In a series of three posts, we’re highlighting remarks from retired Army Four-Star General David G. Perkins, former Commanding General of the U.S. Army Training and Doctrine Command from his keynote address at the Interservice/Industry Training, Simulation and Education Conference in Orlando, Florida in November 2017.
This is a guest post by TAPE President and CEO Louisa Jaffe.
In Part 1 of the blog series, we discussed three innovative aspects of training that a commander needs from industry as identified by General Perkins. In this post, we delve deeper into the third aspect – that we must see training “as a tool, not a task.”
General Perkins stated, “What we need to do is make sure that when we take a look at our training capabilities and training aids, devices, simulators, and simulations (TADSS) that commanders will say, ‘This actually solves one of my training problems.’ It’s not a tasking to do it. It’s a tool that I can use to get better.”
He exclaimed that he does not need “a tool that is just a tool to train, for training’s sake.” General Perkins specified that he needs industry to innovate a tool “that I can use to train for specific missions – mission rehearsal exercises.” He sees a future where a commander, when given a mission to conduct an attack, will also, “look immediately at what training capability [is needed] to get ready for that mission.”
General Perkins called upon the Army to completely integrate training in a mission from its inception. Moreover, he challenged industry to develop the type of training tools that the Army could use across the enterprise from education to training to mission rehearsals. He does not want any more “one trick ponies.” Using General Perkins’ framework, soldiers would waste less time learning multiple training tools and the training data inherent in the tools would benefit commanders across multiple domains.
General Perkins provided key insight into industry’s difficult task of innovating for military training. In Part 1 of this series, we detailed that he not only wants to see the emotional and practical experience of a large-scale live exercise, but one that is put into live, virtual, and constructive (LVC) environments to scale a combined arms training experience.
General Perkins further wants to see all possible domains – land, sea, air, space, and cyber – be interactive in LVC environments. To buttress his goal to integrate training into mission-accomplishment strategy, General Perkins wants to see TADSS become integrated tools for operations instead of separated tasks.
General Perkins envisions innovative training that becomes an extension of the service member at the same time it becomes an innovative extension of leadership itself up to the highest levels. He affirms that the Army is open and receptive to innovations “that connect useful powerful tools with mission strategy.”
The third and final post in this series will explore General Perkins’s innovative views about the concepts of education versus training.
Do you have innovative training ideas to offer the U.S. Army? Well, TAPE President and CEO Louisa Jaffe was fortunate enough to hear now-retired Four-Star General David G. Perkins, former Commanding General of the Training and Doctrine Command (TRADOC), speak from experience about what a military leader at his level (and all levels) is seeking in today’s Army.
General Perkins delivered the keynote address at the Interservice/Industry Training, Simulation and Education Conference (I/ITSEC) in Orlando, Florida in November 2017. The event occurred a few months before his recent retirement on March 2. In a series of three articles, we will present Louisa’s key takeaways from General Perkins’ I/ITSEC speech.
General Perkins started his speech by explaining that TRADOC serves as the proponent FOR and deliverer of doctrine, training, simulations, and education TO the entire Army. He spoke of the long-term requirements of TRADOC’s mission and articulated his vision of industry support from an unusual perspective – not speaking in terms of technical Army requirements or existing contracts coming up for recompete.
He said, “I’d like to talk to you from the point of view of a commander, not as the commander of TRADOC, but as ‘a commander.’ And so, what does a commander expect from his ‘training enterprise’? What does the commander expect from his ‘simulations enterprise’? What does the commander expect from his ‘education enterprise’?” General Perkins spoke in real and genuine terms about what any military leader needs from industry with respect to innovation in training.
He emphasized three main aspects of training that innovators need to consider:
1. Training serves as a “forcing function” to introduce new intellectual ideas. General Perkins explained that one of the impediments to that effective function is overcoming the “tyranny of training.” He defines this phrase as the enormous costs, logistics, labor hours, planning time, and execution of a practical combined arms training exercise – a simulation event that can only train a fraction of those who need it.
Because of high overhead, the exercise cannot really provide the needed repetition for trainees. Innovation from industry must provide not only the “forcing function” of training, but also all the benefits of a large, practical exercise at a fraction of the overhead costs, and perform it locally at the trainees’ home station. General Perkins stated, “I see that as sort of the next training revolution coming into the Army and probably the Joint Forces. We need to change how we view what is done day-in and-day-out as we prepare for the large collective training events – getting rid of this sort of ‘tyranny of training’ and high overhead.”
2. Innovation must bring together all the domains for training. We have to redefine the training requirement from the very beginning as a converged requirement with all of the domains: land, air, sea, space, and cyber. Commanders need training to give participants the experience of “inter” and “intra” domain communications and leaders/commanders the practical experience of commanding within and embracing all these domains. He stated emphatically, “This is an innovation that commanders need from industry.”
3. Commanders (and therefore industry innovators) need to see training “as a tool, not a task.”
Our next blog post will discuss this third aspect of innovation in training. The third and final blog post will explore General Perkins’ innovative views about the concepts of education versus training.
This is a follow up post from one of TAPE’s “capture managers,” a member of our business development team.
It’s important to understand that there are different intelligence zones involved in capture management – customer, competitive intelligence, program, staffing, and pricing. Being able to define it in those chunks helps us understand the kind of solution that we need to write towards in our proposal. Each of those zones have some basic questions and KPIs (key performance indicators).
We looked at client relationships and competitive intelligence in Part 1. Today we’ll look at staffing, and how the TAPE team works together and decides what to bid on.
Staffing is one of the most important aspects of capture to get right because clients don’t buy products or companies; they buy people. Having the right people on your team is critical for success, but who are the right people?
It’s important to distinguish between the key personnel and the rest of the team. Your key personnel are usually the people who lead the program, and their resumes are usually required to be submitted with the proposal. If they’re not already on your payroll, letters of commitment are often required.
The right key personnel will have all the required certifications, training, and years of experience, are known to the customer and have a good reputation, and can help you write the proposal.
For non-key personnel (other team members), it is important to identify as many qualified candidates as possible before submitting a proposal. Staffing matrices are typically required, listing all of the positions and hours assigned to the project.
If the only names in the staffing matrix are those for the key personnel, the program looks unstaffed and therefore more risky to evaluators. That’s why it is important to identify as many qualified candidates as possible (those with all the required certifications, training, and years of experience) before submission.
TAPE’s capture team
Because TAPE is a small business, we often have to wear a lot of different hats. There is always a locus of intelligence in one area, for example our senior vice president, administration and our chief financial officer will certainly help with pricing, but so will others who can bring the customer intimacy and program knowledge – perhaps someone who’s been in government and knows the program or its people. That person may be on staff at TAPE, or we’ll hire subject matter experts who can provide us that information.
It’s a shared responsibility amongst the team to go out and find this information, and my role to coordinate all these efforts and all of these people. What’s most important is having a team you trust, because you can’t do everything. Trust is the biggest component – trust, good working relationships, and good communication.
Also important are positivity, a can-do attitude, and being able to see things from multiple perspectives to gather what’s really important and what can wait, as well as graciousness and thankfulness for everyone’s efforts. At TAPE we always put a high value on our working relationships and communication – things are just so much easier when everyone’s on the same page.
Some days there is bound to be confusion. Giving everyone the benefit of the doubt can be difficult but at the end of the day it keeps us communicating and honest with each other.
Successful relationships require trust and credibility. So often we deal with teammates who are not a part of TAPE. When we’re not teaming, we’re competitors – it’s a friendly competition, but building and maintaining trust in those relationships is vital.
Yes or no?
A big part of capture is about continually vetting and re-vetting opportunities to understand exactly what it is you’re investing in. So often there’s a huge disconnect or built-in conflict between the business development and capture proposal sides of the house. Business development wants to say yes to everything and capture proposal wants to say no to everything. It’s essential to build a bridge between the two because proposals often get seen as Dr. No and business development seen as snake oil salesmen.
When you do decide to qualify a bid and devote capture resources to it, you’re making an investment – though not all investments are equal. Sometimes you invest in a contract that will lose money so you can establish a relationship with a customer; other times you make a smaller investment by teaming with someone. But in all cases these are investments in time and resources, and you must understand exactly how that investment impacts your bottom line.
Thinking back to Lohfeld’s wise words that the best informed win, we can look to the data for this purpose. When discriminating what will remain in the pipeline and what we’ll invest more into, we need to know how much a proposal will cost. Do we have the necessary internal resources, or will we have to hire out? What will that cost?
Capture management means having a systematic way of reviewing an opportunity to determine your probability of win, and how that equates to what you’ll see in revenue and return on investment. Measuring those things and collecting that data in order to make an informed decision is an important component of what we do in capture.
This is a guest post from Dave Moyer, part-time senior analyst for TAPE, LLC.
As a member of a group of adjunct professors for the Graduate School USA, we collectively develop abstracts of pertinent, current legislation for use by the group in multiple class presentations. We attempt to author papers that enlighten our students and occasionally will develop papers that are of use to entities working in the government arena.
The follow paper was developed by four of the financial management professors and contains information that would be of interest to government contractors. In my ongoing capacity as a senior analyst for TAPE, I condensed this information, which is available in the public domain, in an effort to make it a handy thumbnail of the latest NDAA.
On December 12, 2017, President Trump signed the 2018 National Defense Authorization Act (NDAA) (Public Law 115-91). It contains many significant changes to DoD operations and organization, as well as some government-wide changes. Here are some of the important changes, starting with a new law with government-wide applicability:
Subtitle G of the NDAA is referred to as the Modernizing Government Technology Act. It establishes a Technology Modernization Fund and a Technology Modernization Board. The Act also authorizes any agency (not just DoD) to establish an information technology working capital fund (WCF) to improve, retire, or replace existing systems, and for any project, program, or activity related to IT modernization.
An interesting aspect of these WCFs will be their funding sources, and the length of availability of the funds. Agencies are given the authority to transfer other appropriations into the fund, and the WCFs may also receive discretionary appropriations. Thus, the WCFs won’t rely on sales to customers to earn revenue.
In addition, due to their nature, currently WCF balances are always available without fiscal year limitations (that is, no-year). This is no longer true, as these WCF balances will be available for only three years after the year in which funds are transferred in, or the appropriation is received from Congress. After three years, any unobligated balances revert to the general fund in Treasury.
Section 806 of the NDAA amends Title 41 of the US Code and applies to all federal agencies. The micro-purchase threshold increases from $3,000 to $10,000.
The following are some DoD-specific provisions to be aware of:
- Section 827: Directs a pilot program on recovering costs from contractors whose protests are denied by the Government Accountability Office.
- Section 831: Redefines Major Defense Acquisition Programs and Defense Business Systems.
- Section 832: Prohibits the use of lowest price technically acceptable source selection process for engineering and manufacturing development contracts for major defense acquisition programs.
- Sections 841-844: Numerous enhancements relating to the acquisition work force.
- Section 854: Pilot program for multiyear contracts up to 10 years in length.
- Section 905: Adds qualifications for appointment as the Under Secretary of Defense (Comptroller) and the Deputy CFO. Adds duties and powers to the Under Secretary’s position.
- Section 906: Redesignates Principal Deputy Under Secretaries of Defense as Deputy Under Secretaries of Defense.
- Section 910: Establishes a Chief Management Officer of the Department of Defense. This will be the number three ranking person in the department, below the Secretary and Deputy Secretary, but above the Under Secretaries.
- Section 921: Adds qualifications for appointment as the Assistant Secretary for Financial Management in each of the three military departments.
- Section 925: Moves background and security investigations from OPM to DoD.
- Section 1002: Adds a new chapter to Title 10 consolidating, codifying, and improving authorities and requirements relating to the audit of DoD financial statements. Among many other changes, the Financial Improvement and Audit Readiness (FIAR) plan is now called Financial Improvement and Audit Remediation (FIAR) plan.
- Section 1004: By mid-March 2018, DoD must submit a report to Congress ranking every DoD component/agency on their auditability.
- Section 1103: The temporary authority for DoD to offer Voluntary Separation Incentive Program payments up to $40,000 (rather than the old $25,000) will not expire on Sept 30, 2018. It is extended to Sept 30, 2021.
- Section 1648: Requires a report to Congress by May 1, 2018 on the termination of the dual-hat arrangement for the Commander of the United States Cyber Command.
- Section 2802: Operation and Maintenance (O&M) appropriations may be used for construction up to $2,000,000 (up from the previous $1,000,000). Also, the unspecified MILCON limit goes from $3,000,000 to $6,000,000.
- Section 2803: The Secretary of each component will adjust the $6,000,000 unspecified MILCON limit each fiscal year to reflect the local construction cost index, but the limit may not exceed $10,000,000.
- Section 2805: The Secretary of each component may use O&M funds to replace building damaged or destroyed by natural disasters or terrorism incidents, with a limit of $50,000,000 per fiscal year.
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.
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:
- 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.
- 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.
- 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:
- Strong client relationships
- Client-centered solutions
- Robust competitive intelligence
- Secure staffing
- 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:
- Does the client know your name?
- Does the client understand your company’s capabilities?
- Has the client met with you to understand and/or develop their requirements?
- 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:
- Meeting the needs of the customer
- Understanding the needs versus the wants
- Understanding the risks
- Developing a solution that meets the needs
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.
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.
A 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.
A 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.
A 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.
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.
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:
- 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.
- 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.
- 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.
- 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.
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.