This is a guest post by Tonya Saunders of Mid-Tier Advocacy, Inc.
On November 25, 2015 President Obama signed the National Defense Authorization Act (NDAA) for the 2016 fiscal year into law. The NDAA contains many new clauses that affect federal contractors and the Department of Defense (DoD). Among other things, the NDAA aims to increase the capability of small businesses that provide services and products to the federal government.
Here are a few highlights:
- Under this new legislation it requires DoD to notify Congress when Primes are not meeting subcontracting goals under the comprehensive small business-subcontracting plan, to make sure they are getting the most of their contracts.
- It also requires a report to provide an analysis of the reasons for cost and schedule over-runs associated with the program, including with respect to the performance of Prime contractors and subcontractors, and evaluate the future of the requirement.
- It helps new entrants to defense contracting by allowing them to use simpler commercial item purchase procedures rather than the more complex traditional government contracting vehicles.
Under the new NDAA there are a few additional changes that contractors should also be aware of:
- This updated legislation prevents agencies and courts from applying the non-manufacturer rule to small service contractors, so that small service contractors can continue providing incidental items as part of the procurement.
- It also protects small contractors by ensuring that the small business procurement advocates at the Small Business Administration have the correct skill and are receiving the necessary training.
- The Small Business Administration is now required to prioritize prime contracting, subcontracting, participation rates, and industrial diversification when grading agencies on how well they contract with small businesses. This is aimed to address the problem created when the SBA awards an “A” grade to federal agencies even though 100,000 small businesses no longer compete for federal contracts and the agencies do not meet their small business goals, with evidence suggesting that numerous industries have little or no small business participation.
- It allows the small business advocates in each agency to assist small businesses to increase set-aside opportunities with contracts not under consideration for small business participation.
- The NDAA 16 also includes a few protections and enforcements for small and medium size businesses, including the creation of a statutorily independent office to hear challenges to size standards of small business.
- It also empowers the office of the contractor to review the process by which SBA decides the industry-specific small business size standard, since currently small businesses must go to federal court with these challenges.
In short, the NDAA is legislation that continues to receive bi-partisan support that always passes Congress and is usually signed into law by the President – enough said!
About the author: For more than two decades, Tonya Saunders has worked on Capitol Hill, lobbied for client interests, and started her own businesses. As founder and director of Mid-Tier Advocacy, Inc., a 501(c)3 nonprofit national coalition of small, emerging, and medium-sized businesses (primarily federal contractors), Tonya was instrumental in passing legislation that helped these engines of our economy grow and create jobs.
This is a guest post by Keith Stadler of KSA, LLC.
Note from Bill: In last week’s guest post by June Jewell, we looked at project manager accountability. We’ll continue that theme with this look from Keith Stadler at the importance of accountability – authority and responsibility – across your company.
Straightforward organizational challenges can have well-defined solutions around which general agreements are easily made. But for serious matters, the challenges, let alone solutions, are rarely straightforward.
Problems like this are complex, difficult, mysterious, and sometimes require gut-wrenching choices, if properly addressed. This is where a clear understanding of the authority and responsibility to secure the right outcomes is essential.
Surprisingly enough, in many organizations, the matter of making clear in whom the responsibility and authority lays for tasks, projects, and processes is ambiguous; unstated and left to the imagination of the workforce, including the person who will ultimately be seen as the “responsible party.”
It’s not difficult to visualize the effects and results of this kind of arrangement. A consensus-based dynamic necessarily takes over:
- Outputs are the “lowest common denominator” outcome on which all can agree.
- Co-corkers minimize the impact of collaboration on their office rather than maximizing broader organizational benefits.
- Innovation, creativity, adaptation, critical thinking, and advocacy are discouraged, even punished.
- Outspoken personalities dominate collaboration.
- Everyone has a veto, knows it, and feels empowered to exercise it.
- Projects and processes can and do stop altogether when a single party refuses to act.
- It can be difficult to determine if a decision or outcome was reached at all.
- There are minimal or no sustainment of outcomes.
- People simply refuse to show up for planning sessions and meetings.
- Consensus accommodations are made to work around the personalities involved instead of doing what is best for the organization.
- The status quo usually prevails.
So much harm comes of this kind of gap in an organization, but it’s so simple to avoid. Here are 12 things that leaders at every level can do:
- Explicitly and clearly identify the person responsible and confer on her or him the authority need to complete the task, project, or govern the process.
- Make it known to all the participants and their bosses.
- Put it in writing.
- Empower the collaboration effort with your own clear intent. Tell the leader, his team, and their bosses, what is the purpose, a little about the method of getting there, and what the final product will be in your mind.
- Tell them what it is not.
- Be available for follow-up discussions and interim guidance as work proceeds.
- Ask how it is going.
- Make it evident to all that the person in charge is answerable for the final outcome by engaging them as the group leader.
- Ask how you can help the project leader, then do it.
- Precisely capture any decisions that are needed along the way and act on them.
- Follow up with the project leader to ensure that progress is being made. If not, find out why and help fix it.
- Publicly praise and thank the team and especially its leader. Tell their bosses too.
These things easy to do and will be appreciated by everyone involved. Over time, employees will embrace the company’s approach to authority and responsibility and it will become second nature.
Keith Stadler is the founder of KSA, LLC, a company dedicated to advancing organizational visions and fundamentally transforming how businesses everywhere are run. He has over 40 years of leadership experience in organizations from the very large and established to small technology start ups, and everything in between. Visit www.ksaintergration.com for more information.
This is a guest post by June R. Jewell, CPA.
While most project consulting firms expect their project managers (PMs) to deliver profitable projects, many have not put the appropriate measures in place to ensure that it happens. Accountability at the PM level is often vague and unstructured, which can lead to several different consequences – but not the ones we want!
Part of this issue has to do with the many responsibilities given to PMs, and a lack of true visibility into what they are really doing every day. This leads to PMs being given many tasks and little guidance as to how to be successful.
The other big challenge is measuring results. The majority of firms that we work with are not tracking individual performance, or worse, failing to implement consequences even if it is being measured. This has the unwanted effect of grouping good and poor performers together, and the less desired result of passive aggressive behavior on both the PM’s part and the firm’s leadership.
The following are practices that I often see in many project consulting firms that undermine their ability to achieve profitability goals. If you recognize any of the following issues in your firm, they could be costing you a great deal of money! Lost dollars can be found by ensuring that every project hits target profits. If you see any of these practices in your firm, they need to be addressed as soon as possible:
- PM performance is evaluated in an annual review – The annual review is a dreaded process in many firms. Even with top performers, many employees don’t feel adequately recognized, and feedback is often provided too late to make a difference to performance results. A more frequent process of project review can improve financial results and engage employees more in the process of improving their own performance.
- All PMs are given a raise and/or bonus regardless of performance – With the war for talent gaining intensity these days, many firms are afraid of “calling out” mediocre performance. This has the double negative outcome of dis-incentivizing both top performers who don’t see the benefit of going the extra mile, as well as not giving consequence to poor performers for failure to hit goals. Bonuses and raises need to be tied to financial results in order to impact behavior.
- All of our offices do things their own way – This is a common problem in firms that have remote offices, and especially when there has been an acquisition. Many offices take on their own culture, and create their own new processes – from proposals and estimating, to project budgeting and billing. This has the negative impact of making it difficult for leaders to compare one office to the other, determine what is working and not working, and share best practices between groups. It is critical to a profitable firm to get everyone following best practices and operating the same way.
- We never fire anyone – The combination of a family-oriented firm culture along with difficulty finding technical staff has created an environment where many firms tolerate poor performance. This leads to keeping PMs and staff that are actually hurting the profitability of the firm rather than contributing to it. The message that is being delivered to staff is that mediocre or poor performance is acceptable and the ultimate consequence – being terminated – is not a possibility. Without this consequence, it will be very difficult to change behavior or increase profitability.
- We do not have metrics to measure our PMs – How you report on performance is a big indicator of how employees will perform. Many firms choose to measure profit centers, business units, offices, etc. rather than focus on individual results. Without metrics and financial targets, it is much more difficult to evaluate PM performance, and hold them accountable for results. Looking at project profit margins is the most effective way to compare PM performance and the first step to holding them accountable.
All of these flawed business practices add up to lost dollars. So what is the cost of ignoring or even rewarding mediocre or poor performance? It may be much larger than you imagine. On top of the measurable costs of project overruns, rework and scope creep, consider the intangible costs of frustrated staff, unhappy clients and failure to retain your best PMs. This can add up to thousands and even millions of dollars per year in some cases.
Focusing on and improving your firm’s performance management practices can have a huge impact on all of the key metrics you use to measure the health and results of your firm. Special attention should be given to creating a regular rhythm of feedback, establishing clear measures for individual performance and implementing meaningful consequences for attaining financial targets.
This post was originally published on the AEC Business Solutions blog at http://aecbusiness.com/holding-project-managers-accountable-for-profitability-blog/ and was adapted and reprinted with permission.
June R. Jewell, CPA, is the president and CEO of AEC Business Solutions and the author of Find the Lost Dollars: 6 Steps to Increase Profits in Architecture, Engineering and Environmental Firms. Her popular blog covers innovative ideas on business leadership, project management processes, business development and improved operational efficiencies. Register for one of her upcoming webinars at http://aecbusiness.com/webinars/.
There is a whole set of processes that are launched upon winning a new federal contract. Let’s look at some of the things to expect. Of course, the first thing is to get the award – the actual notice of award. However, in the federal sector even that’s not just a single event.
The first thing that happens is you’ll start to hear rumors that you’ve won. There may even be some negotiations between you and the customer to discuss terms.
Before a contract can be awarded, there is a three-day notice to the losers, which essentially announces who the apparent winner is. The purpose of giving this notice is to allow the companies that did not win to submit size-standard protests.
Size-standard protests are the government’s way of policing the process (or allowing companies to police each other), to make sure that the winning company is truly eligible as a small business under the specific NAICS code for this particular contract. There are times when, for a variety of reasons, people are found to be non-compliant, even when they’ve already been on the contract.
Unfortunately, sometimes competitors can be over-zealous with their due diligence, and may incite a protest without having all the facts. For example, a company I knew was the subject of a protest because their website listed billions of dollars worth of contracts they had won. Yet some of these were multiple-award IDIQs and the amount of work they actually won under them was quite small.
Another part of the process is the debrief. Here, any of the losing companies – or the winner – can request a debrief where you get an official explanation of how the government evaluated your proposal and where you fit vis-à-vis the winner, though you’re never told what other businesses may have scored on their proposals.
The protest period lasts for 10 business days from the date of award. It’s important to understand that all of these pre-award and post-award days count as part of the transition time specified in the contract. So you need to start transitioning.
Key elements of a transition
It is a certifiably bad idea to not plan out your transition in as much detail as you can, understanding your activity set and knowing the accountable people. This is the first action you will be taking on a new contract with a new customer; you are building a critical relationship for the future.
Make sure you have the people necessary for the contract, and that you have a place to house them, along with any equipment they’ll need. Or if they’ll be working at the government site, you must know the security requirements to access the computers and other government facilities.
If you have subcontractors you need to have the contract in your hand, and a subcontract document in their hands. In order for them to proceed, you may need to give them what’s called an authorization to proceed – the verbal authority that allows someone to take action even though the legal document is not in place yet during the transition.
Meet with your new customers frequently during the transition and beyond, whether informally or formally. Not only are you building a relationship, but this is a way for the customer to give you the information you need to be successful. If all goes well, you will have a contract for as long as it lasts.
The best and brightest of your staff are the ones who will carry a company far into the future, and every time you promote someone, that act resonates through the entire organization.
This is one such of the “million stories in the Big City” – a Junior PM job opened up, and we promoted a billable supervisor to an overhead PM position. The following is a first-hand story about that transition, and what we as senior staff and managers can do to help the folks going through a similar transition.
Meet Ken Geary, retired Marine, and newest PM on the TAPE block.
What was the biggest change going from being a supervisor to being a project manager?
“I would have to say the scope of management. I went from directly supervising a relatively small team of five individuals performing a task that I was intimately familiar with, to managing a much larger group of people through delegation and direct communication.
Also management is no longer my sole responsibility. I work to not only provide exceptional service to our customers but also focus on business development, seeking to grow our current contracts as well as procure new ones.
I see this as a general trend, where business development is less one person’s specific role, and more rolled into all program management roles.”
A year later, what would you tell yourself when you were about to start?
“Keep better notes and to-do lists. When I first started in the program management role, I was assuming I could continue to just remember everything I needed to do, as I did when managing a smaller team and wasn’t being pulled in so many directions.
Now that I’m often switching from one project to another, I’ve found that writing everything down helps me to ensure that I complete all of my tasks. I can quickly see the current status and be reminded of the key points that are relevant when working with different contracts.”
What do you think are the most important traits of a good project manager?
“When I was in the Marine Corps we affectionately changed the slogan from semper fi (short for semper fidelis – Latin for “always faithful”) to semper gumby (“always flexible”) and I believe that holds true here.
As a program manager many things fall into your scope of work and you need to be ready to switch gears instantly, manage multiple things, and perform those tasks – proposal writing, performance reviews, and anything that comes along in day-to-day program management.”
What are the biggest benefits to having a project manager in place?
“One of the major benefits of putting a program manager in place is to provide a single point of contact for any issues. This is something that benefits our employees as well as the government points of contact by delivering to provide accurate information effectively and directly.
I can work with them to solve a problem directly, or find the answers for them without them having to get passed around. I know when I call up to get answers or solutions it can be frustrating to get passed around from one person to another.”
Is there anything else you would tell a new project manager?
“Ensure that you are asking questions daily. There is a lot of information to learn and if you don’t ask when you have questions people will assume that you know and understand the information and tasks that have been delegated to you.
If you’re not sure about acronyms or other shop talk, say so. Don’t be scared to ask questions, you need to make sure you understand everything.”
So there you have it – Ken’s story, a year later. Without blowing up his ego too much, he’s done a superb job. What he didn’t tell you is that several of our contracts were coming to a close and needed bridging, and his relationship skills with the customer saved TAPE a lot of problems that would or could have surfaced.
A couple of months ago I wrote about how small business federal contractors could use the results of the SBA’s 2014 Small Business Scorecard to target federal agencies looking to increase their set-aside numbers.
“I wish it were that easy,” was the response from one of my readers. They went on to describe what is unfortunately a common contracting experience. Their federal government agency customer had decided to insource some of the work the contractor’s company had been providing.
So what can you do when the government threatens to – or does – insource your best people?
Well, here’s what we did at TAPE back in the day, because it happened to us when we won our first big contract. We showed up at the kick-off meeting and the government contracting officer’s representative (COR) said they were going to insource 25% of the contract before we’d even start.
We did what we could – talked to the agency’s small business person, the SBA, and the contracting officer. However, the reality is that there really was no recourse.
What you have to do in this type of situation is plan for success. Anticipate the possibility that your employees are potentially going to become government employees someday.
If you’ve treated your employees well, then these folks are likely to be friends. Figure out how you’re going to take advantage of that friendship, in terms of new contacts, access to “nearest neighbors” (related departments or agencies that could potentially hire you), and increased awareness of your business’s good reputation.
In our case, while our agency customer was talking about 10 or more positions, they wound up insourcing five. What saved those five positions? The agency hadn’t considered the overhead it would cost to move all those positions in house. As well, it had crossed over into another budget year they didn’t get their required budget.
So five employees stayed our employees. And because we had treated them so well, each of the five who became government employees proved to be a valuable resource for us in the future.
So that’s my advice. Instead of fighting government insourcing, work with it. There’s really nothing much more that you can really do. Believe me, your customer will recognize the difference between resistance and supportive activity, and they will remember that the next time a job comes up.
Recently we were approached by a magazine in an industry somewhat related to what we do, with the idea that we would be one of their honorees for the Top 20-this, Top 50-that list, whatever it was.
At first, it sounded really cool. It’s always good to be honored in some way. But the reality was, and we had to investigate in order to really nail it down, first you had to sign up for a full-page advertisement, and then they make their shortlist from those advertisers, and then their final selection of honorees. The more you advertise, the more likely you are to be honored.
This was not necessarily a terrible thing. It was still a reputable magazine, and it would still be an honor to be on their list, but in these situations it’s always important to have a fundamental understanding of what it is that’s being sold. Are you really being honored, or are you being asked to buy a full-page ad?
When push came to shove, we declined the offer because buying a full-page ad in this particular publication would not have paid off for us.
Has this ever happened to you? How did you handle it? Would you do it differently the next time?
I recently reconnected with someone I had worked with when I was with another company. I always liked his style, so we stayed in touch. Our conversation turned to a particular thing we’re dealing with at my current company, and he had a definite opinion about what we should do. I won’t get into the details; I’ll just say this is not a trivial matter.
When I brought his comments to the person responsible for this area, they let me know they had already decided their path and wouldn’t be pursuing what my friend had suggested.
The question became: Should I listen to the insider who’s doing this work for us on a daily basis, or the outsider who has the benefit of his own experience? Both people are quite knowledgeable in different ways about the subject matter at hand.
As business owners we’re often faced with these dilemmas. We constantly get unsolicited advice from all of our friends, especially those associated with our industry. We’re paying somebody to do something, and then we get a piece of advice from the outside that may contradict what they’re doing, and may even be completely out of left field.
Ultimately we have to decide as business folk which is the right approach. And I’ll say for the record, sometimes we’re going to be right and sometimes we’re going to be wrong, but it is our decision.
I don’t have the final piece of advice that you must do it this way or that way, but what I ended up doing was asking the insider to at least consider the suggestion. Any advice that sounds reasonable should be explored, even if your insider says they’ve already chosen to go another way. It’s still overall your responsibility as the business owner, not theirs.
We’ve discussed financing issues on this blog before, such as SBA loans, bonded contracts, and other alternative financing options for government contractors.
Let’s talk more about some different banking relationships to be sure and understand how to choose between them.
First, there are various forms of what could be considered purchase order financing or invoice financing. At one end of the spectrum of invoice financing is what is traditionally known as factoring. This is where you sell your invoices directly, presumably for a greater or lesser percentage. You don’t do any collection or wait for the funds, you simply sell the invoices.
You don’t have to sell every invoice. The advantage here is that if you don’t need the funds, you can wait and collect when the customer pays. On the other hand, if you’re looking for funds and have a whole different set of circumstances, you can sell or finance a bunch of invoices and move on.
The disadvantage of invoice financing is that it’s traditionally more expensive than other forms of credit, such as a line of credit. While lines of credit are much less expensive, the disadvantage is that they often come with substantial “covenants” – agreement terms you’re supposed to meet.
For example, a line of credit agreement may require you to make a profit every quarter. It doesn’t sound very onerous, but traditionally a lot of business expenses are front-loaded in the first quarter (e.g., annual bonuses or health care costs), and therefore it might become onerous.
There may be additional requirements that strongly affect how you conduct your business, for example a restriction that you can’t take a draw on the line of credit without the bank’s approval.
It’s important to understand all of the parameters, pluses and minuses of the banking relationship you’re choosing. Of course the best quadrant to be in is where you’ve made enough money so that you can self-finance everything. But most of us are not in that quadrant.
Like anything else in business, successful financing comes down to relationships. Remember, though, your relationship here might not be with your regular banker, but rather with your bank’s credit department.
(Watch for a future post about the care and feeding of your banker.)
This is a guest post by Richard Lewis, Financial Engineering Counselors, Ltd.
Securing the financing you need to grow your small business can be a challenge. Over the past decade, banks have increased lending to big business by 36%, but over the same period, bank lending to small businesses has declined by almost 15%, and loans of less than $100,000 have dropped precipitously by more than 33%.
Fortunately, small businesses can find alternative financing sources, including a Small Business Administration (SBA) loan. There are several different types of SBA loans, including:
- The General Small Business Loan,
- The Micro Loan,
- Real Estate and Equipment Loans, and
- Disaster Loans
Be sure to check which type of loan is right for your needs before beginning the application process.
SBA loans have been around for more than 60 years. These loans, which were established to promote small business growth, typically have lower interest rates and monthly loan payments.
Unfortunately, the process of applying for an SBA loan can be complicated and it can take a long time to complete the process. Once you do, there can also be an extended period of time before you actually obtain your funding. You can speed up the approval process by observing some simple guidelines. Here are five you need to be aware of:
- Your credit rating counts: Good credit is important for any loan, and that includes SBA loans. Follow good credit rules, like being sure to pay your bills before the deadlines. Obviously, you’ll want to avoid credit-killing actions like foreclosures and bankruptcies.
- Keep your financial documents up to date and organized: This includes all of your financial and accounting documents, as well as your tax records. You might consider using some good accounting software designed for small business if you don’t already to bring greater organization to your records. Having your financial records organized and accessible will move the process along more quickly.
- Spell out the purpose of the loan as clearly as possible: Lenders want to know that you’re a good loan risk, and that means they’ll be interested in what you plan to do with the money. Take the time to outline this in the clearest possible fashion, whether your loan is to add vehicles to your sales fleet or expand the size of your brick and mortar store.
- Explain how you’ll pay back the loan: You’ll need to demonstrate that you have good cash flow. You can do this through your most recent tax records. Lenders will also want to know how much other debt you have. If the loan is for a start-up business, you should pull together a smart financial plan and include credible projections which demonstrate your ability to make your monthly payments.
- Be prepared to describe your history: Lenders will want to know about your finances, but they’ll also be interested in whether you personally are a good risk. That has to do with your relevant experience, how much time you’ve been in business and the degree of professional success you’ve had.
Applying for any loan, whether traditional or through alternative financing, can be confusing. The good news is that there are experienced professionals who can walk you through the process, answer your questions and maximize your chances of success through long-standing partnerships with banks, finance companies and professional service firms.
This post originally appeared on the Financial Engineering Counselors website at http://www.fecltd.net/blog/?p=102 and was reprinted with permission.
Richard Lewis is a government contractor financing consultant. You can contact him at 703-992-8988.