NDAA FY 2020 Section 806 – Fixed-Price Contracting

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Section 806 of the FY2020 NDAA directs the Under Secretary of Defense for Acquisition and Sustainment to review how the  Department of Defense uses fixed-price contracts.

This is a topic that comes up periodically. To the uninitiated, it would seem that a fixed-price contract will result in larger profits, but that is not always the case.

We first have to understand that while it seems that fixed-price contracts have the potential for higher profits, they also have the potential for substantial losses. Assuming that there are no changes made, you will be obligated to deliver some set of things or services or things with services, at a fixed price, and it just isn’t necessarily clear when you go into this arrangement that the arrangement will be profitable.

It is true that you’ve priced it as a contractor to be profitable, however, circumstances change and the project can be different than you anticipated. Yet you’re still obligated to deliver that same set of things or services or things with services, for that same fixed price.

For example, let’s say I’m obligated to deliver 100 people throughout the country at various locations to do some clerical work. I’m required for those workers to have a certain level of skills, and a certain type of clearance. Well, I actually might deliver fewer people for a short period of time, because some people are in transit, or some have quit and not yet been replaced, but I’m still getting paid as if all 100 workers are still in place.

That’s good for me because I’ve getting paid a fixed price for 100 people and there’s only 95 on the job. Of course this is assuming that the number of people I’m not delivering doesn’t upset the client or cause me to miss deadlines or create problems that threaten my contract.

On the risk side, let’s say we’re in a very low unemployment rate, with correspondingly upward pressure on wages and skillsets. While I’ve told my client I’d deliver those 100 people for $65,000 each, now I’ve got to pay my employees $70,000 in order to get the required level of skill and so forth. Then my current people see what the new people are making and they want more money as well. Wages are up, which is good for people in general, but as a contractor I have to pay more and can’t charge the client more because we have a fixed-price contract.

So the reason fixed-price contracts are often won with a lesser value is because the risk is higher and therefore the margin that I pitch is higher. Often we build in contingencies as well, which might mean I think I can hire at $60,000, so I pitch at $65,000. But I could still end up having have to hire some at $68,000 or $70,000 so now I’m starting to lose money on those people.

This provision brings us into the study phase. The 2020 NDAA directs the Defense Department to look at the circumstances in which fixed-price contracts are used and awarded, and the experience from the government’s perspective.

Understand that the legislators are including many different forms of contracting that include the words fixed price that aren’t necessarily completely fixed, which has muddied the waters a little bit. They’ve included cost plus fixed fee, another form of fixed-priced contracting, and fixed labor rates. This will all come out in the wash.

They set a pretty aggressive deadline of February 2020 for the Under Secretary to brief the congressional defense committees on the findings of the review. If you have any comments once the NDAA is approved, let us know and we should be able to put our oar in the water through the Mid-Tier Advocacy group.


How Do I Get a GSA Schedule Contract?

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This is a guest post by Morgan Taylor of Winvale.

Having a GSA Schedule contract can provide a whole new world of business opportunities for your company. Billions of dollars go through GSA contracts each year, and there are millions of GSA contractors. The GSA Schedules program is a great way to break into government sales, but it can be a lengthy and confusing process if you’re not familiar with the requirements. Check out the steps to getting on a GSA Schedule below.

Preliminary

It is important to determine if you are eligible to submit a GSA proposal before beginning the proposal process. Below is a list of requirements to keep in mind:

  • Must have financial stability
  • Must have been in business for at least two years (unless it is a Schedule 70 Springboard offer)
  • Must be able to prove that proposed products/ services have been sold commercially
  • Must be compliant with the Trade Agreement Act (TAA)
  • Must have a DUNs Number and active SAM.gov registration

If your company meets the above requirements, then you are ready to begin the proposal process. There is a great deal of required documentation that must be submitted with a GSA proposal. The documentation is separated into three main sections: Administrative, Technical and Pricing.

Administrative

The administrative section gives GSA a background of your company. This includes documents such as financial statements, the employee handbook, the company organizational chart and SAM.gov registration. Additionally, at least one person from your company must have an active digital certificate upon submission. The administrative section also consists of various required training courses which prepare the vendor for acquisition and maintenance of a GSA Schedule.

Technical

The technical section of the proposal gives GSA a deeper look into your company’s experience and expertise. The technical section requires corporate experience and quality control narratives, which highlight the company’s skills and abilities as well as organizational functions. The technical section also includes descriptions of past projects completed and a customer ratings report called the Past Performance Evaluation.

Pricing

The pricing section is the bulk of the proposal. Offerors must provide pricing support for all proposed products or services that support the company’s commercial price list or market rates. If offering labor categories, you must provide detailed descriptions of functional responsibility, education and experience. In addition, the offeror must disclose all commercial sales practices, commercial prices, and GSA proposed pricing. The pricing section itself can include up to 15 different documents upon submittal.

Proposal to Award

Once the proposal has been submitted, GSA can either reject the offer due to insufficiencies or request clarifications. If the assigned Contracting Officer feels that the offer is sufficient, he or she will next aim to negotiate for lower prices. Once negotiations have concluded, a Final Proposal Revision (FPR) will be signed, and the contract will be awarded.

Submitting a GSA proposal can be a complicated process that requires a great deal of GSA knowledge and experience. Winvale has highly experienced consultants who have worked on proposals for nearly every GSA Schedule. Winvale consultants can support your proposal process from the very beginning all the way to award. Looking to acquire a GSA Schedule? Give us a call!

Morgan Taylor is a consultant for Winvale’s Professional Services Department where she provides GSA Schedule acquisition and maintenance support to her clients. Morgan is currently a member of the National Contract Management Association (NCMA).


Comparing Commercial and DoD/Federal Market Sector Business Environments

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This is a guest post by R.J. Kolton, SVP of Data Systems Analysts (DSA), Inc. and VP of Mid-Tier Advocacy, Inc.

The 17-person 809 panel was tasked with finding ways to streamline and improve the defense acquisition process. I met with the 809 Panel in February 2017 and I found it important to speak about the challenges facing mid-tier companies.

Another question the panel asked me to address was what are the differences between contracting with the Department of Defense and a commercial sector.

New entrants, such as “Silicon Valley” companies, entering via OTAs and other mechanisms will eventually confront the same challenges as traditional players in the defense sector. This is particularly the case as they achieve success, become established, and play by the same rules as traditional government contractors.

These new entrants must prepare to operate in a defense contracting business environment. Described below are key differences between the commercial and DoD business environments, which impact directly on the business models companies operating in those environments adopt:

1) Commercial Environment:

  • Customer/company commercial contractual practices reflect the need to adhere to general legal contractual requirements as defined by local, State, and federal government and are far less complex and formal than the practices encountered when working with DoD and to comply with the FAR/DFAR.
  • Commercial marketplace involves rapid customer decision making and compressed timelines.
  • Commercial marketplace includes flexible contractual arrangements that foster rapid business deals.
  • In general, there is no requirement to meet specific socio-economic/small business targets in contracting.
  • Customers have more flexibility to develop and establish criteria for selecting venders.
  • Awarded work often involves rapid delivery of products and services.
  • Companies focus on rapidly closing deals, maintaining continuous cash flow, and minimizing peaks and valleys in revenue/profit streams.
  • Companies maintain robust sales and marketing capacity to continuously sustain and grow business.
  • Commercial companies offering products/services relevant to DoD market sector stress continuous R&D and product scaling and improvement in order to sustain competitive position.
  • Losing companies in commercial transactions have little recourse to protest customer’s decision.

2) DoD Contracting Environment:

  • Contractual practices are guided by FAR and DFAR, unless waived, such as OTAs; procedures are formal and time intensive.
  • Customer procurement strategies, criteria, and practices reflect guidelines provided by Executive Branch, Congress, DoD, and DoD agencies, which leads to complex customer requirements.
  • Customer decision making involves multiple layers of leaders; all must adhere to specified procedures, which is time intensive.
  • Contractual arrangements promote adherence to intent and letter of the law rather than focusing on rapid award of contracts.
  • DoD agencies must stress adherence to socio-economic/small business targets.
  • DoD agencies allocate significant time and resources to develop criteria, specifications, and requirements for contractual competitions; companies operating in the defense market space establish business model that are influenced by those government characteristics.
  • Companies focus on obtaining access to contract vehicles, winning task orders or full & open competitions, and protecting incumbent work.
  • Awarded work often involves multi-year contracts; this reduces the challenges associated with short duration commercial work.
  • Companies address continuous cash flow and minimizing peaks and valleys in revenue/profit streams by sustaining numerous concurrent contracts.
  • Successful defense-oriented companies maintain BD teams that focus on account management/business intelligence, capture, and proposal development.
  • While many defense companies by their nature focus on R&D and building new capacity to remain competitive, they are influenced in their investments by the need to invest in activities required to meet DoD certifications and requirements (e.g.,  financial and security compliance, ISO-standards, CMMI-standards, etc.).
  • DoD is generally unwilling to compensate companies for being innovative; viewed as a value-added trait.
  • Companies operating in the defense market sector must obtain and sustain key certifications to remain competitive, such as ISO 9001:2008/2015, ISO 20000, ISO 27001, CMMI-3 & 4, NIST compliance, etc. This involves major internal investments.
  • Losing companies in DoD transactions can protest large procurements; this impacts government procurement strategies and timelines.

Companies must design their organizations to optimize performance relative to the customers they serve, and as I’ve shown, the commercial market is very different form the Government market.

Given this, the DoD will be challenged in enticing non-traditional companies to enter the DoD market sector. While the DoD can offer short-term relief to the various barriers to entry, non-traditional players in that market sector will eventually have to adapt business models that support congressional and DoD policy requirements.

Randy J. (“RJ”) Kolton is VP of Mid-Tier Advocacy Group, and Senior Vice President (SVP), Business Development for Data Systems Analysts (DSA), Inc., a mid-sized, employee-owned company that is a leader in delivering business driven information technology and consulting solutions and services to the Federal Government and industry. Building on experience spanning more than five decades, DSA has deep expertise and comprehensive understanding of the operational, security, collaboration, and identity management challenges our customers must address.


7 Ways that Mid-Tier Companies Are Being Squeezed Out of DoD Contracts

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This is a guest post by R.J. Kolton, SVP of Data Systems Analysts (DSA), Inc. and VP of Mid-Tier Advocacy, Inc.

The 17-person 809 panel, created in Section 809 of the FY 2016 National Defense Authorization Act (NDAA), was tasked with finding ways to streamline and improve the defense acquisition process. The panel had two years to develop recommendations for changes in the regulation and associated statute to achieve those ends.

As part of its review, the Section 809 Panel reviewed the DoD small business program. The panel ultimately developed several specific recommendations designed to improve how the DoD small business program supports DoD initiatives. One of the major areas of interest was determining how to promote the entry of non-traditional DoD companies who offered advanced technology and innovative solutions to DoD challenges.

I met with the 809 Panel in February 2017. I found it important to note that mid-tier companies performing in the DoD market sector play a major role in generating jobs and enhancing overall economic growth for the Nation and that mid-tier companies, defined as companies earning $25M-$500M annually, are being squeezed by small businesses on one side and by large businesses on the other.

In that context, I offered seven points, which also generally apply to small businesses, innovating companies developing new technologies, and companies that are new entrants into the defense market space.

  1. First, mid-tier companies cannot grow effectively if they are primarily subcontractors to large businesses since subcontractors are unable to obtain significant workshare.  Large businesses have little motivation to offer mid-tier companies significant work since DoD acquisition policies encourage them to award subcontracts to small businesses. 
  2. Second, the primary pathway for growth for mid-tier companies is to win large multiple award, indefinite delivery/indefinite quantity (IDIQ) contracts as primes so they can compete for agency task orders. However, to win these IDIQs, mid-tier companies must surmount major challenges:
    • Mid-tiers are often locked out of large multiple award IDIQs owing to significant past performance criteria.
    • The tendency of DoD agencies to consolidate contracts to reduce administrative burdens and costs, which favors large businesses. Such IDIQ consolidation reduces opportunities for mid-tier companies to penetrate and support customer agencies, which constrains future growth. Consolidation also poses risk to growth owing to long period of performance of awarded IDIQs; mid-tier companies often have to wait a decade before they can compete again as an IDIQ prime if they miss out on the near-term opportunity.
  3. Third, mid-tier companies must contend with ever rising costs that increase their indirect rates and make it more difficult to compete against large businesses. These cost increases are the result of several factors, chief among them are supporting employee benefits under newly enacted national healthcare polices, responding to current and emerging cyber security requirements, maintaining sophisticated auditable financial systems, and obtaining certifications and appraisals, such as ISO-9001:2008/20015, ISO 20000, ISO 27001 and CMMI-3/4, which DoD agencies increasingly require of companies seeking to pursue and perform work.
  4. Fourth, while mid-tier companies are capable of providing the same or better level of service and customer relations as large businesses, their competiveness is hampered by higher overhead costs relative to large businesses because they lack the scale to absorb those indirect costs. These higher costs, combined with the lowest price technically acceptable and low price competition environment we are experiencing in the defense sector, hinder mid-tier companies in achieving success as they compete against large business on full and open competitions. 
  5. Fifth, North American Industry Classification System (NAICS) codes used to classify DoD work and define company size standards offer little support for mid-tier companies. While some NAICS codes, such as 541712/5, Research and Development, reflect a size standard of 1000 employees, up from 500 employees in Feb 2016, DoD agency contracting officials tend to strictly interpret the type of work performed and the size standard offers little benefit to mid-tier companies. Hence, there are no contracting tools to benefit or promote mid-tier company growth.
  6. Sixth, graduating small businesses confront major challenges as they evolve into mid-tier companies and must compete as newly minted large businesses. While seeking a merger or acquisition may represent a potential exit strategy, in many cases, successful small businesses owe their growth to small business contract awards, which are of little value to large business acquirers. Hence, the businesses are at great risk of failing shortly after graduating from small business status: they are too big to be small and too small to be effective as large businesses. While the Congress and DoD have done an excellent job in establishing policies that promote small business growth, particularly for socio-economic challenged groups, they have failed to establish an effective strategy to promote business health and growth across the total business life cycle, from start-up/small business through mid-tier to large business.
  7. Seventh, and my final point, small business officials in DoD agencies generally sympathize with the challenges mid-tier companies confront, however they state they can do little to help without congressional and/or department involvement and legislation. Their focus is on accomplishing their duties by promoting the various small business classifications.

The US lacks a strategic approach to promoting growth of US businesses supporting the DoD. The current government programs that promote the interests of small businesses fail to account for their eventual growth into being mid-tier companies. At that point, such companies must compete against small businesses, other mid-tier companies, and very large companies. This poses great challenges to rising small businesses. I believe Congress and DoD should seek avenues to promote the lifecycle growth of companies by accounting for those mid-tier company challenges.

Randy J. (“RJ”) Kolton is VP of Mid-Tier Advocacy Group, and Senior Vice President (SVP), Business Development for Data Systems Analysts (DSA), Inc., a mid-sized, employee-owned company that is a leader in delivering business driven information technology and consulting solutions and services to the Federal Government and industry. Building on experience spanning more than five decades, DSA has deep expertise and comprehensive understanding of the operational, security, collaboration, and identity management challenges our customers must address.


OMB Acquisition Reform Proposal 6 – Removal of Recovered Materials Certification Requirement

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We’ve been discussing the Office of Management and Budget (OMB)’s six proposals for streamlining the acquisition process and improving the acquisition environment, part of the FY 2020 National Defense Authorization Act (NDAA), and we’ve reached the final post in the series.

This proposal would revise 42 U.S.C. 6962(c)(3)(A), which requires certification by Federal contractors to estimate the percentage of the total recovered material content for U.S. Environmental Protection Agency (EPA)-designated item(s) delivered and/or used in contract performance, and to submit a certified report to their contracting officer. 

This proposal has to do with the administration’s move to reduce “regulatory burdens.” It is part of a general overall trend, and here at TAPE we are unrelentingly in favor of reducing any kind of administrative burden. In this case there was a duplication where things had to be reported both to the EPA and to the contracting officer, who really wasn’t going to do anything about it because it’s the EPA who needs to keep track of recovered products.

For example, if you’re removing asbestos from a building, you have to report that it’s there, and how you’re going to dispose of it by taking it to the right place, getting it recycled, etc. Since that is an EPA requirement, not a FAR requirement, it makes good sense to leave it out of FAR. There’s still a burden, you still have to report it, but you only have to do it once.

Don’t we love the OMB?


Benefits and Disadvantages of the GSA Schedule Program

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This is a guest post by Morgan Taylor of Winvale.

At Winvale, we are constantly challenged by organizations new to the federal market with questions around why a GSA Schedule contract is so valuable. Any savvy consultant should be prepared to adequately describe the benefits of a GSA Schedule contract program and even articulate drawbacks of having one in place.

Let’s focus first on this contract vehicle’s benefits.

What are the benefits of a GSA Schedule contract?

NO. 5: COMPETITIVE ADVANTAGE

FAR Subpart 8.002 and 8.004 describes the order of precedence for federal agencies considering sources in procuring goods and services. Federal agencies have a statutory obligation to consider mandatory sources of supply of goods and services, and the use of Federal Supply Schedules (i.e., GSA schedule contracts) are encouraged in advance of “commercial sources in the open market.”

This means that your organization will have a competitive advantage when compared to competitors who do not have a GSA Schedule contract. This is significant, because it puts you in an elite group of organizations who may receive preference (in most cases, chances are in your favor) when an agency is considering how to meet its needs.

Having a GSA Schedule is also a great asset to advertise on your company website and marketing materials. Having a GSA Schedule provides a great deal of visibility in the federal marketplace that can be used to win GSA bids and even Open Market bids.

NO. 4: A LONG-TERM PARTNERSHIP

GSA Schedule contracts can last up to 20 years, do not have a sales limit, and everyone in the federal government can use them. Specifically, GSA Schedule contracts have four five-year option terms. It is one of the most widely used government contacts available and they are recommended to anyone serious about selling to the federal government.

Of course, vendors will need to remain productive (generating at least $25,000 annually) and ensure they are properly administering their contract from a reporting and compliance standpoint, but the contract can help facilitate a long-term relationship with agency customers.

NO. 3: ENJOY EASIER AND FASTER PROCUREMENTS

Schedule orders do not require much of the extensive documentation and competitive analysis that is required when vetting commercial sources in the open market. This is why the GSA Schedule contract is so valuable. The contract pre-qualifies you to sell to federal buyers because the GSA has already negotiated fair and reasonable pricing for those federal buyers and made the requisite responsibility determination. This means it is significantly easier to win government business, as individual agencies do not have to go through the process of determining if your pricing is competitive in the market.

As can be seen under the FAR subpart 8.4 language, depending on the specifics, agencies can order directly from a GSA Schedule holder and do not need to make that public. By placing an order against a GSA Schedule contract, the government buyer has concluded that the order represents the “best value.” Less work makes contracting officers happy.

Another way GSA Schedule contracts lead to easier and faster procurements is through pre-vetted technical capabilities.When submitting a GSA proposal, offerors must provide technical narratives that capture a company’s experience in the field and specific expertise related to the proposed Special Item Numbers (SINs). In addition, offerors of SINs such as the Highly Adaptive Cyber Security (HACS) SIN 132-45, must undergo a verbal technical evaluation to ensure the main criteria is met.

While this can sometimes make for a lengthy proposal process, it allows agencies to buy from contractors with the assurance that the work performed will be satisfactory and meet all requirements. This can prevent GSA Schedule holders from having to submit separate technical narratives in each individual bid proposal.

NO. 2: ACCESS TO EXCLUSIVE OPPORTUNITIES

Once you have a GSA Schedule contract, you gain access to GSA sites that other companies do not. For example, GSA eBuy is a website that only contract holders and agency buyers may access. This acquisition tool is where agencies look to request information and quotes from GSA Schedule holders. GSA eBuy often houses high-dollar, high-profile contract opportunities not available anywhere else. GSA eBuy makes it easy to find business opportunities, respond to government requests and establish new business relationships. An impressive number of orders are transacted through this exclusive website.

…AND NO. 1: EXPAND YOUR CUSTOMER BASE

This is the absolute key for anyone pursuing a GSA Schedule contract. The vehicle widens your customer base and has great potential to lead to increased revenue over time. A GSA Schedule contract is also accessible by state and local markets. The Cooperative Purchasing Program under the GSA Schedule program allows state and local governments to purchase from Schedule 70 for information technology and Schedule 84 for law enforcement and security products and services, at any time, for any reason, using any funds available. Having access to this additional market is a key differentiator that again exhibits the value of having a GSA Schedule contract.

The U.S. government is the biggest buyer of goods and services in the world, and a GSA Schedule contract could mean new business relationships and major opportunities with a reliable customer and source of income during tough economic times. Any business should certainly take notice.

What are the disadvantages of a GSA Schedule contract?

PRICING RESTRICTIONS

GSA Schedule pricing is determined by establishing a company’s Most Favored Customer (MFC) and discounting from there. GSA is obligated to make sure that the government receives the best pricing possible, so maintaining the established discount relationship is an essential part of having a GSA Schedule. Once your ceiling GSA rates are awarded, you are required to charge at or below this rate to government buyers. You may never charge above the GSA established ceiling rate if you are selling through the Schedule. You must also maintain the discount relationship, meaning that you may never charge a commercial customer lower than your MFC rates, or you are required to revise your awarded Commercial Sales Practices (CSP).

These rules require that you monitor the amount you bill and the discount you provide to every customer class, which can sometimes cause unwanted administrative burden.  However, structuring pricing this way can help establish firm guidelines for sales desk and business development departments within your company.

COMPLIANCE AND MAINTENANCE

The GSA Schedule should change and grow with your company. Schedule holders should be monitoring the contract pricing and Terms and Conditions throughout the life of the contract to ensure that all changes made commercially are updated on the contract through a contract modification. To remain compliant, contractors are required to report all GSA sales, accept Schedule refreshes and keep the contract terms and conditions current, accurate and complete. Having a GSA Schedule does take some extra time and effort, but if maintained correctly, can be a valuable tool for your company’s continued growth in the federal marketplace.

The GSA Schedule has clear advantages but does require companies to take on additional compliance and maintenance concerns. Looking for compliance and maintenance assistance? Give us a call!

Morgan Taylor is a consultant for Winvale’s Professional Services Department where she provides GSA Schedule acquisition and maintenance support to her clients. Morgan is currently a member of the National Contract Management Association (NCMA).


Highlights From NCMA World Congress 2019

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Nearly 20,000 members strong, the National Contract Management Association (NCMA) is the world’s leading resource for professionals in the contract management field.

Each year NCMA holds their annual World Congress which is the nation’s premier training event for contract management, procurement, and acquisition professionals. Participants from both government and industry backgrounds gather to learn about critical issues challenging our industry.

This year’s World Congress was from 28-31 July 2019, when more than 2,500 contract management professionals from across the federal government, state and local government, private industry and education gathered in Boston, MA. This year’s theme was, “Shaping Acquisition: Modern, Adaptive, Connected.”

An engaging list of main stage speakers included Suzanne Vautrinot, president of Kilovolt Consulting Inc., who spoke about balancing risk with opportunity, as well as a Workforce Challenges panel consisting of several key acquisition leaders in the federal government. They offered their thoughts on innovative ways to make today’s workforce more flexible and nimbler and the use of enabling technologies such as AI and “workforce bots.”

Other mainstage sessions included a panel discussion on managing change and some of the emerging challenges facing government acquisition and a keynote by Stacy Cummings, Principle Deputy Assistant Secretary of Defense, Acquisition Enabler, US Dept of Defense. She emphasized the ultimate goal of DoD to modernize its acquisition process and introduced attendees to the Adaptive Acquisition Framework, a flexible acquisition process that is tailorable based on the operational need to have capability delivered.

A new innovation was the use of “Exchange Sessions,” which were informal discussions led by a moderator to focus in on a topic of interest to attendees. These exchange sessions were set in groups of 10-20 and allowed participants to share best practices and ask questions of each other regarding how to overcome a variety of acquisition challenges.

While the conference provided an opportunity to network and learn there was also an opportunity to celebrate NCMA’s 60th anniversary at the Boston Institute of Contemporary Art with live music, dinner and an extraordinary view across Boston Harbor.

TAPE LLC’s SVP and Chief Operating Officer Ted Harrison moderated a panel at this year’s event entitled, “What do the 809 Panel Recommendations Mean for Small Business?” The Section 809 Panel has made several recommendations aimed at refocusing DOD’s small business program. While many have extolled the bold recommendations that would allow the government to purchase “readily available” items more like the purchasing department in private industry, still others have sounded the clarion call to stop what some perceive as the destruction of the DOD small business programs. This panel sought to find the truth in a discussion with representatives from the 809 Panel, DOD small business, and industry.

TAPE actively supports NCMA in several ways. TAPE COO Ted Harrison is a Board Director on NCMA’s National Board and TAPE CEO Louisa Jaffe is on NCMA’s Board of Advisors and has supported NCMA for many years. As well, Ted Harrison was the event chair for the annual Government Contract Management Symposium in December 2018 in Washington, DC.

You can read more about the event on the NCMA event page, or check out what’s planned for World Congress 2020.


Proposed Rule to Align the 8(a) BD and EDWOSB Program Requirements

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In a previous post we discussed the SBA’s proposed rule about the certification processes for women-owned small businesses (WOSBs) and economically disadvantaged women owned small businesses (EDWOSBs).

This proposed rule, posted in May 2019, also looks to make the economic disadvantage requirements for the 8(a) Business Development (BD) program consistent to the economic disadvantage requirements for women-owned firms seeking EDWOSB status. This proposed change would eliminate the distinction in the 8(a) BD program for initial entry into and continued eligibility for the program.

Under the current system, the economic disadvantage criteria for EDWOSBs are the same as the continuing eligibility criteria for the 8(a) BD program, however an entity that applies for EDWOSB and 8(a) status at the same time, might be found to be economically disadvantaged for EDWOSB purposes, but denied the eligibility for the 8(a) BD program based on not being economically disadvantaged.

The new rule looks to make economic disadvantage for the 8(a) BD program consistent to that of an entity seeking to qualify as economically disadvantaged for the EDWOSB program.

The SBA specifically asked for comments (comments were closed on July 15, 2019) on the net worth standard that would be used for the EDWOSB and 8(a) programs. A 2017-18 study that the SBA conducted supported a $375,000 adjusted net worth for initial eligibility, in comparison to the current threshold of $250,000.

The SBA considered applying a $375,000 net worth standard to both the 8(a) BD and EDWOSB programs, however the study did not take into consideration differences in economic disadvantage between businesses applying to the 8(a) BD program and those continuing in the program once admitted.

The new rule proposes to use the $750,000 net worth continuing eligibility standard for all economic disadvantage determinations in the 8(a) BD program.

SBA specifically requested comments on whether the $375,000 net worth standard or the $750,000 net worth standard should be used for the 8(a) BD and EDWOSB programs, as well as how the different standards would affect small business owners participating in the federal marketplace.


SBA Proposed Rule to Amend WOSB and EDWOSB Regulations

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The main goal of the U.S. Small Business Administration’s (SBA) proposed rule (May 14, 2019) to amend regulations on the Women-Owned Small Business program is to put in place a statutory requirement to certify women-owned small businesses (WOSBs) and economically disadvantaged women owned small businesses (EDWOSBs), which can make them eligible for set-aside and sole source awards.

This proposed rule would allow an entity to be eligible to receive awards under the Women-Owned Small Business program, as long as its application is pending.

If that entity were to be selected for the award, its application would be prioritized by the SBA, which would lead to a determination within 15 days. The SBA would provide a free electronic application process to the entities looking to get WOSB and EDWOSB certified.

The provision also acknowledges that SBA may have difficulty processing all the potential applications in a timely manner, as there are approximately 10,000 firms currently in the WOSB repository.

The anticipated increase of applications from firms could possibly overwhelm the SBA, which typically processes around 3,000 applications per year for 8(a) status, and about 1,500 a year for HUBZone status.

The SBA asked for comments on possible solutions to avoid the potential bottleneck. Comments were accepted until July 2019 and they received more than 300 comments.

It’s important to note that if or when the rule is finalized, the certification requirement will apply only to those entities that wish to compete for set-aside or sole source contracts under the WOSB Contract program.

WOSBs that are not certified will not be eligible to compete on set asides for the program. However, women-owned small businesses that do not  participate in the program may continue to self-certify their status, receive contract awards outside the program as     WOSBs, and count toward an agency’s goal for awards to WOSBs.

Contracting officers would be able to accept self-certifications without verification for subcontracts, full-and-open awards, and small business set-asides.

The SBA believes that the proposed rule will bolster the number of federal contract awards to WOSB and EDWOSB-certified businesses, as well as better help agencies reach the 5% federal contracting goal for women-owned small businesses.

Under the current system, contracting officers must review a contract awardee’s documentation to verify an applicant’s WOSB and EDWOSB eligibility.

From the SBA press release: “By establishing a transparent, centralized, and free certification process, the SBA aims to provide contracting officers with reassurance that firms participating in the WOSB program are eligible for awards and encourage them to set aside contracts for women-owned small businesses.”


OMB Acquisition Reform Proposal 5 – Task and Delivery Order Protest Threshold

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This proposal seeks to standardize the task and delivery order protest dollar threshold for defense and civilian agencies by raising the civilian agency threshold from $10 million to equal the defense agency threshold at $25 million.

So while this is a straightforward action, it does have extensive implications. Currently, the task and delivery order protest threshold are those things that apply to multiple-award IDIQ-type contracts.

Let’s say, for example, you’re on a contract vehicle like GSA Aliant and you lose a task order. Currently, you can only lodge a protest if the dollar value of the contract exceeds $10 million, however the same situation on the defense side has a threshold of $25 million before you can protest.

If this OMB proposal goes into effect, then everyone would be subject to the higher $25 million limit, below which a protest would not be allowed on task and delivery order contracts.

This will have the effect of reducing the number and likelihood of protests in the civil sector. Things that were formally protestable between $10 million and $25 million will no longer be protestable.

From the government’s standpoint, it is certainly sensible for both sides to have the same rules. By taking on the larger standard, however, it will reduce the protestasbility of a large number of task orders. This is likely to be more of a problem for small businesses then for large businesses.

The government is attempting to streamline and reduce the activities that are different between civil and defense section and in the long run, and that’s a good thing. On the other hand, the reason the rules are different is there is less money in the civil sector and the jobs are smaller in size, and that’s the way it’s always been. Ultimately this is not good news for the small businesses who now cannot protest.


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