This is a guest post by Shelley Hall
Effective 24 Jun 14, DOD, GSA, and NASA adopted as final an interim rule amending the FAR to remove the dollar limitation for set-asides to economically disadvantaged women owned small business (EDWOSB) concerns and woman owned small businesses (WOSB). As a result, COs may set aside acquisitions for competition restricted to EDWOSB concerns or WOSB concerns eligible under the WOSB Program at any dollar level above the micro-purchase threshold, provided the other requirements for a set-aside under the WOSB Program are met.
The Women-Owned Small Business (WOSB) Program, set forth in section 8(m) of the Small Business Act, 15 U.S.C. 637(m), authorizes Federal contracting officers to restrict competition to eligible WOSBs or EDWOSBs for Federal contracts in certain industries. Section 8(m) of the Small Business Act (Act) sets forth certain criteria for the WOSB Program, including the eligibility and contract requirements for the program. For example, the Act had stated that contracting officers could only set-aside a requirement under the program if the anticipated award price of the contract did not exceed $5 million in the case of manufacturing contracts and $3 million in the case of all other contracts. Recently, SBA had amended its regulations to adjust these statutory thresholds for inflation so that the anticipated award price of the contract awarded under the WOSB Program must not exceed $6.5 million in the case of manufacturing contracts and $4 million in the case of all other contracts.
Even with this adjustment for inflation, these dollar value restrictions on awards under the program limited a contracting officer’s ability to set-aside contracts for WOSBs or EDWOSBs. As a result, Section 1697 of the National Defense Authorization Act for Fiscal Year 2013, Public Law 112-239, amended the Small Business Act and removed these dollar value limitations. Contracting officers may now set-aside any contract for EDWOSBs or WOSBS under the program if: (1) There is a reasonable expectation that, in industries in which WOSBs are underrepresented, two or more EDWOSBs will submit offers for the contract or, in industries where WOSBs are substantially underrepresented, two or more WOSBs will submit offers for the contract; and (2) in the contracting officer determines the contract can be awarded at a fair and reasonable price. The anticipated contract can be for any dollar amount.
While this is good news for EDWOSBs and WOSBs, it is also good news for the government. The Federal government consistently fails to meet the statutory 5% goal for WOSBs. The purpose of the WOSB Program is to assist agencies in achieving the statutorily mandated 5% government-wide goal for procurement from women-owned small businesses. By removing the limitations on the dollar amount of a contract award that can be set-aside for WOSBs or EDWOSBs, the SBA will be clarifying that there are more contracting opportunities for WOSBs, which should result in more contracts being awarded to this group of small businesses.
This post originally appeared on the Skyway Acquisition Solutions blog at http://skywayacquisition.com/good-news-edwosbs-wosbs/ and was reprinted with permission.
Shelley A. Hall has over 30 years’ experience with DOD. Her experience runs the gamut across the spectrum of government contracting from commodities and services, commercial and non-commercial, simplified acquisition procedures, foreign military sales, systems, to major source selections. In her current job, she holds an unlimited Contracting Officer warrant and serves as a Procurement Analyst for a variety of range and launch support contracts. Shelley also works as a consultant for Skyway Acquisition Solutions.
When you’re recruiting to fill a position as part of an RFP, compliance is a hugely important issue. The candidate must meet the government’s specific criteria for experience, technical skills and certifications to a T.
Believe it or not, I once had a resume rejected for an RFP because the candidate listed their experience with PC DOS, and the RFP had asked for experience with MS-DOS. (They’re one and the same thing.)
It’s absurd, but these things happen. There is no such thing as close enough. You have to remember that the government is not going to interpret, they’re going to measure you against the exact requirement that’s down on paper.
After compliance, it’s time to think about profitability. When you’re hiring for an RFP, you’re not just filling a job within your organization, you’re filling a job that will be billable to your customer. You have to understand what the billing rate translates to in terms of your bottom line, so you determine an appropriate salary.
During the bidding process, you have to first figure out whether you’re in a cost-sensitive environment or not. I wrote about how to compete on price with your salaries in an LPTA environment in a previous post.
You should also consult salary surveys for that particular discipline, to compare other salaries and contract terms. Pay attention also to what your current employees are making, so you don’t anger them and poison your work culture by hiring a bunch of new people at a higher rate.
Finding the right people
These days hardly anyone is using the newspaper to find a job. You have to be in the places job seekers are looking, namely LinkedIn and other social media, and online job boards like Monster.com. For very specialized requirements, you may want to do an insert in a technical association newsletter or an industry magazine.
What are your best recruiting tips for government contracting? Share them as a comment below, or on my LinkedIn post.
This is a guest post by Steven Koprince.
Small businesses were awarded 23.39% of prime contracting dollars in Fiscal Year 2013, a jump of more than a percentage point from FY 2012 levels–and above the 23% government-wide goal for the first time in several years.
According to the recently-released SBA Procurement Scorecard, the government exceeded its goals for SDVOSBs and SDBs, but failed to hit its targets for HUBZones and WOSBs. Despite these shortfalls, the SBA gave the government an overall “A” rating for its FY 2013 performance.
In FY 2013, the government awarded $83.1 billion in prime contracting dollars to small businesses, a rate of 23.39%. The government should be applauded for surpassing its percentage goal, but the percentage is not the whole story. Thanks to spending cuts, overall dollars awarded to small businesses fell considerably–down from $89.9 billion in FY 2012, a year in which the government only managed to award 22.25% of prime dollars to small businesses. In FY 2011, the government awarded only 21.65% of prime dollars to small businesses, but total awards were $91.5 billion. Hitting a percentage target is nice, but doesn’t make up for more than $8 billion in decreased small business spending in the last two years.
The government reached two of its four socioeconomic goals: 8.61% for SDBs (5% goal) and 3.38% for SDVOSBs (3% goal). Awards to WOSBs increased, on a percentage basis, from 4% to 4.32%, but still fell short of the 5% goal. HUBZone awards continued to decline sharply, down to 1.76% from 2.01% the previous year–just more than half the 3% goal.
Among notable agencies, the DoD awarded only 21.09% of prime dollars to small businesses, and missed three of the four socioeconomic goals–including the SDVOSB goal. The SBA nonetheless gave the DoD a “B” grade. The VA performed well overall, awarding 36.21% of prime dollars to small businesses and 19.38% to SDVOSBs. Although the VA missed its WOSB and HUBZone goals, it received an “A” for its efforts. The Department of Transportation received a well-deserved “A+” for awarding 43.34% of prime dollars to small businesses and meeting all four of its socioeconomic goals. As usual, the Department of Energy received an “F,” awarding only 5.71% of prime dollars to small businesses and falling far short on all four socioeconomic goals.
The FY 2013 Procurement Scorecard shows that many agencies are making sustained and committed efforts to award contracts to small businesses and meet their goals. Still, until the government meets all of its goals–including its WOSB and HUBZone goals–I question whether the overall “A” grade was deserved.
This post originally appeared on the SmallGovCon blog at http://smallgovcon.com/statutes-and-regulations/government-meets-fy-13-small-business-goal-hubzones-and-wosbs-fall-short/ and was reprinted with permission.
Steven Koprince is a partner with Petefish, Immel, Heeb & Hird, LLP in Lawrence, KS, with a practice focusing on federal government contracts and small business law. Steven is the author of The Small-Business Guide to Government Contracts (AMACOM Books, 2012), and has published a number of articles on government contracting. Steven has spoken to audiences across the country on government contracting and small business matters, and blogs regularly on similar topics at SmallGovCon.
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!
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/.
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.
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.
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:
- Inflation adjustment to receipts-based size standards
- Inflation adjustment to program-based size standards
- All new size standards by NAICS industry
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.
(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.
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)?
- 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.
- 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.
- 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.