New FAR Rule: Partial Set-Asides and Reserves, Small Business Set-Asides Under Multiple-Award Contracts

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DoD, GSA, and NASA have issued a final rule amending the Federal Acquisition Regulation (FAR) to implement regulatory changes made by the Small Business Administration, which provide Governmentwide policy for partial set-asides and reserves, and for set-asides of orders for small business concerns under multiple-award contracts. The rule went into effect March 30, 2020.

As part of the implementation of reserves of multiple-award contracts, the proposed rule removed the term “reserve” in the FAR where it is not related to reserves of multiple-award contracts.

This final rule makes the following significant changes from the proposed rule:

  • Removal of the term “HUBZone order.” This term has been removed throughout the final rule.
  • Requirement to assign a North American Industry Classification System (NAICS) code. The final rule clarifies that NAICS code(s) must be assigned to all solicitations, contracts, and task and delivery orders, and that the NAICS code assigned to a task or delivery order must be a NAICS code assigned to the multiple-award contract. This clarification appears at FAR 19.102, with cross references in 8.404, 8.405-5, and 16.505.
  • Requirement to assign more than one NAICS code and associated size standard for multiple-award contracts where a single NAICS code does not describe the principal purpose of both the contract and all orders to be issued under the contract. In the proposed rule, the date for implementation of this particular requirement was listed as January 31, 2017. For the final rule, this date has been extended to October 1, 2022. This is when Governmentwide systems are expected to accommodate the requirement. This date also allows time for Federal agencies to budget and plan for internal system updates across their multiple contracting systems to accommodate the requirement. Use of this date in the final rule means that the assignment of more than one NAICS code for multiple-award contracts is authorized only for solicitations issued after October 1, 2022. Before this date, agencies may continue awarding multiple-award contracts using any existing authorities, including any addressed in this rule, but shall continue to report one NAICS code and size standard which best describes the principal purpose of the supplies or services being acquired.
  • Rerepresentation of size status for multiple-award contracts with more than one NAICS code. FAR 19.301-2 is revised to clarify that, for multiple-award contracts with more than one NAICS code assigned, a contractor must rerepresent its size status for each of those NAICS codes. A new Alternate I is added for the clause at 52.219-28 to allow rerepresentations for multiple NAICS codes, and a prescription is added at 19.309(c). Alternate I will be included in solicitations that will result in multiple-award contracts with more than one NAICS code.
  • Rerepresentation for orders under multiple-award contracts. The clause at 52.219-28 is revised to relocate the paragraph addressing rerepresentation for orders closer to the beginning of the clause and to renumber subsequent paragraphs.
  • Representation of size and socioeconomic status. FAR 19.301-1 is revised to clarify that, for orders under basic ordering agreements and FAR part 13 blanket purchase agreements (BPAs), offerors must be a small business concern identified at 19.000(a)(3) at the time of award of the order, and that a HUBZone small business concern is not required to represent twice for an award under the HUBZone Program. A HUBZone small business concern is required to represent at the time of its initial offer and be a HUBZone small business concern at time of contract award.
  • Applicability of the limitations on subcontracting to orders issued directly to one small business under a reserve. The final rule clarifies that the limitations on subcontracting and the nonmanufacturer rule apply to orders issued directly to one small business concern under a multiple-award contract with reserves. This clarification appears in multiple locations in parts 19 and 52. The final rule also clarifies the limitations on subcontracting compliance period for orders issued directly, under multiple-award contracts with reserves, to small businesses who qualify for any of the socioeconomic programs. These clarifications appear in subparts 19.8, 19.13, 19.14, and 19.15, and in the clauses at 52.219-3, 52.219-14, 52.219-27, 52.219-29, and 52.219-30.
  • Compliance period for the limitations on subcontracting. The final rule revises the proposed text at sections 19.505, 19.809, 19.1308, 19.1407, and 19.1507 to be consistent with the implementing clauses for those sections. The clauses reflect that the contracting officer has discretion on whether the compliance period for a set-aside contract is at the contract level or at the individual order level.
  • Fair opportunity and orders issued directly to one small business under a reserve. The final rule addresses orders issued directly to one small business under a reserve at FAR 16.505.
  • Conditions under which an order may be issued directly to an 8(a) contractor under a reserve. The final rule clarifies in 19.804-6 the conditions under which an order can be issued directly to an 8(a) contractor on a multiple-award contract with a reserve.
  • Set-asides of orders under multiple-award contracts. At FAR 19.507, the prescription for Alternate I of the clause at 52.219-13 is revised to apply to any multiple-award contract under which orders will be set aside, regardless of whether the multiple-award contract contains a reserve.
  • Consistent language for “rule of two” text. FAR 19.502-3, 19.502-4, and 19.503 are revised for consistency with FAR 19.502-2(a), which most closely matches the “rule of two” in the Small Business Act (15 U.S.C. 644(j)(1)).
  • Documentation of compliance with limitations on subcontracting. The requirement for contracting officers to document contractor compliance with the limitations on subcontracting is removed from subparts 19.5, 19.8, 19.13, 19.14, and 19.15. FAR part 4 and subpart 42.15 already prescribe documentation of contractor compliance with various contract terms and conditions, including the limitations on subcontracting. FAR subpart 42.15 is revised to clarify that performance assessments shall include, as applicable, a contractor’s failure to comply with the limitations on subcontracting.
  • Clarification of “domestically produced or manufactured product.” FAR 19.6 is revised to use the phrase “end item produced or manufactured in the United States or its outlying areas” instead of “domestically produced or manufactured product.”
  • Subcontracting plans for multiple-award contracts with more than one NAICS code. FAR subpart 19.7 is revised to provide guidance to contracting officers on how to apply the requirement for small business subcontracting plans to multiple-award contracts assigned multiple NAICS codes. With the requirement to assign multiple NAICS codes, it will be possible for a contractor to be both a small business concern and an other than small business concern for a single contract.
  • HUBZone price evaluation preference and reserves. FAR subpart 19.13 is revised to clarify that the HUBZone price evaluation preference shall not be used for the reserved portion of a solicitation for a multiple-award contract. The price evaluation preference shall be used in the portion of a solicitation for a multiple-award contract that is not reserved. In addition, the clause at 52.219-4 is revised to remove the proposed text that stated the HUBZone price evaluation preference did not apply to solicitations that have a reserve for HUBZone small business concerns, since that is not accurate.
  • Performance by a HUBZone small business concern. FAR 19.1308 is revised to specify performance by a HUBZone small business concern instead of performance in a HUBZone. The related changes that were proposed in the clause at 52.219-4, paragraph (d)(2), are not being adopted as they are no longer accurate.
  • Separate provision for reserves and clause for orders issued directly under a reserve. The final rule provides a new solicitation provision at 52.219-31, Notice of Small Business Reserve, and prescription at 19.507 to address information and requirements that are related to reserves of multiple-award contracts and are appropriate for inclusion only in the solicitation. These requirements and information were proposed as part of the clause at 52.219-XX (now 52.219-32); however, since they only apply prior to contract award, the final rule relocates them to a separate provision. The final rule also revises the clause at 52.219-32 to address only orders issued directly to one small business under a reserve. The title of the clause reflects the revised content.

Click here for a link to the FAR rule, or read more at GSA Interact.


Top 5 Cybersecurity Tips for Government Contractors

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This is a guest post by Benjamin Brooks of Beryllium InfoSec Collaborative.

When you think “contractor with the U.S. government,” what do you think of? Bureaucracy? Guaranteed steady revenue? Those are the most popular responses, because after-all, we are in business to make money, right? But how many people reading this think of “cybersecurity” as one of the ideas surrounding contracting with the United States government?

Today, however, when it comes to getting a government contract, cybersecurity is “the new black.” Traditionally, cybersecurity requirements were only a big deal for direct, prime contractors or their subs. However, because there have been so many breaches involving contractors, and the associated costs of those breaches, the United States government is starting to get tough on cybersecurity.

So much so, that the government is going to issue a certification process for ensuring cybersecurity before allowing contracts to be awarded! Because government contractor cybersecurity is such a huge issue today, let’s jump into some information to help companies earn their contractor cybersecurity “badge.”

1. Identity management

Contractors are going to need to make sure that all the users in the organization can be positively identified when using the information system (the network/computers). This means everyone who uses a computer gets a username. And who needs one, gets a mailbox. You can have a shared inbox, but the logins need be unique to each person. That goes for admins too!

2. Multi-factor authentication (MFA)

Multi-factor authentication is one of the most affordable ways to protect your organization from a plethora of cyber-attacks. Whether your organization uses single sign-on, zero-trust, or another model in between, MFA is a powerful tool against cybercriminal activity.

For example, if Tiny Tim wants to log in to his email remotely, it would be a good idea to confirm it is he who is logging in, right? By using MFA, an alert can be sent to Tiny Tim’s phone to prompt “is this you logging in?”…and Tiny Tim clicks “yes.” If a hacker were to obtain Tiny Tim’s username (typically his email address) and his password (which often is an easy one to remember, yikes!), the hacker still needs Tiny Tim’s phone to gain access. That is a simple way to make it much harder for the bad guy! For smaller organizations (and larger ones too) MFA solutions like DUO are a great way to provide MFA services/software.

Security tip: Avoid using an SMS code push, or a phone call for your second authentication factor, as SIM-swap attacks are on the rise.

3. Effective anti-malware programs

There are plenty of anti-malware programs around, and unless your organization has been hiding under a rock for the past 10 years, you probably know this simple and essential protection. On that note, the most effective anti-malware solutions are those that can be centrally managed for updates, patches, etc., by your IT folks.

4. General user cybersecurity awareness training

Training your employees of the current cybersecurity threats, and what to do in the event something bad does happen, is one of the biggest bangs-for-your-security-buck! With email-based compromises being one of the largest sources of breaches these days, improving poor user behavior into an effective line of defense is a huge double impact investment. Of course, the right user awareness training is key. Making it fun and memorable will make your employees be more aware of cyber threats.

If you really want your organization to build internal information security defense via your people, test them via a phishing simulation tool! What good is training if you aren’t testing to see if it is working? There are very good (and super affordable!) solutions out there to strengthen your first line of defense (your employees). There have been rave reviews about InteproIQ’s platform that combines both training and a phishing tool, so it is definitely worth looking into.

5. The Cybersecurity Maturity Model Certification

If your organization has been anywhere near the United States government defense contracting space for the last few months, you hopefully have heard of the newly announced Cybersecurity Maturity Model Certification (CMMC). I think we can all agree that cybersecurity is important. The new sheriff in town for DOD contractor (and potentially other federal) cybersecurity policy and practice adherence is the Office of the Under Secretary of Defense.

The Cybersecurity Maturity Model Certification will be tiered-out in order to ensure affordability by even the smallest of sub-contractors, but more importantly, by the data potentially sensitive data shared with outside organizations. The CMMC allows for different levels of security for different amounts and types of information that need protection. Whether or not this will be implemented outside of the DOD is yet to be determined.

In cases where the contract is not with the DOD, specific clauses for cybersecurity requirements will be laid out through FAR clauses, specific organizational requirements, and NIST 800 series documents.

Final thoughts

To summarize, cybersecurity in government contracting is not going away anytime soon. If your organization is aspiring to get a GSA schedule, or be a contractor to the U.S. government in any regard, it will pay dividends to get help understanding the ins-and-outs of both contract negotiating and cybersecurity requirements.

Ensuring taxpayers are not overspending on goods and services is a worthwhile and potentially lucrative business opportunity. Safeguarding the information and data surrounding that venture will ensure it stays lucrative.

Beryllium InfoSec Collaborative helps defense contractors get compliant and implemented with all the DFARS 252.204-7012 and NIST SP 800-171 requirements. We do so in an affordable, practical and secure way, so you can focus on your business. You can watch Winvale’s joint webinar with Beryllium about “Managing Cybersecurity Requirements in Today’s Federal Market” here.

This post originally appeared on the Winvale blog at https://info.winvale.com/blog/top-5-cybersecurity-tips-for-government-contractors.


GSA MAS Consolidation – What Current GSA Contractors Need to Know

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This is a guest post by John Abel and Haley Lawrie of Winvale.

The GSA MAS Consolidation is here, and things are changing FAST for government contractors. Not to worry, Winvale is here with all the information your company needs to help successfully navigate the new MAS solicitation updates. We’ve seen the updates and how they affect new offerors, but let’s take a look at how current contractors will be affected.

ALL GSA Schedule holders will be receiving a notice for Mass Modification A812 – MAS Consolidation over the course of the next week or so. Some of those reading this may have already received the notice, depending on Schedule number. Below is a schedule for the release dates of the mass mod across all 24 GSA legacy Schedules:

Mass Mod A812 Release DateLegacy Schedule Number
Friday, 1/3103FAC, 23V, 36, 48, 51V, 58 I, 599
Monday, 2/300CORP (PSS)
Tuesday, 2/400CORP (PSS) Cont.
Wednesday, 2/570
Thursday, 2/670 Cont.
Friday, 2/756, 66, 67, 71, 71 II K, 72, 73,
Monday, 2/10736, 738X, 75, 751
Tuesday, 2/1176, 78, 81 I B, 84

Why is the MAS Mass Mod happening?

GSA is making active efforts to modernize and simplify the federal acquisition process by consolidating the current GSA Schedules. This mass modification will be the most important to date for GSA Contractors.

24 Schedules have been consolidated into 1 Multiple Award Schedule, 12 Large Categories, 83 Subcategories, and 316 newly formatted Special Item Numbers. GSA wants to eliminate any duplicate Schedules while continuing to meet the needs of its government buyers.

When do you need to take action on Mass Mod A812?

It is imperative that you check your email regularly to ensure that you’ve received the mass modification notice. If your contract administrator has not received the email by the corresponding date for your specific schedule, contact your GSA Administrative Contracting Officer (ACO) as soon as possible. (Don’t know who your ACO is? Find them here.)

Not only is it essential for contractors to ensure acceptance of this mass modification in order to reap the benefits of the consolidation, it is also mandatory, with a 90-day window for acceptance after the initial email notification is received. Within this mass modification, contractors will be required to:

  • Review and accept 210 FAR and GSAM clauses
  • Review the updated terms and conditions for the MAS
  • Map existing SINs on your current Schedule to new SINs under the applicable Large Categories

If you have taken exception to any solicitation clauses in previous Mass Modifications, these exceptions will not carry over and that process must occur again.

How do you know what SINs you will have awarded after the Mass Mod?

It is important to note that awarded products/services, pricing, contract number, and the period of performance for your GSA Contract will NOT change. While the Contract Type and Special Item Numbers (SINs) will change, the pricing components of your contract won’t change. You don’t need to apply for a new contract and the Mass Mod will not automatically consolidate your contracts down to one contract per your DUNs number.

GSA will provide a mapping of your current SINs to the new SINs that will go into effect upon acceptance. If you are wondering what new SINs your contract will be mapped to, we can help.

Overall, changes from this MAS consolidation will be contingent on Mass Mod A812, but there are a few things on the backend that contractors must complete in order to be fully compliant and ensure proper use of the GSA Schedule to its full potential moving forward. Although accepting the mass modification will update a number of fields within GSA’s internal systems, contractors must still manually complete the updates through programs like SIP to reflect the new MAS structure on GSA eLibrary and GSA Advantage!.

After accepting the mass mod, contractors will need to perform a SIP upload to initiate a “merge” of the legacy SINs to the new SINs within 30 days acceptance. This will ensure that all records remain current with the new MAS solicitation structure and terms and conditions so that buyers will be able to conform to the new structure when seeking out contracting partners.

How will this impact your current GSA Schedule Maintenance?

To ensure there are no hiccups when accepting the Mass Mod, GSA is suspending the ability to submit requests in eMod for “Add SIN” and “Delete SIN” modifications under the legacy Schedules on Jan. 30, 2020. The ability to process “Add SIN” and “Delete SIN” modifications will be restored March 14, 2020. All other modification types will still be accepted throughout Phase II of MAS Consolidation.

With regards to sales reporting, SINS are effective immediately when you sign the Mass Mod, and you will see both legacy SINs and new MAS SINs in SRP for the first sales reporting period after the Mass Mod approval date. After that reporting period has been completed, future reporting periods will only display the new MAS SINs.

The MAS Consolidation may seem like a huge hurdle to overcome, but it is a step in the right direction for GSA and your GSA Schedule contract. To make it easier for our clients, Winvale is hosting a webinar on Tuesday, February 25 about the MAS Consolidation and how it impacts your contract.

If you can’t make the webinar, feel free to contact our consulting team today for more information on how these updates will affect your company’s GSA Schedule and a more in-depth look into the changes. Winvale offers full-service GSA Schedule support from our experienced professionals specializing in SIP, FAR compliance, GSA Advantage! and Schedule compliance.

This post originally appeared on the Winvale blog at https://info.winvale.com/blog/gsa-mas-consolidation-phase-2-current-gsa-contractors and was reprinted with permission.


15 Government Contracting Tips

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Our friends at Winvale offered this post from their client Andrea Davis, Director of Contracts at Govplace, who shared these top 15 tips that she’s learned in her 20 years working for government contractors, in no particular order:

1. Late is late.

Electronically submit your competitive proposal at least 24 hours in advance to be safe. Case law is not favorable for contractors who submit their proposal less than 24 hours before the due date, even if the late delivery is the Government’s fault (e.g., the Government’s network is down).

2. Small Businesses with sub-categorizations (e.g., Women-Owned Small Businesses, or HUBZone Businesses) count TWICE OR MORE for small business reporting.

So, if you are wondering why your large business is so excited about subcontracting to a woman-owned small business (WOSB), where the owner happens to be a service-disabled veteran (SDVOSB) doing business in a HUBZone, it is because the dollars subcontracted to this entity likely count towards the subcontracting goals for: 1) Small Business, 2) WOSB, 3) SDVOSB and 4) HUBZone.

3. The subcontract type does not have to match the prime contract type, and the subcontract NAICS code does not have to match the prime contract’s NAICS code.

If I had a dollar for each instance when I heard someone state the opposite of the above truths, I’d be a millionaire.

4. Generally, concerning Government data rights / Intellectual property (IP), even if a company develops software using Government funds under a Government contract, the Government doesn’t own the software.

The Government does have unlimited rights in the software, but so does the company who developed the software.

5. You’ll never regret having a solid process in place for comparing job candidates’ resumes to GSA Labor Category minimum qualifications for education and experience.

For both your company’s employees and any lower tier subcontractor’s employees. People charging to a GSA labor category for which they are not qualified is a compliance issue that can bite you years down the road. By then, people have moved on, resumes cannot be located, the subcontractor is out of business, etc.

6. In Government contracting, ‘realism’ and ‘reasonableness’ have opposite meanings.

When the Government is checking to see if labor costs/prices are too low (i.e., if they are worried about the company being able to retain employees during contract performance), they are evaluating for ‘cost realism,’ but if they are checking to ensure prices/costs are not too high, they’re evaluating ‘cost/price reasonableness.’ It is not correct to use these words interchangeably.

7. FAR 9.6 defines prime-sub relationships, partnerships, and joint ventures as contractor team arrangements (e.g., a classic teaming agreement resulting in a subcontract once the prime contract is awarded).

But a GSA Contractor Teaming Arrangement (CTA) is entirely different. A GSA CTA is a when two companies who each have their own GSA Schedules, join together to co-prime an opportunity. Interesting fact: since all GSA CTA partners are considered co-primes, if any of the GSA CTA partners are ‘other than small’ in the solicitation’s NAICS code, the entire GSA CTA is considered Large.

8. There is a difference between regulation and law.

The FAR is mostly regulation, but it also references statutes/laws. Understand that you can influence regulation by submitting comments when the proposed regulation is posted for public comment.

9. Many non-Federal (state and local) government entities and even commercial companies performing due diligence on a company, will check for SAM.gov active exclusions (formerly, the Excluded Party List System or ‘EPLS’).

Therefore, if you are debarred from Federal contracting, some of your other future non-Federal business may be at risk as well.

10. The protest ‘effectiveness rate’ percentage (in recent years ranging 43-47%) is the best way to gauge how often a protester gets some sort of relief in response to their bid protest at GAO.

If you only look at the sustain rate percentage, which is much lower (ranging 12-17%), you are not getting the full picture. Many protests are dismissed as ‘academic’ before the 100-day time frame at GAO (often because the agency chooses to take corrective action to remedy a procurement flaw) so you can’t just look at the protests that went to a full GAO decision.

11. Post-award obligations in teaming agreements (TAs) (i.e., the requirement to enter into a subcontract) are generally not enforceable in Virginia because Virginia courts have repeatedly interpreted a TA as ‘an agreement to agree in the future.’

But some of the case law highlights things that would have potentially made the particular TA at issue enforceable. Like replacing this language: “The parties will negotiate a subcontract after prime award,” with “Prime shall award a subcontract to the subcontractor after prime award.” If you’re in the subcontractor role, try removing any language where a TA will terminate if negotiations haven’t concluded within x days of prime contract award. Virginia courts have left open the possibility that post-award obligations in TAs could be enforceable, depending on the certainty and specifics provided in the TA.

For example, while often impractical, courts have hinted that attaching a subcontract template to the TA that is contingent upon the prime being awarded the prime contract, would render the promise to award a subcontract enforceable. Note, however, that even when it is difficult for a teammate to enforce a prime’s promise in a TA to award the teammate a subcontract, that does not mean that other requirements and obligations in a TA are unenforceable. For example, the parties are still likely bound by the pre-award obligations to cooperate on preparing a proposal, to be exclusive to one-another (if applicable), and to maintain the confidentiality of information that may be disclosed pursuant to the agreement.

12. As Federal contracts professionals, we still must learn commercial contracts interpretation rules for our commercial negotiations.

The imperative ‘SHALL’ is the strongest language for contracts interpretation. ‘Will,’ ‘may,’ and ‘should’ are not as strong — use ‘shall.’

13. If you want to challenge a solicitation term (e.g., evaluation method, Statement of Work ambiguity, etc.) and you cannot resolve it through Q&As, you MUST submit a PRE-AWARD protest BEFORE THE PROPOSAL DUE DATE.

Otherwise, 98% of the time, a post-award protest challenging the solicitation will be dismissed by as untimely, regardless of the merit.

14. There is a difference between quotes and proposals. A quote is submitted in response to an RFQ and is considered ‘informational.’

The contract is not formed until the Government signs their acceptance of the ‘information’ and the contractor countersigns or starts performing. A proposal is an official offer made in response to an RFP that is valid for a specific duration of time (e.g., 60 days). It becomes a contract when the Government signs a contract with your proposal details in it.

15. Unless there have been some late 2019 cases on this topic, as of right now, the Government Accountability Office (GAO) case law on key personnel who depart a company between the time of a final proposal submission and contract award, is not favorable for contractors.

Companies would be wise to limit named key personnel (not propose more than required), and maybe offer proposed key personnel an incentive to stay until the contract is awarded (and hopefully longer). I’ve also learned that it can be helpful to get a written commitment from a departing key person that they will return to work for the company if an award is made.

This blog post appeared on the Winvale blog at https://info.winvale.com/blog/15-government-contracting-tips-from-winvale-client-govplace and was reprinted with permission.


NDAA FY 2020 Section 806 – Fixed-Price Contracting

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Section 806 of the FY2020 NDAA directs the Under Secretary of Defense for Acquisition and Sustainment to review how the  Department of Defense uses fixed-price contracts.

This is a topic that comes up periodically. To the uninitiated, it would seem that a fixed-price contract will result in larger profits, but that is not always the case.

We first have to understand that while it seems that fixed-price contracts have the potential for higher profits, they also have the potential for substantial losses. Assuming that there are no changes made, you will be obligated to deliver some set of things or services or things with services, at a fixed price, and it just isn’t necessarily clear when you go into this arrangement that the arrangement will be profitable.

It is true that you’ve priced it as a contractor to be profitable, however, circumstances change and the project can be different than you anticipated. Yet you’re still obligated to deliver that same set of things or services or things with services, for that same fixed price.

For example, let’s say I’m obligated to deliver 100 people throughout the country at various locations to do some clerical work. I’m required for those workers to have a certain level of skills, and a certain type of clearance. Well, I actually might deliver fewer people for a short period of time, because some people are in transit, or some have quit and not yet been replaced, but I’m still getting paid as if all 100 workers are still in place.

That’s good for me because I’ve getting paid a fixed price for 100 people and there’s only 95 on the job. Of course this is assuming that the number of people I’m not delivering doesn’t upset the client or cause me to miss deadlines or create problems that threaten my contract.

On the risk side, let’s say we’re in a very low unemployment rate, with correspondingly upward pressure on wages and skillsets. While I’ve told my client I’d deliver those 100 people for $65,000 each, now I’ve got to pay my employees $70,000 in order to get the required level of skill and so forth. Then my current people see what the new people are making and they want more money as well. Wages are up, which is good for people in general, but as a contractor I have to pay more and can’t charge the client more because we have a fixed-price contract.

So the reason fixed-price contracts are often won with a lesser value is because the risk is higher and therefore the margin that I pitch is higher. Often we build in contingencies as well, which might mean I think I can hire at $60,000, so I pitch at $65,000. But I could still end up having have to hire some at $68,000 or $70,000 so now I’m starting to lose money on those people.

This provision brings us into the study phase. The 2020 NDAA directs the Defense Department to look at the circumstances in which fixed-price contracts are used and awarded, and the experience from the government’s perspective.

Understand that the legislators are including many different forms of contracting that include the words fixed price that aren’t necessarily completely fixed, which has muddied the waters a little bit. They’ve included cost plus fixed fee, another form of fixed-priced contracting, and fixed labor rates. This will all come out in the wash.

They set a pretty aggressive deadline of February 2020 for the Under Secretary to brief the congressional defense committees on the findings of the review. If you have any comments once the NDAA is approved, let us know and we should be able to put our oar in the water through the Mid-Tier Advocacy group.


How Do I Get a GSA Schedule Contract?

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This is a guest post by Morgan Taylor of Winvale.

Having a GSA Schedule contract can provide a whole new world of business opportunities for your company. Billions of dollars go through GSA contracts each year, and there are millions of GSA contractors. The GSA Schedules program is a great way to break into government sales, but it can be a lengthy and confusing process if you’re not familiar with the requirements. Check out the steps to getting on a GSA Schedule below.

Preliminary

It is important to determine if you are eligible to submit a GSA proposal before beginning the proposal process. Below is a list of requirements to keep in mind:

  • Must have financial stability
  • Must have been in business for at least two years (unless it is a Schedule 70 Springboard offer)
  • Must be able to prove that proposed products/ services have been sold commercially
  • Must be compliant with the Trade Agreement Act (TAA)
  • Must have a DUNs Number and active SAM.gov registration

If your company meets the above requirements, then you are ready to begin the proposal process. There is a great deal of required documentation that must be submitted with a GSA proposal. The documentation is separated into three main sections: Administrative, Technical and Pricing.

Administrative

The administrative section gives GSA a background of your company. This includes documents such as financial statements, the employee handbook, the company organizational chart and SAM.gov registration. Additionally, at least one person from your company must have an active digital certificate upon submission. The administrative section also consists of various required training courses which prepare the vendor for acquisition and maintenance of a GSA Schedule.

Technical

The technical section of the proposal gives GSA a deeper look into your company’s experience and expertise. The technical section requires corporate experience and quality control narratives, which highlight the company’s skills and abilities as well as organizational functions. The technical section also includes descriptions of past projects completed and a customer ratings report called the Past Performance Evaluation.

Pricing

The pricing section is the bulk of the proposal. Offerors must provide pricing support for all proposed products or services that support the company’s commercial price list or market rates. If offering labor categories, you must provide detailed descriptions of functional responsibility, education and experience. In addition, the offeror must disclose all commercial sales practices, commercial prices, and GSA proposed pricing. The pricing section itself can include up to 15 different documents upon submittal.

Proposal to Award

Once the proposal has been submitted, GSA can either reject the offer due to insufficiencies or request clarifications. If the assigned Contracting Officer feels that the offer is sufficient, he or she will next aim to negotiate for lower prices. Once negotiations have concluded, a Final Proposal Revision (FPR) will be signed, and the contract will be awarded.

Submitting a GSA proposal can be a complicated process that requires a great deal of GSA knowledge and experience. Winvale has highly experienced consultants who have worked on proposals for nearly every GSA Schedule. Winvale consultants can support your proposal process from the very beginning all the way to award. Looking to acquire a GSA Schedule? Give us a call!

Morgan Taylor is a consultant for Winvale’s Professional Services Department where she provides GSA Schedule acquisition and maintenance support to her clients. Morgan is currently a member of the National Contract Management Association (NCMA).


Comparing Commercial and DoD/Federal Market Sector Business Environments

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This is a guest post by R.J. Kolton, SVP of Data Systems Analysts (DSA), Inc. and VP of Mid-Tier Advocacy, Inc.

The 17-person 809 panel was tasked with finding ways to streamline and improve the defense acquisition process. I met with the 809 Panel in February 2017 and I found it important to speak about the challenges facing mid-tier companies.

Another question the panel asked me to address was what are the differences between contracting with the Department of Defense and a commercial sector.

New entrants, such as “Silicon Valley” companies, entering via OTAs and other mechanisms will eventually confront the same challenges as traditional players in the defense sector. This is particularly the case as they achieve success, become established, and play by the same rules as traditional government contractors.

These new entrants must prepare to operate in a defense contracting business environment. Described below are key differences between the commercial and DoD business environments, which impact directly on the business models companies operating in those environments adopt:

1) Commercial Environment:

  • Customer/company commercial contractual practices reflect the need to adhere to general legal contractual requirements as defined by local, State, and federal government and are far less complex and formal than the practices encountered when working with DoD and to comply with the FAR/DFAR.
  • Commercial marketplace involves rapid customer decision making and compressed timelines.
  • Commercial marketplace includes flexible contractual arrangements that foster rapid business deals.
  • In general, there is no requirement to meet specific socio-economic/small business targets in contracting.
  • Customers have more flexibility to develop and establish criteria for selecting venders.
  • Awarded work often involves rapid delivery of products and services.
  • Companies focus on rapidly closing deals, maintaining continuous cash flow, and minimizing peaks and valleys in revenue/profit streams.
  • Companies maintain robust sales and marketing capacity to continuously sustain and grow business.
  • Commercial companies offering products/services relevant to DoD market sector stress continuous R&D and product scaling and improvement in order to sustain competitive position.
  • Losing companies in commercial transactions have little recourse to protest customer’s decision.

2) DoD Contracting Environment:

  • Contractual practices are guided by FAR and DFAR, unless waived, such as OTAs; procedures are formal and time intensive.
  • Customer procurement strategies, criteria, and practices reflect guidelines provided by Executive Branch, Congress, DoD, and DoD agencies, which leads to complex customer requirements.
  • Customer decision making involves multiple layers of leaders; all must adhere to specified procedures, which is time intensive.
  • Contractual arrangements promote adherence to intent and letter of the law rather than focusing on rapid award of contracts.
  • DoD agencies must stress adherence to socio-economic/small business targets.
  • DoD agencies allocate significant time and resources to develop criteria, specifications, and requirements for contractual competitions; companies operating in the defense market space establish business model that are influenced by those government characteristics.
  • Companies focus on obtaining access to contract vehicles, winning task orders or full & open competitions, and protecting incumbent work.
  • Awarded work often involves multi-year contracts; this reduces the challenges associated with short duration commercial work.
  • Companies address continuous cash flow and minimizing peaks and valleys in revenue/profit streams by sustaining numerous concurrent contracts.
  • Successful defense-oriented companies maintain BD teams that focus on account management/business intelligence, capture, and proposal development.
  • While many defense companies by their nature focus on R&D and building new capacity to remain competitive, they are influenced in their investments by the need to invest in activities required to meet DoD certifications and requirements (e.g.,  financial and security compliance, ISO-standards, CMMI-standards, etc.).
  • DoD is generally unwilling to compensate companies for being innovative; viewed as a value-added trait.
  • Companies operating in the defense market sector must obtain and sustain key certifications to remain competitive, such as ISO 9001:2008/2015, ISO 20000, ISO 27001, CMMI-3 & 4, NIST compliance, etc. This involves major internal investments.
  • Losing companies in DoD transactions can protest large procurements; this impacts government procurement strategies and timelines.

Companies must design their organizations to optimize performance relative to the customers they serve, and as I’ve shown, the commercial market is very different form the Government market.

Given this, the DoD will be challenged in enticing non-traditional companies to enter the DoD market sector. While the DoD can offer short-term relief to the various barriers to entry, non-traditional players in that market sector will eventually have to adapt business models that support congressional and DoD policy requirements.

Randy J. (“RJ”) Kolton is VP of Mid-Tier Advocacy Group, and Senior Vice President (SVP), Business Development for Data Systems Analysts (DSA), Inc., a mid-sized, employee-owned company that is a leader in delivering business driven information technology and consulting solutions and services to the Federal Government and industry. Building on experience spanning more than five decades, DSA has deep expertise and comprehensive understanding of the operational, security, collaboration, and identity management challenges our customers must address.


7 Ways that Mid-Tier Companies Are Being Squeezed Out of DoD Contracts

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This is a guest post by R.J. Kolton, SVP of Data Systems Analysts (DSA), Inc. and VP of Mid-Tier Advocacy, Inc.

The 17-person 809 panel, created in Section 809 of the FY 2016 National Defense Authorization Act (NDAA), was tasked with finding ways to streamline and improve the defense acquisition process. The panel had two years to develop recommendations for changes in the regulation and associated statute to achieve those ends.

As part of its review, the Section 809 Panel reviewed the DoD small business program. The panel ultimately developed several specific recommendations designed to improve how the DoD small business program supports DoD initiatives. One of the major areas of interest was determining how to promote the entry of non-traditional DoD companies who offered advanced technology and innovative solutions to DoD challenges.

I met with the 809 Panel in February 2017. I found it important to note that mid-tier companies performing in the DoD market sector play a major role in generating jobs and enhancing overall economic growth for the Nation and that mid-tier companies, defined as companies earning $25M-$500M annually, are being squeezed by small businesses on one side and by large businesses on the other.

In that context, I offered seven points, which also generally apply to small businesses, innovating companies developing new technologies, and companies that are new entrants into the defense market space.

  1. First, mid-tier companies cannot grow effectively if they are primarily subcontractors to large businesses since subcontractors are unable to obtain significant workshare.  Large businesses have little motivation to offer mid-tier companies significant work since DoD acquisition policies encourage them to award subcontracts to small businesses. 
  2. Second, the primary pathway for growth for mid-tier companies is to win large multiple award, indefinite delivery/indefinite quantity (IDIQ) contracts as primes so they can compete for agency task orders. However, to win these IDIQs, mid-tier companies must surmount major challenges:
    • Mid-tiers are often locked out of large multiple award IDIQs owing to significant past performance criteria.
    • The tendency of DoD agencies to consolidate contracts to reduce administrative burdens and costs, which favors large businesses. Such IDIQ consolidation reduces opportunities for mid-tier companies to penetrate and support customer agencies, which constrains future growth. Consolidation also poses risk to growth owing to long period of performance of awarded IDIQs; mid-tier companies often have to wait a decade before they can compete again as an IDIQ prime if they miss out on the near-term opportunity.
  3. Third, mid-tier companies must contend with ever rising costs that increase their indirect rates and make it more difficult to compete against large businesses. These cost increases are the result of several factors, chief among them are supporting employee benefits under newly enacted national healthcare polices, responding to current and emerging cyber security requirements, maintaining sophisticated auditable financial systems, and obtaining certifications and appraisals, such as ISO-9001:2008/20015, ISO 20000, ISO 27001 and CMMI-3/4, which DoD agencies increasingly require of companies seeking to pursue and perform work.
  4. Fourth, while mid-tier companies are capable of providing the same or better level of service and customer relations as large businesses, their competiveness is hampered by higher overhead costs relative to large businesses because they lack the scale to absorb those indirect costs. These higher costs, combined with the lowest price technically acceptable and low price competition environment we are experiencing in the defense sector, hinder mid-tier companies in achieving success as they compete against large business on full and open competitions. 
  5. Fifth, North American Industry Classification System (NAICS) codes used to classify DoD work and define company size standards offer little support for mid-tier companies. While some NAICS codes, such as 541712/5, Research and Development, reflect a size standard of 1000 employees, up from 500 employees in Feb 2016, DoD agency contracting officials tend to strictly interpret the type of work performed and the size standard offers little benefit to mid-tier companies. Hence, there are no contracting tools to benefit or promote mid-tier company growth.
  6. Sixth, graduating small businesses confront major challenges as they evolve into mid-tier companies and must compete as newly minted large businesses. While seeking a merger or acquisition may represent a potential exit strategy, in many cases, successful small businesses owe their growth to small business contract awards, which are of little value to large business acquirers. Hence, the businesses are at great risk of failing shortly after graduating from small business status: they are too big to be small and too small to be effective as large businesses. While the Congress and DoD have done an excellent job in establishing policies that promote small business growth, particularly for socio-economic challenged groups, they have failed to establish an effective strategy to promote business health and growth across the total business life cycle, from start-up/small business through mid-tier to large business.
  7. Seventh, and my final point, small business officials in DoD agencies generally sympathize with the challenges mid-tier companies confront, however they state they can do little to help without congressional and/or department involvement and legislation. Their focus is on accomplishing their duties by promoting the various small business classifications.

The US lacks a strategic approach to promoting growth of US businesses supporting the DoD. The current government programs that promote the interests of small businesses fail to account for their eventual growth into being mid-tier companies. At that point, such companies must compete against small businesses, other mid-tier companies, and very large companies. This poses great challenges to rising small businesses. I believe Congress and DoD should seek avenues to promote the lifecycle growth of companies by accounting for those mid-tier company challenges.

Randy J. (“RJ”) Kolton is VP of Mid-Tier Advocacy Group, and Senior Vice President (SVP), Business Development for Data Systems Analysts (DSA), Inc., a mid-sized, employee-owned company that is a leader in delivering business driven information technology and consulting solutions and services to the Federal Government and industry. Building on experience spanning more than five decades, DSA has deep expertise and comprehensive understanding of the operational, security, collaboration, and identity management challenges our customers must address.


OMB Acquisition Reform Proposal 6 – Removal of Recovered Materials Certification Requirement

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We’ve been discussing the Office of Management and Budget (OMB)’s six proposals for streamlining the acquisition process and improving the acquisition environment, part of the FY 2020 National Defense Authorization Act (NDAA), and we’ve reached the final post in the series.

This proposal would revise 42 U.S.C. 6962(c)(3)(A), which requires certification by Federal contractors to estimate the percentage of the total recovered material content for U.S. Environmental Protection Agency (EPA)-designated item(s) delivered and/or used in contract performance, and to submit a certified report to their contracting officer. 

This proposal has to do with the administration’s move to reduce “regulatory burdens.” It is part of a general overall trend, and here at TAPE we are unrelentingly in favor of reducing any kind of administrative burden. In this case there was a duplication where things had to be reported both to the EPA and to the contracting officer, who really wasn’t going to do anything about it because it’s the EPA who needs to keep track of recovered products.

For example, if you’re removing asbestos from a building, you have to report that it’s there, and how you’re going to dispose of it by taking it to the right place, getting it recycled, etc. Since that is an EPA requirement, not a FAR requirement, it makes good sense to leave it out of FAR. There’s still a burden, you still have to report it, but you only have to do it once.

Don’t we love the OMB?


Benefits and Disadvantages of the GSA Schedule Program

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This is a guest post by Morgan Taylor of Winvale.

At Winvale, we are constantly challenged by organizations new to the federal market with questions around why a GSA Schedule contract is so valuable. Any savvy consultant should be prepared to adequately describe the benefits of a GSA Schedule contract program and even articulate drawbacks of having one in place.

Let’s focus first on this contract vehicle’s benefits.

What are the benefits of a GSA Schedule contract?

NO. 5: COMPETITIVE ADVANTAGE

FAR Subpart 8.002 and 8.004 describes the order of precedence for federal agencies considering sources in procuring goods and services. Federal agencies have a statutory obligation to consider mandatory sources of supply of goods and services, and the use of Federal Supply Schedules (i.e., GSA schedule contracts) are encouraged in advance of “commercial sources in the open market.”

This means that your organization will have a competitive advantage when compared to competitors who do not have a GSA Schedule contract. This is significant, because it puts you in an elite group of organizations who may receive preference (in most cases, chances are in your favor) when an agency is considering how to meet its needs.

Having a GSA Schedule is also a great asset to advertise on your company website and marketing materials. Having a GSA Schedule provides a great deal of visibility in the federal marketplace that can be used to win GSA bids and even Open Market bids.

NO. 4: A LONG-TERM PARTNERSHIP

GSA Schedule contracts can last up to 20 years, do not have a sales limit, and everyone in the federal government can use them. Specifically, GSA Schedule contracts have four five-year option terms. It is one of the most widely used government contacts available and they are recommended to anyone serious about selling to the federal government.

Of course, vendors will need to remain productive (generating at least $25,000 annually) and ensure they are properly administering their contract from a reporting and compliance standpoint, but the contract can help facilitate a long-term relationship with agency customers.

NO. 3: ENJOY EASIER AND FASTER PROCUREMENTS

Schedule orders do not require much of the extensive documentation and competitive analysis that is required when vetting commercial sources in the open market. This is why the GSA Schedule contract is so valuable. The contract pre-qualifies you to sell to federal buyers because the GSA has already negotiated fair and reasonable pricing for those federal buyers and made the requisite responsibility determination. This means it is significantly easier to win government business, as individual agencies do not have to go through the process of determining if your pricing is competitive in the market.

As can be seen under the FAR subpart 8.4 language, depending on the specifics, agencies can order directly from a GSA Schedule holder and do not need to make that public. By placing an order against a GSA Schedule contract, the government buyer has concluded that the order represents the “best value.” Less work makes contracting officers happy.

Another way GSA Schedule contracts lead to easier and faster procurements is through pre-vetted technical capabilities.When submitting a GSA proposal, offerors must provide technical narratives that capture a company’s experience in the field and specific expertise related to the proposed Special Item Numbers (SINs). In addition, offerors of SINs such as the Highly Adaptive Cyber Security (HACS) SIN 132-45, must undergo a verbal technical evaluation to ensure the main criteria is met.

While this can sometimes make for a lengthy proposal process, it allows agencies to buy from contractors with the assurance that the work performed will be satisfactory and meet all requirements. This can prevent GSA Schedule holders from having to submit separate technical narratives in each individual bid proposal.

NO. 2: ACCESS TO EXCLUSIVE OPPORTUNITIES

Once you have a GSA Schedule contract, you gain access to GSA sites that other companies do not. For example, GSA eBuy is a website that only contract holders and agency buyers may access. This acquisition tool is where agencies look to request information and quotes from GSA Schedule holders. GSA eBuy often houses high-dollar, high-profile contract opportunities not available anywhere else. GSA eBuy makes it easy to find business opportunities, respond to government requests and establish new business relationships. An impressive number of orders are transacted through this exclusive website.

…AND NO. 1: EXPAND YOUR CUSTOMER BASE

This is the absolute key for anyone pursuing a GSA Schedule contract. The vehicle widens your customer base and has great potential to lead to increased revenue over time. A GSA Schedule contract is also accessible by state and local markets. The Cooperative Purchasing Program under the GSA Schedule program allows state and local governments to purchase from Schedule 70 for information technology and Schedule 84 for law enforcement and security products and services, at any time, for any reason, using any funds available. Having access to this additional market is a key differentiator that again exhibits the value of having a GSA Schedule contract.

The U.S. government is the biggest buyer of goods and services in the world, and a GSA Schedule contract could mean new business relationships and major opportunities with a reliable customer and source of income during tough economic times. Any business should certainly take notice.

What are the disadvantages of a GSA Schedule contract?

PRICING RESTRICTIONS

GSA Schedule pricing is determined by establishing a company’s Most Favored Customer (MFC) and discounting from there. GSA is obligated to make sure that the government receives the best pricing possible, so maintaining the established discount relationship is an essential part of having a GSA Schedule. Once your ceiling GSA rates are awarded, you are required to charge at or below this rate to government buyers. You may never charge above the GSA established ceiling rate if you are selling through the Schedule. You must also maintain the discount relationship, meaning that you may never charge a commercial customer lower than your MFC rates, or you are required to revise your awarded Commercial Sales Practices (CSP).

These rules require that you monitor the amount you bill and the discount you provide to every customer class, which can sometimes cause unwanted administrative burden.  However, structuring pricing this way can help establish firm guidelines for sales desk and business development departments within your company.

COMPLIANCE AND MAINTENANCE

The GSA Schedule should change and grow with your company. Schedule holders should be monitoring the contract pricing and Terms and Conditions throughout the life of the contract to ensure that all changes made commercially are updated on the contract through a contract modification. To remain compliant, contractors are required to report all GSA sales, accept Schedule refreshes and keep the contract terms and conditions current, accurate and complete. Having a GSA Schedule does take some extra time and effort, but if maintained correctly, can be a valuable tool for your company’s continued growth in the federal marketplace.

The GSA Schedule has clear advantages but does require companies to take on additional compliance and maintenance concerns. Looking for compliance and maintenance assistance? Give us a call!

Morgan Taylor is a consultant for Winvale’s Professional Services Department where she provides GSA Schedule acquisition and maintenance support to her clients. Morgan is currently a member of the National Contract Management Association (NCMA).


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