:
- Procurement complications or protests
- Shifting acquisition strategies
- Concerns about fairness or evaluation processes
- A broader reassessment of DHS’ contract vehicle landscape
Regardless of the exact reasons, the message is clear: even “sure bets” aren’t sure anymore.
📌 What Capture and BD Leaders Should Do Now:
- Reevaluate Your Pipeline Immediately
Don’t wait for official debriefs. Update your pipeline forecasts to reflect these cancellations and assess the impact on revenue goals. - Engage with DHS and Partner Networks
If DHS plans to recompete or restructure these vehicles, you’ll want early visibility. Join industry calls, reconnect with DHS points of contact, and monitor public sources and SEWP/GSA alternatives closely. - Stay in Front of Teaming Partners
If you were a subcontractor or had subs aligned, maintain those relationships. Many teams will look to reconstitute for the next iteration or find alternate paths together. - Turn Disappointment into Differentiation
Use this moment to reassert your firm’s value in upcoming task order bids or new vehicles. Agencies are watching how firms respond—resilience and professionalism will leave a mark. - Build in Flexibility for GFY25 Planning
Capture strategies need to build in margin for risk. Don’t hinge your GFY25 growth plan on any one vehicle or agency—even when it seems “in the bag.”
📈 What’s Next for Small GovCons?
The cancellation of FSIII ITVAR and PACTS III underscores a reality that seasoned BD and Capture teams know well: contract vehicles are not guarantees—they’re entry points.
DHS may reissue these vehicles in new formats, or shift spending to existing GWACs and BPAs. For smart GovCons, this is a time to:
- Monitor recompete rumors closely
- Pivot to agency-level opportunities
- Identify adjacent IT and professional services vehicles already in motion
Final Thoughts:
GovCon Capture isn’t for the faint of heart. The FSIII and PACTS cancellations are disappointing—but they also reaffirm why agility, relationships, and readiness matter more than ever.
Now’s the time to stay sharp, stay engaged, and prepare for what’s next.
Here’s a “What Now?” Checklist specifically designed for GovCon Capture Managers, BD, and Proposal Managers affected by the DHS PACTS III and FSIII ITVAR cancellations. This can help your team stabilize, re-align, and prepare for what’s next.
✅ What Now? Checklist: Navigating the Cancellation of PACTS III & FSIII ITVAR
🧭 1. Assess the Impact Internally
- ☐ Meet with BD/Capture/Proposal/Delivery to review strategic and financial impact
- ☐ Quantify sunk costs and reallocate proposal budget where possible
- ☐ Update GFY24/GFY25 revenue and pipeline forecasts
- ☐ Communicate the change clearly to internal stakeholders (Execs, Delivery, Finance)
🔍 2. Gather Intelligence
- ☐ Request debriefs if awards were already made to your company
- ☐ Monitor DHS communications, SAM.gov, and agency-specific portals for recompete signals
- ☐ Check if work will migrate to other vehicles (SEWP, Alliant, GSA MAS, etc.)
- ☐ Connect with industry associations (e.g., ACT-IAC, PSC) and GovCon news outlets
🤝 3. Reconnect with Teaming Partners
- ☐ Reconfirm partner interest for future recompetes
- ☐ Coordinate on joint pursuit strategy adjustments
- ☐ Explore short-term opportunities to collaborate on existing vehicles or recompetes
📂 4. Realign Pipeline Strategy
- ☐ Reprioritize near-term opportunities already in pipeline
- ☐ Look for open task orders under DHS’s active contract vehicles
- ☐ Shift attention to agency-level small business BPAs or sole-source eligible areas
- ☐ Add new “vehicle-agnostic” or agency-specific captures to rebalance pipeline risk
🧰 5. Repurpose Your Work
- ☐ Salvage proposal content, pricing models, and past performance narratives
- ☐ Reuse compliance matrices, staffing plans, and technical volumes for future bids
- ☐ Turn loss into leverage: repurpose lessons learned into stronger positioning
📣 6. Stay Visible & Engaged
- ☐ Check in with your DHS contacts and CORs — ask how their buying strategies are changing
- ☐ Attend upcoming DHS or industry outreach events to stay top of mind
- ☐ Brief leadership on any short-term adjustments and long-term positioning plans
📊 7. Strengthen Your Resilience
- ☐ Reevaluate over-reliance on any single IDIQ or vehicle
- ☐ Increase pursuit of smaller direct awards or quick-turn task orders
- ☐ Build flexibility into pipeline and proposal resourcing plans for GFY25
- ☐ Document risks in strategic plans and prepare a BD contingency playbook
How are you shifting your FY24–25 strategy? Contact Skip at BIT Solutions: Skip@bitsolutionsllc.com to talk about how CaptureExec can help with your GovCon strategy or Book a demo to see CaptureExec in action: https://tinyurl.com/BIog-When-The-Ground-Shifts
