Labor Law Changes That Will Affect Small Business Federal Contractors

Hand putting card in time clock

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The Fair Labor Standards Act (FLSA) is a federal statute that defines, among other things, the difference between an exempt employee (one who is paid a salary and is therefore exempt from overtime pay) and an hourly employee (someone who may be paid on an hourly, weekly, or even yearly basis, but is not exempt and is therefore subject to overtime pay).

The current threshold is $455 per week, meaning that if you’re paid that amount or less you’re automatically assumed to be hourly. If you’re paid more than $100,000 per year, you’re automatically assumed to be exempt. In between, there are duties (referred to as professional standards) that will define an employee as exempt.

So that’s the current law. Under the new law, they’re going to raise that salary to $913 per week, and the automatic compensation level to $134,000 per year. What this means is that a lot more people are going to become subject to hourly rules, no longer exempt. When that happens, as a small business owner you will have to convert those people from exempt status to hourly status, from being paid a salary and not being eligible for overtime pay, to being eligible for overtime pay and being paid hourly.

In government contracting, it’s common practice for people to put in a lot of extra hours, many of them spent on non-billable work (sometimes called “company time”) rather than directly serving customers, after the 40-hour week is “done.” This might be time spent doing things like interviewing candidates for other jobs in the project or elsewhere in the company, preparing status reports, or attending company meetings. A major example of this is doing proposal work.

Let’s say you have an employee who works 40 hours a week of billable time and 10 hours a week of “company time.” Under these new rules that employee will now have to be paid for all of those 50 hours (and 10 of them at overtime rates).

Of course you’d be smart to consult with the compensation experts and lawyers whose job it is to work on this stuff. I will only say that it’s important for you to understand these issues because these changes are definitely going to be a challenge.

For more details, see this fact sheet from the Department of Labor and this article from the HR Bartender.


How to Lose a Contract in 3 Easy Steps

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© WavebreakmediaMicro – Fotolia.com

This is a guest post by Debbie Ouellet of EchelonOne Consulting. Debbie gets it exactly right. Pay attention, folks!

From time to time I’m approached by a business owner who has just been blind-sided. They’ve been a long-term service provider for a customer and just learned that they no longer have the contract.

And they don’t know why.

Most often this has happened when the contract went back out for bid, usually through the RFP (Request for Proposal) process, and the service provider prepared their own response. I’m called in to perform a postmortem and provide feedback with the goal of preventing a recurrence with other contracts.

Many business owners might assume that they were simply underbid (i.e.: another vendor low-balled their price to win the contract). The truth is; that’s rarely the reason.

What are 3 of the main reasons that long term vendors lose contracts in the bid process?

They got complacent.

Any procurement manager will tell you… complacency in a vendor is a contract killer. The vendor works hard in the first year or so of the contract to bring innovation, quality initiatives and cost control strategies into play. And then they ride the wave for the remainder of the term.

It’s not that they’re lazy or even bad vendors. They just get comfortable that all is well within their contract and relationship and that everyone is happy with the status quo.

When you read their RFP response and distill it down to the main messages, it says, “We’re great, you know we’re great and we’re going to keep doing what we’ve been doing…because hey, it’s working.” Unfortunately, their competitors have done their homework and suggested new approaches and offered added value in their responses making the incumbent’s proposal look pretty darn blah.

Another tactic that drives customers crazy is when long-term vendors save all of their ideas and innovations to submit with the rebid process. Instead, a better approach is to show steady improvement over the entire term of the contract. Your customer then sees you as consistently bringing value to the table. Then when it comes time for the contract to go out to bid again, you can cite the great initiatives you’ve implemented and offer a few more that you’d like them to consider moving forward.

The best piece of advice I can give a vendor who already has a contract is this: At least once each year, sit down and take stock of what you’ve done for your client lately. Where did you bring value, suggest cost control or improve quality? If you haven’t, find ways to do it now before the contract goes out to rebid.

They assumed that they knew it all.

At times, being the incumbent has its drawbacks. They’ve been immersed in their customer’s business so much so that they lose perspective and believe that they already know everything there is to know about them.

Because the vendor thinks they already know, they don’t read the RFP documents carefully. They make assumptions and miss key elements for the response.

No matter how good your relationship is with your customer, you should always approach an RFP as though it’s anybody’s game. Read it carefully, ask questions and follow the instructions to the tee.

They assumed that the client knew it all.

At times, an incumbent won’t explain responses fully in an RFP because they assume that the client already knows about their business, what they do and how they do it.

There are three reasons why this is a bad approach:

  1. The people reading your response may not know you. The truth is, your main contact; the one who loves you; may not be the decision maker in the bid process. Changeover in decision makers is also commonplace in today’s business world.
  2. Most RFPs go through a scoring process. Each set of answers to questions is scored against a pre-defined process to come up to an overall score. It’s a process that was designed to ensure objectivity in the review process. The bids with the highest scores make it to the finalists list. If you don’t provide full answers to questions, how can you be scored properly?
  3. Incomplete answers look sloppy and lazy. You don’t want your customer to think that you couldn’t be bothered to take the time to answer their questions properly.

Use incumbency to your benefit

Being the incumbent in the RFP process can be a huge advantage as long as you understand that winning and keeping a contract starts long before it goes out to bid.

  • Consistently show value (and make sure that your customer knows about it) while you have the contract. Document it so that you’ve got the information readily available at bid time.
  • Always approach an RFP as though it’s anybody’s game.
  • Don’t assume that you know everything. Read the RFP document carefully and follow the instructions closely.

Don’t assume that the people reading your response know all about you just because you’re their current vendor. Answer questions fully as if they didn’t know you.

I’d much rather help a client win back a contract through the RFP process than explain to them postmortem why they didn’t.

This article originally appeared at http://www.echelonone.ca/apps/blog/show/44087958-how-to-lose-a-contract-in-3-easy-steps and was reprinted with permission.

Debbie Ouellet of EchelonOne Consulting is a Canadian RFP consultant and business writer. She helps business owners win new clients and grow their business by helping them to plan and write great RFP responses, business proposals, web content and marketing content. You can find out more about Debbie at www.echelonone.ca.


Service-Disabled Veteran-Owned Small Business Joint Ventures – New SBA Requirements

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© alexmillos – Fotolia.com

This is a guest post by Steven Koprince of SmallGovCon.

SDVOSB joint venture agreements will be required to look quite different after August 24, 2016.  That’s when a new SBA regulation takes effect–and the new regulation overhauls (and expands upon) the required provisions for SDVOSB joint venture agreements.

The changes made by this proposed rule will affect joint ventures’ eligibility for SDVOSB contracts.  It will be imperative that SDVOSBs understand that their old “template” JV agreements will be non-compliant after August 24, and that SDVOSBs and their joint venture partners carefully ensure that their subsequent joint venture agreements comply with all of the new requirements.

If you’ve been following SmallGovCon lately (and I hope that you have), you know that we’ve been posting a number of updates related to the SBA’s recent major final rule, which is best known for establishing a universal small business mentor-protege program.  But the final rule also includes many other important changes, including major updates to the requirements for SDVOSB joint ventures.  For those familiar with the requirements for 8(a) joint ventures, most of the new requirements will look familiar; the SBA states that its changes were intended to ensure more uniformity between joint venture agreements under the various socioeconomic set-aside programs.

The SBA’s final rule moves the SDVOSB joint venture requirements from 13 C.F.R. 125.15 to 13 C.F.R. 125.18 (a change of note primarily to those of us in the legal profession).  But the new regulation is substantively very different than the old.  Below are the highlights of the major requirements under the new rule.  Of course (and this should go without saying), this post is educational only; those interested in forming a SDVOSB joint venture should consult the new regulations themselves, or consult with experienced legal counsel, rather than using this post as a guide.

Size Eligibility

In order to form an SDVOSB joint venture, at least one of the participants must be an SDVOSB, and must also be a small business under the NAICS code assigned to the procurement in question. The other joint venturer can be another small business, or the partner can be the SDVOSB’s mentor under the new small business mentor-protege program or the 8(a) mentor-protege program:

A joint venture between a protege firm that qualifies as an SDVO SBC and its SBA-approved mentor (see [Sections] 125.9 and 124.520 of this chapter) will  be deemed small provided the protege qualifies as small for the size standard corresponding to the NAICS code assigned to the SDVO procurement or sale.

This piece of the new regulation appears to overturn a recent SBA Office of Hearings and Appeals decision, in which OHA held that a mentor-protege joint venture was ineligible for an SDVOSB set-aside contract because the mentor firm was not a large business.

Required Joint Venture Agreement Provisions

Under the new regulations, an SDVOSB joint venture agreement must include the following provisions:

  • Purpose.  The joint venture agreement must set forth the purpose of the joint venture.  This is not a change from the old rules.
  • Managing Member.   An SDVOSB must be named the managing member of the joint venture.  This is not a change from the old rules.
  • Project Manager.  An SDVOSB’s employee must be named the project manager responsible for performance of the contract.  This, too, is not a change from the old rules.  Curiously, unlike in the rules governing small business mentor-protege joint ventures, the SBA doesn’t specify whether the project manager can be a contingent hire, or instead must  be a current employee of the SDVOSB.  The new regulation also doesn’t address OHA case law holding that a specific individual must be named in the agreement (i.e., it’s insufficient to simply state that “an employee of the SDVOSB will be the project manager.”)  It’s unfortunate that the SBA didn’t address that issue; if the SBA agrees with OHA’s rulings, it would have been nice to have the regulations reflect this requirement so that SDVOSBs understand that a specific name is required.
  • Ownership. If the joint venture is a separate legal entity (e.g., LLC), the SDVOSB must own at least 51%.  This is a change from the old rules, which don’t address ownership.
  • Profits. The SDVOSB member must receive profits from the joint venture commensurate with the work performed by the SDVOSB, or in the case of a separate legal entity joint venture, commensurate with its ownership share. This is a change from the old rule, which applies the 51% threshold to all SDVOSB JVs.  To me, there is no good reason to distinguish between “informal” and “separate legal entity” joint ventures, especially since the SBA (elsewhere in its final rule) concedes that “state law would recognize an ‘informal’ joint venture with a written document setting forth the responsibilities of the joint venture partners as some sort of partnership.”  In other words, an informal joint venture is a legal entity too, just not one that has been formally organized with a state government.  In any event, the long and short of this change is that we can expect to see many more informal SDVOSB joint ventures.  That’s because, using the informal form, the non-SDVOSB will be able to perform up to 60% of the work and receive 60% of the profits (see the discussion of work split below); whereas in a separate legal entity joint venture, the non-SDVOSB will be limited to 49% of profits, no matter how much work the non-SDVOSB performs.
  • Bank Account.  The parties must establish a special bank account” in the name of the joint venture.  This is a change from the old rule, which is silent regarding bank accounts.  The account “must require the signature of all parties to the joint venture or designees for withdrawal purposes.” All payments to the joint venture for performance on an SDVOSB will be deposited in the special bank account; all expenses incurred under the contract will be paid from the account.
  • Equipment, Facilities, and Other Resources. Itemize all major equipment, facilities, and other resources to be furnished by each venturer, along with a detailed schedule of the cost or value of such items. This is a change from the old rule, which doesn’t require this information to be set forth in an SDVOSB joint venture agreement.  In a recent court decision, an 8(a) joint venture was penalized for providing insufficient details about these items—even though the contract in question was an IDIQ contract, making it difficult to provide a “detailed schedule” at the time the joint venture agreement was executed. Perhaps in response to that decision, the new regulations provide that “if a contract is indefinite in nature,” such as an IDIQ, the joint venture “must provide a general description of the anticipated major equipment, facilities, and other resources to be furnished by each party to the joint venture, without a detailed schedule of cost or value of each, or in the alternative, specify how the parties to the joint venture will furnish such resources to the joint venture once a definite scope of work is made publicly available.”
  • Parties’ Responsibilities.  Specify the responsibilities of the venturers with regard to contract negotiation, source of labor, and contract performance, including ways that the parties will ensure that the joint venture will meet the performance of work requirements set forth in the new rule.  Again, if the contract is indefinite, a lesser amount of information will be permitted.  This is an update from the old rule, which requires information on contract negotiation, source of labor, and contract performance, but does not require a discussion of how the SDVOSB joint venture will meet the performance of work requirements.
  • Ensured Performance. Obligate all parties to the joint venture to ensure complete performance despite the withdrawal of any venturer. This is not a change from the current rule.
  • Records. State that accounting and other administrative records of the joint venture must be kept in the office of the small business managing venturer, unless the SBA gives permission to keep them elsewhere. Additionally, the joint venture’s final original records must be retained by the SDVOSB managing venturer upon completion of the contract. These provisions, which are not included in the old rule, seem dated in the assumption that records will be kept in paper form; it instead would have been nice for the SBA to allow for more modern record-keeping, like a cloud-based records system that enables documents to be available in real-time to both parties.
  • Statements. Provide that quarterly financial statements showing cumulative contract receipts and expenditures (including salaries of the joint venture’s principals) must be submitted to the SBA not later than 45 days after each operating quarter of the joint venture. This language, which was basically copied from the 8(a) program regulations, doesn’t specify who might be a “joint venture principal” in a world in which populated joint ventures have been eliminated. The joint venture agreement must also state that the parties will submit a project-end profit-and-loss statement, including a statement of final profit distribution, to the SBA no later than 90 days after completion of the contract.  I find these requirements a bit odd because, unlike for 8(a) joint ventures, the SBA doesn’t pre-approve SDVOSB joint ventures, nor does it seem that the SBA will review a particular SDVOSB joint venture agreement except in the case of a protest.  So why the ongoing requirement for submitting financial records?

While I wish that every SDVOSB would call qualified legal counsel before setting up an SDVOSB joint venture, the reality is that many SDVOSBs attempt to cut costs by relying on joint venture agreement “templates” obtained from a teammate or even from questionable internet sources.  Using SDVOSB joint venture agreement templates is risky enough under the old rules, but will be an even bigger problem after August 24, when all those old templates become severely outdated.  I hope that all SDVOSBs become aware of the need to have updated joint venture agreements meeting the new regulatory requirements, but I won’t be surprised to see some SDVOSB joint ventures using outdated templates in the months to come–and losing out on SDVOSB set-asides as a result.

Performance of Work Requirements

In addition to setting forth many new and changed requirements for SDVOSB joint venture agreements, the new regulation also specifies that, for any SDVOSB contract, “the SDVO SBC partner(s) to the joint venture must perform at least 40% of the work performed by the joint venture.”  That work “must be more than administrative or ministerial functions so that [the SDVOSBs] gain substantive experience.”  The joint venture must also comply with the limitations on subcontracting set forth in 13 C.F.R. 125.6.

And that’s not all: the SDVOSB partner to the joint venture “must annually submit a report to the relevant contracting officer and to the SBA, signed by an authorized official of each partner to the joint venture, explaining how and certifying that the performance of work requirements are being met.”  Additionally, at the completion of the SDVOSB contract, a final report must be submitted to the contracting officer and the SBA, “explaining how and certifying that the performance of work requirements were met for the contract, and further certifying that the contract was performed in accordance with the provisions of the joint venture agreement that are required” under the new regulation.

Past Performance and Experience 

Many SDVOSBs will groan at the new paperwork and reporting requirements established under the new regulation.  But the SBA has inserted at least one provision that is a definite “win” for SDVOSBs and their joint venture partners: the new regulation requires contracting officers to consider the past performance and experience of both members of an SDVOSB joint venture.  The regulation states:

When evaluating the past performance and experience of an entity submitting an offer for an SDVO contract as a joint venture established pursuant to this section, a procuring activity must consider work done by each partner to the joint venture as well as any work done by the joint venture itself previously.

Small businesses sometimes assume that agencies are required to consider the past performance and experience of the individual members of a joint venture–but until now, that wasn’t the case.  True, many contracting officers considered such experience anyway, but there have been high-profile examples of agencies refusing to consider the past performance of a joint venture’s members.  Of course, a joint venture is defined as a limited purpose arrangement, so it makes no sense to require the joint venture itself to demonstrate relevant past performance.  This change to the SBA’s regulations is important and helpful.

The Road Ahead

After August 24, 2016, those old template SDVOSB joint venture agreements won’t be anywhere close to compliant, so SDVOSBs should act quickly to educate themselves about the new regulations and adjust any planned joint venture relationships accordingly.  For SDVOSBs and their joint venture partners, the landscape is about to shift.

This post originally appeared at http://smallgovcon.com/statutes-and-regulations/sdvosb-joint-ventures-sba-overhauls-requirements/#sthash.hSCSekWL.dpuf and was reprinted with permission.


Small Business Subcontracting Changes You Should Know About

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© dizain – Fotolia.com

This is a reprint from the Federal Register: The Daily Journal of the United States Government for July 14, 2016.

DoD, GSA, and NASA are issuing a final rule amending the Federal Acquisition Regulation (FAR) to implement regulatory changes made by the Small Business Administration, which provide for a Governmentwide policy on small business subcontracting. The changes being implemented in this final rule include the following:

(1) Requiring prime contractors to make good faith efforts to utilize their proposed small business subcontractors during performance of a contract to the same degree the prime contractor relied on the small business in preparing and submitting its bid or proposal. To the extent a prime contractor is unable to make a good faith effort to utilize its small business subcontractors as described above, the prime contractor is required to explain, in writing, within 30 days of contract completion, to the contracting officer the reasons why it is unable to do so;

(2) Authorizing contracting officers to calculate subcontracting goals in terms of total contract dollars in addition to the required goals in terms of total subcontracted dollars;

(3) Providing contracting officers with the discretion to require a subcontracting plan in instances where a small business re-represents its size as an other than small business;

(4) Requiring subcontracting plans even for modifications under the subcontracting plan threshold if said modifications would cause the contract to exceed the plan threshold;

(5) Requiring prime contractors to assign North American Industry Classification System (NAICS) codes to subcontracts;

(6) Restricting prime contractors from prohibiting a subcontractor from discussing payment or utilization matters with the contracting officer;

(7) Requiring prime contractors to resubmit a corrected subcontracting report within 30 days of receiving the contracting officer’s notice of report rejection;

(8) Requiring prime contractors to provide the socioeconomic status of the subcontractor in the notification to unsuccessful offerors for subcontracts;

(9) Requiring prime contracts with subcontracting plans on task and delivery order contracts to report order level subcontracting information after November 2017;

(10) Funding agencies receiving small business subcontracting credit; and

(11) On indefinite-delivery, indefinite-quantity contracts, the contracting officer may establish subcontracting goals at the order level (but not a new subcontracting plan), 81 Fed. Reg. 45833. This final rule is effective November 1, 2016.

This information was reprinted from the Federal Register: The Daily Journal of the United States Government. We first learned of it in the PilieroMazza Weekly Report newsletter (click here to subscribe).

Note from Bill: Several of these changes could have a material impact on your circumstances as a small business in the Federal marketplace:

  • #1 creates a contract ratings impact for not using your “bid team.”
  • #3 will require even single award contracts being novated to large businesses to implement small business goals.
  • #6, while risky, allows you to bring a dispute to the KO, when the big Prime is delaying payments.
  • #10 is interesting; it establishes credit for “outside” funders. So if a contract is issued by Agency A, but Agency B uses it with their money, they now get credit for any set-aside used to award the contract. This could be huge in letting contracts be used by all.

How to Choose a Proposal Consultant

Business people negotiating a contract, they are pointing on a document and discussing together

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Sometimes choosing a proposal consultant happens accidentally. When we bought a small company down in Florida, Ray Vause was a consultant for them, and we got to see him operate before deciding to make him our own proposal manager consultant – and that’s been a very good thing. Through several proposals including a winning 50+ person effort for the Marines, we’ve continued to get good results from that decision.

I asked Ray to share his thoughts about choosing the right proposal consultant.

What should federal contractors keep in mind when choosing a proposal consultant?

A proposal consultant should truly be a consultant, not someone who is between jobs and looking for employment, who may leave once they have a permanent offer. 

Look at their track record of experience and wins. Your consultant needs to have won some programs. A consultant should also have many years of experience writing proposals for different DoD agencies (Army, Navy, Marines, Air Force and different buyers within each DoD branch). (Note from Bill: Or civil agencies, depending on where your opportunity is.)

 The consultant’s experience should also include different types of proposals (services, products, support, etc.), different volumes as volume lead and proposal manager (cost, technical, logistics, management, past performance, etc.), and various procurement strategies (LPTA, Best Value, etc.).

How many consultants should a company interview?

At least three. It is also very important to see references from companies who have used the consultant.

What can the business owner do to keep the work on track?

Daily correspondence with the consultant via email and conference call, attending the standup meetings conducted by the consultant, and reviewing the invoices and hours charged by the consultant.

What are important things to agree upon before starting work with a proposal consultant?

The process for each phase of the capture process, the level of detail for each phase of the proposal development (draft and final), and the level of authority the consultant has.

Is there anything else you think our readers should know about choosing a proposal consultant?

Proposal consultants have specific talent that many small businesses do not have on their staff. Good proposal consultants are hard to find. When you discover one who is flexible and works well with your senior staff, you have achieved your goal and you are on the road to success.


Federal Sales Tactics for the Stage and Screen

Speaker Giving a Talk at Business Meeting. Audience in the conference hall. Business and Entrepreneurship. Panoramic composition suitable for banners.

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This is a guest post by Judy Bradt of Summit Insight. Judy and I recently partnered up for the webinar, Insights from the Mid-Tier: More Federal Q4 Tactics. If you missed Part One, here are Judy’s first three federal sales tactics for Q4.

Webinars, podcasts and videos

YouTube is the world’s second-largest search engine. Do your competitors have a YouTube channel? You could be the first in your niche to have one!

After websites, federal buyers consider webinars to be a leading, trusted, source of information from vendors. In fact, federal buyers are far more interested in webinars than suppliers realize.

The webinars don’t even have to be an hour; try a half-hour. Thirty-minute podcasts are particularly popular, because that’s often someone’s drive time (okay, in the DC area, someone might listen to three of them in a single trip, but you get the idea).

Pick topics for your webinars and videos that center based on their biggest concerns. Did you know…? Simplify complex concepts. Share actionable ideas. Vary the format: Invite guests, include an active Q&A, chat with a moderator or industry expert, share your screen.

Close with a call to action. What would you like your listener to do? Visit your website? Sign up for your e-news? Invite a deeper relationship: what’s the next natural step? You’ll want to have a solid, permission-based promotion platform and make sure you’re capturing at least name, email address and phone number when people register. If your content is good enough, people are willing to share information like job title and name of organization, too.

Stand out tactics:

  • Be energetic, focused, and authentic. Have some fun!
  • Go shorter rather than longer. Did you know that the vast majority of YouTube how-to videos are just two minutes long? What could you teach someone in two minutes?
  • Focus on content that emphasizes your best values: things that are quantifiable, and objectively proven.
  • Be sure to include a healthy Q&A period. Invite some of your best contacts or even current clients to ask the first few questions.
  • Get to know how the features of your broadcast platform work. Experiment ahead of time, learn how to get good lighting and audio quality. There are often many options, and that can be another reason to invite a partner or moderator to share the broadcast with you.
  • Take advantage of the post-webinar survey features to get feedback.
  • Use the chat windows as well as the ability to selectively unmute people in order to let everyone hear diverse voices. Then it gets fun! Ask people where they’re calling from and what they do before you get to their question, and remember to thank them afterward. If your platform lets you include a webcam stream, don’t be shy.
  • Record your webinar! Once you have the recording, you can share it with those who participated. You can also share the link afterwards to those who missed your event, post it on your website and social media, and have the content transcribed into later blog posts or articles, just for starters.
  • Finally, be generous as well as confident! Share handouts or links to follow-up tools like short checklists or more in-depth insights from you, your co-presenters, and others.

Key: these online educational channels offer a no-risk way to get to know you and connect.

Speaking engagements

Speak up about innovation! Thought leaders get invited more. Share your expertise and insight. Keep the focus narrow. Inspire conversations! Share highlights of case studies – including but not limited to those involving your own clients. Not all gigs will be paid, but some will be; expect a mix of free and paid speaking opportunities.

Great speakers make complex things simple. You might not ever give a TED Talk, but you can draw on these masterful tips offered by Chris Anderson, the head of TED.

Stand out tactics:

  • Memorable speakers come early and stay late.
  • Share fresh, meaty data, but don’t fill slides with busy graphs and tons of tiny-font text. Let images be the backdrop for your story.
  • Involve your audience, with quick polls, questions, and even the chance to talk with each other.
  • Talk about their problems and leave them with hope and ideas for solutions. Offer actionable next steps – besides suggesting they hire you! Let that come naturally, when they understand they could do it themselves, but they’d love to have you do it for or with them.
  • Own the room: treat the occasion as if you were the host, and each attendee were your cherished guest.

Key: Be the friendly expert: generous, personable, accessible.


About the author: Judy Bradt, CEO of Summit Insight, gives federal contractors the focus, skills and tools you need to transform your federal business and achieve the sales and partnerships you’ve always wanted. It’s easier than you ever imagined. Call her at 703-627-1074 or visit http://www.summitinsight.com and find out more.


Federal Sales Tactics for Q4 – Getting Close and Personal

Business people shaking hands, finishing up a meeting

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This is a guest post by Judy Bradt of Summit Insight. Judy and I recently partnered up for the webinar, Insights from the Mid-Tier: More Federal Q4 Tactics.

Looking for marketing strategies to ramp up your fourth-quarter federal sales? These five ideas are important year-round. For now, focus on the ones you’re already using, and take a look at how you can move those into high gear. Save the others for your FY2017 plan!

  1. Personal contact and office calls

Time after time, companies say that these are the most effective marketing strategies, if you can get in the door! Looking to break down barriers? Remember to reconnect with something as simple as sending thank you notes to your federal contracting officers and end users, and writing their managers to let them know what a great job they do.

Office visits are easier to get in October through May. But whenever you can get there, make sure your briefing is short – less than 15 minutes – and isn’t a sales pitch or a standard capability briefing. Share highlights of your expertise, best practices, industry findings and case studies. Always say yes to a walk-about or site tour, and be sure to ask what they like best about the vendors they’re working with now. Explain, “We only want to team with the best!”

Stand out tactics:

  • Make sure the business owner attends. That reinforces that everybody in the company is not 100% billable; you’re established enough to have time and resources for business development.
  • Become the “go-to” resource. Say, “Make me your first call. Even if I don’t do that, I’ll find you someone who does. Call my mobile, nights, weekends, no problem. I’m here for you!” Show them you’re looking out for them!
  • Share links to articles or resources on things you know they care about. This is a personal, one-to-one email, not a campaign newsletter. While you might run across something about industry best practices, also keep a lookout for a great recipe if you remember he loves to cook, or maybe a local canine agility event if you noticed how much she likes dogs.

Key: Show you care about what matters to them. Become their first call.

  1. Association memberships

Show up! Participate regularly, not just once in a while. Have one or more members of your federal team become active, visible members. Show up in force at their meetings and events – that makes a big impact – and don’t all sit together. Reach out to individual members to follow up.

Stand out tactics:

  • Submit content to organization newsletter or magazine.
  • Make a commitment for a whole year.
  • Designate a senior member of the company, especially the owner or VP, as your flagship representative.
  • Volunteer for a couple of the group’s committees that relate to things you care about and enjoy, and benefit you and your company, personally and/or professionally. Golf tournament? STEM Scholarships? Use your creativity. Maybe you focus on something you think SHOULD happen and isn’t being done, or could be done better.

Key: Value comes not from paying your fees…but from paying your DUES.

  1. Assessment, white paper, or limited free product trial

Consistently offer a minimally-priced or possibly even free short assessment or product trial through drip email campaigns (a pre-written series of emails sent through an email service responder like MailChimp or Constant Contact). Be sure not to give away a service you normally sell! You can also offer a white paper, a reading list, or checklist.

An “assessment” can be a simple half-hour chat about needs. Be sure to make it a conversation; don’t turn it into a sales pitch. If, after the half-hour, someone wants to explore working with you, you can always book a follow-up call – ideally, including colleagues or managers.

If a custom, one-on-one, assessment is feasible and is a service during which you would share substantive professional expertise, pricing it below $3,500 will let your federal buyer engage you sole-source and pay you immediately. What’s not to like?

Stand-out tactics:

  • Offer a quick quote. Do a walk-through and some commentary (though remember to first validate what they’re already doing, then educate them on the latest and greatest). Maybe offer an informal design sketch of what an installation or project might look like.
  • Draft a short white paper outline – literally, a project description on white paper or a document with no author information listed in the document properties – that a buyer who really likes you and is hoping for fiscal year-end money can turn around into a fast statement of work and hire you in a hurry.
  • Put together something for the ‘Budget’ – a quick needs analysis/scope of work.

Key: Get something on file for Q4 “Wish List” proposals.

About the author: Judy Bradt, CEO of Summit Insight, gives federal contractors the focus, skills and tools you need to transform your federal business and achieve the sales and partnerships you’ve always wanted. It’s easier than you ever imagined. Call her at 703-627-1074 or visit http://www.summitinsight.com and find out more.

Stay tuned for Part Two of this post, where Judy reveals two more federal sales tactics for Q4.


Proposed Legislation to Penalize Pentagon Contractors That Game the Bid Protest System

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This is a guest post by Sandra I. Erwin of National Defense Magazine, originally printed on June 6, 2016.

One of the legislative proposals the Senate will debate this week would penalize Pentagon contractors that game the bid protest system.

The language adopted by the Senate Armed Services Committee in its version of the fiscal year 2017 National Defense Authorization Act reflects longstanding grievances about the impact of contractor protests on defense procurements. The reforms specifically take aim at frivolous contractor protests. They would punish incumbent contractors that challenge the government after losing a bid knowing that they can hold on to the job until the protest is settled. The provisions also would restack the deck in favor of small businesses, which for years have complained that the bid protest system is weighed in favor of companies that can afford to wait months or years for disputes to be resolved.

The issue could become contentious during the NDAA conference later this year when the Senate and House meet to iron out differences between their respective bills. The House chose to not immediately shake up the protest system, and instead requires the secretary of defense to do an in-depth review of the process and report back.

The current system that allows losing contractors to appeal decisions to the Government Accountability Office was intended to create a level playing field. But the Senate Armed Services Committee believes the system has been abused. As it has done in many other areas of policy, what Congress giveth, it also can taketh away.

It is widely recognized that the protest system has become counterproductive, said Arnold Punaro, CEO of The Punaro Group, retired Marine Corps major general and a former staff director of the Senate Armed Services Committee. “We need to reform the protest process,” Punaro told National Defense. “The process stymies acquisition decisions. Like lots of other things, it was a good idea when it started.”

There are legitimate reasons to file protests, especially big-ticket weapon contracts that can make or break a company’s future, Punaro said. But protests today are so pervasive that they are used to stall even relatively small “task orders,” he said. “I know companies that have been in protests for three years. We need a course correction.”

When awards are protested and projects are put on hold, “it is very hard on small businesses,” said Punaro. “You win something and you may have to wait three years to find out if you won.” Oftentimes decisions to challenge awards are made by incumbent companies’ chief financial officers who may favor “dragging things out and get revenues” for however long the dispute goes on. The point of protests is to make sure the government makes a fair and objective decision, Punaro noted, but the system has spiraled out of control.

Contractors in the services sector are known to “protest for profits,” said Donald J. Wetekam, retired Air Force lieutenant general and senior vice president of AAR Corp. The company provides aviation maintenance services and logistics support. Contracts in this sector tend to be long-term deals so incumbents have a lot at stake every time the contract is recompeted, Wetekam said June 3 at a Lexington Institute forum on Capitol Hill. “What we see today is that the system incentivizes losing incumbents to protest,” he said. “You can extend your contract by a minimum of 100 days, more likely six months.”

Most companies do not protest frivolously, Wetekam cautioned. “There are, however, irresponsible contractors particularly in the services sector, and the system is structured to essentially support that.” The Senate Armed Services Committee’s language is a “small step in the right direction,” he said. “I’m happy to see that. We need more aggressive action. The system rewards bad behavior. It’s a problem.”

Section 821 of the SASC bill makes an incumbent contractor forfeit any profit or fee earned from a bridge contract awarded because of delays caused by the incumbent’s protest, if the protest is unsuccessful. Incumbents would “have all payments above incurred costs withheld on any bridge contracts or temporary contract extensions awarded to the contractor as a result of a delay in award resulting from the filing of such protest,” the bill stated.

The withholdings would be returned to the incumbent contractor only if the “subject of the protest is canceled and no subsequent request for proposal is released or planned for release,” or GAO “issues an opinion that upholds any of the protest grounds filed under the protest.” Otherwise, the withheld payments would go either to GAO or the contractor that was awarded the contract before the protest.

These provisions raise many red flags, noted contracting attorneys Patrick Stanton and Hunter Bennett, of the Washington, D.C. law firm Covington and Burling. It is not clear what happens, for example, when the incumbent is one of several competitors to file a protest.

“Additionally, if it is clear that a contracting agency is taking corrective action as a result of a flaw raised by the incumbent protest, why should the contractor forfeit the withheld payments simply because GAO did not have the opportunity to issue an opinion upholding the protest?” the lawyers ask. “This question is particularly relevant in light of GAO’s 2015 bid protest statistics indicating that, although GAO sustains just 12 percent of all protests, the bid protest effectiveness rate, which includes protests in which the agency takes voluntary corrective action, is a lofty 45 percent.”

Stanton and Bennett wonder whether these provisions “simply go too far. “Clearly aimed at curbing the practice of incumbent contractors filing meritless protests simply to extend performance through bridge contracts, the bill as written would almost certainly have a chilling effect on meritorious bid protests as well,” they write in a blogpost.

The House version of the NDAA has no such provisions. It only instructs the secretary of defense to conduct a review of defense contract bid protests, including an evaluation of protests filed by incumbents.

Congress formalized the role of the GAO as a protest forum in the Competition in Contracting Act of 1984 although GAO has served in that role for 90 years and is the only administrative institution with the authority to hear protests across the federal government. The Court of Federal Claims is the only judicial forum for hearing protests.

Defense contractors have mixed opinions on the NDAA proposals. Large firms have argued that, as much as everyone dislikes the bid protest, it’s the only legal mechanism in place to ensure a fair contracting award process. In these times of fewer big-ticket weapon awards, shareholders expect companies to fight tooth and nail. Small businesses, for their part, would welcome the SASC reforms as a needed rebalancing of a system that penalizes contractors that don’t have the cash flow to stay afloat during protracted contract appeals.

Despite concerns about the impact of protests on Pentagon programs, contracting data does not reveal an epidemic of protesting. Congressional Research Service defense acquisition specialist Moshe Schwartz noted in a July 2015 report that protests have received increased congressional scrutiny. Both the House- and Senate-passed versions of the 2016 National Defense Authorization Act called for a report on the bid protest process.

“Analysts believe that protests are sometimes the result of poor communication between government and industry, poorly written requirements, and agencies not adequately debriefing losing bidders after an award. When agencies do not adequately debrief bidders, companies may file a protest to determine why they lost a competition,” CRS said. “DoD contracts are less likely to be protested, and when protested, less likely to be sustained than civilian agency contracts. Protests against civilian agencies are also growing at a faster rate than protests against DoD.”

There is a strong chance that the full Senate will support the SASC provisions on contractor protests. Analysts won’t predict how the Senate and House would compromise on an issue where they are far apart. According to Punaro, “We can expect there will be negotiations.” Procurement measures in the NDAA will not be among the most contentious. The chambers are deeply at odds over bigger issues such as Pentagon topline spending levels and requiring women to register for the draft.

This article previously appeared in the National Defense Industrial Association’s National Defense Magazine at http://www.nationaldefensemagazine.org/blog/Lists/Posts/Post.aspx?ID=2209, and was reprinted with permission.


How to Present Your Case for a Certificate of Competency

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In a recent post, I explained how government agencies use the Small Business Administration (SBA) Certificate of Competency program to mitigate their risk in working with a small business.

As a follow up, TAPE CEO and President Louisa Jaffe will expand on what small business owners need to emphasize when seeking a certificate of competency.

Ultimately, to present a case to the SBA you need to demonstrate financial viability, understanding of the proposed work and the ability to do it, and documentable, repeatable management processes.

To begin, prepare a binder where you will have copies of everything neatly organized. This binder must be able to speak for itself as to your competency.

There will be a standard list of things the SBA wants to see, such as your articles of incorporation, your operations plan, and your financials, but since a certificate is ordered for a particular project or award, you must also be prepared to be specific about why you can do that particular piece of work.

You must be able to present yourself, preferably in person, to the SBA, even if you have to travel to another city to do that. Be prepared to explain exactly why you can do the job that is required, and to back up that explanation with the documentation in your binder.

For your financial viability, that means evidence of a line of credit, whether it is a letter of credit from your financial institution or from another lender. You have got to show them not only that you are prepared to take on the work of this contract, but also to pay people – that you can financially handle this project.

Your personal interaction and communication skills are also very important. You want to present yourself very well, be dressed appropriately for business, and be able to tell your story. Practice talking about how you started your company, about your company values and business culture, and your plans for how you will take care of employees (such as benefits, and job descriptions with metrics that are written for success, not failure). The SBA puts great importance on best practices concerning employees.

Something that small businesses often overlook is the importance of detailing your executive structure and management practices. Even if your company is still very small and you do not have much structure, you need to demonstrate that you will know what to do with structure as your company grows, and how to manage a small business structure for success.

For example, you will want to discuss that you have a CFO – chief financial officer – in place, and a plan for handling the financial operations of the business. (There are reputable accounting firms who will serve as your CFO on a contract basis so the CFO does not have to be an employee of your company.)

Similarly, the certificate applicant will be required to demonstrate that there is someone to handle operations (running the project[s]), and someone to handle business development (acquiring new work).

Even if there are only one or two people collectively holding all of those positions right now, the SBA wants to see that you have provided for those key responsibilities, and that the business owner understands these three separate functions (financial, operations, development) with a plan for managing them.

As well, you need a specific plan that outlines your management practices for your own employee and for sub-contractors. You must be able to demonstrate to the SBA that you will be able to manage both large and small subcontractors with repeatable and documentable processes.

What the SBA does not want to see is a small business just appearing as a front for a large business. You must explain how you are your own business entity, how you will keep track of what is going on, and how you will handle accountability.

Depending on the size of project, this may include communication practices between the project manager and other leads, particularly if those leads are in another company (a subcontractor). You need to demonstrate how you will stay on top of what is going on in the project at all times, even if some or all of the work is happening in a different city from your own business.

Even if you are not ready to go through a formal quality management program certification such as the ISO 9001, you can create your own transparent plan that serves as an umbrella of all of your management systems; management systems are repeatable and documentable processes – key systems that keep you accountable for every aspect of your business.

If you have accountability and transparency, you will be golden. That way you can sit in front of the SBA and say here is our plan, here is how we will implement these processes, here is how we will document how well we do on these processes, and here is how we will upgrade these processes as we go, if we find we need to do something differently.

The SBA is not looking for someone who is perfect and never makes mistakes, but for someone who is agile enough to see when something needs to change, change it, and document that change.

With all of these documents and artifacts in hand, collected in a professional binder with your logo on the front, you will go in looking very organized and well put together, and you should have no problem getting your certificate.

By the way, when the time comes, this identical type binder of information will go a long way towards qualifying your company for a bank credit line. But that is a topic for another day.


Agency Migration to Small Business Preference

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In a previous post, we looked at the Small Business Administration’s FY2015 Small Business Scorecard for how federal agencies did in meeting their goals to set aside a specific percentage of contracts and award them to small businesses.

So one of the things we can see is we’ve got five departments that achieved 40% or more: Agriculture has 50%, Interior 55%, Transportation 51%, State 44% and Commerce 43%. In addition there are several in the 30s.

Five years ago, none of that would have been the case – departments issuing 30-55% of their total acquisition for the year to small businesses was simply unheard of. Today there is a true migration towards more and more activity, including very robust contract sizes, being awarded to small businesses. This is clearly represented in the scorecard.

I think this trend will continue, and there are several things that growing and mid-sized small businesses need to understand to be ready. As it always comes back to on this blog, it’s all about relationships. Here are some specific relationships to think about:

  • Large business partners and bigger small business neighbors – When they are awarded some of these robust contracts, they are going to want to flip them to other small businesses. They’ll keep a share, of course, and though they can’t get more than a 49/51 split, this still gives them a piece of the revenue and can be a win-win-win for all sides (you as the small business, the bigger business, and the end customer).
  • Potential mentors and/or protégés – Another thing that we are tracking is the emerging regulations on extending mentor-protégé joint venture arrangements to all specially certified businesses as well as regular small business, where this was previously limited to 8(a) businesses.
  • Small business partners – It is important to build early and often good solid relationships with your competitors that are doing the same kind of work. In fact, if one of your partners already has previous relationship and experience with a customer, that will count towards your joint bid for new business with that customer.
  • Seemingly limited departments – Use the scorecard to focus on the departments that are clearly moving more and more work to small business. For example, Interior and Agriculture may have awarded small amounts compared to the giant amounts spent at DoD or Homeland Security, but when you look at the percentages these are no longer less desirable prospects. It is possible to design a robust portfolio and pipeline of opportunities from agencies you may have previously thought of as limited.

As you do your strategic planning, look at these entities and percentages and make some decisions – not just about who your prospects are but who your partners are. Consider whether you will build a true mentor-protégé partnership with bigger companies, and also whether you’re in a position to mentor another small business or mid-sized small business.


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