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Selling to the government

So You Want To Be A Federal Government Contractor

A recent American Express OPEN survey showed that 57 percent of businesses noted a significant increase in revenue when engaged in government contracting. In fact, those businesses saw their revenue grow at a rate of 61percent. Our focus will be on the largest source of doing business with the government, federal government contracting. (The National Law Review May 9, 2022)

Each year the federal government contract spending is in the billions of dollars. The United States government is the single largest procurer of goods and services in the world. Vendors sell anything from paper clips to fighter jets for the Department of Defense. In order to take advantage of this business, at any level, vendors must complete several required steps. (ibid)

Completion of Regulatory Basics

Businesses wishing to work with the federal government must complete specific regulatory requirements. All potential contractors are required to obtain a Unique Entity Identifier (UEI). Your business is assigned a UEI when you register on SAM.gov. Click here to learn more about obtaining a UEI. (ibid)

For a contract to be awarded by the federal government, approval must be obtained by a Contracting Officer (CO). COs only approve responsible contractors. The government will not enter into a contract with a vendor who:

  • owes back taxes
  • has a current or pending legal judgment with the government
  • does not have a checking account
  • is on the government’s excluded parties list
  • has not completed the basic regulatory requirement for doing business with the government

Before moving on, potential contractors should verify all required registrations are completed and a UEI is assigned. (ibid)

Locating Opportunities

Looking for opportunities within the federal government is similar to private industry. One must determine which agency has a need for a particular good or service.

There are many sources to help locate opportunities suited to a specific business. The main portals for entry into the federal government contracting are:

General Services Administration (GSA) Schedule

This is the most common form of a federal government contract. GSA is the “acquisition arm” of the federal government. Vendors who wish to be included on the primary contract vehicle, a GSA Schedule, can find additional information here. (ibid)

To be eligible for a GSA Schedule contract, a potential GSA vendor must show proof of at least two years of measurable past performance and provide two years of financial statements. References from the Federal arena may be used in lieu of experience. (ibid)

FedBizOpps

Federal Business Opportunities (FedBizOpps) contains government contracting opportunities with values over $25,000. (ibid)

GWACs

This is a government-wide acquisition contract (GWAC) in which multiple government agencies align their needs and purchase a contract for goods or services. Government-wide acquisition contracts (GWACs) allow for economies of scale, which usually reduce per-unit costs.

Vendors may also act as a subcontractor to prime contractors. There are several sites to research for subcontracting opportunities. GSA and the Small Business Administration (SBA) both maintain subcontracting databases. Additionally, the SAM website, as well as the Federal Procurement Data System (FPDS), contain sources of information including trade and business publications.

There are two types of government contract offers – bids and proposals. Bids are made in sealed bidding purchases, proposals generally involve contract awards following a negotiation process. The three offer types are:

  • Request for Quotation (RFQ): Used for proposed contracts with a value of less than $150,000.
  • Request for Proposal (RFP): Used for acquisitions with higher values than an RFQ.
  • Invitation for Bid (IFB): Similar to an RFP, with values over $100,000. Contractors submit a sealed bid for government procurement. Generally, negotiation follows. (ibid)

It is extremely important that all information provided in an offer be factually sound and contain all information necessary for a CO to make an evaluation. Vendors should note that responses to technical specifications will become part of the contract, so it is wise not to overpromise. (ibid)

Once all requirements are satisfied the offer is ready for submission. Note, that the lowest-priced offer does not necessarily ensure a win. More often than not, experience and service excellence are deemed more important. (ibid)

The evaluation of offers begins when the government agency receives es the bids. Patience is key as acceptance of bids can take up to several months. The key is knowing and staying up-to-date with your Contracting Officer. (ibid)

Have questions about contracting with the federal government? Give us a call.

GSA has an equity plan

For the first time in its history, GSA has an equity action plan. Their goal is to increase investments in small disadvantaged businesses (SDB)s. This while the Biden Administration addresses systemic issues, negatively affecting underserved communities. (Federal Computer Week April 14, 2022)

Last week, GSA announced its plan to administer $75 billion in annual contracts. GSA plans to focus on three particular areas: federal procurement, federal buildings, and federal technology design and delivery. (ibid)

The GSA plan identified five barriers impacting SDBs from achieving equitable outcomes in the federal marketplace:

  • Lack of centralized portal
  • Inability to access potential awards
  • Lack of knowledge of federal procurement requirements
  • Inability to navigate and or comply with federal procurement requirements. (ibid)

GSA is looking for new ways for SDBs to find places on existing governmentwide acquisition contracts while creating a supplier diversity plan along with a “robust post-award engagement strategy” to make sure SDBs are successful. GSA is simplifying the process for new candidates, educating and creating new pathways into the federal procurement arena. (ibid)

According to Robin Carnahan, GSA Administrator, “this plan lays out how GSA intends to integrate diversity, equity, inclusion, and accessibility as a priority in everything we do, from delivering projects to designing websites. For government to work, it needs to work for everyone. That’s why we are focused on improving how we at GSA, and our federal partners, can improve how we deliver services to all of America’s communities.” (ibid)

In support of the Biden Administration’s goal to increase federal contract spending on SDBs, GSA plans to increase federal contract spending by 50% over the coming five years. The Small Business Administration is investing in technology to improve program applications. The goal is to increase access to capital for minority-owned businesses. In addition, the White House plans to invest $31 billion in various forms of assistance for socially and economically disadvantaged businesses. (ibid)

Are you an SDB or minority-owned business looking to work with the Federal Government? Give us a call.

The SBA should focus on small businesses, not fraudulent businesses

Last week the small business community urged lawmakers to shrink administrative burdens complicating entry into the Small. Business Administration’s (SBA’s) 8(a) program.

This is timely as the Biden Administration has set a goal to bolster the share of federal contracts awarded to small disadvantaged businesses from 5% to 15% by 2025. A former SBA official suggests the SBA focus on expanding entry to the program for disadvantaged businesses and not spend time penalizing those who fraudulently attempt to gain entry. This will go a long way to help achieve the goals as set by the administration.

Jackie Robinson-Burnette, CEO of Senior Executive Strategic Solutions and a former SBA senior program executive said SBA should, “shift their focus to include every firm that is eligible'” for the 8(a) program. She mentioned that she served at the SBA, the SBA received over 2,000 applications a year and accepted only 300 participants. The Government Accountability Office believes steps were taken to address fraudulent applications to the 8(a) program. Unfortunately, there remains no official verification procedure. The Government Accountability Office did not take steps to improve oversight of the program, according to report filings.

Robinson-Burnette said, “right now, the focus is making sure they mitigate the risk of firms getting into the program that shouldn’t be in the program – focusing on the fraud – when really that’s 1% or 2% of firms that apply. The other 90-plus percent of firms are struggling to get in … because the SBA is focused on the wrong thing.”

In addition to misplaced focus, Rep. Kweisi Mfune (D-MD) said business owners have reported concerns with the length of the program and that it takes most firms multiple years to receive their first awards. Mfune said, “this hinders the development of program participants and raises the question of whether enterprises are ready for graduation when they exit the program.”

Darryl Hairston, the SBA’s former associate administrator of business development, said he submitted a proposal to redesign the 8(a) program a few years ago. Hairston took into account the complexities small businesses encounter in navigating the federal marketplace during their initial years in operation.

Hairston said, “one of the things that we talked about was that most firms coming into the program, who are truly eligible for the program, had little experience in the federal marketplace. The timeframe is highly dependent upon how successful you are coming into the program and how well you take off with the benefits that are available to you.”

Robinson-Burnette feels adding priority access for SDB mentors will increase successful outcomes. This will occur by shifting some of the SBA’s dependence from their assigned business opportunity and creating additional inroads to work opportunities. Mfume is considering meeting with the SBA administrator to figure out “what can be done in the time we have.”

Are you a small disadvantaged business or a business looking to work with one on an upcoming contract? Give us a call.

The push to buy “Made in America” just got bigger

Last week President Biden announced actions to amplify his “made in America” pledge for federal procurements. These actions came in the form of a pending final rule that builds on the Biden administration’s “Made in America” efforts, announced via executive order in January of 2021. (Federal Computer Week March 8, 2022)

To qualify as “Made in America” for federal procurement, at least 55% of the value of the component parts of a product must be made in the US. The final rule will increase the threshold to 60% in 2022, 65% in 2024, and 75% in 2029, and close any current regulation loopholes. Additionally, it will create more opportunities for small and medium-sized and disadvantaged businesses. (ibid)

The final rule also institutes a foundation for the government “to apply enhanced price preferences to select critical products and components identified in a subsequent rulemaking,” according to a fact-sheet from the White House. “These preferences, once in place, will support the development and expansion of domestic supply chains. They provide a source of stable demand for domestically-produced critical products.” (ibid)

To smooth the transition and assist industry in their preparation for the new domestic content threshold, the final rule will take effect on October 25. This allows time to train the acquisition workforce on the new concepts of the final rule. (ibid)

Currently, there is no ability to verify claims made by contractors regarding the percentage of domestically made content in their products. The Administration plans to institute a reporting requirement validating the percentage of domestically made content in products. Biden pledged this during his announcement, last year. (ibid)

During President Biden’s State of the Union address, he said, “we’ll buy American to make sure everything from the deck of an aircraft carrier to the steel on highway guardrails is made in America from beginning to end.” According to Lonnie Stephenson, international president of the International Brotherhood of Electrical Workers, the Biden administration’s Made in America efforts “support good-paying, union jobs across the country.”

A new Made in America office is being created within the Office of the Management and Budget. Celeste Drake, director of the Made in America Office, recently said, “our strategy is working; businesses are investing in American manufacturing at historic rates.”

Questions about the “Made in America” rule and your current government contract or an upcoming proposal? Give us a call.

There’s more to a Small Business Affiliation than meets the eye

Small business contracting has been gaining momentum through the Small Business Administration’s (SBA) “all small” mentor-protege program. This program allows a large business to form a joint venture with a small business to compete for set-aside contracts. The SBA has several ways to determine if a company is actually small. And just because you meet the size standard for a procurement does not necessarily mean you are eligible for an award. (Federal News Network January 14, 2022)

Every procurement has a size standard assigned. Size standards set the largest size that a business (including its subsidiaries and affiliates) may be. Therefore, it is crucial to note whether the small business has any affiliates. Size standards are based on the number of employees or average annual receipts of a company. An affiliate’s number of employees and annual receipts are included in business size determination. (ibid)

Many award protests arise when offerors allege the winning company is ineligible, based on size. A protestor will argue that a company is not a small business due to its affiliation with a large company. The affiliation thereby exceeds the size standard. Should the SBA find that a bidding company exceeds the size standard due to an affiliation, the result can be the loss of a contract. (ibid)

Affiliation is when one company controls another company, or a third party controls both businesses. It doesn’t matter if the control is exercised. It only matters that it exists. (ibid)

Common ownership can give rise to affiliation. Common ownership happens when an owner of a firm holds an ownership interest in one or more other firms. This gets complicated if a company is owned by multiple shareholders. (ibid)

Affiliation can occur due to the relationship between the firms themselves, such as an affiliation based on the ostensible subcontractor rule. This rule provides that a prime contractor and subcontractor are affiliated if the subcontractor is performing the primary requirements of a contract and the prime contractor is reliant upon the subcontractor. If the SBA dins an affiliation under the ostensible contractor rule, it is limited to the procurement in question. Both companies may be eligible for award of other small business contracts. (ibid)

The rules around affiliation are subtle and often complicated. Many times a company finds out about an affiliation only after a protest is filed. An unfavorable size determination will result in the loss of a contract. This can affect a vendor’s ability to compete for future set-aside contracts. If this happens, a firm must be recertified as small. It is the same if a protested frim is a protege in a mentor-protege joint venture. The protege must be recertified. (ibid)

Affiliations are preventable. All agreements should include representations concerning the prime contractor’s small business status. All parties should be knowledgeable of the circumstances that may result in affiliation. (ibid)

Do you have affiliation questions? Give us a call.