Coming February 1 2012 - Free Download- 4th Edition of "Small Business Federal Government Contracting"

The 4th Edition of "Small Business Federal Government Contracting" will be available on 1 February 2012 as a download from the first, vertical, Box Net Cube in the left margin of this site. 

The document has been expanded to include articles published during the 2010 and 2011 business years and is presented in the logical order of topics normally encountered by an enterprise entering or growing into small business government contracting. 

You may now preview the  topics here at this site by using the site search box at the top of this page and the table of contents published below or by going to the Box Net Cube and using the preview feature. 

• Black = 3rd Edition Issue Now Available as a Download - Articles 2006 through 2009
• Red   =  Supplementary Articles Published at this Site During the Year 2010
• Green = Supplementary Articles Published at this Site During the Year 2011

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HAPPY HOLIDAYS 2011 FROM SMALL TO FEDS

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10 GOLDEN RULES FOR SMALL BUSINESS FEDERAL GOVERNMENT CONTRACTORS

1. Do not promise what you cannot deliver

2. Do not overextend your resources and get a reputation for poor performance.

3. Do not tell the customer what he or she wants to hear. Tell them what they need to know. They will respect you for it.

4. Network constantly on professional sites such as Linked In. Hit the "Answers" feature and accumulate an "Expert" rating from your peers in your field.

5. Blog like there is no tomorrow. A blog is quite different than a web site. Provide good, solid information free of charge and use blog searches for synergistic businesses to team with. Teaming is an absolute necessity these days.

6. Be prepared to provide information, samples and valuable service gratis as a marketing tool. Introduce yourself and then immediately engage the client with your presentation tools available to bring your expertise to whatever topic they are interested in. Let them take you where they want to go with their concerns and their needs. Apply your presentation tools and expertise dynamically on the fly in a sincere manner to those concerns and needs and you will be in demand for follow up business.

7. Quote and bill what the client can afford and grow with him (in content and resources).

8. Be dedicated to working yourself out of a job with a specific customer and having your client take over by training him. He will remember you and recommend you to 10 others.

9. Remember growth is a function of persistence and foresight. Know where your market is headed and get their first - then write and speak about your success indirectly by helping others. Demonstrate humility and a satisfaction in helping others succeed. They will find ways to give you credit. There are ways of tooting your horn without making peoples' lights go out.

10. Word of mouth advertising from pleased clients is a sure ticket to success.

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MARKETING TO ACHIEVE A SMALL BUSINESS SET ASIDE CONTRACT

"THE EARLY BIRD GETS THE WORM"

INTRODUCTION

Marketing is one of the greatest challenges for the small business federal government contractor. We have previously discussed the federal government marketing process at the following articles:

http://www.smalltofeds.com/2010/11/insights-to-succeed-in-small-business.html

http://smalltofeds.blogspot.com/2006/12/marketing-small-business-in-federal_17.html

http://smalltofeds.blogspot.com/2007/06/federal-government-contracting-customer.html

http://www.smalltofeds.com/2010/06/techniques-for-product-development-in_01.html 

This posting will address sculpting a government contracting business opportunity to the point where it becomes a sole source or small business group-designated set aside procurement.

GENERAL CONSIDERATIONS

Small business group-designated procurements are far more frequent than sole source contract awards.  Agencies must prepare special justifications for sole sourcing and those most frequently approved are for Hub Zone and Small, Disadvantaged [8(a)] firms (see table below).

Small business group designations are beneficial to firms who hold them by enhancing the probability of an award through agency restrictions on prime contractor bidding to only those who hold the group designation. Others may bid as subcontractors to the prime but the prime small business contractor must be capable of performing at least 51% of the total effort in terms of work scope, hours and dollars.  

 

In either sole source or group-designated marketing, an agency making the buy must be convinced that sufficient capability exists in a single company or in the small business designated group community to set a contract aside. The agency must be convinced early – before a formal procurement announcement is published on FEDBIZOPPS. 

Marketing to achieve a limited competition under a small business group designation or eliminate competition under a sole source contract assumes the marketing enterprise has one or more of the following federal government set-aside designations:

DESIGNATION                                                         TARGET

Small Business                                                        (Group Designation Set Aside Potential)

Small Woman-Owned Business                              (Group Designation Set Aside Potential)

Small Veteran-Owned Business                              (Group Designation Set Aside Potential)

Small Disabled Veteran-Owned Business               (Group Designation Set Aside Potential)

Small Hub Zone Business                  (Sole Source & Group Designation Set Aside Potential)

Small Disadvantaged Business 8(a)   (Sole Source & Group Desingation Set Aside Potential)

Federal government procurements are further classified under the SBA Small Business Size Standards in terms of North American Industrial Classification System (NAICS) Code, number of personnel and/or annual sales. To determine whether a firm qualifies for a given bid, note the NAICS for a given solicitation and download the SBA Small Business Size Standards from the second, vertical Box Net “References” Cube in the left margin of this site.

Part of the sole source or designated group set aside marketing task is to suggest to the agency the NAICS Code (hence the size standard) for a prospective procurement.

Registering to bid government contacts and establish sole source and group designations may be achieved using guidance in the below articles:

http://www.smalltofeds.com/2009/06/federal-government-contracting-small.html

http://www.smalltofeds.com/2006/12/registering-your-small-business-for.html

Hub Zone and Small Disadvantaged Business 8(a) designations are lengthy certification processes. The remaining designations in the above table are self-certifying at the Central Contractor Registration (CCR) web site, but are verified by site surveys and bid vetting for each solicitation prior to contract award. 

EARLY REQUIREMENT TARGETING IS THE KEY TO SUCCESS IN SET ASIDE MARKETING

Effective set aside marketing reaches the agency decision makers with technical, budget and schedule authority before a synopsis of the requirement is posted on FEDBIZOPPS. 

The objective of this form of targeted marketing is to get concurrence from the government to set the program aside sole source if the company has an 8(a), or Hub Zone Certification or reserve it by one of the above group designation classes to eliminate the prospect of full and open competition involving large business.

• Become known to targeted agency personnel by visiting their program offices and meeting the decision makers.  Bring a capability statement:

http://www.smalltofeds.com/2011/05/your-capability-statement-cape-  for.html

• Present your qualifications openly, objectively and specific to their needs.  You must determine what those needs are through market research, trade magazines, research on what they are buying on FEDBIZOPPS, as well as postings on their web site that are future-program oriented.

• Subscribe to periodicals like "Washington Technology" and other trade magazines.  Observe agency trends and analysis that impact your market segment.  There have been set aside programs marketed by small companies through acquainting agency management and technical personnel with capabilities they were not aware existed in the small business community or fulfillment of needs they in fact did not know they had.

• Pay particular attention to FEDBIZOPPS "Sources Sought" or “Requests for draft RFP Comment”  on programs that have yet to be formally solicited. Obtain an appointment to present your capabilities to the decision makers (not the gate keepers).  Be courteous to contracting officers but understand they are not the individuals who make source selections. Understand that once the requirement is formally published on FEDBIZOPPS the gate closes on informal visits to the customer and the competition begins in the form of proposals by competitors.  It is too late at that point to set the program aside for a sole source or a small business designation if it has not occurred by the publication stage.

• Cultivate teaming relationships with other firms in your industry and look for early opportunities in agencies, not only to prime a program but to bring a team of qualified contractors in lesser roles to fulfill them with you or join a team being led by a more experienced firm:

http://www.smalltofeds.com/2009/05/small-business-teamiing-in-government.html

• Understand the small business start up past performance challenge and work to meet it:

http://www.smalltofeds.com/2008/07/small-business-government-contracting.html

• Attend small business outreach events by agencies and prime contractors.  Stay attuned to who is attending and research their needs and requirements.

• Make a point to be present at bidders' conferences for existing solicitations that you may not choose to bid but which may lend insight into the agency needs and prime contractor relationships in the future.      

SUMMARY

As a small business becomes known in the federal government contracting community, successful marketing of sole source or group-designated business becomes easier, but it is always a challenge due to the need for taking early action in windows of opportunity.  Find those windows and communicate capabilities to the decision makers and industry team members who can help you.  

If you are eligible for any of the designations discussed in this article, make small business set asides or sole source procurements key elements in your marketing plan. 

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SMALL BUSINESS FEDERAL GOVERNMENT CONTRACT DISPUTES AND APPEALS

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REQUESTS FOR EQUITABLE ADJUSTMENT (REA)

ALTERNATIVE DISPUTE RESOLUTION (ADR)

AND CLAIMS

I.  INTRODUCTION

The Federal Acquisition Regulation (FAR) contains provisions for contractors and the government to resolve contract disputes.  Such matters arise due to events during performance, many times surfacing weaknesses in the original contract work  definition, technical parameters, schedule factors or related terms and conditions that can lead to change implications effecting cost, schedule and delivery.

In short, when the understanding the parties thought they had at negotiation and execution of the contract is in dispute, there must be a resolution. 

Such conditions open the baseline of the contract to further clarification and negotiation. The FAR recognizes that a fair and equitable process is necessary to settle such matters and re-establish a mutually agreeable contract baseline.

 II. GENERAL CONSIDERATIONS

As we have conveyed earlier in discussions on contract terminations, certain conditions are usually present when a disputed contract is on the horizon.

Contract baseline management has been discussed previously in the following article:

http://www.smalltofeds.com/2009/08/contract-baseline-management-in-small.html

The above article offers six (6) rules of thumb:

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.

The remainder of this article will discuss the three most common processes that contract disputes undergo and selecting the best method considering the circumstances that exist on the contract. 

III. REQUESTS FOR EQUITABLE ADJUSTMENT (REA)

An REA is most often the first and the least formal step undertaken by a contractor when there has been a clear and recognizable departure from the contract baseline in terms of events that warrant cost, schedule, technical performance or terms and conditions parameter modification.  It does not start the formal claims process under FAR with associated interest implications.

Submitted in the form of a proposal for contract change, the REA cites the "Before and After" conditions of the contract baseline and the details regarding the delta.  Implicit in the submission are actual cost records, documents regarding government actions and guidance, an estimate of the new baseline impact in terms of cost, schedule or technical modifications to the agreement and a request for contract change. 

The government agency may approve or deny the proposal, further negotiate the details with the contractor and may or may not modify the contact.  The following article is an excellent guide to use and preparation of REA’s:

http://www.cbh.com/news/newsletter_details.asp?id=144

IV. ALTERNATIVE DISPUTE RESOLUTION (ADR)

ADR takes advance planning on the part of the government agency and the contractor.  Not every government contracting office chooses to place an ADR clause in contacts they execute.  Not every contractor is willing to accept one at contract award.

ADR is intended to be an alternative to the REA and formal claims process, whereby the government and the contractor agree in advance to place an ADR clause in the contract and subject any dispute that arises to the ADR process for resolution.  

Below is a quote from the FAR on the use of ADR:

33.214  Alternative dispute resolution (ADR)

(a) The objective of using ADR procedures is to increase the opportunity for relatively inexpensive and expeditious resolution of issues in controversy. Essential elements of ADR include—

(1) Existence of an issue in controversy;

(2) A voluntary election by both parties to participate in the ADR process;

(3) An agreement on alternative procedures and terms to be used in lieu of formal litigation; and

(4) Participation in the process by officials of both parties who have the authority to resolve the issue in controversy.

(b) If the contracting officer rejects a contractor’s request for ADR proceedings, the contracting officer shall provide the contractor a written explanation citing one or more of the conditions in 5 U.S.C. 572(b) or such other specific reasons that ADR procedures are inappropriate for the resolution of the dispute. In any case where a contractor rejects a request of an agency for ADR proceedings, the contractor shall inform the agency in writing of the contractor’s specific reasons for rejecting the request.

(c) ADR procedures may be used at any time that the contracting officer has authority to resolve the issue in controversy. If a claim has been submitted, ADR procedures may be applied to all or a portion of the claim. When ADR procedures are used subsequent to the issuance of a contracting officer’s final decision, their use does not alter any of the time limitations or procedural requirements for filing an appeal of the contracting officer’s final decision and does not constitute a reconsideration of the final decision.

(d) When appropriate, a neutral person may be used to facilitate resolution of the issue in controversy using the procedures chosen by the parties.

(e) The confidentiality of ADR proceedings shall be protected consistent with 5 U.S.C. 574.

(f)(1) A solicitation shall not require arbitration as a condition of award, unless arbitration is otherwise required by law. Contracting officers should have flexibility to select the appropriate ADR procedure to resolve the issues in controversy as they arise.

(2) An agreement to use arbitration shall be in writing and shall specify a maximum award that may be issued by the arbitrator, as well as any other conditions limiting the range of possible outcomes.

(g) Binding arbitration, as an ADR procedure, may be agreed to only as specified in agency guidelines. Such guidelines shall provide advice on the appropriate use of binding arbitration and when an agency has authority to settle an issue in controversy through binding arbitration.”

V. CONTRACT CLAIMS

A formal contract claim is a significant step in the relationship with your customer.  It acknowledges that the REA and ADR (if applicable to the contract) processes have not been effective in resolving the dispute and refers the matter to a formal claim which has the potential for adjudication.  It also starts the interest clock in terms of government payment liability in the event the agency loses the claim during adjudication. 

Below are the major clauses regarding formal contact claims and the certifications by the contractor that apply.  They have significant legal implications.

https://www.acquisition.gov/far/html/Subpart%2033_2.html

VI. SUMMARY

When contract disputes or the potential for claims and appeals arise it is best to view each instance uniquely in deciding which of the three avenues discussed in this article may be appropriate. 

Contract disputes are serious matters. In the event the impact to the company from a risk perspective is substantial, it is best to involve a law firm that specializes in government contract claims for advice on how to proceed. 

Great Article on the Current Global Political and Economic Crisis‏

This free article by George Friedman at STRATFOR makes a great deal of sense, in an objective fashion, of the economic and political unrest globally. It is well worth the read:

http://www.stratfor.com/weekly/20110808-global-economic-downturn-crisis-political-economy?utm_source=freelist-f&utm_medium=email&utm_campaign=20110809&utm_term=gweekly&utm_content=readmore&elq=c375cfa4e7d54d339618164cc63e31c8

FEDERAL GOVERNMENT CONTRACT TERMINATIONS

I. INTRODUCTION

On occasion the government finds it necessary to terminate contractual arrangements with contractors. FAR Sub-part 49.5 governs such actions. This article will discuss the two most common forms of contract termination, what you should know about them and how to manage them.

II. GENERAL CONSIDERATIONS

Certain conditions are usually present when contact termination is on the horizon. These factors range from product and services obsolescence to developments that change the direction and amount of agency funding. They may also include customer relations difficulties or changes in the mission of an agency.

It is best to manage the risks associated with terminations by viewing them in the light of funding and performance liability. We have previously discussed limitation of funds and funding exposure in the following articles:

http://www.smalltofeds.com/2007/09/limitatoin-of-funds-and-funding.html

http://www.smalltofeds.com/2009/08/contract-baseline-management-in-small.html

If it is generally known, for instance, that if the government is having funding challenges in terms of justifying the next phase of a program, your company should carefully monitor incurred costs and commitments so they do not exceed the existing funding on the contract.

Moreover, if performance on a particular contract has been sub-par, deliveries have been late and corrective action has not remedied the situation, the reality of a termination for default should be assessed from a liability perspective; particularly concerning costs the government may bill the contractor for inconvenience. Receipt of "Show Cause" notices or "Cure Letters" are signs the government is positioning a justification for contract termination.

Terminations for default are particularly harmful to a contractor's past performance rating on federal government contracts:

http://www.smalltofeds.com/2011/04/your-small-business-federal-government.html

The remainder of this article will focus on each of the two major types of terminations and how to manage each.

III. TERMINATION FOR CONVENIENCE

This form of termination arises from standard clause(s) in your government contract that give the government the right to unilaterally terminate the contract at any time with or without giving any reason. The contractor is generally entitled to a negotiated settlement for an equitable recovery of costs and losses incurred. Please see the following link for applicable clauses:

https://www.acquisition.gov/far/current/html/Subpart%2049_5.html

A termination for convenience is the least risky form of termination to the contractor. Although receiving a notice that your contract is being terminated for convenience is never good news, it does offer the opportunity to recover costs you have incurred and those you estimate will impact your business due to the termination.


Actions necessary:

1. First, insure your costs to date, plus commitments have not exceeded the funding level of the contract. If they have, consider asking for a funds amendment to your contact to cover the overrun. It may not be granted by the government. Next, immediately notify departments internal to the company with regard to the termination and inform them that their charge numbers for the program have been closed. Close all charge numbers. 

2. Notify all suppliers and subcontractors with respect to the contract termination, direct that they cease work, discontinue deliveries and submit to you a termination proposal containing itemization and costs associated with terminating their order or contract. You will negotiate with your supply chain and include their costs in your termination settlement proposal to the government.

3. Open a contract termination charge number for selected use by those who are associated with the termination to charge related time and expenses for ceasing work, inventorying material, supporting a termination proposal, dealing with suppliers, handling special requests or other direct efforts to cease work. It makes no difference whether the individuals are direct or indirect in their normal time keeping. This special accounting charge number will be utilized to record the cost to your firm for terminating the contract and proposing a settlement to the government. 

4. Complete your contract termination settlement proposal and submit it to the agency contracting officer to meet the date specified by the agency for same. The following article originally appearing in the Air Force Law Review is an excellent reference for your termination settlement proposal preparation:

http://findarticles.com/p/articles/mi_m6007/is_2002_Spring/ai_103223911/

5. When the contract termination settlement proposal has been negotiated and formalized with an amendment to the contract, closeout the contract in accordance with the following government approved practices:

http://www.smalltofeds.com/2010/12/contract-closeout-in-small-business.html

IV. TERMINATION FOR DEFAULT

A termination for default rises from standard clause(s) in your contract that give the government the right to unilaterally terminate the contractor if the contractor fails to perform according to the specified terms. The contractor is generally not entitled to any payment for the unfinished part of the contract and, instead, may be liable for (1) repayment of monies advanced, (2) liquidated and other damages and (3) excess cost incurred by the government in completing the contact under a new contractor. Please see the following link for applicable clauses:

https://www.acquisition.gov/far/current/html/Subpart%2049_5.html

The Government contracting officer will terminate a contract for default when he or she determines that the contractor has failed to adequately perform in accordance with the contract. The Default clause applicable to fixed-price contracts limits the Government's liability for unaccepted work, subjects the contractor to actual (or liquidated) damages, and may subject the contractor for the excess cost of re-procurement. Moreover, the default becomes part of the contractor's past performance record which will harm the contractor's ability to compete on future contracts. Because the Government is not liable for work not accepted, the termination for default has a greater adverse consequence on supply contracts than service and construction contracts.

The government may terminate all or part of a contract for anything that was done that was not in the interest of the government, including:

• Attempted fraud

• Failure to meet quality requirements

• Failure to deliver the supplies or perform the services within the time specified in the contract

• Failure to make progress and that failure endangers performance of the contract

• Failure to perform any other provisions of the contract.

Cure Notice

Before terminating a contract for default because of your failure to make progress or to perform, the contracting officer will usually give you a written notice, called a "cure notice." That notice allows you at least 10 days to cure any defects. Unless the failure to perform is cured within the 10 days, the contracting officer may issue a notice of termination for default.

Show-Cause Notice 

If there is not sufficient time for a cure, the contracting officer will usually send a show-cause notice. That notice directs you to show why your contract should not be terminated for default. It ensures that you understand your predicament, and your answer can be used in evaluating whether circumstances justify default action.

If a contractor succeeds in appealing the termination for default, the default is usually converted into one for the convenience of the Government.

Actions Necessary:

1. When a termination for default is at hand, contact a law firm that specializes in government contract terminations and proceed within the guidance offered by them in pursuing any part of the termination that could be converted to a termination for convenience or other form of relief with respect to conditions over which you may not have had control or for which you may be entitled to a request for equitable adjustment or contact claim.

2.  You should also proceed in accordance with paragraphs III. 1. through III. 3. above to limit your internal and supplier liability as well as isolate costs associated with the termination for a potential settlement or claim.  

When the contract has been amended by termination for default, close out the contract in accordance with the following government approved practices:

http://www.smalltofeds.com/2010/12/contract-closeout-in-small-business.html

V. SUMMARY

Contract terminations should be avoided if at all possible. They are expensive on the part of both the government and the contractor. The negative aspects of a termination for default, in particular, can last for years in government contractor past performance data bases.

TOTAL TIME ACCOUNTING

It is necessary to establish a written policy and procedure disclosing time keeping practices to DCAA and to fact-finding teams on proposals as the company process for both pricing and accounting for overtime as a whole. In doing so, topics such as compensated and uncompensated time must be addressed.

Include in the policy/process for pricing and job cost accounting those steps required for compensated overtime to personnel who are non-exempt from the Fair Labor Standards Act (hourly who receive time and one half).

Also include the policy/ process for pricing and job cost accounting, those steps required for uncompensated overtime to personnel who are exempt from the Fair Labor Standards Act (salaried who receive pay at straight time for hours in excess of 40 and those who do not receive pay at all for hours in excess of 40) The former are usually engineers and technicians. The latter are usually management or staff).

I encourage "Total Time Accounting" to my clients to make all hours worked a part of the record and stay away from waste fraud and abuse or defective pricing allegations.

I believe the below article by Find Law contains the best approach to the issue of uncompensated overtime and I encourage my clients to make part of their policy the practice specified in the last 4 paragraphs of the article:

 http://library.findlaw.com/1999/Jul/1/127569.html

 "In our view, contractors performing labor-hour, time-and-material, or cost reimbursable contracts should avoid any timekeeping system that fails to accurately report the total time worked. Such a system under-bills clients for work performed and thereby affects a company’s bottom line. Moreover, any timekeeping system that by its very design under-reports actual hours worked invites labor mis-charging and false claim allegations.

A total time accounting system that accurately reports hours will generate the proper amount of revenue for contractors on each of their labor-hour and time-and-material contracts. Cost reimbursable contracts have an added twist. Many cost reimbursable contractors who report total time use a diluted hourly rate approach for distributing labor costs to projects. For example, if an employee is paid $1,000 per week and works 40 hours, the projects are charged $25 per hour. If the same employee works 50 hours the following week, the hourly rate is diluted and projects are charged $20 per hour. In this example the contractor gets no additional revenue for the extra 10 hours of effort — they are provided free of charge to the Government.

 Fortunately, acceptable standard cost approaches will negate this windfall to the Government and still allow the contractor to take advantage of uncompensated overtime. The most common of these approaches involves charging direct labor to projects at a standard hourly rate established annually for each direct labor employee. Actual hours are charged to projects at this standard rate.

For uncompensated overtime situations, the variance between labor charged to projects and actual compensation is credited to overhead. Such an approach allows contractors to account for their hours in an accurate, straightforward manner, bill for the hours actually worked, and effect a competitively beneficial decrease in their overhead rates. DCAA has recognized this as an acceptable method of accounting for labor costs, and we think that it generally beats just giving the Government hours of effort for free."

WHAT TO EXPECT FROM PRE-AWARD SURVEYS AND FACT FINDING

INTRODUCTION

When a government contracting specific market target has been identified and a proposal has been submitted, pre-award surveys and fact finding by the buying agency or the prime contractor often follow. These processes take two forms:

1. A survey visit to the small company facility

2. Inquiries with respect to supplementary details for enhancing the customer perspective on a proposal submittal.


Undertaking the above processes with a government agency differs from that of undergoing them with a prime contractor. You are not required to disclose proprietary data to a prime contractor. Please see the following articles for further information in this vital area:

http://www.smalltofeds.com/2008/09/protecting-intellectual-property-and.html

This article will discuss each of the above processes and suggest measures to prepare for, conduct and succeed at pre-award surveys and finding.


PRE-AWARD SURVEY
A pre-award survey is a government or prime contractor visit to a supplier's facility. The Procurement Contracting Officer (PCO) or the Administrative Contracting Officer (ACO) and the Contracting Officer’s Technical Representative (COTR) as well as members of their respective staffs may attend.


In some instances the local Defense Contract Management Area Office (DCMAO) is involved. As you become a regular supplier to an agency, site survey visits will normally cease or occur only rarely.


For further explanation of the above government officials and their roles, please see the following article:

http://www.smalltofeds.com/2007/06/federal-government-contracting-customer.html

The site survey team is interested in establishing the physical presence of a new supplier, the technical capability and the human resources to perform the prospective work and the quality of the environment in which the effort will be performed. A "Pre-award Survey of Prospective Contractor" Forms are completed and become part of the contract file:

http://fast.faa.gov/ProcurementToolboxForms.cfm

Pre-Award Survey of Prospective Contractor SF-1403 8/1997
Pre-Award Survey of Prospective Contractor (Accounting System) SF-1408 8/1997
Pre-Award Survey of Prospective Contractor (Financial Capability) SF-1407 8/1997
Pre-Award Survey of Prospective Contractor (Production) SF-1405 8/1997
Pre-Award Survey of Prospective Contractor (Quality Assurance) SF-1406 8/1997
Pre-Award Survey of Prospective Contractor (Technical) SF-1404 8/1997

Select the person who will lead the meeting with the government survey team. This person should be empowered to speak for the company and should be completely familiar with details of the solicitation and your company's offer.


If relevant, make available one or more technicians to answer questions. Identify any disparities that may exist between the solicitation and your company's offer that should be resolved during the initial meeting with the survey team. Think about how you can demonstrate actual technical capability or the development of technical capability on the proposed contract. Make sure your facilities and equipment are available and operable. If they are not, be prepared to demonstrate that they can be developed or acquired in time to meet proposed contract requirements.


Make sure that your labor resources have the proper skills or that personnel with the needed skills can be hired expeditiously. Gather and make available to the survey team documentation, such as previous government contracts or subcontracts or commercial orders, to demonstrate a past satisfactory performance record with regard to delivery, quality and finances. Gather financial documentation for the team financial analyst, including the company's current profit and loss summary, balance sheet, cash flow chart and other pertinent financial information. Make sure the plans are in place for vendor supplies and materials or subcontracts to assure that the final delivery schedule can be met. Make sure that these plans are verifiable.

Review any technical data and publications that may be required under the proposed contract and make sure you understand them. If the contract is a type other than a firm-fixed price or if you have requested progress payments, prepare adequate accounting documentation for review. Review your quality control program and make sure that it is workable and consistent with the quality requirements stated in the contract.


PROPOSAL FACT FINDING
Fact-finding usually involves the government requesting additional information to supplement that which was submitted by you in your proposal. These areas of interest are early indications of where the negotiator is looking for weaknesses in your cost justifications or disconnects between your technical approach and the cost you are estimating to do the job. If you have subcontractors or major material suppliers, the government may ask for copies of your vendor proposal evaluations. The government may wish to examine cost history for the last time you performed similar efforts.


Keep in mind that most government agencies put together an independent cost estimate of what they feel the item or service should cost. These are commonly called "Should Cost Estimates". The additional requests for information during fact finding are feeding the should cost estimate. The Procurement Contracting Officer (PCO ) typically has an end user for the product or service internal to his organization who will become the Contracting Officer's Technical Representative (COTR) when the contract is awarded.


The COTR has a strong influence on the negotiations and will usually be present when negotiations commence. On many occasions, the COTR is the real internal customer at the agency. He has fiscal, technical and schedule responsibilities to his management for the program you are servicing. He simply cannot sign for the government.


The PCO has the agency warrant to commit the government and knows the most about public law and the Federal Acquisition Regulation (FAR) as it is applied to contracts the agency undertakes. It is the COTR who is likely feeding the PCO requests for fact-finding data. Keep in mind that the COTR and the PCO are formulating their assessment of the cost and the risk associated with the program during the fact-finding process. Cost is the first item of negotiation and risk has a direct influence on the government's position on profit.


The contacting officer may order a Defense Contract Audit Agency (DCAA) audit. The Request for Proposal (RFP) to which you responded may in fact have ordered a copy of your proposal be submitted to the DCAA Office nearest your location. If you are a new supplier to the government, DCAA may ask for a copy of your long-range plan containing your direct and indirect rate structure. They will verify the rates utilized in your proposal against your LRP, evaluate escalation factors utilized for long term projects and check the math. For guidance on these matters, please see the following article:

http://www.smalltofeds.com/2008/02/dcaa-audits-and-small-business-job-cost.html

The auditor will ask for copies of major material and travel quotations and insure that government per diem rates are utilized for lodging and meals in the cost proposal. DCAA may also visit your facility to check compliance with Cost Accounting Standards insuring that the company sets up each new government contract on job cost accounting in the identical manner in which it was proposed; in effect identifying direct labor, direct material and other direct costs to each contract monthly and allocating overhead and G&A utilizing the same numerator and denominator relationships upon which the contract was originally estimated.


DCAA is paid by the PCO to perform the audit. The audit does not extend to negotiations and at the audit conclusion the auditor files a report with the PCO. The report will contain information on any errors uncovered and findings on the adequacy of the accounting and long range planning systems. DCAA will not express an opinion on the cost content of the proposal in terms of a value judgment regarding prices for prospective supplies and services. If the auditor does not offer an exit interview, ask for one. Better yet, ask for a copy of the audit report to the PCO. Many DCAA offices will provide a copy to audited contractors. DCAA does not have the authority to direct a proposal revision based on audit findings. An astute contractor will immediately correct any errors found by the auditor in the proposal and examine other audit findings in preparation for negotiations.


SUMMARY
With adequate preparation and an understanding of what the processes involve, the small enterprise can succeed in passing government agency or prime contractor site surveys and fact finding.

Remember that these encounters are extensions of your image as presented in your proposal. They are building block in nature and serve to establish, reinforce or change a customer’s view of your company and your proposal.

YOUR CAPABILITY STATEMENT (CAPE) FOR SMALL BUSINESS FEDERAL GOVERNMENT CONTRACTING

INTRODUCTION

Federal government contracting is all about relationship development.  Marketing to influential agency personnel, industry partners, prospective team members, employees, associate contractors and others who can help you requires a hard hitting synopsis of what your firm brings to the table.

Place into a capability statement (CAPE) the specific information others need to know for a sound decision about your company qualifications. This information includes such items as a D&B Number, government registration numbers, North American Industrial Classification System (NAICS) codes and the like. These items are elected or determined when you register your company for government contracting.

KEEP IT SHORT

An electronic capability statement (CAPE) for government contracts should be short and hard-hitting. It should be 1 -2 pages and should highlight the salient points of products and offerings, personnel and qualifications.

Below are examples of two good capability statements in the public domain.  The first is a services company, the second example is for a company selling off-the-shelf products.

CLICK ON IMAGES OR DOWNLOAD TO ENLARGE

CLICK ON IMAGES OR DOWNLOAD TO ENLARGE 

MAKE IT PROMOTIONAL

A good CAPE  will be a promotional brochure that on paper and through the electronic media advertises who you are, what you do and why the government or prime contractors should buy from you. Major elements of your capability statement, in addition to your small business designation and certifications, are as follows: 

(1) Company overview

(2) Supplies and services description couched utilizing your marketing ideas and strategy.

(3) Past performance of your enterprise or your personal background and qualifications 

(experience, education, etc.).

(4) Facilities or capabilities overview (How you perform your service couched in a manner that will appeal to your target market).

(5) Explanation of the positive results the client should expect.

(6) Points of contact and ways to contact you for meetings, placing an order and contracting your services. 

INCLUDE GRAPHICS

The document itself can be created with some graphics, pictures, themes and sales pitches in MS Word or Power Point Software. "Art Explosion Publisher Pro" is an inexpensive product which is useful in creating business brochures. It offers templates and works well with photos, graphics, background, etc. A picture of your product also helps. 

DISTRIBUTION

Your capability statement should be distributed on paper to your target market as a brochure, emailed as an attachment and linked into related industry web sites or partner marketing to get the word out about your product or service. Your CAPE targets contracting officers and prime contractor buyers who are seeking to fulfill their small business buying goals. It is a way to get you in the door and speak to, or correspond with, the management and technical personnel who are the decision makers in sourcing small business buys. 

SUMMARY

A good quality CAPE is the spearhead of your marketing campaign and your visual image;  focused and direct, it must be informative, concise and a snapshot of the very best you can offer.

YOUR SMALL BUSINESS FEDERAL GOVERNMENT CONTRACTING PAST PERFORMANCE RECORD

“Relevant information for future source selection purposes, regarding a contractor’s actions under previously awarded contracts. It includes, for example, the contractor’s record of conforming to contract requirements and to standards of good workmanship; the contractor’s record of forecasting and controlling costs; the contractor’s adherence to contract schedules, including the administrative aspects of performance; the contractor’s history of reasonable and cooperative behavior and commitment to customer satisfaction; and generally, the contractor’s business-like concern for the interest of the customer.”

FAR 42.1501

CLICK ON IMAGE OR DOWNLOAD TO ENLARGE

INTRODUCTION


As a small enterprise enters the government contracting venue, the phrase “Past Performance” almost immediately comes to the fore. When examining government Requests for Proposal (RFP’s) a section of the award criteria is almost always specified for past performance ratings on previous similar government work.

We have discussed meeting the initial past performance challenge for companies new to government contracting in the following discussion:


http://www.smalltofeds.com/2008/07/small-business-government-contracting.html

The primary purpose of past performance evaluations is to ensure that accurate data on contractor performance is current and available for use in source selections. A past performance evaluation report provides a record of a contractor’s performance, both positive and negative, on a given contract during a specified period of time.

This article will focus on accessing your past performance record, and explain how the government rates a contractor’s past performance:

ACCESS

The following is an extract from the Contractor Past Performance Information Retrieval Web Site on obtaining information on your company information there:

http://www.ppirs.gov/ppirsfiles/faqs.htm

“Contractors obtain access to PPIRS through the Central Contractor Registration process. To obtain access, a contractor must enter a Marketing Partner Identification Number (MPIN) in their profile in the Central Contractor Registration system (http://www.ccr.gov/). This can then be used to access their own reports in PPIRS. If they are already registered in CCR, contractors will be asked for their DUNS number and Transaction Partner Identification Number (TPIN) when they update their contractor profile to include the past performance point of contact and MPIN. Contractors should ensure that they know their DUNS number and TPIN number in order to update contact information in their CCR profile. To access information in PPIRS, they log in using their DUNS and MPIN number.

Performance Assessment reports are NOT required on every contract. The government has issued agency guidelines that define when a report card should be completed. Generally report cards are required for all contracts for products or services that are greater than $100,000. However, DOD has been granted a waiver to that requirement (See class deviation 99-O002 of 29 January 1999). Instead, within DOD, they categorize procurements by business sector and dollar value groupings. These are listed in the DOD Guide to Collection and Use of Past Performance Information. A copy of that guide is available at http://www.acq.osd.mil/dpap/Docs/PPI_Guide_2003
.
If you are providing commodities or services in the Systems or Operations Support business sector then a report would be required if the total dollar value of any one contract exceeds $5,000,000. For Services and Information Technology, the threshold is any contract that totals over $1,000,000. For Ship Repair and Overhaul contracts the reporting threshold is $500,000. For Fuels and Healthcare, it is only $100,000. Within DOD, there are also specialized past performance databases for the Construction (CCASS) and Architect-Engineering (ACASS) business sectors. If you are doing business in those specialized business sectors, your past performance information would be in either ACASS or CCASS. For more information ACASS/CCASS, go to https://www.nwp.usace.army.mil/ct/i. Another guide that is applicable to all agencies is the OFPP Best Practices for Collecting and Using Current and Past Performance Information.

We've been collecting report card information for about the past five years. Not all assessing officials have yet gotten into the habit of completing report cards. If one is not completed, it will not be in the PPIRS system. If you know that you have a contract that falls within the reporting limits indicated above, then you should contact that contract's program manager or contracting officer to assure that a report card is completed. By doing that, you will ensure that a record of your performance will be available to source selection officials for consideration in future contract awards.

CCR information is contained in a different database than PPIRS. Currently, the CCR file is updated to PPIRS weekly (usually on Thursday mornings). call our Help Desk at (207) 438-1690 and we will research and help correct a problem.

A report card is not required until at least twelve months have passed since the contract was awarded. So, a report card may not yet be due. Second, the government is allowed an additional period of time for report processing. Even if a contractor has commented on a report card, it still must be processed by the program manager/assessing official and possibly a reviewing official before the completed report is entered into the PPIRS database and made available to source selection officials.

Tip: As a contractor, you do not have to enter any parameters on the “Assessment Reports” selection screen to view all of the information assigned to your DUNS and MPIN number. Just click on “Submit” to view all the PPIRS information for your company. The application has already restricted you to view only PPIRS information assigned to your DUNS and MPIN combination. The filters that are available on the “Assessment Reports” retrieval menu simply allow you to further restrict your view to a defined subset of the information that is available to you.

PPIRS contains all of the records that have been submitted by the contracting official responsible for preparing the report. NIH, NASA and DOD operate systems to track contractor performance. These systems feed into PPIRS. DOD also has specialized databases that track performance on construction (CCASS) and Architect-Engineering (ACASS) contracts. ACASS data is not yet in PPIRS, but plans are underway to make that information available in PPIRS. Use of PPIRS is not mandatory, therefore an agency may track performance using a manual process.”

PAST PERFORMANCE REVIEW CONTENTS BY KEY ASSESSMENT ELEMENT

Below are the key assessment elements required for contractor reviews of major procurement sectors in federal government contracting.

Assessment Elements for the Systems Sector

Technical (Quality of Product) —This element is comprised of an overall rating and six sub elements.


Activity critical to successfully complying with contract requirements must be assessed within
one or more of these sub-elements. The overall rating at the element level is the Program Manager's integrated assessment as to what most accurately depicts the contractor's technical performance or progress toward meeting requirements. It is not a predetermined roll-up of the sub-element assessments.

Product Performance—Assess the achieved product performance relative to performance
parameters required by the contract.

Systems Engineering—Assess the contractor's effort to transform operational needs and
requirements into an integrated system design solution.

Software Engineering—Assess the contractor's success in meeting contract requirements for software development, modification, or maintenance. Results from Software Capability Evaluations (SCEs) (using the Software Engineering Institute {SEI's} Capability Maturity Model {CMM} as a means of measurement), Software Development Capability Evaluations (SDCEs), or similar software assessments may be used as a source of information to support this evaluation.


Logistic Support/Sustainment—Assess the success of the contractor's performance in
accomplishing logistics planning.

Product Assurance—Assess how successfully the contractor meets program quality objectives (e.g., producibility, reliability, maintainability, inspectability, testability, system safety) and controls the overall manufacturing process.

Other Technical Performance—Assess all the other technical activity critical to successful
contract performance. Identify any additional assessment aspects that are unique to the contract or that cannot be captured in another sub-element.

SCHEDULE—Assess the timeliness of the contractor against the completion of the contract, task orders, milestones, delivery schedules, administrative requirements, etc.
 COST CONTROL—(Not required for firm-fixed-price or firm-fixed-price with economic price adjustment contracts.) Assess the contractor's effectiveness in forecasting, managing, and controlling contract cost, including reporting and analyzing variances.
 Management—This element is comprised of an overall rating and three sub-elements. Activity critical to successfully executing the contract must be assessed within one or more of these sub-elements. This overall rating at the element level is the Program Manager's integrated assessment as to what most accurately depicts the contractor's performance in managing the contracted effort. It is not a predetermined roll-up of the sub-element assessments.
 Management Responsiveness—Assess the timeliness, completeness, and quality of problem
identification, corrective action plans, proposal submittals (especially responses to change orders, engineering change proposals, or other undefinitized contract actions), the contractor's history of reasonable and cooperative behavior, effective business relations, and customer satisfaction.

Subcontract Management—Assess the contractor's success with timely award and management of subcontracts, including whether the contractor met or exceeded small business, small disadvantaged business, small business HUBZone, veteran-owned small business, service disabled veteran-owned small business, and women-owned small business participation and subcontracting goals.


Program Management and Other Management—Assess the extent to which the contractor
discharges its responsibility for integration and coordination of all activity needed to execute the contract, identifies and applies resources required to meet schedule requirements, assigns
responsibility for tasks/actions required by contract, and communicates appropriate information to affected program elements in a timely manner. Assess the contractor's risk management practices, especially the ability to identify risks and formulate and implement risk mitigation plans. If applicable, identify and assess any other areas that are unique to the contract or that cannot be captured elsewhere under the Management element.

Assessment Elements for the Services, Information Technology, and Operations Support Sectors
 QUALITY OF PRODUCT OR SERVICE—Assess the contractor's conformance to contract requirements, specifications, quality of software product and development, and standards of good workmanship (e.g., commonly accepted technical, professional, environmental, or safety and health standards).
 SCHEDULE—Assess the contractor’s timeliness against the completion of the contract, task orders, milestones, delivery schedules, and administrative requirements (e.g., efforts that contribute to or effect the schedule variance).

COST CONTROL—(Not required for firm-fixed-price or firm-fixed-price with economic price adjustment contracts.) Assess the contractor's effectiveness in forecasting, managing, and controlling contract cost, including reporting and analyzing variances.
 BUSINESS RELATIONS—Assess the integration and coordination of all activity needed to execute the contract, specifically the timeliness, completeness, and quality of problem identification, corrective action plans, proposal submittals, the contractor's history of reasonable and cooperative behavior, customer satisfaction, timely award and management of subcontracts, and whether the contractor met small business, small disadvantaged business, small business HUBZone, veteran-owned small business, service disabled veteran-owned small business, and women-owned small business participation and subcontracting goals.

MANAGEMENT OF KEY PERSONNEL (for Services and Information Technology business sectors only)—Assess the contractor's performance in selecting, retaining, supporting, and replacing—when necessary—key personnel.


SUMMARY


Regular review of your past performance information system data is vital to your future marketing efforts. Please feel free to download the Guide to the Past Performance Retrieval System in the second, vertical Box Net "References" cube in the left margin of this site.