NDAA FY18 H.R. 1774 – Next Generation of Small Biz

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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:

  1. 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.
  2. 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.
  3. 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.

National Defense Authorization Act FY 2017 – Small Business Overview

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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.

Disaster Relief for Small Businesses Affected by Hurricane Harvey and Hurricane Irma

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

Is It About Winning Or Fulfilling Your Interest?

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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.

Busting Five More Myths About Government-Vendor Communications

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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!

Federal Contracting Officers, Let’s Bust Some Myths!

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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.

WOSBs and The Rule of Two

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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.

Small Business Jobs Act of 2010 – Defining Reduced and Late Payments

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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.

2017 NDAA Changes to Mid-Tier Small Business Contracting

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As I wrote earlier on this blog, “Business growth is something that should be celebrated, yet if you’re a small business whose customer is the federal government, your growth can have a noticeable downside.” Namely, being too big to qualify for small business set-asides.

If your business falls into the mid-tier category of being too big to be eligible for set-asides but too small to compete with industry giants, here are the most important changes from the 2017 NDAA (click the links to learn more about each item):

  • Gives certain small subcontractors a new tool to request past performance ratings from the government. If the pilot program works as intended, it may ultimately improve those subcontractors’ competitiveness for prime contract bids, for which a documented history of past performance is often critical (learn more).
  • Will require the GAO to issue a report about the number and types of contracts the Department of Defense awarded to minority-owned and women-owned businesses during fiscal years 2010 to 2015. The GAO will be required to submit its report within one year of the statute’s enactment (learn more).
  • Designed to help ensure that large prime contractors comply with the Small Business Act’s “good faith” requirement to meet their small business subcontracting goals (learn more).
  • Establishes a new prototyping pilot program for small businesses and nontraditional defense contractors to develop new and innovative technologies (learn more).
  • Will extend the life of the Small Business Innovation Research and Small Business Technology Transfer programs (learn more).

We’ll keep digging into these topics and what they mean for your federal contracting success. Stay tuned!

Federal Contractors Can Now Protest Civilian Task Orders Over $10 Million

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We’ve talked before about protests, and when and how to do them, risk factors and warnings, etc., as well as some of the issues and processes. The perception is that there are a lot of protests, and that if YOUR contract award is protested, that’s clearly one too many…

One area that has expanded lately is the use of Multiple-Award (MA) IDIQ contracts, and the task orders underneath them have often been quite large. Originally, you could only protest contracts, but the task orders were immune to protests. Then, the GAO Civilian Task and Delivery Order Protest Authority Act of 2016 (H.R. 5995) became law on December 14, 2016.

Now, a contractor can protest “the issuance or proposed issuance of a civilian federal agency’s task or delivery order contract,” if the value of that order exceeds $10 million.

According to GAO statistics, for FY 2012 there were 2,475 protests filed with the GAO (U.S. General Accountability Office). In 2016 that rose to 2,789, so up a little bit more than 10% over four years. In 2012, protests were sustained, that is to say the protest was accepted, about 18% of the time. In 2016, that was up to 22.5%.

The three most common reasons to protest an order are:

  1. Brand name solicitation – The order references a brand name instead of the generic equivalent (e.g., Pepsi instead of cola).
  2. Out of scope modification – The agency adds work or changes a particular solicitation in a way that is out of the scope of that function. If the winning contractor got more work out of the original task order, the losing contractors were essentially shut out of bidding for those additional tasks.
  3. New information – The third most common reason to protest is new information that leads you to believe that the evaluation was unfair and that the losing contractor was “done wrong” by the government agency for not choosing them.

That third point is a big part of what protests normally come down to, i.e., “I don’t think you evaluated me (and/or the winner) fairly.” That may refer to evaluating price, technical proposal, or past performance.

Two other elements of protests are size standards, i.e., “I think these guys are too big for that NAICS code, even though they won the job,” and OCI (organizational conflict of interest), i.e., “I think the other company won because they were too close to the customer and learned secret information that helped them win.”

Without getting into the weeds, protesting when the evaluation is truly egregious is definitely a risk-reward kind of calculation, as the risks and legal costs can be quite high.