In preparing this blog post we benefitted from support from the Army Contracting Command-New Jersey to make sure the descriptions were correct.
Other transaction agreements (OTAs) and their underlying authorities allow for more flexible, commercial–like, and novel business solutions than the Federal Acquisition Regulation. In fact, Office of the Secretary of Defense (OSD) guidance states that contracting officers should not use specific templates for designing such structures. The intent, rather, is for the government to structure business arrangements that are most appropriate for each specific scenario.
However, there are OTA structures that have been effectively demonstrated and can be replicated. One such structure was implemented by Army Contracting Command-New Jersey (ACC-NJ) and involves the use of a consortia of companies interested in working with the Army within a given subject area.
The OTA consortium model has existed for more than a decade and has cumulatively resulted in the award of over $1B for prototype development. While there are several variants between OTA consortia, the general premise is that ACC-NJ executes an OTA not with a single entity but an organized group of entities that agree to participate under a common rule set.
The consortia typically employ a management organization to address administrative needs and manage the flow of information between the Army to the consortia. Typically, these consortia are designed to minimize barriers for new companies to participate.
In several cases, the application to become a consortium member is a one-page form that can be completed online with a $500 annual consortium membership fee. Prospective members must agree to the terms of the consortium and the OTA, but these terms are much more flexible than standard FAR-based contracts (e.g., intellectual property issues may be negotiated on a case-by-case basis).
Once the consortium self-forms the Government may negotiate and award a base OTA. Once the base OTA is awarded, the Government may issue calls for white papers to the consortium in lieu of full-up proposals, thereby cost effectively separating good ideas from those that are less desirable.
The Government may then select a small number of companies to submit a more formal proposal based on the evaluation of the white papers. Ultimately, the Government selects one or more awardees and delivers funding to the selected consortium member(s) – typically through the consortium management organization.
In any instance, OTA provides for flexibility to alter the solicitation, evaluation and award process. However, once the process is established, government compliance is extremely important to maintain fairness in determining contract awards.
The OTA consortium model provides tremendous flexibility, streamlined processes and procedures, and access to the broadest possible pool of prospective vendors.
The Promoting Value Based Procurement Act was forwarded by House Oversight lawmakers in September 2017. Its purpose is to require executive agencies to avoid using lowest price technically acceptable source selection criteria in certain circumstances, and for other purposes.
This is an important change that has been coming down the pike for several years. Increasingly, government procurement officials and their customers, the actual government activities, have noticed again and again, that “lowest price technically acceptable” contracts are a problem – especially after award.
LPTA was originally designed to give the contracting officers a tool to force lower prices and make easier bid decisions. They could assess the technical response on a pass-fail, then just award the lowest price bidder. Yet the end result has been disastrous, such companies who’ve lowered their labor prices so much that they’re unable to hire at those low rates.
These practices have already led to the decline of LPTA contracts, but this legislative initiative codifies that effect and makes it extremely difficult to use LPTA.
I discussed this with my favorite experienced (now retired) contracting officer (CO), and he did raise one interesting side effect: he postulated that we’ll see ‘better’ proposals. I disagreed, but we do agree that we’ll see more technology and innovation proposed in best value procurements; people will look for where they can get discriminators and have the right technical outcome.
In conclusion – we’ll see! In the meantime, for more insights on this legislation, see this NextGov article: House Panel Moves Bill Urging Federal Buyers to Consider Quality, Not Just Cost.
We’ve been taking a look at the biggest changes affecting small businesses in the National Defense Authorization Act for FY 2018. In a previous post we looked at H.R. 1773, meant to clarify terminology and improve uniformity, and today we’ll move on to H.R. 1774.
H.R. 1774, Developing the Next Generation of Small Businesses Act of 2017
This act aims to expand the entrepreneurial development programs to further the important work being done by the House Armed Services Committee on procurement reform, by ensuring that SBA is effectively introducing the next generation of entrepreneurs to the opportunities afforded by federal procurement contracts.
Within H.R. 1774, the following bills are found:
- H.R.1702 – Small Business Development Centers Improvement Act of 2017 – This bill amends the Small Business Act with respect to the authority of the Small Business Administration (SBA) to use certain SBA programs, including the small business development center (SBDC) program, to provide grants, financial assistance, loans, export assistance, and subcontracting opportunities on federal contracts to specified small businesses, organizations, state governments, universities, companies, and other entities that assist smaller enterprises.
- H.R.1680 – Women’s Business Centers Improvements Act of 2017 – The bill revises the duties of the Office of Women’s Business Ownership and declares it is the Office’s mission to assist women entrepreneurs to start, grow, and compete in global markets by providing quality support with access to capital, access to markets, job creation, growth, and counseling.
- H.R.1700 – SCORE for Small Business Act of 2017 – This bill amends the Small Business Act to reauthorize the SCORE program (Service Corps of Retired Executives) for FY2018-FY2019. The program is renamed as simply the SCORE program.
So this NDAA is a little less “bold” – more has been packed into other versions of NDAAs over the years that had a material impact. The items here in H.R. 1774 focus on SBA programs, which are impacting the overall health of small businesses, but do not address the really punishing occasional prejudice that can occur during and after contract procurement.
Remember, too, that the hurricanes will have some material impact on how SBA sees their mission, as they struggle to help small businesses in SE Texas/Louisiana, then Florida and the Gulf Coast, and finally the Caribbean.
Stay tuned, more will be coming in the budget, in the NDAA for FY19, and as tax reform/tax cuts hit the legislative calendars.
What is the status of the National Defense Authorization Act (NDAA)?
As of July 14th, 2017 the House passed H.R. 2810, the FY2018 National Defense Authorization Act.
Ranking Member Nydia M. Velázquez commented:
“The NDAA bill contains a package of bipartisan, small business legislative proposals that will help small firms win their share of federal contracts, strengthen entrepreneurial development programs and assist cutting edge firms as they bring new technologies and products to market.”
What is the purpose of the NDAA?
This bill aims to authorize appropriations for fiscal year 2018 for military activities of the Department of Defense, for military construction, and for defense activities of the Department of Energy, to prescribe military personnel strengths for such fiscal year, and for other purposes.
Nine members of the Small Business Committee introduced contracting and entrepreneurial development bills this year, which are included in the final draft of the NDAA.
Chairman Steve Chabot of the Small Business Committee commented:
“I am proud that many of the bipartisan bills the House Small Business Committee has worked on were included in the bill. I thank Chairman Thornberry for his hard work putting together this year’s National Defense Authorization Act and for recognizing the vital role small business reforms play in our nation’s security. These provisions will ensure small businesses have a greater opportunity to compete for federal contracts, and bring entrepreneurial development programs up-to-date to better equip our small federal contractors.”
Stay tuned for our follow-up posts about the biggest changes affecting small businesses in NDAA FY18.
Did you know that SBA provides low-interest disaster loans to businesses of all sizes, as well as other organizations and individuals?
Check out this page for more information: https://www.sba.gov/disaster-assistance
This is a guest post from Tonya Buckner of BucknerMT Management & Technology, Inc.
Every day we find ourselves in situations that require us to negotiate. Whether it is for business or personal reasons, it is critical to understand that there is more to negotiation than just simply winning. In preparation for negotiations with our clients, team members, partners, or even friends or acquaintances, the key criteria to determine is “How do we bring value together?” The mindset has to be on finding a way to innovate and create.
It is important to understand that when someone says “no” we don’t need to feel alarmed; it is just the beginning of the conversation. It is critical to remember that negotiation is problem-solving. The only way to solve problems is to have key information. The exchange of information allows us to get there together.
Further, it is vital to understand that value and quality don’t always align with cost. When we focus on the bottom-line and cost, we may lose quality. For example, many government contracts are based on “Lowest Price Technically Acceptable (LPTA).” This leaves little room for creativity or innovation. Contracting officers are governed by the Federal Acquisition Regulations (FAR), which in most cases focuses on lowest cost, but often the FAR fails to consider that it costs to add value.
We must dig deep, be honest with ourselves, and decide what we really want. Every situation requires its own strategy. It is imperative that we play to our strengths. The more passionate we are about our own goals but also the more clear we are about our limits, the more clarity and enthusiasm we will have to negotiate until the best possible agreement that can be reached, has been reached.
It is also important to understand what drives us and what got us to the table. While our goal or target should never change, the interest is never money for its own sake and the financial gain is just the path.
Ultimately, the conversation should be centered on adding value. We must see the bigger picture beyond the dollars and the technical baseline. Once we do that creatively, we can enter a world of much greater possibilities. There are many paths to success. By observing sober limits decided upon in advance, we can be clear enough to calmly walk away from a bad deal but also be open enough to negotiate good deals (even if they require more time and complexity).
Additionally, it is dangerous to get caught up in our own interest or our egos. This is the difference between a deal and no deal. There is the interest (our underlying motivation), and the position (the what, in this case financial gain). Negotiation is never about winning just for winning’s sake.
Lastly, the goal is to maintain a good relationship with your client. Creating a win/win situation for both parties results in a long-term relationship and the possibility of more contracts. So don’t lose sight, the end result should be value on both sides!
This post was originally published on the TAPE blog at http://tape-llc.com/2017/07/winning-fulfilling-interest/ and was reprinted with permission.
We’ve been digging up some myths and facts about government-industry communications during the acquisition process. This document from the OFPP has been around for several years, and so have these myths.
The first myth-busting memo from 2011 (there have been two more since then) identified the 10 most common misconceptions shared in a series of meetings with various stakeholders in the acquisitions process. I covered the first five in a previous post, and now here are the rest.
Misconception 6: When the government awards a task or delivery order using the Federal Supply Schedules, debriefing the offerors isn’t required so it shouldn’t be done.
Fact: Providing feedback is important, both for offerors and the government, so agencies should generally provide feedback whenever possible.
Note from Bill: Yes, yes, yes! Feedback is amazingly necessary to learn the next steps for small businesses. What did we do wrong, and what can we do better? Help us succeed the next time; that’s not going to create protests.
Misconception 7: Industry days and similar events attended by multiple vendors are of low value to industry and the government because industry won’t provide useful information in front of competitors, and the government doesn’t release new information.
Fact: Well-organized industry days, as well as pre-solicitation and pre-proposal conferences, are valuable opportunities for the government and for potential vendors – both prime contractors and subcontractors, many of whom are small businesses.
Note from Bill: Industry days rock! More communication, in a controlled environment, that’s always the ticket.
Misconception 8: The program manager already talked to industry to develop the technical requirements, so the contracting officer doesn’t need to do anything else before issuing the RFP.
Fact: The technical requirements are only part of the acquisition; getting feedback on terms and conditions, pricing structure, performance metrics, evaluation criteria, and contract administration matters will improve the award and implementation process.
Note from Bill: Draft RFPs also rock – just because you’ve written many of these before doesn’t mean industry won’t find the logistical problems and special needs for this procurement. Publish a draft and encourage feedback, please!
Misconception 9: Giving industry only a few days to respond to an RFP is OK since the government has been talking to industry about this procurement for over a year.
Fact: Providing only short response times may result in the government receiving fewer proposals and the ones received may not be as well-developed – which can lead to a flawed contract. This approach signals that the government isn’t really interested in competition.
Note from Bill: Procurements with only a few days notice usually means someone lost track of the time, or that they were completely and irrevocably wired for a specific vendor.
Misconception 10: Getting broad participation by many different vendors is too difficult; we’re better off dealing with the established companies we know.
Fact: The government loses when we limit ourselves to the companies we already work with. Instead, we need to look for opportunities to increase competition and ensure that all vendors, including small businesses, get fair consideration.
Note from Bill: Absolutely – new blood is often good. Of course TAPE just won a job for the 3rd consecutive time, but we’re doing a good job as seen in our CPARs and customer comments. Get fair competition and everyone will benefit.
The OFPP released two other sets of myths and facts, and we’ll be delving into those in future blog posts. Stay tuned!
In February 2011, the Office of Federal Procurement Policy (OFPP) released a memo called “Myth-Busting: Addressing Misconceptions to Improve Communication with Industry During the Acquisition Process.”
They recognized that agencies were hesitating to meet with vendors out of fear of protests or because they just didn’t have effective strategies to manage these communications. Vendors, on the other hand, had fears of their own, such as inadvertently creating a conflict of interest that would keep them from competing on future requirements.
They held a series of sessions with representatives from all aspects of the acquisition process to get a better sense of everything that was getting in the way of clear communication between the federal agencies and their prospective vendors. Out of those talks, they pulled together the 10 misconceptions they heard most frequently, and gathered them in this myth-busting memo, along with the corresponding fact and a detailed explanation for each point.
You can read the full report in the White House Archives, but here is a summary of the 10 myths and facts, along with my comments. This document may be a few years old, but the myths are still around!
Misconception 1: We can’t meet on-on-one with a potential vendor.
Fact: Government officials can generally meet one-on-one with potential offerors as long as no vendor receives preferential treatment.
Note from Bill: Just be aware that anything government officials say to you, they might be obligated to publish.
Misconception 2: Since communication with contractors is like communication with registered lobbyists, and since contact with lobbyists must be disclosed, additional communication with contractors will involve a substantial additional disclosure burden, so we should avoid these meetings.
Fact: Disclosure is required only in certain circumstances, such as for meetings with registered lobbyists. Most contractors do not fall into this category, and even when disclosure is required, it is normally a minimal burden that should not prevent a useful meeting from taking place.
Note from Bill: Go ahead and meet. Don’t accept this excuse; push back and tell them you’re not a registered lobbyist, and that shouldn’t be a barrier.
Misconception 3: A protest is something to be avoided at all costs – even if it means the government limits conversations with industry.
Fact: Restricting communication won’t prevent a protest, and limiting communication might actually increase the chance of a protest – in addition to depriving the government of potentially useful information.
Note from Bill: This canard is very common, that they are afraid of Misconception #1 causing a protest from whomever they don’t meet with. Not true, as long as they discuss the same things with everyone.
Misconception 4: Conducting discussions/negotiations after receipt of proposals will add too much time to the schedule.
Fact: Whether discussions should be conducted is a key decision for contracting officers to make. Avoiding discussions solely because of schedule concerns may be counter-productive, and may cause delays and other problems during contract performance.
Note from Bill: Well, it will add time, but it also improves the result and lowers the cost. It’s too bad more contracting officers don’t do this, because the result would be much better for the customer.
Misconception 5: If the government meets with vendors, that may cause them to submit an unsolicited proposal and that will delay the procurement process.
Fact: Submission of an unsolicited proposal should not affect the schedule. Generally, the unsolicited proposal process is separate from the process for a known agency requirement that can be acquired using competitive methods.
Note from Bill: Unsolicited proposals are very welcome and they often lead to contracts! Chase down that revenue – create a truly formatted correct unsolicited proposal, and submit away.
Let’s stop there for now, and we’ll cover the last five sets of myths and facts in another post.
After publishing my article about sole source contracts for women-owned small businesses, I received the following comment on LinkedIn:
“Mr. Jaffe, isn’t it still very difficult for EDWOSB firms that provide services, i.e., program and project management, to receive sole source contracts due to the Rule of Two? The 8(a) program is different in that they can sole source to firms even if there are 100 other 8(a)s that can provide that service, whereas if a client wants a particular firm but there are others that provide the service then they can do a set aside, but can’t directly award a sole source contract to that EDWOSB.
Am I correct in this, or is the program changing so that the Rule of Two will not be a factor and EDWOSB’s are following the same sole source rules as 8(a)?”
When I followed up with Matthew to find out more about what was behind his question, he told me:
“Bugbee Consulting is an EDWOSB for years now and we were excited about the changes to the program, until they were implemented and the rules were more similar to other programs rather than the 8(a). Essentially, no contracting office will attempt a WOSB sole source to a service-oriented firm like Bugbee Consulting due to the Rule of Two.”
My team and I dug a little deeper, but unfortunately we didn’t have any better news for Matthew. Indeed, the Rule of Two applies to the WOSB program, as it does to all other set-aside programs. WOSB sole source requires you follow the same rules that you do for service-disabled veteran-owned small business or HUBZone sole source procurements.
Contracting officers can accept TPC (third-party contracting) when verifying an offeror’s eligibility for WOSB or EDWOSB set-aside contracts or sole source awards. As well, contracting officers can accept a WOSB’s or EDWOSB’s self-certification, as long as the contracting officer verifies that the required documentation has been uploaded to the WOSB Repository.
Contracting Officers’ roles and responsibilities in connection with the WOSB Program are discussed in FAR 19.15. If you have more questions, I’d suggest you contact your local Procurement Center Representative (PCR) for guidance on WOSB Program requirements.
Effective January 19, 2017, DoD, GSA, and NASA issued a final rule amending the Federal Acquisition Regulation (FAR) to implement a section of the Small Business Jobs Act of 2010. According to the Federal Register, “this statute requires contractors to notify the contracting officer, in writing, if the contractor pays a reduced price to a small business subcontractor or if the contractor’s payment to a small business subcontractor is more than 90 days past due.”
The new FAR clause 52.242-5 defines a reduced payment as a payment that is for less than the amount agreed upon in a subcontract in accordance with its terms and conditions, for supplies and services for which the Government has paid the prime contractor.
An untimely payment is defined as one that is more than 90 days past due under the terms and conditions of a subcontract, for supplies and services for which the Government has paid the prime contractor.
As I discussed in a previous post, these incidents then get reported into a system called FAPIIS, and a history of delayed payments in FAPIIS will affect a prime’s CPARS rating (Contractor Performance Assessment Reporting System), which could affect eligibility for future contracts.
These new clearer definitions give this ruling some teeth. Since it’s possible to get dinged in a permanent accountable way that will be noticeable to prospective customers, it’s advantageous for primes to pay on time.