INTRODUCTION
Many clients in the start-up service contracting business to the federal government have contacted SCORE recently experiencing DCAA audit difficulties, suspended billings or negative marks on pricing proposals for not having addressed job cost accounting and business system issues involving Federal Acquisition Regulation (FAR) Cost Accounting Standards (CAS) requirements. This article will address the basics of resolving those issues in a service contracting start-up environment.
"Small to Feds" has addressed the requirements of CAS and the associated business system design requirements previously in the following articles that are suggested for review as refreshers:
http://www.smalltofeds.com/2008/03/establishing-far-and-cas-compliant.html
http://www.smalltofeds.com/2009/09/federal-government-contracting-small.html
http://www.smalltofeds.com/2008/02/dcaa-audits-and-small-business-job-cost.html
http://www.smalltofeds.com/2008/08/provisional-indirect-rates-in-small.html
DEFINING YOUR COMPANY AND ITS COMPLIANT JOB COST ACCOUNTING - RULES OF THE GAME
Please view the below matters in the context of your business system design at the cost element and job description level:
You must consider the job cost accounting implications of the government contract environment; i.e how do the individual labor charges every day on time cards for the company employees and management get booked to the correct accounts or expense pools and do they or do they not become part of the labor distribution directly to contracts or indirectly though overhead and G&A applications at month end (in effect is the government billed for the cost?).
In most small start-ups the best way to handle this is to write job descriptions for every position, including the owners and executives as well as other employees. Each job description is declared chargeable as direct only, indirect only or in rare exceptions, both direct and indirect chargeable.
Job descriptions are also declared salaried or hourly, exempt and non-exempt under the Fair Labor Standards Act, which drives eligibility for time and one half for overtime. All company personnel are furnished copies of job descriptions and informed of their direct or indirect, salaried or hourly status as a function of their employment offers. (You should generate retroactive offer letters for everyone in the company, have all personnel accept them in writing and put the letters and the job descriptions in the company personnel files for audit purposes)
Job descriptions are assigned to labor cost element codes in the job cost system (as opposed to other codes for materials, subcontract, travel and other direct costs that may require separate cost element codes to distinguish them for accounting purposes.
A direct charge job description will always have a contract charge number every day for every hour of work (typically technical performers) This usually drives the employee eligibility for overtime pay for hours in excess of 40. A company policy should be established early for this matter. Most companies pay straight time for hours in excess of 40 for salaried direct charge personnel. Exceptions are hourly non-exempt personnel who must be paid time and on half under the law.
An indirect job description performer will charge every day on a time card to an overhead or G&A account and the associated labor cost will become part of expenses that are distributed at month end to all contracts, based on the direct labor dollar content of each contract for the accounting period (typically secretaries, administration personnel and the like charge to overhead and the owners and executives charge to G&A (unless an executive is working exclusively in an individual overhead cost center - that person would then charge the overhead charge number for that cost center or directly to a project if performing project-direct effort).
Exceptions to the above would be where a direct charge employee has no contract home and his labor must be charged somewhere. In that instance he would charge to a company overhead account or G&A account outside the overhead pool and his or her labor would not become part of the allocation to contracts, effectively making it come out of the company bottom line (profit). This situation normally drives layoffs or finding the person a contract home to charge.
Labor donated to the company as a form of loan must also be charged in the exceptions manner discussed above (loan labor liability account) and may not be charged or recovered via a contract bill to the government directly or as part of an overhead allocation. DCCA really goes looking for this type of thing.
Where an executive normally charging to an overhead or G&A pool, is a key person on a contract or performing direct effort on a contract for parts of his or her day, that person would charge the contract charge numbers for those efforts and the overhead or G&A accounts for company business of an indirect nature.
CHECKLIST
The above rules of the game (disclosure practices in DCAA parlance) normally force several business system tangibles. It is suggested that you generate the following as a minimum in your startup preparations for demonstration during a proposal or fact finding audit:
1. Time Cards with a time card policy requiring they be filled out daily and turned in and approved by a supervisor weekly, then booked into the accounting system weekly.
2. Expense Reports bearing charge numbers for accounting as direct or indirect expenses.
3. Written Purchase orders to suppliers bearing charge numbers for accounting as direct or indirect purchases
4. Labor Job Descriptions - specially ear marked in the manner discussed above.
5. Cost element assignments for accounting purposes for 1-4, above.
6. Charge numbers for 1-4 above. A charge number is the combination of an employee number, supplier number, expense report number and a cost element, charged to a unique direct charge contract number, an overhead pool expense account or a G&A expense account.
7. Consider hiring a payroll service company to support salaries and regular paychecks plus tax and withholding for EVERYONE IN THE COMPANY.
8. A monthly closing where direct costs are burdened with indirect costs and billings are generated to customers creating accounts receivable for that which can be billed and liabilities for that which cannot.
9. Revenue accounting upon receipt of a payment from a customer directly to the contract against which a bill was generated with offsetting receivable reductions at the contract level.
10. The discipline and attention to set up 1-9 and demonstrate its operation to a DCAA auditor.
CONCLUSION
Every successful small business in federal government service contracting has gone through the above; some proactively and others when they have had difficulties with a DCAA audit during a proposal or cannot get paid when they are under contact. The choice is yours. It is not rocket science but it is different and it is a serious matter and must have your attention.
Monday, March 1, 2010
Saturday, January 30, 2010
SMALL BUSINESS GOVERNMENT GRANTS VERSUS DIRECT GOVERNMENT CONTRACTS
INTRODUCTION
Start-ups, entrepreneurs and new small businesses regularly seek information regarding small business grants. There are many misconceptions about the nature of such instruments, who qualifies for them and what constitutes a small business grant. The misunderstanding stems from advertising on the Internet and other media creating the impression that grants are readily available and that they are "Free Money".
There is no such thing as “Free” small business government grant money. In many instances individuals seeking grants should be looking to direct government contracting; this article will explain why.
DEFINITIONS
Small Business Government Grants
Small Business government grants are a type of contract and involve performance of a statement of work for agencies that are in some socio-economic endeavor serving the public, such as health care, public information, communications, high technology, or similar undertakings. A small business entity receiving a grant from a government agency becomes an extension of the agency mission and obtains funding to enhance that mission while growing as an enterprise.
Small Business Direct Contracts
Small business direct government contracting differs from grants in sheer numbers and regulatory control. Direct contracts are used by all agencies of the federal government to acquire supplies and services. Both for-profit and non-profit organizations compete in direct government contracting. A direct government contract has a very specific work scope, schedule, deliverable items, pricing and in many instances incremental funding. A grant has a more generic functional orientation to funding and may or may not include deliverable items.
There are some programs, such as Mentor/Protege and Small Business Innovative Research (SBIR) that appear to be hybrids of grants and direct government contracting and are often mistaken for grant instruments. They are not grants and are governed under the Federal Acquisition Regulation (FAR) as direct government contracts.
REGISTRATION
Guidance on registering to become eligible for both small business grants and direct contracts is at the following link:
http://smalltofeds.blogspot.com/2006/12/registering-your-small-business-for.html
STRUCTURE AND STRATEGIC PLANNING
Non-Profit Organizations
Most small business government grants go to non-profit organizations because of the nature of the work such entities do.
A non-profit organization operates in much the same way that a for-profit company does except that the founder (s) work for a board of directors that pays them a salary and, upon registration with state and federal governments under IRS provision 501 3 (c) or a similar designation, the business pays no taxes.
What would normally be considered profit in a for-profit company is re-invested back into a non-profit to further its work. Annual reports are required by the IRS to demonstrate the re-investment and maintain a tax-free status.
Non-profit organizations are usually initiated to pursue a religious or socio-economic endeavor serving the public, such as churches, health care, public information, communications, high technology, or similar undertakings.
No one owns a non-profit organization. A board of directors, a charter, articles of organization filed with the state and the IRS designation with the federal government establish it as a public entity. In the event it is discontinued, all proceeds and assets are distributed by the government for public use and no one individual benefits. A non-profit charter must include that provision.
The following link at NOLO provides the chronological process between a state registration and the IRS in applying for non-profit registration and tax-exempt status:
http://www.nolo.com/article.cfm/objectID/EA3D3043-9A88-43F5-8DC869639F0F6E77/111/262/ART/
For-Profit Organizations
A for-profit organization is founded by individuals specifically defined by name as owners in the articles of incorporation with the state and registered with the federal government for tax purposes. There are many different types of for-profit entities (S Corp, Sole Proprietorship, LLC, Partnership, etc.); each type has its own unique tax and operating characteristics.
A for-profit organization exists for the specific purpose of providing a return on investment for the owners. All assets on the books of the company are the property of the company, and although certain types of corporations, such as a Limited Liability Company (LLC) reduce the risk and insulate the owners' private assets to some degree, in general what is invested by an owner in the firm is the property of the firm and subject to business risks and the laws governing such matters. In return the owner or stockholder is entitled to the return on his or her investment as an individual in the form of dividends, direct proceeds after costs or other forms of entitlement (conveying what is commonly known as profit).
GRANTS VS. DIRECT CONTRACTING
Small Business Grant Funding
Small Business Government Grants have the effect of supplying lump sum funding to a non-profit organization for a specific period once the grant is awarded. In general the funding is used to further the stated mission of the business. However, the grant provider may reserve the right to receive reports on how the money was spent and may require deliverable items associated with performance of the work under the grant.
Certain grants take the form of cooperative agreements, whereby the non-profit and the agency commit to supplying mutual funding amounts to a project. Under limited or special circumstances involving 0 profit, a for-profit entity may be eligible for such a cooperative agreement with the federal government.
Federal Government grant regulations are at the following link:
http://fa.statebuy.state.gov/content.asp?content_id=120&menu_id=66
Web sites for researching federal grants as well as additional information on grants in general are at the following sites:
http://www.grants.gov/
http://www.npguides.org/links.htm
Small Business Direct Contract Funding
Federal Government direct contracting regulations are at:
https://www.acquisition.gov/far/
“Small to Feds”, the web site you are reading, was initiated to assist small businesses in understanding the above regulation and direct federal government contracting. Please see the table of contents in the left margin of this site for topics.
As stated in the introduction above, both for-profit and non-profit entities compete for direct federal contracting. A non-profit entity will bid grants and direct contracts at 0 profit. The following links are suggested as an introduction to direct federal government contracting:
http://www.smalltofeds.com/2009/10/introducing-federal-government.html
http://www.smalltofeds.com/2009/06/federal-government-contracting-small.html
http://www.smalltofeds.com/2009/01/should-you-consider-small-business.html
SUMMARY
This article has provided a brief (and admittedly general) overview of the difference between non-profit and for-profit business entities and the small business government grants and direct contracting available to each.
Both small business government grants and direct government contracts are highly competitive. Selecting potential agency sources and submitting winning proposals are acquired skills. For assistance in writing grant and direct contract proposals please see the following links:
http://www.smalltofeds.com/2007/02/federal-government-contract-proposal.html
http://www.proposalwriter.com/
When considering forming an enterprise, please assess in your business plan the potential of both types of entities in direct contracting or grant competitions. Go to the SBA web site that guides you through the business planning process. I suggest you follow the site presentation and note the factors to consider:
http://www.sba.gov/smallbusinessplanner/plan/writeabusinessplan/index.html
The following site contains samples of business plans:
http://www.bplans.com/sample_business_plans/all_plans.cfm
Look for examples in the above of both for-profit and non-profit organizations at the above link.
Ask yourself some strategic questions, such as what competition you envision and what your marketing plan will be. Addressing these questions may take some research and that is all part of the process of putting in place your plan. It is your road map for the future.
Start-ups, entrepreneurs and new small businesses regularly seek information regarding small business grants. There are many misconceptions about the nature of such instruments, who qualifies for them and what constitutes a small business grant. The misunderstanding stems from advertising on the Internet and other media creating the impression that grants are readily available and that they are "Free Money".
There is no such thing as “Free” small business government grant money. In many instances individuals seeking grants should be looking to direct government contracting; this article will explain why.
DEFINITIONS
Small Business Government Grants
Small Business government grants are a type of contract and involve performance of a statement of work for agencies that are in some socio-economic endeavor serving the public, such as health care, public information, communications, high technology, or similar undertakings. A small business entity receiving a grant from a government agency becomes an extension of the agency mission and obtains funding to enhance that mission while growing as an enterprise.
Small Business Direct Contracts
Small business direct government contracting differs from grants in sheer numbers and regulatory control. Direct contracts are used by all agencies of the federal government to acquire supplies and services. Both for-profit and non-profit organizations compete in direct government contracting. A direct government contract has a very specific work scope, schedule, deliverable items, pricing and in many instances incremental funding. A grant has a more generic functional orientation to funding and may or may not include deliverable items.
There are some programs, such as Mentor/Protege and Small Business Innovative Research (SBIR) that appear to be hybrids of grants and direct government contracting and are often mistaken for grant instruments. They are not grants and are governed under the Federal Acquisition Regulation (FAR) as direct government contracts.
REGISTRATION
Guidance on registering to become eligible for both small business grants and direct contracts is at the following link:
http://smalltofeds.blogspot.com/2006/12/registering-your-small-business-for.html
STRUCTURE AND STRATEGIC PLANNING
Non-Profit Organizations
Most small business government grants go to non-profit organizations because of the nature of the work such entities do.
A non-profit organization operates in much the same way that a for-profit company does except that the founder (s) work for a board of directors that pays them a salary and, upon registration with state and federal governments under IRS provision 501 3 (c) or a similar designation, the business pays no taxes.
What would normally be considered profit in a for-profit company is re-invested back into a non-profit to further its work. Annual reports are required by the IRS to demonstrate the re-investment and maintain a tax-free status.
Non-profit organizations are usually initiated to pursue a religious or socio-economic endeavor serving the public, such as churches, health care, public information, communications, high technology, or similar undertakings.
No one owns a non-profit organization. A board of directors, a charter, articles of organization filed with the state and the IRS designation with the federal government establish it as a public entity. In the event it is discontinued, all proceeds and assets are distributed by the government for public use and no one individual benefits. A non-profit charter must include that provision.
The following link at NOLO provides the chronological process between a state registration and the IRS in applying for non-profit registration and tax-exempt status:
http://www.nolo.com/article.cfm/objectID/EA3D3043-9A88-43F5-8DC869639F0F6E77/111/262/ART/
For-Profit Organizations
A for-profit organization is founded by individuals specifically defined by name as owners in the articles of incorporation with the state and registered with the federal government for tax purposes. There are many different types of for-profit entities (S Corp, Sole Proprietorship, LLC, Partnership, etc.); each type has its own unique tax and operating characteristics.
A for-profit organization exists for the specific purpose of providing a return on investment for the owners. All assets on the books of the company are the property of the company, and although certain types of corporations, such as a Limited Liability Company (LLC) reduce the risk and insulate the owners' private assets to some degree, in general what is invested by an owner in the firm is the property of the firm and subject to business risks and the laws governing such matters. In return the owner or stockholder is entitled to the return on his or her investment as an individual in the form of dividends, direct proceeds after costs or other forms of entitlement (conveying what is commonly known as profit).
GRANTS VS. DIRECT CONTRACTING
Small Business Grant Funding
Small Business Government Grants have the effect of supplying lump sum funding to a non-profit organization for a specific period once the grant is awarded. In general the funding is used to further the stated mission of the business. However, the grant provider may reserve the right to receive reports on how the money was spent and may require deliverable items associated with performance of the work under the grant.
Certain grants take the form of cooperative agreements, whereby the non-profit and the agency commit to supplying mutual funding amounts to a project. Under limited or special circumstances involving 0 profit, a for-profit entity may be eligible for such a cooperative agreement with the federal government.
Federal Government grant regulations are at the following link:
http://fa.statebuy.state.gov/content.asp?content_id=120&menu_id=66
Web sites for researching federal grants as well as additional information on grants in general are at the following sites:
http://www.grants.gov/
http://www.npguides.org/links.htm
Small Business Direct Contract Funding
Federal Government direct contracting regulations are at:
https://www.acquisition.gov/far/
“Small to Feds”, the web site you are reading, was initiated to assist small businesses in understanding the above regulation and direct federal government contracting. Please see the table of contents in the left margin of this site for topics.
As stated in the introduction above, both for-profit and non-profit entities compete for direct federal contracting. A non-profit entity will bid grants and direct contracts at 0 profit. The following links are suggested as an introduction to direct federal government contracting:
http://www.smalltofeds.com/2009/10/introducing-federal-government.html
http://www.smalltofeds.com/2009/06/federal-government-contracting-small.html
http://www.smalltofeds.com/2009/01/should-you-consider-small-business.html
SUMMARY
This article has provided a brief (and admittedly general) overview of the difference between non-profit and for-profit business entities and the small business government grants and direct contracting available to each.
Both small business government grants and direct government contracts are highly competitive. Selecting potential agency sources and submitting winning proposals are acquired skills. For assistance in writing grant and direct contract proposals please see the following links:
http://www.smalltofeds.com/2007/02/federal-government-contract-proposal.html
http://www.proposalwriter.com/
When considering forming an enterprise, please assess in your business plan the potential of both types of entities in direct contracting or grant competitions. Go to the SBA web site that guides you through the business planning process. I suggest you follow the site presentation and note the factors to consider:
http://www.sba.gov/smallbusinessplanner/plan/writeabusinessplan/index.html
The following site contains samples of business plans:
http://www.bplans.com/sample_business_plans/all_plans.cfm
Look for examples in the above of both for-profit and non-profit organizations at the above link.
Ask yourself some strategic questions, such as what competition you envision and what your marketing plan will be. Addressing these questions may take some research and that is all part of the process of putting in place your plan. It is your road map for the future.
Tuesday, December 8, 2009
2010 Small Business Federal Government Contracting Guidebook
PLEASE CLICK ON IMAGE OR DOWNLOAD TO ENLARGE
Please use the "Box Net" cube on the left margin of this site to download a free copy of this 3rd Edition of "Small Business Federal Government Contracting".
The book contains guidance in 7 major areas of the business with 38 articles and two appendices (A and B) on company long range rate forecasting and pricing.
I appreciate the 44 thousand individuals who have visited this site (See Site Meter - also on left margin) and the survey responses which have influenced the content of this book. I have also enjoyed the over 2,800 SCORE clients who have contacted me for assistance. You have helped to keep an old vet intellectually stimulated and professionally fulfilled.
My thanks to you all and Happy Holidays!
Ken Larson
2. SHOULD YOU CONSIDER SMALL BUSINESS FEDERAL GOVERNMENT CONTRACTING
CONTRACTOR REGISTRATION REQUIREMENTS
3. SMALL BUSINESS SET ASIDE DESIGNATIONS
4. SERVICE-DISABLED, VETERAN-OWNED BUSINESS EMPHASIS
5. REGISTERING FOR FEDERAL GOVERNMENT CONTRACTING
KNOW YOUR CUSTOMER
6. PROCUREMENT INTEGRITY AND THE LAW
7. CUSTOMER RELATIONS
8. PROTECTING INTELLECTUAL AND PROPRIETARY DATA
ACQUISITION AND CONTRACT TYPES
9. ACQUISITION CATEGORIES
10. CONTRACT TYPES
MARKETING
11. INTRODUCING GOVERNMENT CONTRACTING INTO YOUR COMMERCIAL BUSINESS
12. FEDBIZOPPS - THE FEDERAL BUSINESS OPPORTUNITIES WEB SITE
13. MARKETING IN THE FEDERAL ENVIRONMENT
14. SEVEN MANAGEMENT TECHNIQUES TO ACHIEVE A CONTRACT
15. MULTIPLE FRONT MARKETING
16. TEAMING IN GOVERNMENT CONTRACTING
17. OBTAINING AND UTILIZING A GSA SCHEDULE
18. IMPORT/EXPORT MANAGEMENT
PROPOSALS
19. PROPOSAL PREPARATION
20. THE “PAST PERFORMANCE” CHALLENGE
21. CONTINGENT HIRE AGREEMENT
THE CONTRACT
22. CONTRACT FORMAT
23. CONTRACT LINE ITEMS
24. STATEMENT OF WORK AND TECHNICAL SPECIFICATIONS
25. CONTRACT DATA REQUIREMENTS LIST (CDRL)
26. CONTRACT NEGOTIATION
27. CONTRACT WORK AUTHORIZATION
28. CONTRACT BILLING
29. CONTRACT PROPERTY MANAGEMENT
30. SECURITY CLEARANCES
PRICING, BUSINESS SYSTEMS, FINANCE & ACCOUNTING
31. SMALL BUSINESS SYSTEMS DEVELOPMENT
32. UNALLOWABLE COSTS
33. LIMITATION OF FUNDS AND FUNDING EXPOSURE
34. ESTABLISHING COMPLIANT SMALL BUSINESS SYSTEMS
35. DCAA AUDITS AND JOB COST ACCOUNTING SYSTEMS
36. PROVISIONAL INDIRECT RATES
37. EARNED VALUE MANAGEMENT SYSTEMS
38. CONTRACT BASELINE MANAGEMENT
The book contains guidance in 7 major areas of the business with 38 articles and two appendices (A and B) on company long range rate forecasting and pricing.
I appreciate the 44 thousand individuals who have visited this site (See Site Meter - also on left margin) and the survey responses which have influenced the content of this book. I have also enjoyed the over 2,800 SCORE clients who have contacted me for assistance. You have helped to keep an old vet intellectually stimulated and professionally fulfilled.
My thanks to you all and Happy Holidays!
Ken Larson
TABLE OF CONTENTS
1. FORWARD 2. SHOULD YOU CONSIDER SMALL BUSINESS FEDERAL GOVERNMENT CONTRACTING
CONTRACTOR REGISTRATION REQUIREMENTS
3. SMALL BUSINESS SET ASIDE DESIGNATIONS
4. SERVICE-DISABLED, VETERAN-OWNED BUSINESS EMPHASIS
5. REGISTERING FOR FEDERAL GOVERNMENT CONTRACTING
KNOW YOUR CUSTOMER
6. PROCUREMENT INTEGRITY AND THE LAW
7. CUSTOMER RELATIONS
8. PROTECTING INTELLECTUAL AND PROPRIETARY DATA
ACQUISITION AND CONTRACT TYPES
9. ACQUISITION CATEGORIES
10. CONTRACT TYPES
MARKETING
11. INTRODUCING GOVERNMENT CONTRACTING INTO YOUR COMMERCIAL BUSINESS
12. FEDBIZOPPS - THE FEDERAL BUSINESS OPPORTUNITIES WEB SITE
13. MARKETING IN THE FEDERAL ENVIRONMENT
14. SEVEN MANAGEMENT TECHNIQUES TO ACHIEVE A CONTRACT
15. MULTIPLE FRONT MARKETING
16. TEAMING IN GOVERNMENT CONTRACTING
17. OBTAINING AND UTILIZING A GSA SCHEDULE
18. IMPORT/EXPORT MANAGEMENT
PROPOSALS
19. PROPOSAL PREPARATION
20. THE “PAST PERFORMANCE” CHALLENGE
21. CONTINGENT HIRE AGREEMENT
THE CONTRACT
22. CONTRACT FORMAT
23. CONTRACT LINE ITEMS
24. STATEMENT OF WORK AND TECHNICAL SPECIFICATIONS
25. CONTRACT DATA REQUIREMENTS LIST (CDRL)
26. CONTRACT NEGOTIATION
27. CONTRACT WORK AUTHORIZATION
28. CONTRACT BILLING
29. CONTRACT PROPERTY MANAGEMENT
30. SECURITY CLEARANCES
PRICING, BUSINESS SYSTEMS, FINANCE & ACCOUNTING
31. SMALL BUSINESS SYSTEMS DEVELOPMENT
32. UNALLOWABLE COSTS
33. LIMITATION OF FUNDS AND FUNDING EXPOSURE
34. ESTABLISHING COMPLIANT SMALL BUSINESS SYSTEMS
35. DCAA AUDITS AND JOB COST ACCOUNTING SYSTEMS
36. PROVISIONAL INDIRECT RATES
37. EARNED VALUE MANAGEMENT SYSTEMS
38. CONTRACT BASELINE MANAGEMENT
Saturday, October 31, 2009
INTRODUCING FEDERAL GOVERNMENT CONTRACTING INTO YOUR COMMERCIAL SMALL BUSINESS
INTRODUCTION
As a result of the current economic recession and associated government stimulus programs, many SCORE inquiries have been received from commercial firms and startups regarding entering the small business federal government contracting market. Topics relevant to the issue have been posted at this site since 2006, but a comparison has not been made between the commercial and government environments to benefit readers. The purpose of this article is to compare small business federal government contracting as opposed to selling commercial products and services. The comparison may be useful for those who are considering melding commercial and federal government business or starting an enterprise involving both venues.
WHAT FEDERAL GOVERNMENT CONTRACTING IS -- AND IS NOT
Small business federal government contracting is not rocket science - to succeed you must take what you do well in the commercial market place or what your experience leads you to believe you can plan successfully as a commercial enterprise and then apply it in a slightly different manner from a business perspective to accommodate federal government contracting requirements. Very few companies enter federal government contracting without some commercial experience and success. Very few startups entertain contracting exclusively to the federal government without commercial work to sustain operations while the more lengthy government procurement process is being pursued.
Federal government contracting is controlled by the Federal Acquisition Regulation (FAR). Bid and proposal types are driven by the nature of the supply or service being procured. No one reads the FAR cover to cover - It is a source book for when you need it. The FAR and associated regulations are taught in only a few colleges, such as the Defense Systems Acquisition University at Ft. Belvoir and the George Washington School of Government Contracting. Very few CPA's are familiar with the US Government FAR Cost Accounting Standards (CAS) and I am not aware of any questions regarding CAS on current CPA exams. In general one must grow to understand these requirements and that usually happens by doing business under them.
BUSINESS DRIVER COMPARISONS
The following are some common driving business factors and a commercial versus federal government comparison for each:
PLEASE CLICK ON IMAGE OR DOWNLOAD TO ENLARGE
SUMMARY
The above are not all the driving factors you should consider when weighing the differences between commercial and government work, but they are some of the most significant. Becoming a government supplier may not result in the highest profit-making product/service line in your enterprise but the venue has the potential to pay the bills and be a major platform for stability and long term growth. It should not be your only endeavor but it could be a major element of your total business plan.
Please see the table of contents at this site and the free downloads of books and materials for further details.
As a result of the current economic recession and associated government stimulus programs, many SCORE inquiries have been received from commercial firms and startups regarding entering the small business federal government contracting market. Topics relevant to the issue have been posted at this site since 2006, but a comparison has not been made between the commercial and government environments to benefit readers. The purpose of this article is to compare small business federal government contracting as opposed to selling commercial products and services. The comparison may be useful for those who are considering melding commercial and federal government business or starting an enterprise involving both venues.
WHAT FEDERAL GOVERNMENT CONTRACTING IS -- AND IS NOT
Small business federal government contracting is not rocket science - to succeed you must take what you do well in the commercial market place or what your experience leads you to believe you can plan successfully as a commercial enterprise and then apply it in a slightly different manner from a business perspective to accommodate federal government contracting requirements. Very few companies enter federal government contracting without some commercial experience and success. Very few startups entertain contracting exclusively to the federal government without commercial work to sustain operations while the more lengthy government procurement process is being pursued.
Federal government contracting is controlled by the Federal Acquisition Regulation (FAR). Bid and proposal types are driven by the nature of the supply or service being procured. No one reads the FAR cover to cover - It is a source book for when you need it. The FAR and associated regulations are taught in only a few colleges, such as the Defense Systems Acquisition University at Ft. Belvoir and the George Washington School of Government Contracting. Very few CPA's are familiar with the US Government FAR Cost Accounting Standards (CAS) and I am not aware of any questions regarding CAS on current CPA exams. In general one must grow to understand these requirements and that usually happens by doing business under them.
BUSINESS DRIVER COMPARISONS
The following are some common driving business factors and a commercial versus federal government comparison for each:
PLEASE CLICK ON IMAGE OR DOWNLOAD TO ENLARGE
SUMMARY
The above are not all the driving factors you should consider when weighing the differences between commercial and government work, but they are some of the most significant. Becoming a government supplier may not result in the highest profit-making product/service line in your enterprise but the venue has the potential to pay the bills and be a major platform for stability and long term growth. It should not be your only endeavor but it could be a major element of your total business plan.
Please see the table of contents at this site and the free downloads of books and materials for further details.
Wednesday, September 30, 2009
FEDERAL GOVERNMENT CONTRACTING SMALL BUSINESS SYSTEMS DEVELOPMENT
INTRODUCTION
Waiting for a contract award to achieve a government contracting business process is not advisable. A win may not happen at all without addressing the structure and process requirements in your proposal to convince the customer you understand his business environment.
If you are not prepared in advance and you are fortunate enough to win, then in a very short time frame you will have to evolve your business system to perform on your contract and submit a billing
This article will discuss a framework for a small enterprise to develop a business system in service contracting, which is the most frequent venue utilized to enter the government market.
The following diagram depicts the major elements of a suggested integrated template:
(PLEASE CLICK ON IMAGE OR DOWNLOAD TO ENLARGE)
Waiting for a contract award to achieve a government contracting business process is not advisable. A win may not happen at all without addressing the structure and process requirements in your proposal to convince the customer you understand his business environment.
If you are not prepared in advance and you are fortunate enough to win, then in a very short time frame you will have to evolve your business system to perform on your contract and submit a billing
This article will discuss a framework for a small enterprise to develop a business system in service contracting, which is the most frequent venue utilized to enter the government market.
The following diagram depicts the major elements of a suggested integrated template:
(PLEASE CLICK ON IMAGE OR DOWNLOAD TO ENLARGE)
If you are a small startup organization, your process and automation may be quite rudimentary and simple in addressing the above structure and functions. If your company is in a high growth mode with many transactions, projects and details your processes and computerization will be more complex.
The point to remember is the need to overlay the above on your existing company for the unique products and services you provide, and then address how to fit, supplement, or accommodate the necessary adjustments to support contracting to the government.
Please read the following articles on the highlighted topics for details that may assist in evolving your unique business processes to support government contracting:
Long Range Planning
http://www.smalltofeds.com/2009/01/should-you-consider-small-business.html
http://www.smalltofeds.com/2008/08/provisional-indirect-rates-in-small.html
http://www.smalltofeds.com/2009/05/small-business-teamiing-in-government.html
http://www.smalltofeds.com/2008/09/protecting-intellectual-property-and.html
Human Resource Planning
http://www.smalltofeds.com/2009/05/generic-contingent-hire-agreement.html
Project Planning
http://www.smalltofeds.com/2008/05/earned-value-management-systems.html
http://www.smalltofeds.com/2009/08/contract-baseline-management-in-small.html
Cost Centers, General and Administrative , Operations, Job Cost Records
http://www.smalltofeds.com/2008/03/establishing-far-and-cas-compliant.html
http://www.smalltofeds.com/2008/02/dcaa-audits-and-small-business-job-cost.html
Customer Relations
http://www.smalltofeds.com/2009/09/what-small-business-should-know-about.html
http://www.smalltofeds.com/2009/07/multiple-front-marketing-in-small.html
http://www.smalltofeds.com/2009/06/federal-government-contracting-small.html
SUMMARY
You may wish to download the free book and related documents at the "Box Net" cube in the left margin of this site for further information and live examples.
Remember, small business federal government contracting is not rocket science - it is taking what you do well in the commercial environment and applying it in a slightly different manner from a business perspective to accommodate the way the federal government does business.
Tuesday, September 1, 2009
WHAT SMALL BUSINESS SHOULD KNOW ABOUT "FEDBIZOPPS.GOV" - THE FEDERAL BUSINESS OPPORTUNITIES WEB SITE
INTRODUCTION
This posting will provide strategic guidance on FEDBIZOPPS and factors for using it in small business marketing to government agencies and prime contractors.
A PUBLIC DOMAIN ACQUISITIONS BULLETIN BOARD
Established as the public announcement vehicle for all federal procurements over $25K, FEDBIZOPPS is a web-based, "Public Announcement Bulletin Board" to satisfy fairness in government contracting laws mandated by US law. It is a terrific market research tool and an absolute necessity once a solicitation has gone formal to stay abreast of modifications, changes in proposal due dates, questions and answers and other necessary information that contracting officers are required to make public. The site has recently been expanded to include a special section on federal government "Recovery and Re-Investment" Contracts.
WHAT ANNOUNCEMENTS MEAN
FEDBIZOPPS is the mandated posting point for contracting officers in all federal agencies. It is also the required notification point for GSA schedule solicitations, contract award announcements of all types and other information that is required by law for communication to the public in a fair and open manner regarding federal government procurement of supplies and services. The site contains "Sources Sought" and bidders conference notices, government requests for industry comment on draft RFP's and formally published solicitations with proposal due dates. The current FEDBIZOPPS "Agency Tab" lists 122 agencies:
https://www.fbo.gov/index?s=agency&mode=list&tab=list
A solicitation posted at FEBIZOPPS generally means that a procurement has received funding and the contracting officer has been authorized to start the source selection process.
Often misunderstood, is that much has occurred in the way of marketing activities by companies in advance of notices formally published by the government on FEDBIZOPPS. By the time the formal, solicitation is published it is too late to market for setting a procurement aside for a small business designation if it has not already been established as such. In addition, formal solicitation publication closes the window on self-marketing by HUB Zone and 8(a) firms for set asides to them individually without competition. In short, businesses have been marketing for the requirement long before it became formally announced at FEDBIZOPPS.
Finding a solicitation that is ideal for your company for the first time on FEDBIZOPPS is excellent market research insight into what the agency publishing the requirement is buying. However, a careful bid/no bid analysis should be conducted as to whether it is prudent to go through the expense of a proposal if the opportunity has not been a new business target for your firm earlier in the game. Please see the following article on completing a bid/no bid analysis:
http://www.smalltofeds.com/2007/02/federal-government-contract-proposal.html
NAVIGATING THE SITE
Start by registering at FEDBIZOPPS. Many of the features available to users are not accessible without a registration. Begin some careful searches by key words into agency solicitations that could use your products and services. The FEDBIZOPPS user guide is available as a free download at the "Boxnet" cube of this web site to the immediate left of where you are now reading. Study it before you complete your registration. Be specific in your key word selections on the feature that allows direct emailing to you of announcements by agencies.
The data base is huge and it is best to move from specific key word selections to the more general with experience to avoid being inundated with meaningless solicitations. Some companies establish a separate email address for the FEDBIZOPPS mailings to keep the results out of the mainstream of other business. The mailings are totally automated so there are no marketing factors to consider in setting up such an arrangement.
As you examine the solicitations, see who has indicated an interest in bidding them among your competitors and the primes you are pursuing and then target such projects for participation by your firm either as a prime yourself or as a subcontractor. Pay particular attention to "Sources Sought", Draft RFP "Request for Industry Comments" and similar announcements that indicate an early requirement taking shape.
For active solicitations that you wish to monitor, check the "Follow" Box on FEDBIZOPPS to receive updates and announcements by email. Once the solicitation reaches the formal RFP stage and a due data for a proposal has been established, if you have decided to bid the job the "Follow" feature is especially critical.
If there is a bidders conference and you intend to bid the job, make plans to attend. When questions are solicited you may ask them but remember that your question and its associated answer will be published by the government so be careful not to educate your competition to your win strategy in the process.
You do not have to indicate you are interested in bidding the job by registering as an "Interested Vendor" in order to bid a solicitation. Some companies prefer not to advertise their bid intentions, seeking to avoid competitors modeling their firm.
A MARKET RESEARCH SOURCE
If you are new to federal government contracting and wish to determine the best market for your supplies and services, observing what a given agency is buying on FEDBIZOPPS is a key factor.
Keep in mind that the decision makers in government contracting are the technical managers and process people behind the scenes in an organization (either government agency or large company). They have the budget authority, program responsibility and accountability. These people pass their decisions on to buyers and contracting officers via signed requisitions. Buyers and contracting officers are really no more than gate keeping staff members, knowledgeable in legalities, terms and conditions and who sign on behalf of the agency or company AFTER an internal review by the executives who have technical and management responsibility.
Thus your real marketing targets are behind the gatekeepers and little is achieved by marketing to a contracting officer or buyer. This rule of thumb applies with prime contractor contracting specialists and administrators as well as government personnel. For further details on the roles of these personnel please see the following link:
http://www.smalltofeds.com/2007/06/federal-government-contracting-customer.html
Once again, bidding an active solicitation after it has hit FEDBIZOPPS may be too late. The idea is to use them for market research so you can target similar projects earlier in the process. Research the technologies and services in which your targeted agencies and primes are involved through trade magazines, Internet articles, web sites, employment hiring fairs and industry conferences.
Focus your marketing campaign on finding evolving projects you can use as vehicles to approach teaming partners and agencies directly with a marketing campaign geared to your capability statement. Develop a solution to the specific needs of the project and present it to gain their attention.
Your principal challenge as a small product and services provider is finding evolving programs and projects into which your capabilities fit. Once you have found such targets it is then a matter of marketing brusquely to get into the game with eye catching solutions and capabilities.
SUMMARY
When a procurement becomes public on FEDBIZOPPS it stays public, but many invisible strings behind the scenes are likely already attached to it by aggressive and talented companies who may have sculpted the requirement with the agency, assisted in writing the statement of work or influenced the structure of the specifications to favor their products and services. All this is good, competitive marketing practice in the government contracting venue, just as it is in the commercial marketplace.
Use FEDBIZOPPS as discussed here in consonance with the following teaming and marketing articles:
http://www.smalltofeds.com/2009/05/small-business-teamiing-in-government.html
http://www.smalltofeds.com/2009/07/multiple-front-marketing-in-small.html
http://www.smalltofeds.com/2006/12/marketing-small-business-in-federal_17.html
FEDBIZOPPS is an absolute necessity once you make a bid decision. It is an extensive resource prior to such decisions and if utilized prudently it can enhance your small business government contract marketing plan dramatically.
This posting will provide strategic guidance on FEDBIZOPPS and factors for using it in small business marketing to government agencies and prime contractors.
A PUBLIC DOMAIN ACQUISITIONS BULLETIN BOARD
Established as the public announcement vehicle for all federal procurements over $25K, FEDBIZOPPS is a web-based, "Public Announcement Bulletin Board" to satisfy fairness in government contracting laws mandated by US law. It is a terrific market research tool and an absolute necessity once a solicitation has gone formal to stay abreast of modifications, changes in proposal due dates, questions and answers and other necessary information that contracting officers are required to make public. The site has recently been expanded to include a special section on federal government "Recovery and Re-Investment" Contracts.
WHAT ANNOUNCEMENTS MEAN
FEDBIZOPPS is the mandated posting point for contracting officers in all federal agencies. It is also the required notification point for GSA schedule solicitations, contract award announcements of all types and other information that is required by law for communication to the public in a fair and open manner regarding federal government procurement of supplies and services. The site contains "Sources Sought" and bidders conference notices, government requests for industry comment on draft RFP's and formally published solicitations with proposal due dates. The current FEDBIZOPPS "Agency Tab" lists 122 agencies:
https://www.fbo.gov/index?s=agency&mode=list&tab=list
A solicitation posted at FEBIZOPPS generally means that a procurement has received funding and the contracting officer has been authorized to start the source selection process.
Often misunderstood, is that much has occurred in the way of marketing activities by companies in advance of notices formally published by the government on FEDBIZOPPS. By the time the formal, solicitation is published it is too late to market for setting a procurement aside for a small business designation if it has not already been established as such. In addition, formal solicitation publication closes the window on self-marketing by HUB Zone and 8(a) firms for set asides to them individually without competition. In short, businesses have been marketing for the requirement long before it became formally announced at FEDBIZOPPS.
Finding a solicitation that is ideal for your company for the first time on FEDBIZOPPS is excellent market research insight into what the agency publishing the requirement is buying. However, a careful bid/no bid analysis should be conducted as to whether it is prudent to go through the expense of a proposal if the opportunity has not been a new business target for your firm earlier in the game. Please see the following article on completing a bid/no bid analysis:
http://www.smalltofeds.com/2007/02/federal-government-contract-proposal.html
NAVIGATING THE SITE
Start by registering at FEDBIZOPPS. Many of the features available to users are not accessible without a registration. Begin some careful searches by key words into agency solicitations that could use your products and services. The FEDBIZOPPS user guide is available as a free download at the "Boxnet" cube of this web site to the immediate left of where you are now reading. Study it before you complete your registration. Be specific in your key word selections on the feature that allows direct emailing to you of announcements by agencies.
The data base is huge and it is best to move from specific key word selections to the more general with experience to avoid being inundated with meaningless solicitations. Some companies establish a separate email address for the FEDBIZOPPS mailings to keep the results out of the mainstream of other business. The mailings are totally automated so there are no marketing factors to consider in setting up such an arrangement.
As you examine the solicitations, see who has indicated an interest in bidding them among your competitors and the primes you are pursuing and then target such projects for participation by your firm either as a prime yourself or as a subcontractor. Pay particular attention to "Sources Sought", Draft RFP "Request for Industry Comments" and similar announcements that indicate an early requirement taking shape.
For active solicitations that you wish to monitor, check the "Follow" Box on FEDBIZOPPS to receive updates and announcements by email. Once the solicitation reaches the formal RFP stage and a due data for a proposal has been established, if you have decided to bid the job the "Follow" feature is especially critical.
If there is a bidders conference and you intend to bid the job, make plans to attend. When questions are solicited you may ask them but remember that your question and its associated answer will be published by the government so be careful not to educate your competition to your win strategy in the process.
You do not have to indicate you are interested in bidding the job by registering as an "Interested Vendor" in order to bid a solicitation. Some companies prefer not to advertise their bid intentions, seeking to avoid competitors modeling their firm.
A MARKET RESEARCH SOURCE
If you are new to federal government contracting and wish to determine the best market for your supplies and services, observing what a given agency is buying on FEDBIZOPPS is a key factor.
Keep in mind that the decision makers in government contracting are the technical managers and process people behind the scenes in an organization (either government agency or large company). They have the budget authority, program responsibility and accountability. These people pass their decisions on to buyers and contracting officers via signed requisitions. Buyers and contracting officers are really no more than gate keeping staff members, knowledgeable in legalities, terms and conditions and who sign on behalf of the agency or company AFTER an internal review by the executives who have technical and management responsibility.
Thus your real marketing targets are behind the gatekeepers and little is achieved by marketing to a contracting officer or buyer. This rule of thumb applies with prime contractor contracting specialists and administrators as well as government personnel. For further details on the roles of these personnel please see the following link:
http://www.smalltofeds.com/2007/06/federal-government-contracting-customer.html
Once again, bidding an active solicitation after it has hit FEDBIZOPPS may be too late. The idea is to use them for market research so you can target similar projects earlier in the process. Research the technologies and services in which your targeted agencies and primes are involved through trade magazines, Internet articles, web sites, employment hiring fairs and industry conferences.
Focus your marketing campaign on finding evolving projects you can use as vehicles to approach teaming partners and agencies directly with a marketing campaign geared to your capability statement. Develop a solution to the specific needs of the project and present it to gain their attention.
Your principal challenge as a small product and services provider is finding evolving programs and projects into which your capabilities fit. Once you have found such targets it is then a matter of marketing brusquely to get into the game with eye catching solutions and capabilities.
SUMMARY
When a procurement becomes public on FEDBIZOPPS it stays public, but many invisible strings behind the scenes are likely already attached to it by aggressive and talented companies who may have sculpted the requirement with the agency, assisted in writing the statement of work or influenced the structure of the specifications to favor their products and services. All this is good, competitive marketing practice in the government contracting venue, just as it is in the commercial marketplace.
Use FEDBIZOPPS as discussed here in consonance with the following teaming and marketing articles:
http://www.smalltofeds.com/2009/05/small-business-teamiing-in-government.html
http://www.smalltofeds.com/2009/07/multiple-front-marketing-in-small.html
http://www.smalltofeds.com/2006/12/marketing-small-business-in-federal_17.html
FEDBIZOPPS is an absolute necessity once you make a bid decision. It is an extensive resource prior to such decisions and if utilized prudently it can enhance your small business government contract marketing plan dramatically.
Saturday, August 1, 2009
CONTRACT BASELINE MANAGEMENT IN SMALL BUSINESS FEDERAL GOVERNMENT CONTRACTING
INTRODUCTION
Government Computer News (GCN) recently carried a story on the difficulties experienced with, "Performance-Based Contracting", which has been made part of the Federal Acquisition Regulation (FAR) in an attempt to pre-establish at contract award those discrete outcomes that determine if and when a contractor will be paid.
Interestingly enough, the article splits the blame for the difficulties right down the middle, stating the government typically has problems defining what it wants as an end product or outcome and looks to contractors to define it for them. More than willing to do so, the contactors detail specific end products or outcomes, set schedule milestones and submit competitive proposals.
The winner is selected based on what the government thinks it needs at the time to fulfill its requirement and a contract is negotiated. Once underway, the government decides it wants something else (usually a management-by-government committee phenomena with a contractor growing his product or service by offering lots of options). The resulting change of contract scope invalidates the original price and schedule, so a whole new round of proposals and negotiations must occur with the winner while the losers watch something totally different evolve than that for which they competed. The clock keeps ticking and the winner keeps getting his monthly bill paid based on incurred cost or progress payments. The link to the GCN article is below:
http://www.gcn.com/online/vol1_no1/42691-1.html
The present state of the economy will not allow the aforementioned to continue. Government agencies are now hard pressed to insure the most "Bang for the Buck". It is in the long term interests of astute contractors to assist in that endeavor. The only way to achieve such an objective is through sound technical, cost and schedule contract definition via an iterative process of baseline management and control. This article will address that process.
SOLICITATION AND STATEMENT OF WORK BASELINE
If you are selling a straight commercial product off the shelf, the problem of baseline management is minimal, assuming your product meets the specifications required and you deliver on time. Is it during development programs for new products or service contracts involving labor supplied to the government that lack of definition and poor communication are high risks. The initial benchmark for managing this risk is in the government solicitation and statement of work.
A wise customer farms the preliminary draft solicitation and statement of work out to prospective bidders and requests comment. A wise supplier is constructive, yet critical in pointing out weaknesses in the document.
Part 1, Section C, is where the technical specifications and statement of work are located in the solicitation and will reside in your negotiated contract.Without a well written Statement of Work (SOW) and associated supplies and services specifications there is unacceptable risk in the future contract and is it exceptionally high risk to bid or contract the job. Both the contractor and the government must come to an understanding regarding the scope of effort to be performed. That understanding is conveyed in the SOW and confirmed in the specifications referenced therein. A good SOW should have the following principal attributes:
* Clear identification of the products, services, skills, materials and performance factors required to complete the contract
* A description of the conditions under which the contractor will be required to perform and any related environmental or location factors
* Specific references to product specifications that govern an acceptable product or services performance outcome and delivery acceptance
* A schedule for the contract that identifies discrete delivery dates for products and specific start and end dates for supporting labor.
* A precise description of government furnished material or facilities required and when it will be made available to the contractor.
If your customer does not provide the above, offer a revision to the document during the comments period, during your proposal or during negotiations that represents a version to which your company will commit. Do not let the fact the program is competitive sway you from the facts. Signing off on a poorly written SOW results in a difficult contract to manage, a high probability for disputes during the contracting period and a poor past performance record you will have to deal with in the future on other jobs.
You should also do a complete review of the Contract Line Item (CLIN) Structure in the solicitation and cross foot SOW requirements to insure the scope is covered by the CLIN'S.
Please see the following article on how to perform this analysis:
http://www.smalltofeds.com/2009/03/contract-line-items-heart-of-your.html
NEGOTIATION BASELINE
The following article discusses the standard template for negotiations through which government contracts generally pass:
http://www.smalltofeds.com/2007/03/small-business-federal-government.html
During the audit, fact-finding and subsequent negotiation steps, a growing definition of the contract occurs and a clear understanding between you and your customer evolves. If you find the process slow and unknowns frequently surfacing, that is a barometer of future difficulty unless the issues are resolved. Technical work scope, schedule, cost and terms and conditions regarding inspection and acceptance as well as payment provisions are especially sensitive.
CONTRACT AWARD BASELINE
Signing the contract represents full agreement on the proposal and conclusion of negotiations. Award is the benchmark baseline for contract performance.
BASELINE MAINTENANCE - THE CHANGES CLAUSE
During the period of performance on a development or services contract, effort does not always go as planned. The article on Earned Value Performance Measurement (EVMS) at this site is one technique to control this situation:
http://www.smalltofeds.com/2008/05/earned-value-management-systems.html
Not all programs warrant EVMS or have the funding to perform that type of control. The simple rule of thumb is that the changes clause in your contract allows you to request additional funding and schedule relief, as well as a modification to the SOW if you are being driven by customer directed work scope change events to depart from the baseline to which you committed at contract award.
To the extent you do not remain sensitive to this provision, on a firm fixed price contract you will lose money. On a cost plus and time and materials type contract you will consume funding at a higher rate and faster than the contact baseline anticipated and your customer may or may not be able to provide additional monies when the ceiling amount on the contract is reached. At that point in time it is too late and everyone is disappointed.
The above occurrences are collectively known as "Scope Creep" in project management circles.
THE DIFFERENCE BETWEEN BUDGET AND FUNDING - (Limitation of Funds and Funding Exposure)
Many federal contracts are funded incrementally, usually based on the government fiscal year that runs from 1 October to 30 September. Although the government may negotiate dollar price ceilings for cost plus and time and materials contracts or firm, fixed total price arrangements, the contracts themselves may be incrementally funded, particularly if they extend over two government fiscal years.
A contract may contain negotiated prices or a cost ceiling but also specify an incremental funding value. The contractor is required to inform the government when actual costs incurred plus obligations to suppliers or payroll on a specific contract reach certain thresholds of the current incremental funding specified in the contract (usually 80%). The government is then obligated to further fund the contract. In the event the contract is not funded further, the contractor has the right to stop work before he exceeds the incremental funding.
Some contractors choose to operate on "risk," continuing to perform on a contract while exceeding the incremental funding in booked cost and obligations. The government is under no obligation to reimburse the contractor for amounts exceeding incremental funding.
Nearing the end of a government fiscal year, a contractor may find delays in funding reaching all the way to congress. This situation must be managed with the government contracting officer.
If a contract is not funded to continue and the contractor has performed to date in accordance with all required terms, the government retains the right to terminate the contract for the convenience of the government. This requires a special notification to the contractor from the government and usually occurs due to changes in government priorities. The contractor may then bill the government for all costs and obligations to date, plus any direct and indirect extraordinary costs associated with business disruption, termination administration, employee layoff cost and the like. Terminations for convenience are very expensive for the government. Nevertheless, limitation of funds and funding exposure must be carefully monitored by an astute small business.
To properly manage incremental funding, the business system must be capable of accounting monthly for all direct and indirect costs on each contract, plus commitments to suppliers and employees in the form of open purchase orders and unpaid or un-posted payroll.
Your internal release document should specify the current incremental funding if your contract is not fully funded at award. Further revisions to your release documentation should convey receipt of contact amendments from the government that supply additional required funding to the contract as performance proceeds. Requests for increases in incremental funding are required when the actual booked cost plus commitments to suppliers reaches 80% of the current funding on the contact.
In the event the contact is not adequately funded incrementally by the government, a revision to your internal release documentation should specify a stop work order after you have notified your customer that you plan to cease performance on the contract due to lack of sufficient funding. Notification should be provided to suppliers under your contract with a stop work to avoid their incurring additional costs for which you are not receiving funding from the government. Be specific with a stop work date to these suppliers.
IN SUMMARY - KNOW WHERE YOUR ARE AND WHEN TO SAY "NO"
"Scope Creep" can kill a contract, a customer relationship and a past performance record, all of which are important to your business. Stay in front of "The Scope Creep" by communicating positively with your customer to control your baseline, keeping cost, schedule and technical performance integrated and synchronous.
Six rules of Thumb to control "Scope Creep":
1. KNOW - The contract value and its ceiling amount
2. KNOW - The incurred cost to date and commitments
3. KNOW - The scope of work and whether or not your current efforts are supporting it or some other objectives
4. KNOW - The estimated cost at completion based on where you are at today
5. KNOW - Your customer and who among the customer population is prone to direct out of scope effort.
6. KNOW - WHEN TO SAY "NO" to "Scope Creep" and say it officially in writing to the contracting officer specified in your contract.
Government Computer News (GCN) recently carried a story on the difficulties experienced with, "Performance-Based Contracting", which has been made part of the Federal Acquisition Regulation (FAR) in an attempt to pre-establish at contract award those discrete outcomes that determine if and when a contractor will be paid.
Interestingly enough, the article splits the blame for the difficulties right down the middle, stating the government typically has problems defining what it wants as an end product or outcome and looks to contractors to define it for them. More than willing to do so, the contactors detail specific end products or outcomes, set schedule milestones and submit competitive proposals.
The winner is selected based on what the government thinks it needs at the time to fulfill its requirement and a contract is negotiated. Once underway, the government decides it wants something else (usually a management-by-government committee phenomena with a contractor growing his product or service by offering lots of options). The resulting change of contract scope invalidates the original price and schedule, so a whole new round of proposals and negotiations must occur with the winner while the losers watch something totally different evolve than that for which they competed. The clock keeps ticking and the winner keeps getting his monthly bill paid based on incurred cost or progress payments. The link to the GCN article is below:
http://www.gcn.com/online/vol1_no1/42691-1.html
The present state of the economy will not allow the aforementioned to continue. Government agencies are now hard pressed to insure the most "Bang for the Buck". It is in the long term interests of astute contractors to assist in that endeavor. The only way to achieve such an objective is through sound technical, cost and schedule contract definition via an iterative process of baseline management and control. This article will address that process.
SOLICITATION AND STATEMENT OF WORK BASELINE
If you are selling a straight commercial product off the shelf, the problem of baseline management is minimal, assuming your product meets the specifications required and you deliver on time. Is it during development programs for new products or service contracts involving labor supplied to the government that lack of definition and poor communication are high risks. The initial benchmark for managing this risk is in the government solicitation and statement of work.
A wise customer farms the preliminary draft solicitation and statement of work out to prospective bidders and requests comment. A wise supplier is constructive, yet critical in pointing out weaknesses in the document.
Part 1, Section C, is where the technical specifications and statement of work are located in the solicitation and will reside in your negotiated contract.Without a well written Statement of Work (SOW) and associated supplies and services specifications there is unacceptable risk in the future contract and is it exceptionally high risk to bid or contract the job. Both the contractor and the government must come to an understanding regarding the scope of effort to be performed. That understanding is conveyed in the SOW and confirmed in the specifications referenced therein. A good SOW should have the following principal attributes:
* Clear identification of the products, services, skills, materials and performance factors required to complete the contract
* A description of the conditions under which the contractor will be required to perform and any related environmental or location factors
* Specific references to product specifications that govern an acceptable product or services performance outcome and delivery acceptance
* A schedule for the contract that identifies discrete delivery dates for products and specific start and end dates for supporting labor.
* A precise description of government furnished material or facilities required and when it will be made available to the contractor.
If your customer does not provide the above, offer a revision to the document during the comments period, during your proposal or during negotiations that represents a version to which your company will commit. Do not let the fact the program is competitive sway you from the facts. Signing off on a poorly written SOW results in a difficult contract to manage, a high probability for disputes during the contracting period and a poor past performance record you will have to deal with in the future on other jobs.
You should also do a complete review of the Contract Line Item (CLIN) Structure in the solicitation and cross foot SOW requirements to insure the scope is covered by the CLIN'S.
Please see the following article on how to perform this analysis:
http://www.smalltofeds.com/2009/03/contract-line-items-heart-of-your.html
NEGOTIATION BASELINE
The following article discusses the standard template for negotiations through which government contracts generally pass:
http://www.smalltofeds.com/2007/03/small-business-federal-government.html
During the audit, fact-finding and subsequent negotiation steps, a growing definition of the contract occurs and a clear understanding between you and your customer evolves. If you find the process slow and unknowns frequently surfacing, that is a barometer of future difficulty unless the issues are resolved. Technical work scope, schedule, cost and terms and conditions regarding inspection and acceptance as well as payment provisions are especially sensitive.
CONTRACT AWARD BASELINE
Signing the contract represents full agreement on the proposal and conclusion of negotiations. Award is the benchmark baseline for contract performance.
BASELINE MAINTENANCE - THE CHANGES CLAUSE
During the period of performance on a development or services contract, effort does not always go as planned. The article on Earned Value Performance Measurement (EVMS) at this site is one technique to control this situation:
http://www.smalltofeds.com/2008/05/earned-value-management-systems.html
Not all programs warrant EVMS or have the funding to perform that type of control. The simple rule of thumb is that the changes clause in your contract allows you to request additional funding and schedule relief, as well as a modification to the SOW if you are being driven by customer directed work scope change events to depart from the baseline to which you committed at contract award.
To the extent you do not remain sensitive to this provision, on a firm fixed price contract you will lose money. On a cost plus and time and materials type contract you will consume funding at a higher rate and faster than the contact baseline anticipated and your customer may or may not be able to provide additional monies when the ceiling amount on the contract is reached. At that point in time it is too late and everyone is disappointed.
The above occurrences are collectively known as "Scope Creep" in project management circles.
THE DIFFERENCE BETWEEN BUDGET AND FUNDING - (Limitation of Funds and Funding Exposure)
Many federal contracts are funded incrementally, usually based on the government fiscal year that runs from 1 October to 30 September. Although the government may negotiate dollar price ceilings for cost plus and time and materials contracts or firm, fixed total price arrangements, the contracts themselves may be incrementally funded, particularly if they extend over two government fiscal years.
A contract may contain negotiated prices or a cost ceiling but also specify an incremental funding value. The contractor is required to inform the government when actual costs incurred plus obligations to suppliers or payroll on a specific contract reach certain thresholds of the current incremental funding specified in the contract (usually 80%). The government is then obligated to further fund the contract. In the event the contract is not funded further, the contractor has the right to stop work before he exceeds the incremental funding.
Some contractors choose to operate on "risk," continuing to perform on a contract while exceeding the incremental funding in booked cost and obligations. The government is under no obligation to reimburse the contractor for amounts exceeding incremental funding.
Nearing the end of a government fiscal year, a contractor may find delays in funding reaching all the way to congress. This situation must be managed with the government contracting officer.
If a contract is not funded to continue and the contractor has performed to date in accordance with all required terms, the government retains the right to terminate the contract for the convenience of the government. This requires a special notification to the contractor from the government and usually occurs due to changes in government priorities. The contractor may then bill the government for all costs and obligations to date, plus any direct and indirect extraordinary costs associated with business disruption, termination administration, employee layoff cost and the like. Terminations for convenience are very expensive for the government. Nevertheless, limitation of funds and funding exposure must be carefully monitored by an astute small business.
To properly manage incremental funding, the business system must be capable of accounting monthly for all direct and indirect costs on each contract, plus commitments to suppliers and employees in the form of open purchase orders and unpaid or un-posted payroll.
Your internal release document should specify the current incremental funding if your contract is not fully funded at award. Further revisions to your release documentation should convey receipt of contact amendments from the government that supply additional required funding to the contract as performance proceeds. Requests for increases in incremental funding are required when the actual booked cost plus commitments to suppliers reaches 80% of the current funding on the contact.
In the event the contact is not adequately funded incrementally by the government, a revision to your internal release documentation should specify a stop work order after you have notified your customer that you plan to cease performance on the contract due to lack of sufficient funding. Notification should be provided to suppliers under your contract with a stop work to avoid their incurring additional costs for which you are not receiving funding from the government. Be specific with a stop work date to these suppliers.
IN SUMMARY - KNOW WHERE YOUR ARE AND WHEN TO SAY "NO"
"Scope Creep" can kill a contract, a customer relationship and a past performance record, all of which are important to your business. Stay in front of "The Scope Creep" by communicating positively with your customer to control your baseline, keeping cost, schedule and technical performance integrated and synchronous.
Six rules of Thumb to control "Scope Creep":
1. KNOW - The contract value and its ceiling amount
2. KNOW - The incurred cost to date and commitments
3. KNOW - The scope of work and whether or not your current efforts are supporting it or some other objectives
4. KNOW - The estimated cost at completion based on where you are at today
5. KNOW - Your customer and who among the customer population is prone to direct out of scope effort.
6. KNOW - WHEN TO SAY "NO" to "Scope Creep" and say it officially in writing to the contracting officer specified in your contract.
Wednesday, July 1, 2009
MULTIPLE-FRONT MARKETING IN SMALL BUSINESS FEDERAL GOVERNMENT CONTRACTING
INTRODUCTION:
Your enterprise must market on several targeted government contracting fronts to be successful. Simply registering as a federal government contractor or acquiring a small business set aside designation does not mean that contracting officers will find you or that larger corporations will seek you out as a teaming partner. A GSA schedule or a multi-year IDIQ umbrella contract, purchase agreement or similar vehicle may look promising, but they are really no more than hunting licenses. The game must still be bagged (targeted sales of specific products or service projects to customers).
With the economy under duress and federal recovery funding finding its way into multiple venues across the country, the prudent small business will target agencies and teaming partners that best fit its products and services, positioning itself to acquire developing information on requirements and displaying capabilities by conveying early solutions to customer decision makers. This article will suggest techniques, approaches and tools to conduct a multi-front, targeted, requirements-driven, marketing campaign for small business federal government contracting.
SELECT YOUR SMALL BUSINESS SET ASIDE DESIGNATIONS CAREFULLY
Your small business designation by North American Industrial Classification System (NAICS) Codes should be thorough and as comprehensive as possible when you register at the Central Contractor Registration (CCR). Make sure your CCR has the maximum number of codes for which you qualify, since the whole federal procurement system rides on those codes. Insure the narrative description of your services is complete as well. Please see the following link for further information on registration:
http://www.smalltofeds.com/2006/12/registering-your-small-business-for.html
The sub-categories of small business set-aside certifications should be chosen carefully and based on your company ownership and specific market research into which categories the agency or prime contractor favors, what their small business contracting plan includes in the way of targets and what their track record has been in awarding contracts. Good information on awards can be gleaned from the federal web site on federal government spending at:
http://www.usaspending.gov/
You can also check the SBA small business goaling report at:
http://www.sba.gov/aboutsba/sbaprograms/goals/index.html
For further details on each of the 7 small business set aside designations please see the following link:
http://www.smalltofeds.com/2009/06/federal-government-contracting-small.html
TARGET REQUIREMENTS EARLY
Government agencies, like companies, have long range plans and budget cycles. Keep abreast with the latest developments in trade magazines and journals regarding government contracting trends within agencies to develop and market solutions for anticipated requirements.
Monitor agency web sites and forecasts. Be constantly aware of the annual federal budgeting cycle, its development progress in the executive branch and its approval status in Congress. Agencies push to commit excess funding late in the fiscal year and at the same time forecast their next year needs for submittal to higher authorities. In the 1 October to September 30 fiscal year cycle, July, August and September are prime marketing periods.
Watch FEDBIZOPPS for sources sought notifications, requests for industry comments on draft RFP's and similar early indications of programs taking shape which will later be advertised in full solicitation. Go after them early enough to market and get them set aside for your small business designation and influence the development of the project with constructive input creating a presence in the eyes of the customer and prospective teaming partners.
MAKE PRUDENT BID/NO BID DECISIONS
Develop a good fit in your bid/no bid decisions. The only thing worse than losing a contract bid is winning it and performing poorly, creating negative past performance notations on your record. Know what your company can do and cannot do. Acquire skilled personnel through contingent hire agreements or incumbent work forces as you grow and carefully choose what you bid. For information on bid/no bid decisions and proposal preparation please see the following link:
http://www.smalltofeds.com/2007/02/federal-government-contract-proposal.html
EXPLORE SERVICE CONTRACTING AND TEAMING
Other than FAR Part 12 Commercial Contracting for off-the-shelf items, entry into federal government contracting for small business usually occurs through service contracting direct to an agency or teaming as a subcontractor with another firm for a major program. Even for commercial products, particularly new ones on the market, the best way to introduce your solution to a customer is to become involved in a service contact supporting the client's operations.
With regard to larger government contracting corporations to whom you could subcontract, cover the waterfront. Find out what they are bidding and aggressively market a piece of the action as a small business. Find the locations for the largest government contractors nearest you and register at their supplier business sites. Everything they buy for their facilities, their personnel and their operations counts toward the small business goals required contractually of them by their enormous government contracts.
Research their web sites and locate their small business liaison officers. Make appointments and visit them. While visiting, seek the names and titles of managers internal to their companies who manage prime contracts involving expertise your business can supply. Go after those managers.
Form teaming agreements early with good industry partners and begin to develop a winning message to the customer while he is defining his program. The following article provides further details on teaming:
http://www.smalltofeds.com/2009/05/small-business-teamiing-in-government.html
OBTAIN A GSA SCHEDULE
The below link is an article on how to apply for and utilize a GSA schedule:
http://smalltofeds.blogspot.com/2007/05/achieving-and-utilizing-gsa-schedule.html
There are 3 major challenges to going through the GSA schedule application process:
1. Finding an open solicitation that fits your product line
2. Establishing a good working relationship with the GSA Contracting Officer on the schedule solicitation and getting his/her assistance in working the system expediently.
3. Presenting viable, auditable cost history on what you have previously sold your products for to pass the cost/pricing audit portion of the process.
Most companies continue to bid work to the government through FAR Part 12, Commercial Contracting procedures or other contract vehicles discussed this web site while their GSA schedule application is pending. Please examine this site for articles on teaming, marketing, IDIQ contracts, negotiations, subcontracting and many others.
Remember there are thousands of companies out there going through the system, so you will have to be patient. Very few applicants get through it in any less than 6 months. A GSA Schedule is a very valuable item to achieve, but it takes time to do so and there are other forms of government contracting you can use while your application is in process.
DEVELOP A DYNAMIC CAPABILITY STATEMENT
A capability statement (CAPE) is an absolute necessity. It contains the specific information a contracting officer needs to place an order. This information includes such items as your D&B Number, your government registration numbers, your North American Industrial Classification System (NAICS) codes and the like. These items are selected or provided by you or determined by the system when you register your company for government contracting.
Your electronic capability statement (CAPE) for government contracts should be short and hard-hitting. It should be 1or 2 pages and should highlight the salient points of your products and offerings, your personnel and your qualifications. Please see the following link for an example of a capability statement:
http://www.smalltofeds.com/2007/01/seven-management-techniques-to-assist.html
WRITE RESPONSIVE PROPOSALS
Writing a winning proposal is an art form. It takes practice and the more proposals you prepare and submit the more artful you will be. You will find yourself utilizing the same materials over again on successive proposals. Management approaches, personnel profiles, win strategies and other major components of a good submission will fill your library and extend your CAPE to specific solutions for specific customers.
The following link contains guidance on writing effective proposals:
http://www.smalltofeds.com/2007/02/federal-government-contract-proposal.html
SUMMARY
Your reputation as a reputable performer in the small business federal government contracting community is important. Be selective and high performing. Agencies, past performance data bases and other companies will be observing you, recording your performance and passing the word along to others directly and indirectly.
Then insure your web site, your capability statement and your marketing plans are maintained current alive and dynamically reflective of your successes as you pursue new business and carefully develop your library of past performance records by project with accessible profiles to use in your government proposals.
Please see the following link on meeting the past performance requirements challenge in federal government contracting:
http://wbx.me/l/?u=http%3A%2F%2Fwww.smalltofeds.com%2F2008%2F07%2Fsmall-business-government-contracting.html
Your enterprise must market on several targeted government contracting fronts to be successful. Simply registering as a federal government contractor or acquiring a small business set aside designation does not mean that contracting officers will find you or that larger corporations will seek you out as a teaming partner. A GSA schedule or a multi-year IDIQ umbrella contract, purchase agreement or similar vehicle may look promising, but they are really no more than hunting licenses. The game must still be bagged (targeted sales of specific products or service projects to customers).
With the economy under duress and federal recovery funding finding its way into multiple venues across the country, the prudent small business will target agencies and teaming partners that best fit its products and services, positioning itself to acquire developing information on requirements and displaying capabilities by conveying early solutions to customer decision makers. This article will suggest techniques, approaches and tools to conduct a multi-front, targeted, requirements-driven, marketing campaign for small business federal government contracting.
SELECT YOUR SMALL BUSINESS SET ASIDE DESIGNATIONS CAREFULLY
Your small business designation by North American Industrial Classification System (NAICS) Codes should be thorough and as comprehensive as possible when you register at the Central Contractor Registration (CCR). Make sure your CCR has the maximum number of codes for which you qualify, since the whole federal procurement system rides on those codes. Insure the narrative description of your services is complete as well. Please see the following link for further information on registration:
http://www.smalltofeds.com/2006/12/registering-your-small-business-for.html
The sub-categories of small business set-aside certifications should be chosen carefully and based on your company ownership and specific market research into which categories the agency or prime contractor favors, what their small business contracting plan includes in the way of targets and what their track record has been in awarding contracts. Good information on awards can be gleaned from the federal web site on federal government spending at:
http://www.usaspending.gov/
You can also check the SBA small business goaling report at:
http://www.sba.gov/aboutsba/sbaprograms/goals/index.html
For further details on each of the 7 small business set aside designations please see the following link:
http://www.smalltofeds.com/2009/06/federal-government-contracting-small.html
TARGET REQUIREMENTS EARLY
Government agencies, like companies, have long range plans and budget cycles. Keep abreast with the latest developments in trade magazines and journals regarding government contracting trends within agencies to develop and market solutions for anticipated requirements.
Monitor agency web sites and forecasts. Be constantly aware of the annual federal budgeting cycle, its development progress in the executive branch and its approval status in Congress. Agencies push to commit excess funding late in the fiscal year and at the same time forecast their next year needs for submittal to higher authorities. In the 1 October to September 30 fiscal year cycle, July, August and September are prime marketing periods.
Watch FEDBIZOPPS for sources sought notifications, requests for industry comments on draft RFP's and similar early indications of programs taking shape which will later be advertised in full solicitation. Go after them early enough to market and get them set aside for your small business designation and influence the development of the project with constructive input creating a presence in the eyes of the customer and prospective teaming partners.
MAKE PRUDENT BID/NO BID DECISIONS
Develop a good fit in your bid/no bid decisions. The only thing worse than losing a contract bid is winning it and performing poorly, creating negative past performance notations on your record. Know what your company can do and cannot do. Acquire skilled personnel through contingent hire agreements or incumbent work forces as you grow and carefully choose what you bid. For information on bid/no bid decisions and proposal preparation please see the following link:
http://www.smalltofeds.com/2007/02/federal-government-contract-proposal.html
EXPLORE SERVICE CONTRACTING AND TEAMING
Other than FAR Part 12 Commercial Contracting for off-the-shelf items, entry into federal government contracting for small business usually occurs through service contracting direct to an agency or teaming as a subcontractor with another firm for a major program. Even for commercial products, particularly new ones on the market, the best way to introduce your solution to a customer is to become involved in a service contact supporting the client's operations.
With regard to larger government contracting corporations to whom you could subcontract, cover the waterfront. Find out what they are bidding and aggressively market a piece of the action as a small business. Find the locations for the largest government contractors nearest you and register at their supplier business sites. Everything they buy for their facilities, their personnel and their operations counts toward the small business goals required contractually of them by their enormous government contracts.
Research their web sites and locate their small business liaison officers. Make appointments and visit them. While visiting, seek the names and titles of managers internal to their companies who manage prime contracts involving expertise your business can supply. Go after those managers.
Form teaming agreements early with good industry partners and begin to develop a winning message to the customer while he is defining his program. The following article provides further details on teaming:
http://www.smalltofeds.com/2009/05/small-business-teamiing-in-government.html
OBTAIN A GSA SCHEDULE
The below link is an article on how to apply for and utilize a GSA schedule:
http://smalltofeds.blogspot.com/2007/05/achieving-and-utilizing-gsa-schedule.html
There are 3 major challenges to going through the GSA schedule application process:
1. Finding an open solicitation that fits your product line
2. Establishing a good working relationship with the GSA Contracting Officer on the schedule solicitation and getting his/her assistance in working the system expediently.
3. Presenting viable, auditable cost history on what you have previously sold your products for to pass the cost/pricing audit portion of the process.
Most companies continue to bid work to the government through FAR Part 12, Commercial Contracting procedures or other contract vehicles discussed this web site while their GSA schedule application is pending. Please examine this site for articles on teaming, marketing, IDIQ contracts, negotiations, subcontracting and many others.
Remember there are thousands of companies out there going through the system, so you will have to be patient. Very few applicants get through it in any less than 6 months. A GSA Schedule is a very valuable item to achieve, but it takes time to do so and there are other forms of government contracting you can use while your application is in process.
DEVELOP A DYNAMIC CAPABILITY STATEMENT
A capability statement (CAPE) is an absolute necessity. It contains the specific information a contracting officer needs to place an order. This information includes such items as your D&B Number, your government registration numbers, your North American Industrial Classification System (NAICS) codes and the like. These items are selected or provided by you or determined by the system when you register your company for government contracting.
Your electronic capability statement (CAPE) for government contracts should be short and hard-hitting. It should be 1or 2 pages and should highlight the salient points of your products and offerings, your personnel and your qualifications. Please see the following link for an example of a capability statement:
http://www.smalltofeds.com/2007/01/seven-management-techniques-to-assist.html
WRITE RESPONSIVE PROPOSALS
Writing a winning proposal is an art form. It takes practice and the more proposals you prepare and submit the more artful you will be. You will find yourself utilizing the same materials over again on successive proposals. Management approaches, personnel profiles, win strategies and other major components of a good submission will fill your library and extend your CAPE to specific solutions for specific customers.
The following link contains guidance on writing effective proposals:
http://www.smalltofeds.com/2007/02/federal-government-contract-proposal.html
SUMMARY
Your reputation as a reputable performer in the small business federal government contracting community is important. Be selective and high performing. Agencies, past performance data bases and other companies will be observing you, recording your performance and passing the word along to others directly and indirectly.
Then insure your web site, your capability statement and your marketing plans are maintained current alive and dynamically reflective of your successes as you pursue new business and carefully develop your library of past performance records by project with accessible profiles to use in your government proposals.
Please see the following link on meeting the past performance requirements challenge in federal government contracting:
http://wbx.me/l/?u=http%3A%2F%2Fwww.smalltofeds.com%2F2008%2F07%2Fsmall-business-government-contracting.html
Monday, June 1, 2009
FEDERAL GOVERNMENT CONTRACTING SMALL BUSINESS SET ASIDE DESIGNATIONS
Many questions have recently been received at the "Linked In" and "SCORE" web sites regarding federal government contracting small business set aside designations. This article will explain the designation types and suggest the best ways to establish and use them in your business planning.
There are 7 major, small business set-aside designations in federal government contracting. Below is a listing of these designations, divided into two groups, Self-Certifying at the Central Contractor Registration (CCR) and those where government certification is required.
SELF CERTIFYING
1. Small Business - Established by North American Industry Classification (NAICS) Code for all categories of government business (Please download the "SBA Small Business Size Standards" at the "Box Net" Cubicle on the left margin of this web site for further information). Every federal procurement has a NAICS Code assigned to it and is registered on the below web site if it exceeds $25k:
http://www.fedbizopps.gov/
2. Minority Business Enterprise (MBE) - Self-Certifying at CCR and a good interim designation while an 8(a) application is in process for minority-owned companies
3. Woman-Owned Business - Applicable to Women-Owned Businesses only
4. Veteran-Owned Business - Applicable to Veteran-Owned Businesses only
5. Disabled Veteran-Owned Business - Applicable to Disabled Veteran-Owned Businesses only
GOVERNMENT CERTIFICATION REQUIRED
6. Small/Disadvantaged Business SBA 8(a) Program - Requires 2 years in business and a lengthy application process with the SBA at the following web site:
https://sba8a.symplicity.com/applicants/guide
7. Historically Under-Utilized Business (HUB) Zone Located - Pertains to small businesses located in geographic areas with a historical record of low government contracting. This designation requires application at the following HUB Zone Site Web Site:
https://eweb1sp.sba.gov/hubzone/internet/index.cfm
QUALIFICATIONS, REGISTRATION, CERTIFICATIONS AND REPRESENTATIONS
To qualify as a small business for a given solicitation an enterprise must have registered at the CCR under the applicable NAICS code for the procurement and meet the SBA eligibility size standards for that code.
A small business also certifying under items 2-5 and 6 above must have individuals qualifying for the designation with at least 51% ownership interest and an operating role in the company. 60% is recommended to avoid the appearance of a front. Silent partners and investors without qualifying status or an operating role in the firm do not count toward the designation. It is suggested that ownership interest be specified by name in the articles of incorporation with the state and by % of ownership in an operating agreement.
To qualify as a HUB Zone Enterprise the business must be located in a HUB Zone and a qualifying percentage of the members (owners or employees) of the business must also live in the appliable HUB Zone.
The CCR Registration Web site is at:
http://www.ccr.gov/
For instructions on registration at the CCR please see the following link:
http://www.smalltofeds.com/2006/12/registering-your-small-business-for.html
The Annual On-line Certifications and Representations (ORCA) form must also be completed at the following link to bid federal government jobs:
https://orca.bpn.gov/
Your latest ORCA Certification should be printed out, signed and included with all federal government contract proposals.
SUMMARY
Carefully select your small business designations when preparing your business and marketing plans for federal government contracting. Keep in mind that self-certifications are verified through records checks and site visits by contracting officers, DCMAO and Source Selection Boards for federal procurements before contract awards are made.
A small business set-aside designation can be a valuable tool if adequately documented, registered, certified and prudently used for bidding work that your enterprise is capable of performing successfully.
There are 7 major, small business set-aside designations in federal government contracting. Below is a listing of these designations, divided into two groups, Self-Certifying at the Central Contractor Registration (CCR) and those where government certification is required.
SELF CERTIFYING
1. Small Business - Established by North American Industry Classification (NAICS) Code for all categories of government business (Please download the "SBA Small Business Size Standards" at the "Box Net" Cubicle on the left margin of this web site for further information). Every federal procurement has a NAICS Code assigned to it and is registered on the below web site if it exceeds $25k:
http://www.fedbizopps.gov/
2. Minority Business Enterprise (MBE) - Self-Certifying at CCR and a good interim designation while an 8(a) application is in process for minority-owned companies
3. Woman-Owned Business - Applicable to Women-Owned Businesses only
4. Veteran-Owned Business - Applicable to Veteran-Owned Businesses only
5. Disabled Veteran-Owned Business - Applicable to Disabled Veteran-Owned Businesses only
GOVERNMENT CERTIFICATION REQUIRED
6. Small/Disadvantaged Business SBA 8(a) Program - Requires 2 years in business and a lengthy application process with the SBA at the following web site:
https://sba8a.symplicity.com/applicants/guide
7. Historically Under-Utilized Business (HUB) Zone Located - Pertains to small businesses located in geographic areas with a historical record of low government contracting. This designation requires application at the following HUB Zone Site Web Site:
https://eweb1sp.sba.gov/hubzone/internet/index.cfm
QUALIFICATIONS, REGISTRATION, CERTIFICATIONS AND REPRESENTATIONS
To qualify as a small business for a given solicitation an enterprise must have registered at the CCR under the applicable NAICS code for the procurement and meet the SBA eligibility size standards for that code.
A small business also certifying under items 2-5 and 6 above must have individuals qualifying for the designation with at least 51% ownership interest and an operating role in the company. 60% is recommended to avoid the appearance of a front. Silent partners and investors without qualifying status or an operating role in the firm do not count toward the designation. It is suggested that ownership interest be specified by name in the articles of incorporation with the state and by % of ownership in an operating agreement.
To qualify as a HUB Zone Enterprise the business must be located in a HUB Zone and a qualifying percentage of the members (owners or employees) of the business must also live in the appliable HUB Zone.
The CCR Registration Web site is at:
http://www.ccr.gov/
For instructions on registration at the CCR please see the following link:
http://www.smalltofeds.com/2006/12/registering-your-small-business-for.html
The Annual On-line Certifications and Representations (ORCA) form must also be completed at the following link to bid federal government jobs:
https://orca.bpn.gov/
Your latest ORCA Certification should be printed out, signed and included with all federal government contract proposals.
SUMMARY
Carefully select your small business designations when preparing your business and marketing plans for federal government contracting. Keep in mind that self-certifications are verified through records checks and site visits by contracting officers, DCMAO and Source Selection Boards for federal procurements before contract awards are made.
A small business set-aside designation can be a valuable tool if adequately documented, registered, certified and prudently used for bidding work that your enterprise is capable of performing successfully.
Saturday, May 16, 2009
Friday, May 1, 2009
SMALL BUSINESS TEAMING IN GOVERNMENT CONTRACTING
INTRODUCTION:
While developing a government marketing plan, teaming with other companies is a productive venue for the small business. This article will convey general guidance pertinent to teaming and explore the types of teaming used successfully by small business federal government contractors.
GENERAL CONSIDERATIONS
Synergism is paramount in teaming with any size company, whether in a lead or subcontracting role. There should be technical, management and market segment similarities between you and any company with whom you are considering teaming. Your prospective team member ideally will not be a direct competitor; rather a business in a related field with whom you share a mutual need for each other's contributions in pursuing large-scale projects.
Relationships must be developed with primes and other small businesses that can help you, team with you and keep you in mind as they search for success. That takes time, patience and open-minded, out of the box thinking. It also takes more than a Non-Disclosure Agreement (NDA), a teaming agreement (TA) and a proposal to succeed. It takes dynamic marketing and communication with strong partners and hard, innovative work. Nice buzz words you say - but it is the truth and you have to find what that truth means to you.
Successful teaming for a specific program occurs early. Very few astute teams in government contracting are formed after a solicitation is formally published on FEDBIZOPPS. Checking the "Interested Parties" block of a solicitation there and attempting to form or join a team is generally too late to effectively achieve a cohesive relationship, agreement and a win strategy by the time the proposal is due.
A size factor need not be a deterrent if you use contingent hire agreements, aspire to take over incumbent work forces in existing government operations or keep yourself open as a partner to a multiple number of primes and synergistic small businesses who are not direct competitors but with whom teaming will permit chasing larger procurements than any one small business could pursue. You can also grow into security clearances, as individuals and as a company with government agency sponsorship through already cleared companies.
In making contacts with larger firms you may have to go through the "Gate Keepers", such as the small business liaison officer, the registration boxes at web sites, a purchasing agent or a contracts person to get to the program people with the real decision making authority. Give the gate keepers their due, since you may end up working with them later.
Nothing makes a prospective small business or a large business teaming partner perk up like a real hot lead on a program. If you can offer a "Carrot on a Stick" such as an opportunity that they cannot access other than through you, it will get their attention. A non-disclosure agreement (NDA) should be signed before the discrete information on the job is disclosed. Please see the following article on NDA's and Teaming Agreements as documents and protecting your associated intellectual property:
http://smalltofeds.blogspot.com/2008/09/protecting-intellectual-property-and.html
SUBCONTRACTING TO ANOTHER COMPANY
In teaming as a subcontractor with other companies your goal is to sign a teaming agreement with a prime contractor for a prospective program. You prepare your proposal and submit it to the prime contractor who incorporates it into his submission to the government. Your submission contains flow down terms and conditions from the prime's proposal as well as a technical description of the effort you intend to perform. Your cost proposal to the prime contains fully loaded rates for the labor categories and material as well as the travel you will perform on the subcontract. The government awards the prime contract to your team member. You then undertake negotiations with the prime to convert your teaming agreement to a subcontract. The subcontract will replace the teaming agreement between you and your prime and contract performance can then commence.
Be especially careful in negotiating the attachment to a teaming agreement which identifies the scope of work which you will perform. Insure it has sufficient detail in terms of labor categories, % of the program (both hours and dollars) a discrete description of your effort, and any additional assurances you need to feel comfortable with the deal.
Keep on mind that a teaming agreement is an agreement to agree. It is not a contract and rarely enforceable in a court of law. That means you must negotiate your contract upon award and in many cases the prime may pressure you to lower your rates, decrease your share of the program or otherwise depart from the teaming agreement when your subcontract is finalized. Your business acumen will come into play during that transition. For tips please see the following link:
http://smalltofeds.blogspot.com/2007/03/small-business-federal-government.html
BECOMING A PRIME CONTRACTOR
As a prime contractor you sign a teaming agreement with a subcontractor during the RFP stage of a solicitation. Your subcontractor prepares a proposal and submits it to you. You incorporate it into the prime contract proposal to the government. You negotiate flow down versions of terms and conditions from your federal contract to the subcontractor as well as a technical description of the effort the subcontractor will perform. The subcontractor's cost proposal contains fully loaded rates for the labor categories and material as well as the travel he intends to perform on the subcontract. The government awards the prime contract to you. You undertake negotiations with the subcontractor to convert the teaming agreement to a subcontract. The subcontract will replace the teaming agreement between you and your subcontractor.
Your role as a prime may be the result of your status a small business, a woman-owned, minority-owned or veteran-owned business under a program set-aside to one of those designations. It is usually best to subcontract no more than a 40% share of the total business to firms with whom you are teaming to avoid the appearance of a front. The statutory requirement is 51% to the prime in these types of programs but you need to convey strength as a prime in terms of resources to be deemed a winner by the government source selection board.
If the program you are bidding is a negotiable procurement it is preferable to negotiate subcontracts with team members before you negotiate your final contract with the government. Going into negotiations with the government having definitized your subcontracts reduces your risk in terms of unknowns contractually at the supplier level. It also eliminates the subcontractor wanting to know the result of your prime contract negotiations so that he can use it as a frame of reference for his negotiation position with you. The baseline when you go to the table with your subcontractor is your teaming agreement specifying his statement of work and your collective proposal to the government containing the prospective cost and price for his effort as part of the total proposal.
SUMMARY
There are many subsidiary forms of the above basic teaming approaches. You can join multi-company teams under a major prime on IDIQ umbrella contracts of long duration. You can bid a team effort using your GSA Schedule.
Although the Federal Mentor-Protégé Program is a fine vehicle, keep other options open at the same time you pursue a long term teaming partner in that venue.
Joint ventures are difficult for small and start-up companies. They are made up of resources from both companies, yet a JV exists as separate legal entity and is complex to administer. A joint venture agreement is a special form of teaming agreement subject to approval by the government agency with whom the JV is contracting. JV's are usually managed by a JV Board and include administrative costs and billing nuances associated with a "3rd Entity" that many firms find difficult to manage.
If you are in a prime contractor role you have an additional management challenge in being accountable for the performance of your subcontractors and flowing down the terms, conditions and performance requirements under which you are being contracted by the government. Your customer expects effective subcontractor management. Proposal preparation imposes a substantial burden on the prime contractor because the prime must integrate, assemble, package and deliver the final submission after receipt of data from the subcontractor(s).
Keep in mind that you may be exclusively teaming with a company on certain procurements and competing against them on others. Protect your intellectual property, only exchange fully loaded rate information and keep the relationship professional at all times.
Your reputation as a reputable team member in the small business federal government contracting community is important. Be selective and high performing in this area. Agencies, past performance data bases and other companies will be observing you, recording your performance and passing the word along to others directly and indirectly.
While developing a government marketing plan, teaming with other companies is a productive venue for the small business. This article will convey general guidance pertinent to teaming and explore the types of teaming used successfully by small business federal government contractors.
GENERAL CONSIDERATIONS
Synergism is paramount in teaming with any size company, whether in a lead or subcontracting role. There should be technical, management and market segment similarities between you and any company with whom you are considering teaming. Your prospective team member ideally will not be a direct competitor; rather a business in a related field with whom you share a mutual need for each other's contributions in pursuing large-scale projects.
Relationships must be developed with primes and other small businesses that can help you, team with you and keep you in mind as they search for success. That takes time, patience and open-minded, out of the box thinking. It also takes more than a Non-Disclosure Agreement (NDA), a teaming agreement (TA) and a proposal to succeed. It takes dynamic marketing and communication with strong partners and hard, innovative work. Nice buzz words you say - but it is the truth and you have to find what that truth means to you.
Successful teaming for a specific program occurs early. Very few astute teams in government contracting are formed after a solicitation is formally published on FEDBIZOPPS. Checking the "Interested Parties" block of a solicitation there and attempting to form or join a team is generally too late to effectively achieve a cohesive relationship, agreement and a win strategy by the time the proposal is due.
A size factor need not be a deterrent if you use contingent hire agreements, aspire to take over incumbent work forces in existing government operations or keep yourself open as a partner to a multiple number of primes and synergistic small businesses who are not direct competitors but with whom teaming will permit chasing larger procurements than any one small business could pursue. You can also grow into security clearances, as individuals and as a company with government agency sponsorship through already cleared companies.
In making contacts with larger firms you may have to go through the "Gate Keepers", such as the small business liaison officer, the registration boxes at web sites, a purchasing agent or a contracts person to get to the program people with the real decision making authority. Give the gate keepers their due, since you may end up working with them later.
Nothing makes a prospective small business or a large business teaming partner perk up like a real hot lead on a program. If you can offer a "Carrot on a Stick" such as an opportunity that they cannot access other than through you, it will get their attention. A non-disclosure agreement (NDA) should be signed before the discrete information on the job is disclosed. Please see the following article on NDA's and Teaming Agreements as documents and protecting your associated intellectual property:
http://smalltofeds.blogspot.com/2008/09/protecting-intellectual-property-and.html
SUBCONTRACTING TO ANOTHER COMPANY
In teaming as a subcontractor with other companies your goal is to sign a teaming agreement with a prime contractor for a prospective program. You prepare your proposal and submit it to the prime contractor who incorporates it into his submission to the government. Your submission contains flow down terms and conditions from the prime's proposal as well as a technical description of the effort you intend to perform. Your cost proposal to the prime contains fully loaded rates for the labor categories and material as well as the travel you will perform on the subcontract. The government awards the prime contract to your team member. You then undertake negotiations with the prime to convert your teaming agreement to a subcontract. The subcontract will replace the teaming agreement between you and your prime and contract performance can then commence.
Be especially careful in negotiating the attachment to a teaming agreement which identifies the scope of work which you will perform. Insure it has sufficient detail in terms of labor categories, % of the program (both hours and dollars) a discrete description of your effort, and any additional assurances you need to feel comfortable with the deal.
Keep on mind that a teaming agreement is an agreement to agree. It is not a contract and rarely enforceable in a court of law. That means you must negotiate your contract upon award and in many cases the prime may pressure you to lower your rates, decrease your share of the program or otherwise depart from the teaming agreement when your subcontract is finalized. Your business acumen will come into play during that transition. For tips please see the following link:
http://smalltofeds.blogspot.com/2007/03/small-business-federal-government.html
BECOMING A PRIME CONTRACTOR
As a prime contractor you sign a teaming agreement with a subcontractor during the RFP stage of a solicitation. Your subcontractor prepares a proposal and submits it to you. You incorporate it into the prime contract proposal to the government. You negotiate flow down versions of terms and conditions from your federal contract to the subcontractor as well as a technical description of the effort the subcontractor will perform. The subcontractor's cost proposal contains fully loaded rates for the labor categories and material as well as the travel he intends to perform on the subcontract. The government awards the prime contract to you. You undertake negotiations with the subcontractor to convert the teaming agreement to a subcontract. The subcontract will replace the teaming agreement between you and your subcontractor.
Your role as a prime may be the result of your status a small business, a woman-owned, minority-owned or veteran-owned business under a program set-aside to one of those designations. It is usually best to subcontract no more than a 40% share of the total business to firms with whom you are teaming to avoid the appearance of a front. The statutory requirement is 51% to the prime in these types of programs but you need to convey strength as a prime in terms of resources to be deemed a winner by the government source selection board.
If the program you are bidding is a negotiable procurement it is preferable to negotiate subcontracts with team members before you negotiate your final contract with the government. Going into negotiations with the government having definitized your subcontracts reduces your risk in terms of unknowns contractually at the supplier level. It also eliminates the subcontractor wanting to know the result of your prime contract negotiations so that he can use it as a frame of reference for his negotiation position with you. The baseline when you go to the table with your subcontractor is your teaming agreement specifying his statement of work and your collective proposal to the government containing the prospective cost and price for his effort as part of the total proposal.
SUMMARY
There are many subsidiary forms of the above basic teaming approaches. You can join multi-company teams under a major prime on IDIQ umbrella contracts of long duration. You can bid a team effort using your GSA Schedule.
Although the Federal Mentor-Protégé Program is a fine vehicle, keep other options open at the same time you pursue a long term teaming partner in that venue.
Joint ventures are difficult for small and start-up companies. They are made up of resources from both companies, yet a JV exists as separate legal entity and is complex to administer. A joint venture agreement is a special form of teaming agreement subject to approval by the government agency with whom the JV is contracting. JV's are usually managed by a JV Board and include administrative costs and billing nuances associated with a "3rd Entity" that many firms find difficult to manage.
If you are in a prime contractor role you have an additional management challenge in being accountable for the performance of your subcontractors and flowing down the terms, conditions and performance requirements under which you are being contracted by the government. Your customer expects effective subcontractor management. Proposal preparation imposes a substantial burden on the prime contractor because the prime must integrate, assemble, package and deliver the final submission after receipt of data from the subcontractor(s).
Keep in mind that you may be exclusively teaming with a company on certain procurements and competing against them on others. Protect your intellectual property, only exchange fully loaded rate information and keep the relationship professional at all times.
Your reputation as a reputable team member in the small business federal government contracting community is important. Be selective and high performing in this area. Agencies, past performance data bases and other companies will be observing you, recording your performance and passing the word along to others directly and indirectly.
Wednesday, April 1, 2009
SMALL BUSINESS GOVERNMENT CONTRACT PROPERTY MANAGEMENT
For small businesses involved in development and manufacturing efforts under government contracts, or those who are pursing research and development involving large scale systems, the government property topic often arises.
In general, government contractors are required to provide all that is necessary to fulfill the scope of work on a government contract. However, under time and materials and cost plus contracts where the acquiring agency has made substantial investment in manufacturing aids, special test equipment or apparatus, title to such items will fall to the government.
Title falls to the contractor on firm, fixed price contracts where the cost is base lined at contract award and is assumed to include all that is required to produce the end item when it was bid.
Government property must be stored separately from contractor property when not in use, identified in the facility inventory system as government owned and have government property tags.
Rent – Free Use of government property accountable under one contract must be requested on a non-interference basis from the owning contracting officer before use on another contact and the using contract must reference the approval.
The government may elect to charge rent for use of government property under commercial or foreign contracts. The process for calculating and paying rent is specified in FAR 52.245-9.
The principal FAR Clauses for government Property are 52.245-1 and 52.245-2. If you are undertaking a contract involving government property please read these FAR Clauses. Within these clauses are requirements for inventory, disposal and disposition of government property.
http://farsite.hill.af.mil/VFFARA.HTM
Government property may be furnished by the acquiring agency with a contract award and may be placed in the care of the contractor. In those cases accountability for the items, together with associated maintenance may be assigned to the contract and reassignment of the property must occur before the contract can be closed out at completion.
In general, government contractors are required to provide all that is necessary to fulfill the scope of work on a government contract. However, under time and materials and cost plus contracts where the acquiring agency has made substantial investment in manufacturing aids, special test equipment or apparatus, title to such items will fall to the government.
Title falls to the contractor on firm, fixed price contracts where the cost is base lined at contract award and is assumed to include all that is required to produce the end item when it was bid.
Government property must be stored separately from contractor property when not in use, identified in the facility inventory system as government owned and have government property tags.
Rent – Free Use of government property accountable under one contract must be requested on a non-interference basis from the owning contracting officer before use on another contact and the using contract must reference the approval.
The government may elect to charge rent for use of government property under commercial or foreign contracts. The process for calculating and paying rent is specified in FAR 52.245-9.
The principal FAR Clauses for government Property are 52.245-1 and 52.245-2. If you are undertaking a contract involving government property please read these FAR Clauses. Within these clauses are requirements for inventory, disposal and disposition of government property.
http://farsite.hill.af.mil/VFFARA.HTM
Government property may be furnished by the acquiring agency with a contract award and may be placed in the care of the contractor. In those cases accountability for the items, together with associated maintenance may be assigned to the contract and reassignment of the property must occur before the contract can be closed out at completion.
Sunday, March 1, 2009
CONTRACT LINE ITEMS - THE HEART OF YOUR FEDERAL GOVERNMENT CONTRACT
Contract Line Item(s) (CLIN) specify products or services being procured and the negotiated prices for them. Housed in Section B of your contract, the CLIN is critical for reporting and billing purposes in your accounting system. Invoices to the government for supplies or services delivered must reference the associated CLIN. For service contracts that are cost-based such as Time and Materials (T&M) or Cost Plus and for progress billings under fixed price contracts, your job cost accounting system must be able to track labor, material and other direct costs at the CLIN level or below to provide auditable details for payment approval.
Government requisition and appropriation data against the CLIN are carried throughout the government finance and accounting system that makes payment on your invoices. CLIN’s form the backbone upon which all the other contract sections are built. If the CLIN structure is defective, it is likely many other areas of the contract will also be deficient.
During the “Sources-Sought”, “Pre-solicitation” or “Draft RFP” stages of a procurement the government often invites industry to comment on the evolving solicitation. The CLIN structure should be evaluated in relation to such items as the Work Breakdown Structure (WBS), the Statement of Work (SOW) and the contract schedule from the perspective of visualizing the work underway, tracking and reporting the status and finances of deliverables, inspection and acceptance and accurately billing the deliveries on invoices.
If the agency is establishing a poorly integrated CLIN structure you should comment appropriately to the contracting officer, suggesting corrections and additions to establish a framework against which your enterprise can estimate effectively, operate efficiently, report accurately and bill without experiencing delays. Most agency contracting shops appreciate such contributions.
This article will discuss Section B CLIN relationships to other critical elements of your contract and site matters of consistency that should be carefully reviewed and considered before proposing, accepting and signing your deal.
SECTION C - DESCRIPTION/SPECIFICATIONS/STATEMENT OF WORK
As you read the narrative in this section, carefully establish that it adequately covers all the CLIN's in Section B. During the proposal process it is wise to matrix each paragraph of the SOW to its associated CLIN so you are sure your CLIN level prices have adequately covered the scope described in the SOW and that the SOW addresses each of the CLIN's identified in Section B. If there appear to be omissions point them out. Note where the SOW conflicts with or does not adequately describe the applicable CLIN's in Section B. Also note where there may be missing CLIN's. Then offer either a revision to the CLIN structure, a revision to the SOW, or both.
SECTION D - PACKAGING AND MARKING
Insure that the instructions in this section cover each of the CLIN's in Section B and that your company can comply with any specifications referenced.
SECTION E - INSPECTION AND ACCEPTANCE
Review the criteria for accepting the products and services to be delivered by CLIN as well as the location where deliveries will take place. Insure your company can comply with the criteria for acceptance. A payment will not be made without government acceptance of your delivery.
SECTION F - DELIVERIES OR PERFORMANCE
This section will replicate Section B and specify the due dates for deliveries by CLIN. Insure you can comply with the dates indicated.
SECTION G - CONTRACT ADMINISTRATION DATA
The accounting and appropriation data in this section must be replicated where necessary in your bill to the government by CLIN. Please see the article at this blog entitled, "Government Contract Billing":
http://smalltofeds.blogspot.com/2008/06/small-business-federal-government.html
SECTION H - SPECIAL CONTRACT REQUIREMENTS
Check for any special requirements, such as Earned Value Management Systems, the requirement for a Work Breakdown Structure against which to report cost and schedule data and other clauses such as Design to Cost/Life Cycle Cost, Reliability, Safety and Failure Analysis reporting requirements and similar specifications. If you find such requirements, carefully review the reporting structure therein for consistency with the CLIN structure of the contract and point out any disparities to the Contracting Officer.
SECTION I - CONTRACT CLAUSES
Carefully review this section in the same manner as Section H.
SECTION J - LIST OF DOCUMENTS, EXHIBITS AND OTHER ATTACHMENTS
The Contract Data Requirements List (CDRL) will be in this section. Insure there is a separate CLIN for data items. Most contracts price data at zero cost and include the cost to prepare the data in other CLIN pricing. Determine which of the CLIN's will be affected by the data items required in this section and insure the pricing for those CLIN's includes that cost. Perform an identical review of any other documents contained in this section.
SECTION K - REPRESENTATIONS, CERTIFICATIONS AND OTHER STATEMENTS
Insure that all information provided in this section is consistent with the data specified in each of the sections above.
SUMMARY
By conducting a thorough review of the CLIN structure against all other sections of your prospective contract you will establish a consistent framework and an integrated approach to tracking and reporting the status and finances of deliverables, inspection and acceptance of same and billings that will be promptly paid.
The following is an example of a typical federal government contract CLIN structure:
SECTION B - SUPPLIES OR SERVICES AND PRICES
ITEM NO SUPPLIES/SERVICES
0001 SBIR RESEARCH AND DEVELOPMENT
Firm Fixed Price
The contractor shall perform research and development efforts in
accordance with Section C and the Contractor's SBIR Phase I
proposal dated September 2002 in response to SBIR Topic N02-140
ITEM SUPPLIES/SERVICES QUANTITY UNIT UNIT PRICE AMOUNT
NO
0001AA Monthly Status Report 1 LOT $11,000.00
The contractor shall perform research and development efforts and
provide the First Monthly Status Report in accordance with CDRL AO01.
ITEM SUPPLIES/SERVICES QUANTITY UNIT UNIT PRICE AMOUNT
NO
0001AB Monthly Status Report 1 LOT $11,000.00
The contractor shall perform research and development efforts and
provide the Second Monthly Status Report in accordance with CDRL A00I
ITEM SUPPLIES/SERVICES QUANTITY UNIT UNIT PRICE AMOUNT
NO
0001AC Monthly Status Report 1 LOT $11,000.00
The contractor shall perform research and development efforts and
provide the Third Monthly Status Report in accordance with CDRL A001.
ITEM SUPPLIES/SERVICES QUANTITY UNIT UNIT PRICE AMOUNT
NO
0001AD Monthly Status Report 1 LOT $11,000.00
Phase 11 Program plan
The contractor shall perform research and development efforts and
provide the Fourth Monthly Status Report in accordance with CDRL A001
and the Phase 11 Program Plan in accordance with CDRL. A002.
ITEM SUPPLIES/SERVICES QUANTITY UNIT UNIT PRICE AMOUNT
NO
0001AE Monthly Status Report/ 1 LOT $11,000.00
Preliminary Report
The contractor shall perform research and development efforts and
provide the Fifth Monthly Status Report in accordance with CDRL A001
and the Phase I Preliminary Report in accordance with CDRL A003.
ITEM SUPPLIES/SERVICES QUANTITY UNIT UNIT PRICE AMOUNT
NO
0001AF Contract Summary 1 LOT $13,587.00
Report
The contractor shall perform research and development efforts and
provide the Phase I Final Report in accordance with CDRL A004.
CLIN 0001 TOTAL $68,587.00
ITEM SUPPLIES/SERVICES QUANTITY UNIT UNIT PRICE AMOUNT
NO
0002 DATA 1 LOT *NSP *NSP
DELIVERABLES
Firm Fixed Price
The contractor shall provide the data deliverables in support of
CLIN 0001 in accordance with attached CDRLs.
* - Not Separately Priced
ITEM NO SUPPLIES/SERVICES
0003 OPTION CLIN
SBIR RESEARCH AND DEVELOPMENT
Firm Fixed Price
The contractor shall perform research and development efforts in
accordance with Section C and the Contractor's SBIR Phase I proposal
dated September 2002 in response to SBIR Topic N02-140.
ITEM SUPPLIES/SERVICES QUANTITY UNIT UNIT PRICE AMOUNT
NO
0003AA Monthly Status Report 1 LOT $9,000.00
The contractor shall perform research and development efforts and
provide the First Monthly Status Report in accordance with CDRL A001.
ITEM SUPPLIES/SERVICES QUANTITY UNIT UNIT PRICE AMOUNT
NO
0003AB Monthly Status Report 1 LOT $9,000.00
The contractor shall perform research and development efforts and
provide the Second Monthly Status Report in accordance with CDRL AOO1.
ITEM SUPPLIES/SERVICES QUANTITY UNIT UNIT PRICE AMOUNT
NO
0003AC Contract Summary 1 LOT $11,490.00
The contractor shall perform research and development efforts and
provide the Phase 1 Final Report in accordance with CDRL A004.
CLIN 0003 TOTAL $29,490.00
-
ITEM SUPPLIES/SERVICES QUANTITY UNIT UNIT PRICE AMOUNT
NO
0004 OPTION CLIN 1 LOT *NSP *NSP
DATA
DELIVERABLES
Firm Fixed Price
The contractor shall provide the data deliverables in support of
CLIN 0003 in accordance with attached CDRLs.
* - Not Separately Priced
CLINS 0001 - 0004 TOTAL $98,077.00
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