OFPP Wants Agencies to Set Goals for Using Best-in-Class Contracts

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This is a guest post by Jason Miller of Federal News Radio.

It’s been a year since the Office of Federal Procurement Policy released and accepted comments on its draft circular around category management.

With little-to-no activity on the draft circular over the past year, it seems OFPP is taking a less permanent route to further institutionalize this approach to buying.

Federal News Radio has learned OFPP sent a draft memo out for comment across the agencies earlier this summer, focusing on demand management and “best-in-class contracts.”

Several sources confirmed agencies submitted comments and OFPP is reviewing them.

Government sources familiar with the draft memo say OFPP wants agencies to set goals for using “best-in-class contracts,” and implement demand management by analyzing procurement data and making decisions on who to buy from and how to buy from those vendors.

One source said the draft memo would require agencies to negotiate with OFPP a percentage of work that would have to go through some of the currently 29 governmentwide, multiple-award contracts that have been designated “best-in-class.” These include several General Services Administration contracts, such as OASIS for professional services and Alliant for IT services, as well as the governmentwide acquisition contracts run by NASA and the National Institutes of Health.

“Each agency’s goal would be different because it would be based on what you buy and what you think you should be buying,” said the source, who requested anonymity in order to speak about the pre-decisional memo. “OFPP will look at what you bought in the past and determine what percentage should be bought through these contracts. You will then negotiate with OFPP, much the same way we do with small business goals.”

Multiple government sources say they have real concerns about the memo and have expressed them to OFPP.

Another government source familiar with the memo said they are not a fan of the “best-in-class” designation because it’s based too much on labor rates or categories, and not based on whether the vendor can do the work the agency needs.

“To be ‘best-in-class,’ you have to demonstrate that the vendor is best in class,” the source said. “I understand using it for some things, like delivery services, but for anything mission-related or more complicated, I’m not sure you can just look at the basic information and decide a contract is ‘best-in-class.’”

Lesley Field, the acting OFPP administrator — who, by the way, has been acting for more than a year— said at the Professional Services Council’s Vision Forecast Conference on Nov. 2 that agencies use rigorous criteria to determine “best-in-class.”

“We developed the requirements with a lot of government agencies in mind. It’s not just one agency, but there were customers at the table helping with the requirements,” Field said. “We want to take advantage of volume pricing. We want to have benchmarks for what industry is driving toward. We want to make sure is there data-driven demand and we have to validate our savings methodologies.”

But the criteria for “best-in-class,” according to GSA’s website, are much less rigorous than what Field described.

GSA says to be “best-in-class” a contract must:

  • Allow acquisition experts to take advantage of pre-vetted, governmentwide contract solutions;
  • Support a governmentwide migration to solutions that are mature and market-proven;
  • Assist in the optimization of spend, within the governmentwide category management framework;
  • Increase the transactional data available for agency level and governmentwide analysis of buying behavior.

Field said OFPP, GSA and other agencies look at those contracts to make sure they meet all these criteria as well as others, such as ensuring they support contracting with small businesses.

Roger Waldron, president of the Coalition for Government Procurement, said his members and others in the federal community are concerned about the impact the “best-in-class” designation could have on the marketplace.

“To the extent that ‘best-in-class’ contracts are selected, it’s like picking winners and losers. It could lead to less competition and higher prices in the long run,” Waldron said. “Industry also is scratching their collective heads about what criteria should be used, and even if it’s the right idea. Best-in-class predisposes that it’s the right way to go, but what if it’s a platform or new idea instead of just a contract?”

Waldron said the Federal Acquisition Regulations already tell agencies there are priority sources of supply, so if OFPP wants to hold agencies accountable for using these “best-in-class” contracts, what does it mean for the small business community?

“Is best-in-class establishing a different framework for priorities?” he said. “We don’t understand why OFPP isn’t going through a typical rulemaking process. The Obama administration put out the circular and asked for some comment on it. We submitted a series of comments and questions, and to date, we’ve received no response from the executive branch. I’m not sure how OFPP can implement category management and best-in-class without addressing industry questions and concerns. It doesn’t demonstrate a real partnership.”

Industry isn’t the only place where collaboration may be falling short.

The second government source said OFPP has talked — but not to the acquisition community — about category management and the use of “best-in-class” contracts.

“I’ve been told our comments will be addressed,” the source said. “This is a leftover initiative from the last administration and they are just keeping it going without taking a new look at the effort.”

Sources said OFPP should bring the Chief Acquisition Officer’s Council together to discuss category management and what “best-in-class” really means before creating what some may view as a mandate to use these designated contracts.

Government and industry experts say OFPP should reconsider what “best-in-class” really means.

The government source said maybe it’s around acquisition practices and not contracts.

Waldron said maybe OFPP should consider identifying key characteristics of contracts to drive the best value.

“The only thing we have is criteria that were identified in the draft circular that are all process-driven, not outcome-driven,” he said. “Plus, the definition of best-in-class in government seems to be different than best-in-class in the private sector.”

Sources say one problem with the entire category management effort is it’s being driven by GSA and they stand to gain from the effort.

The first government source said OFPP needs to be more flexible in how it requires agencies to use these contracts. The source said they can’t understand how the GSA Schedules are considered “best-in-class,” given how many vendors there are and the fact that the prices aren’t great to start.

“The way GSA negotiates them means you are not getting the best price, because anyone can get on it as long as you are a legitimate company, you don’t have any failed past performance and can offer a decent price,” the source said. “To me, ‘best-in-class’ means you negotiated and are getting a good deal. Best-in-class should minimize my work and Schedule 70 doesn’t do that, and that’s where I get a little nervous because OFPP is going to an extreme. Best-in-class should be contracts that are products or services that are proven, efficient and cost-effective. You are after quality, timely delivery and cost-effective buying. Right now, the criteria is too loosely written.”

This post originally appeared on the Federal News Radio site at  https://federalnewsradio.com/reporters-notebook-jason-miller/2017/11/ofpp-drafts-memo-to-replace-category-management-circular/ and was reprinted with permission. You can also click here to listen to Jason Miller discuss the topic on the Federal Drive podcast with Tom Temin.


Organizing for Capture

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Here’s a guest post from one of TAPE’s “capture managers,” a member of our business development team.

A large number of my family and friends live outside the “beltway.” So when I tell them I’m a capture manager, they give me a blank look – and you might, too. Unlike medical and legal professions, capture management is a profession that doesn’t get a lot of attention outside of the beltway. But today, we’re going to break it down and understand what capture is and how small businesses can use it to grow.

What is capture? 

Selling to the Government is like a chess game with three phases:

  1. Opening – this is where businesses identify who they are, what they’re going to sell, and the clients they’re going to target. In essence, this is how businesses condition the marketplace to be successful.
  2. Middle – this is where businesses, focusing on specific accounts, manage the client relationship and develop opportunities. This middle game focuses on gathering information and then shaping the client’s perceptions. In essence, this stage of the game is all about conditioning the client.
  3. Endgame – this is where businesses write proposals, negotiate, and sign contracts. This endgame is where businesses condition the deal.

As in chess, when businesses wait until the end to try and win, they’re more likely to lose. Chess games and business contracts are won or lost a majority of the time in the middle game.

Capture is the middle game. It comes after making contact with a prospective client, and before an RFP is released. My colleagues and other industry veterans will tell you that a prospective client’s buying decision is typically 40-80% complete before proposals are even submitted. This means that the middle game constitutes as much as 70% of a company’s probability of win.

Considering these statistics, it is no wonder that large government contractors (LGCs) have dedicated capture teams. In addition to their capture personnel, though, LGCs have also developed a capture discipline, or set of processes, by which they organize, monitor, and evaluate their capture efforts.

Many small businesses cannot afford the cost of a dedicated capture team, but none can afford to neglect building a capture discipline. The question, then, is how can small businesses go about developing a capture discipline?

Developing a capture discipline

One way to begin developing a capture discipline is to define the activities and outcomes that reliably predict success. Since capture is all about conditioning the client to prefer your solution, at TAPE we use the following five characteristics to predict success:

  1. Strong client relationships
  2. Client-centered solutions
  3. Robust competitive intelligence
  4. Secure staffing
  5. Competitive pricing

When clients know you by name, when you’ve collaborated with them to develop their solution, when you’ve used your knowledge of the competition’s strengths and weaknesses to refine your solution, when you’ve identified staff in your solution that the client knows and trusts, and when you’ve priced it competitively you have effectively positioned yourself to win the contract.

Accomplishing all of these goals takes time and persistence. It also helps to have a shared understanding of the steps one takes to achieve these goals.

Building strong client relationships

Before I moved to the DC area, friends here told me that it’s not what you know, but who you know. While this is probably true everywhere, it is especially true for DC. Knowing the right people – and being known to the right people – is critical for success. To ensure that we’re building strong client relationships, we ask ourselves the following questions:

  1. Does the client know your name?
  2. Does the client understand your company’s capabilities?
  3. Has the client met with you to understand and/or develop their requirements?
  4. Does the client trust you?

If the answer to any of those questions is no, our team meets to devise a plan that changes those answers to yes. We assign tasks and record our progress so that our team operates from the same page. This data helps us measure our progress and make key decisions,

Developing client-centric solutions

This is the heart of capture, and doing it well requires that you know the customer’s needs, issues, and hot buttons. Client-centric solutions come down to four key steps:

  1. Meeting the needs of the customer
  2. Understanding the needs versus the wants
  3. Understanding the risks
  4. Developing a solution that meets the needs

Competitive intelligence

Knowledge is power, and what you don’t know can hurt you. My mantra for capture comes from industry titan Bob Lohfeld, whose book of collected articles is titled Best Informed Wins. The whole idea for capture is that we gain as much intelligence as possible to win bids.

That includes intelligence on the customer and customer intimacy, e.g., do we know who the program manager and contracting manager are, have we had conversations with them, are they comfortable calling us by name, do they know who we are, either as TAPE or individuals?

What are their problems, what do they see as possible solutions, and how do we help them solve those problems? Knowing all of that gives us customer intimacy, and the intelligence that comes along with that.

Then there’s market intelligence, e.g., who are our competitors, what have they done recently, and what are their significant strengths and weaknesses? Do we have everything it takes to provide solutions or do we need to team? Do we have the right people, who are of interest to the program office, that they know and trust? Are we able to get people quickly?

There’s also financial intelligence, i.e., knowing the costs, how much the government has to spend and wants to spend. Is cost their biggest priority or is it having the right people?

The more informed we are, the better proposal we are able to write, so capture management is a process of strategically uncovering all the information we need to make the win.

We’ll address the fourth and fifth characteristics of successful capture (secure staffing and competitive pricing) in a future post, along with some of the other elements that affect TAPE’s capture process.


Bonding Basics

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This is a guest post by Donna Porch, former program director for MO PTAC-Kansas City.

Q: What are bonds and when are they required?

According to the Federal Acquisition Regulations (FAR), a bond is a written document between a bidder or contractor (the principal) and a second party (the surety) to ensure fulfillment of the principal’s obligations to a third party (the obligee or government) identified in the bond. If the principal’s obligations are not met, the bond ensures payment, to the extent stipulated, of any loss sustained by the obligee. Put simply, bonding protects the government from financial losses.

The bonding process

Contractors seeking bonding must be prepared to prove to a surety that their company has the capacity, character and capital to perform the project(s) on which they are seeking to be bonded. Sureties want to be sure that entering into a bond relationship with a contractor is a good business decision.

Prior to issuing a bond, a surety will analyze a contractor’s capacity to perform (necessary equipment), financial strength (good credit history and line of credit), past performance in similar contracts, and organizational structure.

Types of bonds

In construction projects, it is typical for the federal government to require bid, performance and payment bonds.

bid bond provides financial assurance to the government that a contractor has submitted the bid in good faith, that the contractor will not withdraw a bid and that if awarded the contract, the contractor intends to enter into the contract at the bid price. A bid bond also ensures that the contractor will provide the required performance and payment bonds.

performance bond protects the government from financial loss should the contractor fail to perform the contract in accordance with the terms and conditions of the contract documents.

payment bond guarantees the contractor will make payments to all subcontractors supplying labor and material in performing the government contract.

An ancillary bond guarantees other factors incidental but often essential to perform a contract.

When are bonds necessary?

Unless waived, bid bonds are only required when performance bonds or performance and payment bonds are required. In such cases, all bidders must submit a bid bond with the offer. The bid bond amount shall be at least 20 percent of the bid price but shall not exceed $3 million.

The Miller Act requires a successful bidder to submit performance and payment bonds for any construction contract exceeding $100,000. This requirement may be waived in limited circumstances. Unless the contracting officer determines that a lesser amount is adequate for the protection of the government, performance and payment bonds shall be 100 percent of the original contract price. If the contract price increases, the performance and payment bonds must also increase by the same amount.

For any construction contract between $25,000 and $100,000, the government contracting officer shall require two or more of the following payment protections from the successful bidder:

  • A payment bond
  • An irrevocable letter of credit, a written commitment by a federally insured bank to pay a stated amount until the expiration date of the letter
  • A tripartite escrow agreement, in which the government makes payments to the contractor’s escrow account, and the escrow agent distributes the payments to the contractor’s suppliers of labor and material
  • A certificate of deposit from a federally insured financial institution, executable by the contracting officer
  • A deposit of the amount of the bond in U.S. bonds or notes, certified or cashier’s checks, bank drafts, postal money orders or currency

Generally, federal government agencies do not require performance and payment bonds for contracts other than construction contracts. However, they may require performance bonds when a contract exceeds the simplified acquisition threshold ($100,000) and government property/funds are provided to the contractor for use in performing the contract; when substantial progress payments are made to the contractor; or if the contract is for dismantling, demolition or removal of improvements.

A payment bond is only required when a performance bond is required and if its use is in the government’s interest. Annual bid bonds and annual performance bonds might be used in lieu of individual bonds for each project.

Reference the FAR Part 28 Bonds and Insurance for further guidelines on bonding for federal government contracts. State and local government agencies may also use bonds for their financial protection. However, they may use them in different contracting situations and with different dollar values.

For more information on bonding, consult your local Missouri Procurement Technical Assistance Center (MO PTAC). A list of MO PTAC training seminars is available online.

Donna Porch was a former program director for MO PTAC-Kansas City. This article originally appeared at https://missouribusiness.net/article/bonding-basics/ (with permission from the Kansas City Small Business Monthly) and was reprinted with permission.


A Servant Leader

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This is a guest post from Tonya Buckner of BucknerMT Management & Technology, Inc.

“The first responsibility of a leader is to define reality. The last is to say thank you. In between, the leader is a servant.” – Max De Pree

Servant leaders not only have to focus on what’s happening today, but what is happening in the future. Yes, today’s problems must be solved, profits must be made and bills must be paid, but a great leader must focus on the future and transforming the culture. It is more than checking items off a checklist. A great leader has a vision and a roadmap to successfully get there. This requires being inspired to achieve it, communicating it, and guiding the company from where it is to where it needs to be!

The top spot is not the only leader. Every level has leaders, whether positive or negative. Doomsayers can be leaders, too. They challenge the vision with their need to combat. Eighty percent of a company’s problems comes from twenty percent of its people. People will rise or fall to the level you set for them. It is important to foster a culture of optimism and the desire to succeed. If not challenged or motivated people will fall.

The key to leadership is to be fair, firm and consistent. Discipline starts with the leader; people will follow the lead you set. To master leadership you need to know what you are doing, find your inner voice, be creative, enjoy the process, and share that joy with others. Successful leaders are selfless, put others first, and look for other people’s 15 minutes of fame – not their own.

A servant leader supports others. This requires praising them in public and critiquing in confidence, driving out fear, and learning from mistakes. Most importantly, as a great leader you make those you lead successful, and as a result you become successful.

Leadership is directly related to character. Character is determined by your behavior, which is reflective of the value system that is in place. When people perceive you as a strong leader, they will believe in you, even if they don’t agree with you.

Despite the myth, leaders are not born nor is leadership innate for everyone. The good news is there are various programs to assist in developing leadership skills. The key is finding the program that best suits your needs. For instance, there is the Women President Educational Organization (WPEO), which develops and mentors presidents of women-owned businesses, the Montgomery County’s Veterans Institute of Procurement (VIP), which assists veteran leaders to foster success as businesses and employers, and the Goldman Sachs 10K Small Business Program, which is aimed at business growth and job creation, just to name a few.

Servant leaders also understand the importance of mentorship. Mentors assist in navigating through the obstacles that are not taught in leadership programs. By sharing best practices and lessons learned, mentees are able to build on their experience and avoid pitfalls.

Lastly, the bottom line as a leader is to ask yourself, do my actions represent who I believe I am? Remember that it is not about the position, it is about your actions; thoughtful actions with leadership in mind, drive and sculpt companies to new heights.

BucknerMT Management & Technology, Inc. (BucknerMT, Inc.) is a verified service-disabled veteran-owned small business (SDVOSB) and woman-owned small business (WOSB). Since 2007, BucknerMT have supported the Department of Defense (DoD) and the Defense Information Systems Agency (DISA) by providing services that include engineering, integrating, and sustaining critical military platforms and systems.


NDAA FY18 H.R. 1773 – To Clarify Terminology and Improve Uniformity

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As we shared in a previous post, on July 14, 2017 the House passed H.R. 2810, the FY2018 National Defense Authorization Act.

Focusing on small businesses, the NDAA is comprised primarily of two main pieces of legislation. We’ll cover one in this post, and follow up with a separate post about the other.

H.R. 1773, the Clarity for America’s Small Contractors Act of 2017

This act amends the Small Business Act to improve reporting on small business goals, achieve uniformity in procurement terminology, clarify the role of small business advocates, and for other purposes.

It modernizes the Small Business Act to ensure that the language used is clear and consistent across federal procurement programs. Heaven knows that the lingo used in legislation is designed for lawyers and lobbyists, and certainly not for the actual small businesses they are addressing.

It strengthens the small business advocates within the Small Business Administration (SBA), who routinely work with Department of Defense contracts by promoting competition and making sure laws are followed, including the NDAA. We know that some small business advocates are not as strong advocates, and legislation that empowers them can only improve things for everyone involved.

The bill implements common sense reforms to ensure transparency and accountability by requiring that important information be provided that clearly shows where taxpayer dollars are being spent on which small business programs. This has always been an issue – small business impact is not easy to track, and then you have complications like mid-tier businesses and sometimes active opposition from the large businesses. Again these are good things – not fixing legislative issues, but strengthening the processes.

Within H.R. 1773, the following bills are found:

  1. R.1597 – Commercial Market Representatives Clarification Act – This bill amends the Small Business Act to specify the principal duties of Commercial Market Representatives, government contracting staff stationed at area Small Business Administration (SBA) offices and reporting to specified senior SBA officers.
  2. R.1641 – To amend the Small Business Act to clarify the responsibilities of Business Opportunity Specialists, and for other purposes. – This bill amends the Small Business Act to declare that the exclusive duties of a Business Opportunity Specialist reporting to the senior official (or designee) appointed by the Small Business Administration (SBA) with certain SBA loan responsibilities, including the procurement program for small business concerns owned and controlled by service-disabled veterans and the Historically Underutilized Business Zone (HUBZone) program, shall be to implement specified SBA loan programs, and complete other duties related to contracting programs.
  3. R. 1693 – Improving Contract Procurement for Small Businesses through More Accurate Reporting Act of 2017 – This bill amends the Small Business Act to require the Small Business Administration to report to the President and Congress an analysis of the number and dollar amount of prime contracts awarded by federal agencies each fiscal year to small business concerns.
  4. R.1640 – To amend the Small Business Act to ensure uniformity in procurement terminology, and for other purposes. While this might seem the least important, fixing definitions so everyone is on the same page is a big deal.

All told, these changes are mostly about the processes that govern our small business management, but truly do make incremental improvements that will make a difference.

Stay tuned for a separate post about the other important NDAA FY18 act that affects small businesses.


SBA’s Agenda Anticipates Significant Rule Changes To WOSB, SDVOSB, And HUBZone Programs

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This is a guest post from Mark Amadeo, principal at Amadeo Law Firm, PLLC.

Last week the SBA published its semiannual Regulatory Agenda (the “Agenda”), which is a summary of current and projected regulatory actions and completed actions. The Agenda (which can be downloaded here) highlights several anticipated changes to regulations that impact small business government contractors, including women-owned small businesses (WOSB’s), service-disabled veteran owned small businesses (SDVOSB’s) and HUBZone small businesses. Below are several of the anticipated changes that government contractors should look out for in the very near future.

WOSB & EDWOSB certification procedures

As we wrote about in a prior edition of The GovCon Bulletin™ (here), the National Defense Authorization Act for Fiscal Year 2015 (NDAA 2015) imposed several mandates on the SBA’s WOSB program, including a requirement that a firm be certified as a WOSB or economically-disadvantaged women owned small business (EDWOSB) under one of four options: By a federal agency, by a state government, by the SBA, or by a national certifying entity approved by the SBA.

The SBA subsequently issued an advanced notice of proposed rule-making on December 18, 2015, again described in the same edition of the The GovCon Bulletin,™ in which the SBA raised several pointed questions and sought public input on each of the four proposed certification options. The comment period ended on February 16, 2016 and now the SBA intends to issue a new rule that will propose certification standards and procedures.

In addition, the new rule will revise procedures for continuing eligibility, program examinations, protests and appeals. Although not much is known about the specific changes, the SBA did make clear that the new certification procedures will include an electronic WOSB and EDWOSB application and certification process.

NDAA 2016 & 2017 mandated rules

The Agenda also anticipates that in the near future the SBA will implement a variety of rule changes required under the National Defense Authorization Act for Fiscal Year 2016 (NDAA 2016) and National Defense Authorization Act for Fiscal Year 2017 (NDAA 2017), including requirements concerning SDVOSB ownership and control, a pilot program granting past performance ratings to subcontractors, and subcontracting report compliance.

1. SDVOSB ownership and control rules

The Agenda indicates that the SBA will issue a proposed rule establishing a uniform definition of a “small business concern owned and controlled by service-disabled veterans” that will be used for SDVOSB procurements by both the Veterans Administration (VA) and by non-VA agencies. Before NDAA 2017, the definition for purposes of VA SDVOSB procurements was contained in VA statutes under former 38 U.S.C. 8127(l), while a different definition for non-VA procurements was contained in SBA legislation under 15 U.S.C. 632(q)(2). Meanwhile, regulations fleshing out the SDVOSB definitions for purposes of VA procurements are under the VA’s regulations in 38 CFR Part 74 and, for purposes on non-VA procurements, under the SBA regulations in 13 CFR Part 125.

NDAA 2017, however, requires a government-wide uniform definition by amending 38 U.S.C. 8127 to refer back to 15 U.S.C. 632 for one controlling definition. Moreover, NDAA 2017 clears the way for the SBA to provide the sole and definitive guidance on what it means to be owned and controlled by a service-disabled veteran by prohibiting the VA from issuing regulations relating to either small business status or the ownership and control of a small business.

As for the new uniform definition of “small business concern owned and controlled by service-disabled veterans,” NDAA 2017 provides three categories of businesses that will meet the definition:

First, a small business concern (i) not less than 51 percent of which is owned by one or more service-disabled veterans or, in the case of any publicly owned business, not less than 51 percent of the stock (not including any stock owned by an ESOP) of which is owned by one or more service-disabled veterans; and (ii) the management and daily business operations of which are controlled by one or more service-disabled veterans or, in the case of a veteran with permanent and severe disability, the spouse or permanent caregiver of such veteran;

Second, a small business concern (i) not less than 51 percent of which is owned by one or more service-disabled veterans with a disability that is rated by the Secretary of Veterans Affairs as a permanent and total disability who are unable to manage the daily business operations of such concern; or (ii) in the case of a publicly owned business, not less than 51 percent of the stock (not including any stock owned by an ESOP) of which is owned by one or more such veterans; and

Third, a small business concern that met either of the two requirements described above immediately before the death of a service-disabled veteran who was the owner of the concern, the death of whom causes the concern to be less than 51 percent owned by one or more service-disabled veterans, if (i) the surviving spouse of the deceased veteran acquires such veteran’s ownership interest in such concern; (ii) the veteran had a service-connected disability rated as 100 percent disabling by the VA or such veteran died as a result of a service-connected disability; and (iii) immediately prior to the death of such veteran and during the period it is otherwise an SDVOSB the small business concern is included in the VA’s VetBiz database.

A surviving spouse in the third category can only continue to operate the SDVOSB until the tenth anniversary of the veteran’s death, the date he or she remarries, or the date he or she relinquishes ownership, whichever comes first. As for the small businesses in the first two categories, small business owners should take note of the exclusion of stock owned by an ESOP in the determination of whether ownership requirements are met for a publicly owned business.

2. Pilot program for qualified subcontractors to obtain past performance ratings

NDAA 2017 also authorized the SBA to establish a pilot program that would enable first tier small business subcontractors without any past performance rating to, nevertheless, obtain past performance ratings for work done as subcontractors.

Under the proposed pilot program a subcontractor must submit to a designated official an application for a past performance rating for work done under a government contract within either 270 days of the completion of the subcontractor’s work or 180 days after the completion of the prime contractor’s work, whichever is earlier.

The subcontractor is required to include with the application evidence of the past performance factors that it seeks to be rated on, as well as its own suggested past performance ratings. The designated official must then forward the application to the covered contract agency’s Office of Small and Disadvantaged Business Utilization (OSDBU), as well as to the prime contractor. Thereafter, the OSBDU and the prime contractor must submit a response to the subcontractor’s application.

NDAA 2017 provides procedures if there is agreement or disagreement over proposed past performance ratings, as well as a procedure for a small business subcontractor to respond to any disagreements by the OSDBU or a prime contractor over proposed past performance ratings.

3. Failure to act in good faith in submitting timely subcontracting reports will be a material breach of the contract

NDAA 2017 also makes changes to the Small Business Act that makes a failure to act in good faith in providing timely subcontracting reports a material breach of a government contract. NDAA 2017 requires the SBA to provide examples of activities that would be considered a failure to make a good faith effort to comply with requirements.

Comprehensive changes to the HUBZone program

Lastly, the SBA Agenda anticipates significant changes to the SBA’s HUBZone program. Although short on any specifics, the Agenda indicates that “comprehensive” revisions will be made to the HUBZone program and regulations under Part 126 of the SBA’s regulations.

The SBA indicates that its focus will be to make it easier for participants to comply with program requirements and to maximize program benefits, to determine if regulations should be modified, streamlined, expanded or repealed to make the HUBZone program more effective and/or less burdensome on small business concerns, and to maintain a framework that identifies and reduces waste, fraud, and abuse in the program.

The SBA has invited the public to comment on any aspect of its Agenda. (Note from Bill: Look for contact information under each specific section of SBA’s Agenda summary.)

This article was originally posted on LinkedIn at https://www.linkedin.com/pulse/sbas-agenda-anticipates-significant-rule-changes-wosb-mark-amadeo/ and was reprinted with permission.

Mark Amadeo has served as outside counsel to Fortune 200, medium, small, and non-profit companies, local government entities, and government contractors. A skilled advocate who has vigorously pursued and defended claims on behalf of clients in federal and state courts throughout the country, Mr. Amadeo offers a unique litigation perspective that helps government contracting clients avoid traps and pitfalls that can lead to time-consuming and expensive litigation. Sign up for the Amadeo Law Firm’s The GovCon Bulletin™ to receive new insights and announcements by email.


Proposed Changes to SBA’s HUBZone Program – PilieroMazza Analysis

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This is a guest post by A. John Shoraka and Kathryn V. Flood of PilieroMazza.

H.R. 3294, the HUBZone Unification and Business Stability Act of 2017, proposes several changes to the HUBZone program that are intended to reduce certification timelines, stabilize the program, and collect and report on performance metrics designed to measure the success of the HUBZone program. While this is a step in the right direction, the proposed changes do not go far enough to provide a meaningful impact to the deficiencies in the program.

To analyze the positive impact the proposed bill may have on the HUBZone program, we believe it is important to understand the historical weaknesses of the program and why those weaknesses have inhibited the government from meeting the HUBZone set-aside goal. Having experiences interacting and engaging with users of the HUBZone program both inside and outside of the government, we would argue that the weaknesses of the program can be categorized as follows: 1) instability in the ever changing HUBZone designated areas, 2) uncertainty for contracting officers when awarding HUBZone contracts, and 3) the inability to quantify the impact of the HUBZone program.

Rather than get into the weeds with respect to formulations on how HUBZones are designated and when those designations change, generally speaking, the current methodology has created a system where HUBZone areas are tweaked and updated annually, if not more frequently, and are significantly changed when new census data becomes available. Furthermore, once an area falls out of designation, it is “grandfathered” into the program for only a period of three years. This constant and ever-changing landscape makes it difficult for a company to rely on and invest in its HUBZone status and its underlying infrastructure. As a result, fewer and fewer companies are willing to establish or relocate their companies in a HUBZone and invest in HUBZone employees and local communities. This results in the government having fewer and fewer qualified HUBZone companies to procure from in order to meet its 3% goal.

The HUBZone program is the only federal set-aside program that requires small businesses to meet program requirements twice during the procurement process; once at the time of offer, and again at the time of award. If anybody has done work for the federal government, you know that the time between offer and award can range from several weeks to several years. Now imagine trying to monitor and stay abreast of the ever-changing HUBZone designated areas, not only to insure that your principal office is located in a HUBZone, but to insure that 35% of your employees live in a HUBZone. That may be easy to do for a few weeks, but as your firm grows, your employees move and HUBZone areas get redesignated; it is highly unlikely that you remain in compliance once the contract is awarded. This can leave a contracting officer with not only a protest and the need to reissue the award, but it may require an entire new acquisition. This may be why contracting officers are more and more reluctant to use the program.

At its core, the HUBZone program is an economic development program. In order to support the existence of the program it is critical to document its impact on under-utilized communities. Unfortunately, it is not only incredibly difficult to correlate HUBZone contract awards to economic growth; there has never been any funding to support such analysis.

While the proposed bill (H.R. 3294) attempts to address the weaknesses identified above, we are concerned that it does not go far enough.

The proposed bill does attempt to create stability with respect to HUBZone designated areas by changing the calculation for non-metropolitan areas from the most recent data available to a five-year average. This should help to stabilize the volatile swings in economic data and the impact it has on designated areas; however, the bill does nothing to extend the “grandfathering period” beyond the current three years.

The bill also requires the SBA to “go live” with its new calculations on 1 January 2020, allowing firms that were certified into the program on or before the date of the enactment of the bill to retain their HUBZone certification until the new calculations are launched. Thereafter, updates for new HUBZone areas will occur every five years; however, redesignated HUBZones are to be removed immediately after the “grandfathering” period.

These provisions may stabilize the program, but they will also limit the number of HUBZone areas, which would in effect limit the number of HUBZone firms in SBA’s portfolio. What’s more, the proposed bill does nothing to address contracting officers’ concerns regarding the risks associated with HUBZone set-asides.

Finally, it is encouraging that the bill requires the SBA to maintain performance metrics on the impact of the HUBZone program and instructs that these metrics be collected and managed at the regional level. However, it will be extremely difficult for the SBA to meet this mandate without additional resources and upgraded information systems.

If you have any questions regarding the HUBZone program, or how these proposed changes might impact your business, please do not hesitate to contact John Shoraka or Katie Flood for more information.

This post was originally published on PilieroMazza at http://www.pilieromazza.com/do-the-proposed-changes-to-sbas-hubzone-program-go-far-enough and was reprinted with permission.

Katie Flood is counsel with PilieroMazza in the Government Contracts Group. John Shoraka is the Managing Director of PilieroMazza Advisory Services, LLC, an advisory company to help small businesses navigate in the federal marketplace by developing successful strategies to help businesses thrive. http://www.pilieromazza.com/


Small Versus Large – an HR Perspective

Big dog nose to nose with small dog.

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Welcome back to TAPE’s Alexia Groszer, GPHR, senior human resources generalist. In a previous post, she answered some common questions about HR for small business. Today, we’re looking at size issues from an HR perspective.

Let’s look first at things from an employee’s view. What are the pros and cons of being employed by a small business versus a large business?

Small business:

Pros: Employees at a small company typically wear more hats, thereby getting exposure to more business areas and skills. The owners and management know employees by name. Good ideas can be implemented quickly. The employee often sees a direct impact of the work they perform and may feel an essential part of a team.

Cons: Job growth is often dependent on the company’s growth. If the company grows rapidly, this could be a pro for the employee who rides the wave of prosperity with the company. Employees who were with Microsoft and AOL in the early days benefited greatly from the rapid growth. However, few small companies have exponential growth. If the company does not grow, the employee may be feel their only option for growth is to leave the company.

Large business:

Pros: A large company may offer more avenues for career development (types of jobs, levels of management, and more internal job opportunities). Employees may be able to move up or laterally while gaining years of service and benefits within the same organization. Large companies often have more structure. They have tried and true processes which provide excellent on the job training for those new in their careers.

Cons: Since large companies often do work on a large scale, employees at a large company often perform a high volume of work of more limited scope. This could mean limited learning/ growth within the job depending on the position they are in. Large companies can also be very bureaucratic. New ideas may take a long time to get implemented. Employees may not feel any direct impact of their work. They may even feel that they a just a number or not essential to the organization.

One person may prefer a smaller more personable environment where they know everyone by name and can make an immediate impact. Another may thrive working amongst many people at a large corporation with brand recognition and the security of a larger and more established pipeline of continued work. Choosing an employer, small or large, depends on many factors. Researching potential employers and comparing it to your own list of preferences is a good place to begin. 

As a small business grows, their HR needs grow and change with them. When should a small business have an in-house HR department versus outsourcing to an HR vendor?

Each company has different business needs, so there is no absolute answer. However, as companies grow they will likely have a bigger need for human resources support. Often they will move from outsourcing to in-house support due to cost.

For start-ups or small companies (5-25) employees, outsourcing HR may be a more cost-effective option, especially if their needs are mainly payroll/benefit administration with only an occasional compliance issue. Advantages of outsourcing include: the employer pays the vendor for support only when it is needed instead of paying for a fulltime employee, they have access to different HR disciplines/experts but only pay for a few hours of advice at time, and they can easily increase or reduce hours of support to match their business needs.

When a company gets bigger and begins using their vendor 40 hours per week or more, they may discover it is more cost-effective to hire their own HR staff. There are advantages to an in-house HR department, too. An internal staff will be more vested in the company’s culture and mission. They can customize policies and processes to fit the needs of that business. The HR staff can build a rapport with employees, providing better customer service and continuity.

This can be especially helpful when there is an employee relations issue or when a manager is seeking general guidance. All of these can create a more cohesive company culture and greater employee engagement.


HR for Small Business

HR meeting

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I thought it was time for us to illuminate some of the human resources myths and issues facing small business owners. I asked TAPE’s Alexia Groszer, GPHR, senior human resources generalist, to answer a few frequently asked questions.

1. What is a myth that you’ve heard about HR for small business?

One myth is that employment laws do not apply to small businesses so there is no need to worry about compliance. While some laws such as the Family Medical Leave Act only apply to employers with 50 or more employees, there are many more laws small companies need to be aware of to avoid potential fines or lawsuits.

To stay ahead of these issues, HR professionals can join a professional organization such as Society of Human Resources Management (SHRM). Their website has links to federal and state government websites, legal updates, certification programs, sample policies, webcasts from experts and much more. While many issues can be researched through SHRM and other sources, it is important to know when to contact an expert, such as an employment attorney, for additional advice.

2. What are the most common HR challenges facing small business owners?

The cost of providing insurance benefits is a common problem due to the rising costs of medical and prescription coverage. This is a balancing act because employers are not only expected to provide benefits but also keep them as affordable as possible. A comprehensive benefits package considers the whole employee.

Recently, Louisa Jaffe, TAPE’s CEO/President, wrote about the importance of providing a full benefits package in an article titled, “When An Employee Passes Away.” As she writes, “It is important to realize that there is a reason we offer HR benefits. Often among those are not only health care but also short-term and/or long-term disability, as well as life insurance. No one likes to think about the worst case scenarios in life but it is important for business owners to consider the impact of these benefits (or the lack of them) on the company and to the individual employee’s well-being should they need to use them.”

A skilled benefits broker can help a small business identify a variety of benefit plans that meet the organization’s goals and cost constraints. An attractive benefits program can help the company recruit and retain talented employees, thereby becoming an employer of choice in a competitive market.

3. Which recent legislative changes have had the biggest impact on HR in small business?

The hot topic in the news is affordable health care. Managing health care costs and ensuring compliance with the Affordable Care Act (ACA) is important to both small and large companies. Understanding what applies to your company requires some research. There are many resources available, including this helpful information from the IRS.

Like other employers, TAPE had to review our benefit plans for compliance and provide Form 1095-C to each of our employees. Fortunately for us, our payroll vendor developed a new ACA Regulatory Management System and provided training to their customers. By educating ourselves and working diligently through each step of the process, we were able to complete the forms and submit them to the IRS on time. This was just another example of staying informed and managing compliance in the field of human resources, where learning is constant.

Thanks for this interesting glimpse into the world of HR, Alexia! Stay tuned for Alexia’s next post about small versus large business, from an HR perspective.


When An Employee Passes Away

man and a woman holding hands at a wooden table

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This is a guest post by TAPE CEO/President Louisa Jaffe.

This is a subject very much on my mind these days since we just lost a long-time employee who succumbed to bone cancer. Three years ago, we lost another long-time employee to another form of cancer. Such events are always devastating in our personal lives with family and friends, but as a business owner, there are other considerations.

To begin with, it is important to realize that there is a reason we offer HR benefits. Often among those are not only health care but also short-term and/or long-term disability, as well as life insurance. No one likes to think about the worst case scenarios in life but it is important for business owners to consider the impact of these benefits (or the lack of them) on the company and to the individual employee’s wellbeing should they need to use them.

Part of our responsibility as executives is to make sure that the pieces are in place to offer the best support possible within our planning constraints so that the professionals on the vendor side will be ready to step in and offer specific help to our employees and their families when the need arises. That way, as managers, we will not have to figure everything out at a time that likely we may be emotionally compromised ourselves.

Just as with the passing of a loved one in our private lives, the news that an employee has died, even if after a long illness, can feel shocking and unexpected. If we can be prepared as suggested above, then we can give in to the grieving process and deal with just that aspect of such a situation. And the “feelings” part of the whole thing is what this blog post is really all about. There are very important leadership actions that can greatly help your entire company if you set the example from the beginning.

My suggestion to executives is to prepare yourselves mentally in several ways. I am drawing on my military experience where the Service does things very well in terms of “taking care of their own.” If an employee becomes ill, we stay in touch with them personally to the extent we can. If possible, visit them and their families in the hospital or even at home, if the family welcomes it.

Going through an illness and death can be very lonely and alienating for an employee and their families. We go visit them, call them, and stay in touch with our personal support. It is both the least and the best that we can do. We can handwrite get well and sympathy cards with our own heartfelt and authentic sentiments.

Most importantly, when the person passes away, be sure to notify your entire company and subcontractors, where appropriate. Put out a message of farewell to the company, adding some interesting facts about the deceased for those who may be on a different project or live in a different place and do not know the employee. Announce the details of family plans, when known. We can attend memorial services and burials in person wherever feasible. It is the most powerful sign of respect for both the employee and the family to stand with them at the very difficult time of these “good-bye” ceremonies.

My own parents passed away many years ago. I well remember how much it helped my sorrow – how much it meant to me – that people came to both of their funerals and told me what my parents had meant to them. Before then, I might have been more inclined not to discuss with someone their loss of a loved one and to stay away from the process as much as possible, thinking I was respecting the mourners’ privacy. Actually, nothing could be further from the truth.

I have learned to reach out to the suffering people left behind, let them cry, let them reminisce, let them connect in whatever way they need to get through the otherwise saddest experience of their lives. It is a way to reach outside of ourselves to think of the needs of others. It is a way to do service. There are few things more empowering than giving service to those who have served you, in their time of need. When we do these things, we can feel proud to know we have conducted ourselves as leaders.

This post originally appeared on the TAPE blog at http://tape-llc.com/2017/06/employee-passes-away/ and was reprinted with permission.


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