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Saturday, October 1, 2016

New Federal Fiscal Year - Have You Managed Contract Funding Risk?


As the federal fiscal year draws to a close and the new year opens this month, an astute contractor will have examined the funding status of all government contracts for risk.

Limitation of funds and funding exposure must be a vital topic for every government contractor.


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 invoiced 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. Limitation of Funds and Funding Exposure


In the current political climate with a new Presidency at hand, Sequestration still in vogue and new fiscal year appropriations being incrementally approved by Congress, contractors may receive stop work orders from agencies unless their contracts were fully funded in the previous fiscal year.   Even then, the government reserves the right to de-obligate funding on contracts, which can effectively bring them to a halt. 

Stop work orders are serious matters and require special handling to comply with government direction and manage the associated financial risk. 

Upon receipt of a stop work order you have no guarantee of payment for any transaction date-stamped in your accounting system after the date of the stop work order (or the commencement date of a stop work order specified in a Contracting Officer's Letter).

Applicable charge numbers in the accounting system must be closed until the stop work order is lifted and any effected suppliers and subcontractors must be notified to do the same.

To the degree the government has made progress payments or has any other form of payment invested in a physical product to date it has ownership rights. If that is the case, treat the physical material work-in-process as government owned, store it as such without performing any more effort on it and await further disposition.

To the degree the government has not paid anything on the contract or delivery order they have no ownership rights to the physical product and you are free to complete it and sell it to another customer (commercial or government that has not stopped work). If the government recommences the order, quote a new price and delivery from ground zero.

At the bottom line a stop work is blunt and to the point.  Treat it as if you will never hear from this customer again to manage the risk.

To the degree you do hear from the Contracting Officer again and he or she has the funding to recommence work, be prepared to submit a proposal for what it will take to start the effort and a realistic delivery schedule to complete it, but do not build any retroactive costs incurred during the stop work period into your logic and expect to bill them; they may not come to payment fruition. 

Continuing effort on a contract after receipt of a stop work is high risk. Astutely managing your options is a far better approach.   What is a Government Contract Stop Work Order?


Having a limitation of funds and funding exposure process in the company should be a standard part of doing business.  A, shrinking, remaining funding level condition on incrementally funded contracts should trigger a risk analysis and government notification process throughout the year.  The federal fiscal year-end brings an additional element of risk to the process with the annual budgeting, approval and appropriations process required by law. 

Thursday, September 1, 2016

7 Techniques to Profile Your Government Contract Competition


Even though small businesses enjoy set aside opportunities in government competition, the majority of set-aside procurement bids are populated with several competitors.
Early market research, industry teaming and customer relations are necessary on the road to a set-aside win.  Marketing to Achieve a Set aside Government Contract

Once a bid target is selected, competitive analysis is vital. This is particularly true in service contracting.  As the small enterprise moves on into the full and open market, it is even more vital to know who else is bidding and their relative strengths and weaknesses.
Make a bid/no bid decision. Making an Astute Bid/No Bid Decision

If you decide to bid, develop a model of your competition as a validating tool for your proposal approach.  Develop a profile of your competitor’s likely technical solution, past performance, personnel qualifications and cost buildup.


The FEDBIZOPPS web site contains an “Add Me to Interested Vendors” feedback link at every published solicitation.  Although many firms may not wish to tip their hand with an entry, those who are seeking teaming partners may list their firm in this feature. Federal Government Business Opportunities

If the government is offering a bidder’s conference, go to the meeting and attend any tours offered. Then obtain the list of attendees from the solicitation contracting officer.

Examine the contract award history on the agency web site and award notices under the “Agency Listing” at FEDBIZOPPS.  Determine who has been awarded previous contracts by the agency and who the present incumbent may be for your bid if the requirement is not a new one and is presently being performed by another company.

Make inquiries regarding the competitor through industry partners and prime contractors with whom you are associated and with whom you hold Non-Disclosure Agreements. Question them regarding the pending procurement who they believe are the bidding companies.


Check the Competitor’s  General Services Administration (GSA) ScheduleMost government contractors who have been in business long enough to qualify for a significant procurement also establish a GSA Schedule.  Virtually all of them post that schedule at their web site.  For products it will contain the prices through profit for items the company wishes to sell off the schedule to the government.  For services the schedule usually contains fully loaded labor rates through overhead, G&A and profit.  Examine the schedule and note the prices, comparing them to your cost build ups. GSA schedules are usually projected for a 5 year period.  Achieving and Utilizing a GSA Schedule

Consider A Freedom of Information Act (FOIA) Request. Note from company web sites, FEDBIZOPPS award announcements, press releases and other public data the contract numbers your competitor has been awarded by the agency to whom you are bidding.  Consider similar program history in other agencies if the present bid has no recent competitor history. Then submit a FOIA request to the agency FOIA Point of Contact listed at the government web site, identifying the document or documents you are requesting specifically by name and identifying number (s).  When requesting contracts, RFP’s, change orders and similar data, always include the contract number and be specific with regard to references to all changes.  If proposals are requested include a specific request for management, technical and cost volumes. The more detail you provide the more likely the response will supply what you wish to have. Utilizing the Freedom of Information Act

Obtain Competitor Dunn and Bradstreet (D&B) and Better Business Bureau (BBB) Reports. You have a D&B Number.  So do your competitors.  Use your registration at the Dunn and Bradstreet web site to order a D&B report on your competition.  It will provide detailed history of the company, its ownership, the length it has been in existence, its credit and payment history, as well as other useful information.  D&B charges a fee for the reports, but you can order them as needed and pay by the report.   Dunn and Bradstreet  A BBB report is free and may provide insights into complaints, problem resolutions and related matters from the buying public.Better Business Bureau

Review the “Project on Government Oversight” (POGO) Federal Contractor Misconduct Database (FCMD).  This data base has surprising detail on many government contractors who have undergone federal legal actions such as defective pricing and other violations of the FAR, yet remain in business having paid fines or financed continuing litigation.   The site is free POGO Contractor Misconduct Data Base

Make a Physical Visit. Visit your competitor’s location, particularly if it is local.  Make sure you are viewing the cost center out of which the job will be bid.  Many businesses have multiple cost centers at multiple locations to maximize competitive factors on government contracts.  Cost Center Strategic Planning  Without entering the facility, assess the size of the operation, the traffic entering and leaving and relative indirect cost factors that can be generally observed, such as square footage, headcount of employees, the size and content of the parking lot and related matters.

Post Generic Help Wanted Ads at Your Web Site and Elsewhere on the Web.  Without revealing the specific contract or program (unless you believe it will benefit you) publish job descriptions and openings for the skill sets necessary to perform the work required by the new program, even if you already have the personnel on board.  Look for interviewees who have worked for, or are presently on, the competitor’s payroll and invite them for a visit at a neutral location. Some companies even announce a job fair for the program.  Talent is fluid today. It is also being re-defined.  Thus, what used to be considered a “Pool” (either captive or available) is now a technologically-equipped, high speed resource of communicators with motivated skill sets seeking opportunity. Economic hardship has also put a hard, cynical edge on many.  Selling must occur both ways (employer and employee).  To an extraordinary degree the age in which we live is requiring us to redefine trust and the degree to which communication and expectation contribute to it. Loyalty has taken a back seat to the above.  Recruiters, companies and entrepreneurs must recognize these hard facts of life.  Is the term, "Talent Pool" Obsolete?

Develop A Cost Model of Your Competition. Make a copy of your cost model spreadsheet for the job and modify it to look like your competitor. To see examples, check the models labeled “Attachments A and B” in XLS spread sheets within the “Books by Ken” BOX in the right margin of this site.  Plug your direct costs for labor, material, ODC (travel and the like) into the competitor model, then using information developed above, evolve estimated indirect cost factors for Overhead, G&A and Profit/ Assume that all competitors will have to pay the same relative wage scale as you have determined by salary survey  to attract or retain talent and a fringe benefits package to meet government requirements for vacation, sick leave, holidays, taxes and similar expenses. Then focus on the overhead and G&A as key factors in winning the pricing criteria for the job, comparing your bid to the competitor cost model. Pricing Small Business Federal Government Contracts


An effective competitor profile contains performance, historical, demographic, statistical, physical operations, human resource and cost information that is trending in nature and provides insights and comparative balance to a challenging bid. It is a key tool in performing risk analysis and making related trade off judgments in the final submission of your bid or proposal.

Monday, August 1, 2016

Is The Term “Talent Pool” Obsolete?

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Yes it is.
Talent is fluid today. It is also being re-defined.  Thus, what used to be considered a “Pool” (either captive or available) is now a technologically-equipped, high speed resource of communicators with motivated skill sets seeking opportunity.
Economic hardship has also put a hard, cynical edge on many.  Selling must occur both ways (employer and employee).  To an extraordinary degree the age in which we live is requiring us to redefine trust and the degree to which communication and expectation contribute to it.
Loyalty has taken a back seat to the above.  Recruiters, companies and entrepreneurs must recognize these hard facts of life. 
As long as values for the organization are base-lined and maintained in the enterprise mission statement and clearly promulgated in objectives to the employees, then it becomes a management maintenance challenge with regard to employee acquisition and retention.
The fact that individual value systems may or may not align with the organization values or changes in them is a communications issue. If the conflict is too stark - people will not join a company, will not perform if they join and leave or be fired as the a usual result.
In a free society organizations and individuals have choices.  "At Will Employment Contracts" are taken literally. In not so free societies other conditions exist that impact     values.  Conditions there are dictated by governments or stark economic conditions.
With the global competition for resources and employment these days, business and governments must view the value issue in its simplest terms and not make a complex science out of it.
People, companies, jobs, resources and success will be achieved through supply and demand.  All will change to acquire the balance necessary for success
Managing Talent
The most successful organizations pair experienced personnel on a staff basis with junior ones as models. Each has individual assignments and reports to the boss but the senior party is the example in the process/experience-driven aspects of the job and is available to answer questions.
The younger individual infuses the older one with energy and new ideas much like osmosis. The result is a hybrid of old and new that works and has been put together by a team.
The above approach works extremely well, imposes on no one, results in the young and old learning by observation, satisfaction and recognition for collective efforts and reduction in the boss’s work load; a win-win all around. 
Know how much leadership to offer and how much to let the individual grow on his or her own. 
Strike the right balance between specific and generic guidance so the unique individual traits of the workers come through in the business model.
Let the employee have a role in solutions to problems, system design and success of the firm. When you do so, your talent will remain stable and grow with you.

Friday, July 1, 2016

10 Common Traits Among Successful Small Business Government Contractors

As a volunteer counselor over the last decade, I have noted common traits among the most successful small business federal government contractors.  The following are 10 of the most prominent traits and tips on how successful small companies developed them
Commercial success before entering government contracting.  From maintaining buildings to keeping the lights on, from grounds maintenance to flight maintenance, look for niches that can be pursued based on successful past performance, transitioning via industry teaming via subcontracts, partner roles with larger companies or in small business set aside orders for minor items and simpler services provided directly to the government.  Your Entry Points
Willingness to concede there were things they did not know and seeking advice early.   You may download the book, SmallBusiness Federal Government Contracting and its supplement from the "Box" in the left margin of this site.  You may also benefit from the free "Reference Materials". Contract agreements, incorporation instructions for all the US states, guidance on marketing and business planning are also included.   Free Books and Supplements
Recognition of the value in industry teaming. 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. Small Business Teaming in Government Contracting 
Strong capability statement (CAPE) development, networked prudently among government agencies and large government contractors. 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.  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 Capability Statement
Maximizing set-aside qualifications in seeking both prime and subcontract opportunities. 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.  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 dollarsMarketing to Achieve a Small Business Set-aside Contract
Prudent bid/no bid decisions. Government contract proposal preparation is time consuming and can be costly. Meeting agency Request for Proposal (RFP) requirements with a responsive proposal can be well worth the effort if a winning strategy can be formulated.  When considering a proposal to a given government solicitation, conduct a bid/no bid exercise. By going through that process you will begin formulating your win strategy or you will discover that you should not bid the job for lack of such a strategy. Making an Astute Bid/No Bid Decision
Ethical business conduct and avoidance of conflicts of interest. A small business ethics image is different than a product or service "Brand Identity". The latter focuses on that which the customer receives from you in the way of products and/or services. A company ethics image is how the organization is viewed in general from a public perception as positive or negative.  That view is held by customers, your industry partners or prospective partners, regulators and the average citizen. If carefully sculpted your public ethics image can be a vital element in business success; if neglected it can pose a high risk to your enterprise.  Maintaining an Ethical Company Image
Excellence in risk analysis. The challenges and difficulties for the small business in government contracting are not so much in the areas of barriers as  they are in lack of knowledge (which I concede is a form of barrier but one that can be dealt with) Large business and government agencies take advantage of the small enterprise lack of knowledge or make poor assumptions regarding what a small business knows about the Federal Acquisition Regulation (FAR) and associated Cost Accounting Standards (CAS). This leads directly to abusive practices. Managing Small Business Risk
 Solid long range planning and plan maintenance. The time to consider separating government from commercial work and/or establishing new cost centers for bidding, accounting and billing purposes is when the enterprise is generating a long range marketing plan to determine rates for bidding new long term contracts. The location of the work (both geographic location and whether performance is in or out of a government facility, its duration, skill set requirements, government-mandated fringe benefits for workers and the competition are all factors to consider).Strategic Planning for Small Business
Excelling in meeting the past performance challenge, building a performance record with solid customer service and sensitivity.  How can a new organization or one that is new to government contracting muster a response to the past performance challenge? The answer lies in historical projects that may be similar in the commercial arena and a high quality proposal that clearly demonstrates an understanding of the requirement at hand, a unique and cost effective project plan and high performing personnel and/or products tailored to the statement of work to offset an interim, light past performance record. Meeting the Past Performance Challenge

Wednesday, June 1, 2016

DOD Revamps Source Selection Process


“New source selection procedures (SSP) on March 31 rescind the previous policies issued five years ago.

The new procedures will have a significant impact on proposal evaluations in DOD and specifically on how they handle best value tradeoffs and lowest price technically acceptable (LPTA) procurements.

If you would like to read the full 40-page memorandum and its three appendices, it is available on our website.

Redefining the best value continuum

DOD added a new source selection approach to the best value continuum for use as a standalone evaluation approach or in combination with the previously defined best value subjective tradeoff or LPTA tradeoff. The new approach is called Value Adjusted Total Evaluated Price (VATEP) tradeoff, and it allows the source selection authority (SSA) to include monetized adjustments to an offeror’s evaluated price based on specific enhanced characteristics proposed in the offeror’s solution.

In traditional best value subjective tradeoff evaluations, bidders may exceed minimum contract requirements, but no guidance is provided about how much the government is willing to pay for performance above minimum performance requirements. In subjective tradeoff procurements, the evaluation team must carefully document instances where a bidder offers to exceed a contract minimum requirement, and the SSA has to subjectively weigh the benefits of each feature in evaluating the offeror’s proposal and trading off these benefits against price.

In the new VATEP approach, the government will clearly identify minimum (threshold) and maximum (objective) performance requirements in the RFP and identify how much it is willing to pay in terms of price increase (either percentage or dollars) for measurable performance above the threshold.

This approach quantifiably links value and cost in such a way that a bidder can make an informed decision whether it should propose to meet or exceed threshold levels.

For example, if speed is a performance requirement, the government will clearly state what it is willing to pay for increased speed above the threshold level up to the objective level. If it costs 10 percent more for the offeror to increase speed from the threshold to the objective performance level, and the government is willing to pay 20 percent more to achieve this higher performance, then proposing the higher performance level would be a good decision.

On the other hand, if the government is only willing to pay 5 percent more, and the offeror would have to raise its price by 10 percent to achieve this higher performance level, then the offeror would be better served to just propose performance at the lower threshold level.

In VATEP procurements, it is expected that the offeror will meet all threshold performance levels but will receive monetized evaluation credits for performance above thresholds. For performance above thresholds, the SSA will reduce the offeror’s evaluated price (for evaluation purposes only) by the amount of the credit the RFP assigns for performance above the threshold.

The government may assign an affordability cap to set an upper limit on how much the government will pay in total for all performance enhancements. Exceeding the affordability cap would make the offeror ineligible for award.

Any enhancements proposed above the threshold will be incorporated into the awardee’s contract.

Standardizing rating methodology and terminology

For all negotiated procurements (FAR Part 15), major system acquisitions (FAR Part 2.101), and task orders greater than $10 million on multiple award contracts, the new SSP standardizes evaluation terminology using five color ratings or adjectival ratings. These are:

  1. Blue (Outstanding) = a proposal with an exceptional approach and understanding of requirements that contains multiple strengths.
  2. Purple (Good) = a proposal with a thorough approach and understanding of requirements and contains at least one strength.
  3. Green (Acceptable) = a proposal with an adequate approach and understanding of requirements and has no strengths.
  4. Yellow (Marginal) = a proposal that does not demonstrate an adequate approach and understanding of requirements.
  5. Red (Unacceptable) = a proposal that does not meet the requirements of the solicitation and thus contains one or more deficiencies and is unawardable.
The above definitions apply when the government decides to consider performance risk as a separate evaluation factor. If performance risk is combined with the technical evaluation, the five color scores remain the same, but the definitions are slightly modified to include performance risk.

Clearly, to score well in highly competitive bids a proposal will need to have multiple strengths associated with each evaluation factor.

Neutral past performance rating may not be neutral

Past performance evaluations consider each offeror’s demonstrated recent and relevant record of performance in supplying products and services that meet contract requirements.
Relevancy is unique to each solicitation but may include, but not be limited to, similarity of product/service/support, complexity, dollar value, contract type, use of key personnel (services bids), and extent of subcontracting/teaming. 

Ratings are generally adjectival and are typically scored as Very Relevant,Relevant, or Somewhat Relevant. For example, very relevant would include present or recent past performance of an effort that involved essentially the same scope, magnitude, and complexities as those in the solicitation.

Quality of product or service as a separate rating is not required, however, a separate confidence assessment is required based on the overall record of recency, relevancy, and quality of performance.

Confidence ratings have five adjectival levels—Substantial, Satisfactory,Neutral, Limited, or No Confidence.

A neutral confidence rating occurs when there is no recent/relevant performance record available or the record is so sparse that no meaningful confidence rating can be assessed. 

When a neutral rating is received, the offeror’s past performance may not be evaluated favorably or unfavorably, however, the SSA may determine that another offeror with a substantialconfidence or satisfactory confidence rating is worth more than a neutralconfidence rating in a best value tradeoff as long as the determination is consistent with the stated evaluation criteria.

In LPTA procurements, an offeror with a neutral rating is given a passing score, so offerors are not penalized for lack of past performance.

LPTA procurement requirements defined

The new SSPs clearly state when an LPTA procurement is appropriate and emphasizes that this approach is appropriate when the products or services being acquired have:

  1. Well-defined requirements;
  2. Minimal risk of unsuccessful contract performance;
  3. Price has a dominant role in the source selection process; and
  4. There is no value, need, or interest to pay for higher performance.
Well-defined requirements mean technical requirements with acceptability standards that can be articulated by government and clearly understood by industry.
Appendix C to the new SSPs cites acquisition of commercial items or non-complex services or supplies as acquisitions that are appropriate for LPTA evaluations. This guidance is consistent with DoD’s Better Buying Power initiatives.

Small business participation

The government will evaluate the extent of small business participation proposed. Small business participation may be a standalone evaluation factor or a subfactor under the technical evaluation.

The requirement for small business participation must be clearly stated in the RFP as percentage goals for small business participation with the applicable breakdown of goals for various categories of small business concerns.

Proposed small business participation will be rated as either acceptable orunacceptable or scored using the same five color scores used for evaluating the technical proposal. When color scores are used, a Blue (Outstanding) rating is defined as “a proposal with an exceptional approach and understanding of the small business objective.”

The procedures do not say that in order to earn a Blue rating the offer must propose to exceed small business participation goals.

Mandatory use of discussions

Discussions are now mandatory for all procurements with an estimated value of $100 million or greater.
The procedures acknowledge that awards without discussions on large procurements are seldom in the best interest of government. Awards without discussions on complex, large procurements are discouraged.
Discussions, as a minimum, must include:

  1. Any adverse past performance information to which the offeror has not had an opportunity to respond; and
  2. Any deficiencies or significant weaknesses that have been identified during the evaluation.
The Procuring Contracting Officer (PCO) is encouraged to discuss other aspects of the proposal that could enhance the offeror’s potential for award such as evaluation weaknesses, excesses, and price, but is not required to discuss every area where the proposal could be improved.

There is no requirement to discuss all weaknesses in an offeror’s proposal even when undiscussed weaknesses may be determinative in the award.

Selecting the Source Selection Authority

The new procedures continue the practice of requiring the agency head to designate, in writing, someone other than the PCO as the source selection authority for procurements with values greater than $100 million (including options and planned orders). For these larger procurements, the SSA must establish a Source Selection Advisory Council (SSAC) to provide functional expertise.

When established, the SSAC’s primary role is to provide a written comparative analysis of the offerors and provide an award recommendation to the SSA. In the absence of an SSAC, the Source Selection Evaluation Board (SSEB) does not prepare a comparative analysis or recommendation for award since this task is the responsibility of the SSA.
The Source Selection Decision Document (SSDD) provides the rationale for award, and a redacted version can be provided at the debriefing.

The establishment of an SSA other than the PCO and use of the SSAC on larger procurements moves the selection decision solidly toward the organization needing the products, systems, or services being procured and away from individuals on the procurement side of the organization that may be more inclined to choose price over performance.

Final thoughts

The new source selection procedures, just like the previous, provide excellent guidance to improve DOD evaluation practices. I believe this procedure will serve DOD and industry well in the coming years and will help industry write better, more competitive proposals."

DOD Revamps Source Selection Process


About the Author

Bob Lohfeld is the chief executive officer of the Lohfeld Consulting Group. E-mail is

Sunday, May 1, 2016

Nimble Large and Small Business Teaming


"Smaller players and the larger contractors work together in a new model of agile programs.
With successful mentorship and partnership programs, larger contractors gain access to contracts for which they would otherwise be ineligible.

Conversely, smaller contractors that lack the resources for federal procurements can break into this competitive marketplace by teaming with larger providers.

In today’s post-sequestration business climate, government contractors are continually challenged with shrinking margins, strong price competition and flat or decreased agency spending.
At the same time, new acquisition reform efforts aimed at streamlining and improving technology procurements are helping to ensure that agency CIOs are more involved in the process, and are responsible for the success or failure of all IT projects at their agency.

For the agency, the combination of these developments creates greater demand for technology collaboration and agile solution development.  With increased CIO involvement and improved agency coordination, programs should benefit by sharing common capabilities through inter-program collaboration.  At the same time, with a shift towards smaller, agile application solutions, as opposed to traditional grand-scale programs, agencies can lower the risk of cost overruns and schedule slippage.

For the large contractors supporting the agency, increased collaboration and more agile development increases the need to team with smaller innovative tech firms in emerging IT areas and then share those capabilities across programs.

For example, with the increasing need for sharing geospatial data across not only the Defense Department but also civilian agencies, contractors can help CIOs leverage their existing geographic software and imagery with available commercial-off-the-shelf solutions from smaller software companies, as opposed to developing custom applications.

When customization is required for success, the same small software companies can help large contractors fill highly specialized capability gaps without the need to directly acquire the innovation. Ultimately, with the right teaming arrangement, program outcomes are optimized which benefits all industry partners.

However, there are always challenges when it comes to developing the right teaming relationship. According to the Washington Technology Insider Report 2015, there is often a lack of transparency and mistrust in the majority of teaming relationships.

Many of these challenges come down to a lack of communication, and a misunderstanding of what each side brings to the table. For smaller specialized companies, it is easier to show their value propositions to both the government customer and the larger primes.

In today’s rapidly evolving government IT arena, these unique value propositions can be anything from spatial data management to mobility to the Internet of Things (IoT) to specialized cybersecurity offerings. These are the new innovation areas that are moving away from being “talked about” to actually being implemented.

In particular, spatial data collection and visualization is fundamental to decision support for all federal agencies.  There will never be a shortage in the need for insightful, actionable data for helping government become more responsive and effective. Government will always need on-demand decision support data about a wide-range of subjects – including disaster recovery, income levels, air quality, disease patterns, environmental incidents or population trends.

For larger contractors, it may be difficult to build out or acquire these types of capabilities in a rapid fashion.  Furthermore, with acquisition reform efforts like FITARA giving agency CIOs more input in the procurement process, it’s even more important for larger contractors to demonstrate greater value with the right teaming arrangements.

Ultimately, we all want successful business outcomes produced by the unmitigated success of our customer agencies. This can be achieved through nimble teaming relationships where the smaller players and the larger contractors work together in a new model of agile programs."

Need for agility drives need for new technology partnerships

Friday, April 1, 2016

Feds Add 92 Industries to Women-Owned Business Contracting Program


Judy Bradt on Linked In

"The Federal government has just expanded the industries included in the Federal Women-Owned Business Contracting Program!
As per the 3/316 Federal Register notice, effective immediately, 92 new NAICS industry groups are eligible for Federal contract preferences under to WOSB program. Is your business affected? Check  here
“At the request of the SBA in 2015, the Office of the Chief Economist, at the U.S. Department of Commerce, conducted a new study on the Women-Owned Small Business (WOSB) Federal Contracting Program. The study reevaluated the North American Industry Classification System (NAICS) industry groups in which WOSBs are underrepresented and substantially underrepresented in Federal contracting. As a result of the study, the SBA has determined changes will be implemented to the WOSB Federal Contracting Program. These changes will provide expanded opportunities for WOSBs to pursue set-aside and sole source federal contracts.
As set forth in the Federal Register notice, the SBA has authorized the use of 113 new NAICS Industry groups for WOSB and EDWOSB set asides. WOSBs will now be eligible for contract participation in 92 NAICS industry groups. EDWOSBs will now be eligible for contract participation in 21 designated NAICS industry groups, along with the 92 NAICS industry groups identified for WOSB. The effective date per the notice for use of these new NAICS is 3 March 2016. ”

Tuesday, March 1, 2016

New Tax Law – Instant Depreciation for Small Businesses

Business Management Daily


“Nearly all small businesses, even the very tiniest, should consider taking advantage of the deduction.

The deduction is essentially limited to small and midsize companies. It begins phasing out when a company spends more than $2 million a year on qualifying purchases, and is eliminated entirely for those that spend more than $2.5 million.

The deduction works like this: If a company has a $90,000 profit and decides to spend $50,000 of it on new computers, the company would normally write off the cost of the equipment gradually, deducting a portion of it each year over the span of the computers’ useful life. But Section 179 allows the business to deduct the entire $50,000 cost at once in the year the equipment is purchased, reducing the company’s taxable profit to $40,000. (The deduction cannot exceed a business’s total net income.)

Section 179 was once a fairly limited tax break, with an annual cap of $25,000 or less. But in 2003, Congress temporarily raised the limit to $100,000, and in 2008, as the recession set in, it raised the cap again to $250,000. In 2010, hoping to stimulate more spending, Congress increased the limit to $500,000, allowing businesses to use the deduction toward expensive items like factory machinery and trucks.

But each increase was a temporary measure requiring annual reauthorization to prevent the cap from returning to $25,000 — and Congress developed a habit of waiting until the very last days of the year to make a decision. In 2012, it missed the calendar deadline completely and passed legislation on Jan 1, 2013, retroactively raising the deduction limit for equipment business owners had purchased the previous year.

“The uncertainty drives my clients up a tree,” said Paul Neiffer, an accountant with CliftonLarsonAllen in Yakima, Wash., who specializes in the agricultural industry. “Not knowing each year if it will be extended prevents a lot of our farmers from pulling the trigger on buying equipment.”

From now on, they will know. Signed on Friday by President Obama, the 233-page tax deal includes in its myriad tax breaks one that permanently sets the Section 179 cap at $500,000, subject to inflation adjustments.

Mr. Kortesmaki said he was confident enough that Congress would once again lift Section 179’s cap to go ahead this year with his planned capital purchases, even before the legislation was passed. But other business owners held off — and this year, the deal came too late for some, Ms. Wuebben thinks.

“You can’t plan to spend that kind of money with just two weeks left in the year,” she said. “We might see some activity this year, but the real benefit for us will come next year, when customers can plan ahead for it.”

Some companies do try to jam in qualifying purchases before the calendar year ends. Last year, Congress raised the Section 179 limit for the year on Dec. 16. The next day, the prices farm machinery sold for at auctions increased compared with just a few days earlier, according to Greg Peterson, the owner of Machinery Pete, a site that tracks equipment auction prices.

“The response is nearly Pavlovian at this point,” he said. “The farm audience had grown so used to this annual silly dance of wait-and-see on our friends in Washington.”
Making Section 179’s higher limit permanent will cost taxpayers $77 billion in foregone revenue over the next 10 years, according to a government estimate. The tax break’s aim is to stimulate spending — but does it work?

An analysis by the Congressional Research Service found that expensing allowances like Section 179 appear to “have a minor effect at best” on how much businesses spend on capital goods. Expectations for future sales growth, not tax considerations, motivates most of the investment in the kinds of assets eligible for expensing.

The main advantage of expensing allowances, the report suggests, comes from simplifying the tax accounting business owners face on their capital purchases.
Still, owners like Mr. Kortesmaki see the tax break as a crucial one for helping their small business grow a bit bigger.

“I’d rather invest that money in my business than pay taxes on it,” he said. “Having this become permanent makes my business planning for the next few years a whole lot easier.”

Small Businesses Get a Permanent Tax Break on Buying Equipment