End of Fiscal Year Planning – The Last 60 Days

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© jpldesigns – Fotolia.com

In this era of LPTA (Lowest Price Technically Acceptable), there are many more times that you might want to bid on something, even though you’ve done no capture or relationship-building work. And the end of fiscal year is a perfect time to take a look at the circumstances in which you might want to throw a bid “over the transom.”

When to bid

  • First of all, does the request for proposal indicate that you need secret knowledge to win? For example, do they want a bunch of resumes, many of them for key positions, or do they just give general staffing requirements?
  • Are they looking to see past performance that’s specific to their work, or can you show work you’ve done elsewhere that may have the same size, complexity and scope?
  • Is there a big emphasis on price? (The more emphasis on price, the less likely the incumbent has an advantage.)
  • Finally, how big is the proposal to write, in particular, the technical and management responses? A smaller proposal has less evaluation or subjectivity in play, and less favors the incumbent.

If there are few or no resumes required, if generally applicable past performance is permitted, and if response time is at least two weeks, these are signs you may want to go ahead and consider a bid.

Conversely, run in the opposite direction if a response is required in three days or less. That bid is wired for somebody else. Maybe not the incumbent, but someone. If that somebody is you, by all means get your proposal in, but if it’s not, there’s no reason to waste your time.

How to compete on price

When you’re competing on price, it’s no longer business as usual. You’ve got to understand what is your wrap rate, and what is the wrap rate of your most likely competitors.

The wrap rate is what you add on top of the salaries or hourly rate of the people in your bid. You’ll add a percentage for fringe, a percentage for overhead – costs directly related to the accomplishment of a job, but which are not billable – and then “G&A” (general and administrative). Plus, profit, of course.

For example, if an employee is sitting at your office but their time is billable to your customer, then you would add that portion of rent, their use of computer, etc. because these things are directly related to project rather than for general work in your company.

You would also add a portion for what is called G&A, or general & administrative. This includes costs like your HR department, accounting people, leadership time that is not billable to the customer, and marketing staff.

On top of those amounts, you put a profit. There are formulas you can use to determine your wrap rate, but typically they’re anywhere from 1.5 to 2.5 (expressed in terms of 1.5 (up to 2.5) times the base hourly salary rate). So for someone who’s salary is $100,000, you would charge $150,000 or $250,000 to the government agency.

The bottom line is that if you’re competing on price, you’d better get your wrap rate down. That might mean shaving benefits, but that hurts hiring. The easiest places to cut are your G&A by operating leaner and less fixed charges, and of course, profit. Sadly. Also, don’t hesitate to reduce escalation (a clause that protects you against higher material prices) in short-term contracts; it’s an area where competition might not think about reductions.

Being selected for a bid in a year-end cycle can bring you great revenue. Even if you haven’t done the capture work, use the criteria I’ve outlined above and when appropriate, you can take a chance without the advance work usually required!

Targeting Government RFPs? Do Not Fish with a Net

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© molchunya – Fotolia.com

This is a guest post by Kevin Jans of Skyway Acquisition Solutions.

Fishing with a cast net here in Florida is fun. In the right place, at the right time of day (and tide), the net is full of surprises: bait fish, a crab or two, a stingray, or even a mullet.

However, cast-netting is a futile and costly way to gain sales – especially as a small business in the Federal market. At best, you’ll stumble upon a few opportunities. At worst, you’ll catch a net full of unqualified leads. Most likely, you’ll end up somewhere in between: spending a lot of time sifting through RFPs hoping to find one that fits your company.

Targeting opportunities is just as important in the federal market as it is in the commercial market. History shows time and time again that a focused strategy wins. In the government market, it can be easy to feel like you are drowning in opportunity. Targeting your efforts is one of the best ways to offset this.

Do you know, really know, what you are fishing for? Why do you target specific agencies? Why are you investing your time on specific RFPs and RFIs? This is not about bid/no bid – this is about deciding whether you should be looking at an agency’s RFPs at all. Or, whether you should be in the Federal market at all. What is your plan? What is your target? What are you trying to catch?

Are you filtering opportunities by NAICS, size of opportunity, and socio-economic set-asides? So is everyone else. What if you fine tuned your search beyond the agency? To a division? To a contracting office? To a specific customer who buys a lot of what you sell? What if you knew that the buyer you targeted actually needed your help and would be excited to know about your company? What if you targeted your efforts to the point that the government customers are calling you to make sure you bid on their RFP? That’s what real targeting looks like.

Save your company time: do not fish with a net.

This post originally appeared on the Skyway Acquisition Solutions blog at http://skywayacquisition.com/targeting-government-rfps-fish-net/, and was reprinted with permission.

Kevin Jans founded Skyway after 16 years as a Department of Defense Contracting Officer (CO). As a CO, he saw many companies struggling in the B2G market. He created Skyway to give these small to mid-size companies access to a leadership team of former contracting officers and to show them how to compete and WIN in the increasingly complex market. Learn more at http://skywayacquisition.com/.


Should You Protest a Loss?

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© olly – Fotolia.com

So you lost a government contract, now what? As I explained in a previous post, a key next step is to request a debriefing to better understand the government’s decision. You’ll find out if you talked to the right people during the capture stage, if you had assembled the right people on your team, if your pricing was in line, etc.

This is all valuable information to improve your process for the next bid so you can move on from this loss to your future wins. There may be times, though, when you’re not ready to move on. You may think the government made a mistake and misevaluated your proposal – or the winner’s.

Should you protest your loss?

Filing a protest is a double-edged sword, and a serious step to consider. After all, no one likes to be wrong, and that includes the government. Your protest will create a lot of documentation and detail, and calls into question their decision and process.

Whether they like it or not, you do have the right to file a protest, as per Federal Acquisition Regulation (FAR), Subpart 33. You can reference this detailed guide to procurement protests, via the Government Contractors Network.

So there are several factors that need to be considered when contemplating a protest. First – if you’re right, and they were to grant “relief,” would you win? Or even, could you win? For example, protesting a tech rating when your price is already too high, seems pyrrhic. You win the point (hooray, you’re right!), but you lose the contract anyways (ummm, not so good).

The other thing to consider is protests cost real cash capital, and they also cause negative relationship capital –the Government is delayed in what they decided to award, and you are the cause of that delay. As we mentioned earlier, no one likes being told they are wrong about something, including the Federal Government.

We protested once, many years ago. The Government was egregiously wrong, and we did win the contract. We protested later on a different contract, spent thousands in legal fees, and discovered our price was too high. They granted us our point but we lost anyways, and spent a lot of money. Now when we lose, we mostly try to learn the lessons about the agency, the opportunity, and our processes, and move on to doing it better the next time. That does save on legal fees.

We Lost One

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© duncanandison – Fotolia.com

In government contracting, we don’t always win the contracts we bid. When we lose, we look for lessons we can apply to win in the future.

We did everything right: We did a bunch of capture work, we visited with the customer, we talked to our industry partners, and we put together a team that included people with experience in the necessary organizations. Well, we just got the results back and we lost anyways. The truth is these things do happen. We work hard, but we’re not the only ones who are working hard.

There are other companies with presumably equal qualifications. Of course there are things they say make them unique, just as we do, but fundamentally, it is the people who sit on the technical evaluation panels who determine who is best suited for the job. At the end of the day, there will be a winner and there will be losers.

It would be nice if we were always the winner when we bid, but the fact is we’re not. So let’s look at the positive things we can do with this situation. The most important one is to request a debriefing, in which we ask the government for their review of our proposal.

According to the Federal Acquisition Regulation (FAR), Subpart 15.5, the government is obligated to give you this review. This gives you the opportunity to determine where you could have done better, for example did you do as good a capture job as you thought, or did something get missed in the process? Did you talk to the right customer group or did you maybe miss somebody whose point of view you should have gotten? Was your pricing within reason?

Another thing you should be listening for at the debrief is whether you think the government made a mistake in evaluating your proposal. If that is the case, you may want to formally protest the decision. We’ll discuss this in a separate blog post.

Note that you must request the debriefing within three days of either being notified directly that your company was excluded from the award, or within three days of being notified that another company was awarded the contract. (See FAR Subpart 15.5 for more details.)

In any case, the fundamental issue is always to get some feedback because you want to apply the lessons learned to the next bid, and the next one, and the next. The technical evaluators you speak to in the debrief process are often insiders you didn’t get to talk to in your capture efforts. This is always a good thing because you’re expanding your network and showing you’re interested in feedback – not taking for granted what happened during the evaluation of your proposal.

The bottom line is that it’s never easy to lose, but when we do, we need to take a look at why we lost, what we can do differently, and how we can prevent ourselves from losing in the future. That positions us for future success.

Size Standard Inflation Adjustment is Big News for Small Business

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© Marek – Fotolia.com

As laid out in this detailed report in the Federal Register, SBA recently announced that they are adjusting the monetary-based industry size standards for inflation, as well as program-based size standards (except for SBA’s 7(a) and 504 loan programs). SBA is required to look at the impact of inflation on size standards every five years – though they are not required to make changes. Luckily for small businesses, this time they did.

SBA recognizes that many businesses have lost their eligibility for set-aside programs because of inflation, rather than having simply grown as a business. They wanted to give them an opportunity to regain that eligibility, as well as to help small businesses stay sheltered for longer.

SBA estimates that these adjustments will help 8,500 firms with receipts-based standards, and 170 firms with assets-based standards. The change will also give federal agencies access to more small businesses who can help them meet their requirements.

For receipts-based size standards, adjustments were made by multiplying their current levels by 1.0873 and then rounding up to the nearest $500,000. The same multiplication was applied to assets-based size standards (affecting five industries in the finance and insurance sector), whose new standard was rounded up to $550 million, an increase from $500 million. Program-based size standards were adjusted using the same calculation and method as the receipts-based standards.

These tables give the specifics:

Potential concerns in the report

Red tape: While the increase in eligibility could create a heavier administrative load for the SBA, they say they’re confident they have the systems in place to handle this. For small businesses themselves, SBA says there shouldn’t be any additional recordkeeping, though a reminder that you must be registered in the SAM database, and you must update your record annually, or sooner if your status has changed.

Competition: More eligible small businesses means more competition among them, though SBA says they predict this may be offset by more procurements being set aside for small businesses.

This is nothing but good news for small businesses, as the size standards will all grow by almost 10% across the board. For example, for my company TAPE, this creates an entire additional year in the NAICS codes governed by the old $25.5M (now $27.5M) size standard. That’s definitely a good thing.


Delays, Delays, Delays

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© nmcandre – Fotolia.com

(And I’m not talking about potato chips, folks.)

One of the things I’ve observed recently is that it seems like almost everything that we’re looking at is slipping to the right (being delayed) – the original estimate for the acquisition timeline including a draft RFP if there is one, an industry day or pre-solicitation conference, or even just an actual RFP.

Now we know that much of this occurs because there is an insufficient number of PCOs (procuring contracting officers), as well as the people who assist them, such as contract specialists and requirement analysts. Everybody is trying to do more with less.

The temptation for the government, then, is rather than issuing an RFP and going through the whole process, to just issue a task order on a simple contract because they don’t have the time to actually put out a competitive procurement or evaluate different proposals – even if there are only a few.

In a time of reduced budgets, some of this is perfectly reasonable and to be expected, but I’m not sure the government realizes the impact that delays or cancellations have on federal contractors, especially small businesses. For example, PEO STRI just cancelled the Train, Educate, and CoacH (TEACH) contract. The draft RFP had been issued (with substantial delay), and people had been working on it for two years, ever since it had been rumored to be started.

A conservative estimate is that the amount of actual cash lost by potential primes and subs is literally more than $250 million across the industry. Someone we know specifically, who was acting as a consultant to one of the potential primes, lost $150,000 in consulting revenue.

Some companies have internal resources, but small companies will typically bet on a job like this, and put a ton of money into it to hire consultants for things like pricing, competitive analysis, and relationship management.

How can small businesses hold staff people as contingent hires, when a procurement process is delayed for months? Of course people have to go and find new jobs; they can’t wait for us or the government. And the government won’t wait for us to re-staff when the job does start!

So be prepared for lengthy delays in the award of contracts. And in the meantime, let’s find a way to help the government understand these implications. I’m sympathetic to the government’s situation of having to do more with less, but I’d rather have them be clear, honest and specific upfront with the actual timeline, so I can know and plan for that, rather than get an optimistic timeline they can’t deliver.

Jumping Though Hoops to Work With the Federal Government


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Terry Budge is the president and owner of Interlinked Resources LLC. He retired from the U.S. Small Business Administration after a 34-year career with the Federal Government. At SBA, he worked with everyone from start-ups to major corporations that are still considered small. He also worked with large prime contractors, as the auditor that reviewed their business plans to meet diversity goals.

With IRG, Terry continues to advise large businesses on how to make sure they’re giving a percentage of their subcontracting work to small and specially certified businesses. He also works closely with small businesses to help them work successfully with government activities. I thought he would have great insights for small businesses who are hoping to fill those needs.

What is the first thing a small business should do if they want to do business with the Federal Government?

There are some key issues to review. The first is how new is your business? If you are within two years of startup, then you should be working closely with the Small Business Development Centers (SBDCs) in your local area. If more than two years, then go to your local Procurement Technical Assistance Center (PTAC). Both of these organizations can get you started to work with the Government and they are free. You can find them via the Small Business Administration (SBA) website.

Next, register your firm on the Systems Award Management (SAM) site at www.sam.gov. Through your PTAC contact, get a listing of federal agencies and find out which agency may have a need for your service or product. Once you have this, go to the Small Business Offices (OSDBUs) of these agencies for advice on how to deal with that particular agency. Also, seek advice from a competitor or other business that is very active in government contracting.

What is the most important step that most businesses miss?

Not being prepared to deal with the federal agency or a prime contractor before they try and bid a job. They don’t have a “Capabilities Sheet” ready and have not listed their business under the Dynamic Small Business area at www.sam.gov.

They have not done what we call going on a “fact-finding mission” to research each client to see what they need in order to qualify to do business. Start talking to these agencies before trying to bid a job. You must understand all the requirements of a government solicitation, and know that your business can meet these requirements.

What do prime contractors wish more small businesses would do?

Be prepared before coming to them to get work. Pick a prime, then go to the prime and discuss their requirements before asking for a contract (another fact-finding mission). Let them do some mentoring or provide you with guidance. Establish a relationship after you insure that they may have work for you now or in the future.

How can small businesses communicate their value to prime contractors?

Research the prime contractor first via their website and your local PTAC. Look at the types of contracts that the prime has; understand what the firm does. From that understanding, develop a good “Capabilities Sheet” on your firm, with expanded details on your company website and available as a PDF file. Always use a professional company e-mail address. Most primes will not even give you consideration if they see an address from @hotmail.com or @yahoo.com.

Give good references from other businesses you have current or past contracts with. If you cannot do this, go back to the prime and find out what is needed to deal with them either now or in the future. Be persistent. When you have prepared all the prime’s requirements, start a follow-up process through phone and email. The squeaky wheel gets the oil. Polite follow-ups keep your business on their radar.

What are the top three benefits of working as a subcontractor rather than directly for the client (federal agency)?

  1. You will find it easier to communicate with a prime buyer than with a government entity, and requirements like pre- and post-award surveys, FAR requirements in the contracts, and pay system requirements will usually be less onerous.
  2. The prime contractor usually has flow-down requirements that are passed down to the small business – contract requirements that may also be levied to you. If you have a good relationship with the contractor, you will learn about other available government contract requirements.
  3. Once you start getting a track record with dealing with several primes, it certainly helps as a reference when dealing with the Government. Your experience with these prime contracts should be listed in the Dynamic Small Business area of www.sam.gov when you register and keep it updated each year.

Terry can be reached at 267-549-4689 or http://www.irgroup.net.

New Legislation Affects Specially Certified Federal Contractors

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© michaeljung – Fotolia.com

Continuing our look at new legislation affecting small business federal contractors, including small construction businesses, today we’ll discuss two bills that impact specially certified contractors, as well as one about mentorship and support for business owners.

H.R. 2882 – Improving Opportunities for Service-Disabled Veteran-Owned Small Businesses Act of 2013

This bill transfers responsibility for verifying the status of service-disabled veteran-owned small businesses from the Department of Veterans Affairs to the Small Business Administration (SBA), in order to improve efficiency, transparency and uniformity in the processes.

The fact is, while VA has been executing this responsibility, companies have waited an enormous amount of time to get certification, and have also had a hard time when trying to renew. The VA has enough troubles right now so moving this responsibility away from them at this time is very good news.

Because they are seemingly so over-sensitive to the potential for fraud, the VA has difficulty processing high volumes of information. The Center for Veterans Enterprise (CVE) verification process takes more than 5-6 times the number of staff SBA uses for both HUBZone and 8(a) verifications combined.

SBA isn’t guaranteed to be better, but frankly they can’t be worse. It’s already part of their day-to-day service, administering the 8(a) and HUB-Zone programs, and this will centralize the small business management programs within one agency.

Some service-disabled veteran business owners may be concerned, thinking they will get more sympathy and understanding from the VA, but in reality that hasn’t been the case. There are a legion of stories throughout the service-disabled business community of people spending thousands of dollars on legal fees, fighting the VA on what I consider to be harassment actions, asking for more and more data for no given reason.

H.R. 2452 – Women’s Procurement Program Equalization Act of 2013

This bill will standardize sole source authorities among the SBA’s procurement programs in order to promote parity.

This is amazingly needed, in my opinion. Because the SBA resisted having any kind of meaningful program for women for years, many inequities have been perpetuated between men and women business owners, e.g., woman-owned small businesses don’t have sole-source authority, and their contracting limits for set-asides were just recently raised in the NDAA 2013. Before that they were smaller than all other set-aside programs.

H.R. 4121 – Small Business Development Centers Improvement Act of 2014

This bill ensures that the SBDCs are able to continue providing entrepreneurial development services and education to small businesses. While there is a lot of duplication between these SBDCs, PTACs and the SCORE program, each do have their own unique role.

Procurement Technical Assistance Centers (PTACs) provide information about opportunities to help you directly get business. The Service Corps of Retired Executives (SCORE) program is a volunteer mentoring program, and SBDCs do a similar type of mentoring on a more formalized basis.

There’s much more to be done, but this is a good start.

Five Ways to Create a Revenue Culture

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© gigra – Fotolia.com

This is a guest post by Matt Falls.

The primary challenge of CEOs is to generate revenue with acceptable margins. Companies must develop new customers while expanding their beachhead in existing accounts. The drive for revenue growth requires that the CEO focus the whole revenue generation team – from marketing to customer service – on the goal of generating revenue.

A company focused on generating revenue works together as a cohesive unit through marketing, opportunity identification, qualification and proposal development. Here are five ways a CEO can create a culture focused on generating revenue:

1. Install a Customer Relationship Management system (CRM)

The primary reason for the CRM is to generate revenue; it is not the end goal. It is a highly useful tool to organize the revenue generation team’s activities, share information about potential revenue opportunities, set performance metrics and provide the information to better manage the company.

Businesses use the information in the CRM to reinforce the revenue culture with team revenue meetings, by creating dashboards that measure activity and performance, to inform coaching sessions that improve performance and to gauge the effectiveness of marketing activities.

2. Hold team revenue review sessions

A key part of establishing the revenue culture is to hold team meetings where the entire revenue generation team focuses on finding the path to revenue. In this meeting, each team member presents their opportunities, products and services proposed, the flow of conversation, competitors, the decision makers, objections and their strategy for winning the business.

The entire team listens and contributes ideas to help close the business. There may be new products and services to propose, a key introduction, or helpful sales techniques are passed along. The entire team works together to close the business.

A similar meeting is held to discuss open customer service cases. Business development uses the information in these meetings to find revenue opportunities and works with line managers to present a solution to the customer. Line managers have the relationships, knowledge of customer challenges and credibility with the customer. Combined with business development’s knowledge of product applications and solutions, they expand the company’s presence in customer accounts.

3. Set goal dashboards to measure activity and performance

Critical to supporting the revenue culture are performance metrics that measure contribution to revenue. Dashboards track activity and performance goals for marketing, business development and customer service teams. Marketing goals such as qualified leads generated and dollar return on marketing campaigns are monitored along with activity goals such as campaigns launched. Customer service’s contribution to revenue is measured not only by cases completed, but also opportunities presented to business development.

Dashboards tell the CEO the most effective marketing channels, the size of the revenue pipeline, revenue forecasts based on probability of win, and the activities that team members are completing to convert opportunities to winning business.

4. Hold monthly individual reviews focused on improving ability to win business

Many companies use annual or twice yearly performance reviews to provide feedback on team members’ performance. Companies that are focused on generating revenue use the performance information in the CRM to provide a higher degree of guidance to individual team members. Individual performance dashboards highlight opportunities, revenue, cases resolved and activity levels.

Performance reviews can focus on improving the team member’s ability to win business, resolve cases or find opportunities. Action items can be created and assigned for follow up in the next month’s review session. With close guidance, individual performance improves and the team wins more business.

5. Measure marketing’s contribution to revenue

When the revenue culture is established in companies, marketing activities are directly connected to the practice of revenue generation. Campaigns are evaluated on the leads that are generated and the revenue that is produced from them.

Marketing makes better investments by tracking the leads and revenue that are generated by each marketing activity. Monthly review sessions facilitate a culture of continuous improvement by highlighting the activities that are generating leads and revenue and modifying marketing activities based on that information.

Highly successful companies create a revenue culture by measuring contribution to revenue, sharing information about potential opportunities and working together to win business, setting performance goals and holding review sessions that improve team member’s ability to generate revenue.

This post is an excerpt of an article that originally appeared at http://matthewfalls.com/five-ways-to-create-a-revenue-culture/, and was adapted and reprinted with permission.

photo, Mathew FallsMatthew Falls helps emerging companies that need a seasoned executive to fill out their senior team. He focuses on driving organic revenue, tapping the expertise of employees to reduce costs, creating innovation teams that transform ideas into highly profitable products, inspiring teams to win more business and creating internal controls and cost systems that sustain profitability. You can email Matthew to learn more.

New Legislation Affects Federal Contractors in Construction

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© treety – Fotolia.com

As part of a group of new bills impacting small businesses in federal contracting, there are two that are of particular interest to construction businesses.

H.R. 2751 – Commonsense Construction Contracting Act of 2013

This bill prohibits the use of reverse auctions (bidding from high to low) when a construction services contract is suitable for award to small business, or when the procurement is made using a small business program.

With reverse auctions, you start at a very high price and continue to go down from there, basically until somebody blinks and says they’ll do it for that price. It highly favors somebody who has an intensely detailed cost structure and knows exactly what things cost. Truth be told, most small businesses don’t fall into that category.

This bill removes the reverse auction roadblock for small construction businesses. Instead, agencies must use what’s known as best value procurement, where there is a tradeoff between technical approach and pricing, with past performance ratings also taken into consideration.

This is always a better scenario than strictly working on price, because then innovation and new methodologies become part of the conversation, even though they can make the work more expensive, not less.

Construction services are clearly not a commodity – you’re buying materials, but also the installation process and the people involved in putting it together. Reverse auctions discount the importance of quality of labor and quality of construction, under the false conception that it will get you a better price.

H.R. 776 – Security in Bonding Act of 2013

This bill increases the access of small construction companies to surety bonds in order to increase the number of small construction contractors able to participate in the federal market. A surety bond is a promise given to one party to pay a certain amount if the second party fails to meet the terms of a contract.

This is a really big deal. The single most common reason that small businesses can’t compete with large businesses in construction is because they don’t have access to the capital – the bonding. Big companies can afford that; little companies cannot.

Obviously Congress is making a reasonable effort to improve the lot of small businesses, and these are good moves to make.