MARKET RESEARCH

SD-5
MARKET
RESEARCH
gathering information
about
commercial products and services
SDMP
July 1997

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MARKET RESEARCH
FOREWORD
As the Department of Defense turns increasingly to the commercial market for the
products and services it needs, knowledge and understanding of the industries and sectors
that make up the global commercial market becomes a vital capability. Market research is
conducted to determine the availability of commercial products and services and to
identify market practices.
This handbook updates and expands the SD-5 handbook dated February 1992, Market
Analysis for Nondevelopmental Items. This updated version of our handbook focuses on
market research leading to the acquisition of both commercial items and commercial
services. Market research is also an important tool for identifying and buying
nondevelopmental items (NDI), when suitable commercial items are not available.
However, because of the breadth and scope of market research needed for a successful
commercial acquisition, I felt this additional guidance specifically for commercial
acquisitions would prove useful. Our SD-2 handbook, Buying Commercial &
Nondevelopmental Items, contains general guidance on buying NDI, including conducting
market research.
In putting together this handbook, we placed an emphasis on practical information,
recognizing that market research varies depending on the acquisition. As a result, a
variety of examples demonstrating successful methods for performing market research,
and the analysis and use of market research information, are included. Since the
publication of the original handbook in 1992, the use of the Internet as a market research
tool has emerged. Appendix A addresses the use of electronic databases available through
the Internet and on CD-ROM.
I would like to thank the members of the market research working group, chartered by the
Defense Standards Improvement Council, which included representatives from the Army,
Navy, Air Force, Marine Corps, and Defense Logisitics Agency. Their experience and
insight shaped the handbook. Working group members are listed on our homepage at the
Internet address cited on the next page. They are individually a valuable source of
information on market research.
Your recommendations on improving the content of this handbook are welcome. Please
send your comments to:
Director, Acquisition Practices
ODUSD (Industrial Affairs & Installations)
The Pentagon, Rm 3B253
Washington, DC 20301-3300
Approved for public release; distribution unlimited. Copies are available from the DoD
Single Stock Point, Standardization Document Order Desk, 700 Robbins Avenue,
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MARKET RESEARCH
Building 4D, Philadelphia, PA 19111-5094, (215) 697-2667 or 2179. Electronic copies
are available from our homepage at the following Internet address:
http://www.acq.osd.mil/es/std/ndi.
/signed/
Walter B. Bergmann, II
Director
Acquisition Practices
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MARKET RESEARCH
Table of Contents
PURPOSE ..................................................................................................v
WHAT IS MARKET RESEARCH? ...............................................................1
WHY DO MARKET RESEARCH? ...............................................................1
WHEN IS MARKET RESEARCH DONE? .............. ....................................3
WHO SHOULD BE INVOLVED IN MARKET RESEARCH?........................5
HOW IS MARKET RESEARCH DONE?......................................................7
Market Surveillance ......................................................................7
Market Investigation ....................................................................11
How Much Is Enough? .................................................................11
SIX PARTS OF A MARKET INVESTIGATION ..........................................13
Summary of Surveillance ..............................................................13
Identification of Sources ...............................................................14
Survey of Suppliers ......................................................................15
Checking of References (Current Users) .......................................17
Evaluation ....................................................................................19
Documentation .............................................................................20
MARKET RESEARCH FOR SERVICES ...................................................22
PRINCIPLES ............................................................................................25
APPENDIX A: COMPUTER-BASED RESOURCES
FOR PRODUCT AND SERVICE INFORMATION ......................................29
WHAT TYPES OF COMPUTER-BASED RESOURCES ARE
AVAILABLE?..............................................................................................29
Product Catalogs .............................................................................29
Vendor Listings ................................................................................30
Text Files ........................................................................................30
Government Procurement Contract Information ..............................31
WHAT INFORMATION IS PROVIDED
BY COMPUTER-BASED PRODUCTS?.................................................... 31
WHAT DOES COMPUTER-BASED INFORMATION COST? ....................32
WHAT INFORMATION IS NOT INCLUDED IN THIS APPENDIX? ............32
HOW WAS THIS SAMPLE OF DATA PRODUCTS SELECTED? .............32
HOW IS AN ON-LINE SEARCH CONDUCTED? .......................................33
COMMERCIAL SYSTEMS ........................................................................34
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MARKET RESEARCH
American National Standards Institute ............................................34
Dun's Marketing Services ................................................................34
ECRI ...............................................................................................35
Forecast International, Inc. ..............................................................36
ILI Infodisk, Inc. ...............................................................................37
Information Access Company ..........................................................37
Information Handling Services (IHS) ...............................................39
Inventory Locator Service (ILS) .......................................................40
Jane's Information Group ................................................................41
Knight-Ridder Information, Inc. .......................................................42
R.R. Bowker Company ....................................................................42
Sterling Commerce .........................................................................43
Thomas Online ................................................................................43
GOVERNMENT SYSTEMS .......................................................................44
Defense Logistics Service Center (DLSC) .......................................44
Defense Technical Information Center (DTIC) .................................45
Government Wide Information Systems Center ...............................45
Naval Surface Warfare Center .........................................................46
INTERNET SITES .....................................................................................47
BizWeb ...........................................................................................47
CommerceNet .................................................................................47
Productivity Through Software plc ...................................................47
TechExpo ........................................................................................47
Yellow Pages ...................................................................................48
APPENDIX B: SURVEY OF SUPPLIERS ............................................................49
INFORMATION TO OBTAIN FROM SUPPLIERS ................. ............................49
INFORMATION TO PROVIDE TO SUPPLIERS ..................................................52
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MARKET RESEARCH
PURPOSE
DoD 5000.2-R, Mandatory Procedures for Major Defense Acquisition
Programs and Major Automated Information System Acquisition
Programs, requires that market research and analysis be conducted to
determine the availability and suitability of commercial and
nondevelopmental items prior to the commencement of any development
effort, during the development effort, and prior to the preparation of any
product description. Part 10 of the Federal Acquisition Regulation
prescribes policies and procedures for conducting market research to
arrive at the most suitable approach to acquiring, distributing, and
supporting supplies and services.
This handbook is intended to complement DoD 5000.2-R and Part 10 of
the Federal Acquisition Regulation by providing general guidance, tools,
and examples to assist you in conducting market research for a wide
variety of items and services.
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MARKET RESEARCH
WHAT IS MARKET RESEARCH?
Market research is a continuous process for gathering data on product
characteristics, suppliers’ capabilities and the business practices that
surround them—plus the analysis of that data to make acquisition
decisions. This requires one to collect and analyze information about the
market that subsequently can be used to determine whether the need can be
met by products or services available in the commercial market; whether
commercial practices regarding customizing, modifying products or
tailoring services are available to meet customer needs; what are the
customary terms and conditions, including warranty, buyer financing, and
discounts under which commercial sales are made; and whether the
distribution and logistics support capabilities of potential suppliers are
sufficient to meet the needs of the government.
Market research information can be used to shape the acquisition strategy,
to determine the type and content of the product description or statement
of work, to develop the support strategy, the terms and conditions included
in the contract, and the evaluation factors used for source selection.
WHY DO MARKET RESEARCH?
Market research is essential to optimize the potential use of commercial
items, commercial services, and nondevelopmental items to meet agency
needs.
The DoD acquisition community has been challenged to reduce unique
military requirements that result in unique processes within defense
production facilities. Removal of these requirements will broaden the
industrial base available to fill DoD requirements and allow historically
defense oriented production facilities to expand and become competitive in
the commercial market. The benefits of a globally competitive, national
industrial base are not only reduced cost, but also reduced acquisition cycle
times. We need to deliver new systems to warfighters within commercially
available cycle times, which are much shorter than the average 12-to 18-
year development cycle for a major DoD weapon system.
Access to the commercial marketplace will also provide access to the latest
advances in technology. Military R&D no longer leads commercial in areas
such as electronics. In the global marketplace, everyone has access to the
same commercial technology base. In the future, part of the military
advantage will belong to those who capture state-of-the-art technology, get
it into weapons systems, and successfully field those systems first.
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MARKET RESEARCH
The preference for utilizing the commercial market applies to more than
items and systems. To meet its budget and readiness goals, the Department
of Defense is turning increasingly to the commercial market for services it
needs, as well.
From a practical standpoint, we can achieve none of these mandates and
goals without market research. Thorough market research provides the
basis for
• identifying opportunities for using commercial items or services
to meet defense needs,
Use market research to
shape:
• determining the availability of other existing items
3 requirements
(nondevelopmental items) to meet defense requirements (see
3 product descriptions
SD-2),
and statements of
work
• writing product descriptions and statements of work which
3 support plans
allow companies to offer their commercial items and services in
3 test plans
consonance with commercial practice, and
3 sections L and M of
the RFP
• crafting acquisition strategies, solicitations, contracts, and
3 contract terms and
support and test plans that accommodate and take advantage of
conditions
commercial business practices and encourage commercial
competition.
Not only does utilization of the commercial marketplace make sense from
cost, schedule, and technology considerations, it is also required by law.
The Federal Acquisition Streamlining Act of 1994 (FASA) requires that
federal agencies to the extent practicable
• buy commercial items, commercial services, and
nondevelopmental items to meet agency needs,
• require prime contractors and subcontractors at all levels to
incorporate commercial and nondevelopmental items as
components of systems they develop for federal agencies,
• state specifications in terms that enable and encourage
companies to supply commercial and nondevelopmental items,
and
• revise procurement policies, practices, and procedures—not
required by law—to remove impediments to the acquisition of
commercial items.
FASA also specifically requires federal agencies to conduct market
research prior to developing new specifications for procurement and before
soliciting bids or proposals for a contract which exceeds $100,000.
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