Work Authorization Is Key To Contract Management Process

The execution of a contract (signing by both parties) is a key benchmark in government contracting. It triggers several events such as the start of the period of performance and the delivery schedule time period. Execution begins a billing period start date, and contractual obligations by the government and the contractor.

Establish an internal document to your company that contains the pertinent data for the contract and assigns it a unique contract identifier in your business system. This is necessary for billing and cost collection purposes as well as government audits. 

Astute government contractors do not allow effort to proceed or cost to be incurred on a particular contract until such a document is generated, signed, approved and distributed by a company official assigned the duty of releasing the contract for performance. 

Such documents are commonly called "Work Authorizations", "Release Orders" "Production Release Orders" or a similar term to benchmark the new business and begin performance, accounting, and time and materials accumulation on the contract. 

Any cost or supplier commitments prior to a signed contract are considered pre-contract costs by the government under FAR and require special authorization by the PCO under the contract. They cannot be billed until the contract is signed. Incurring pre-contract costs without authorization is high risk for the contractor. 

Any work or supplier commitments outside the scope of the current contract documentation are also high risk without a negotiated contract amendment adding the scope of work to the contract or government authorization for the use of designated management reserve.

Sarbanes Oxley regulations and other recent government laws regarding corporate responsibility have made control of work authorization and record keeping important factors. Keep in mind that a small business past performance record begins when a contract is signed.  This record is maintained by the government and is updated as deliveries and performance occur. 

You should begin your internal project management record on each contract by attaching all the necessary information for your performing organizations and support functions to begin doing their jobs. 

A copy of the contract should accompany the internal release to key functions in your enterprise. The master should be filed in your central files. Some companies perform work authorization electronically. The government is moving in the direction of electronic record keeping as well.

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 - a profile of your competitor’s likely technical solution, past performance, personnel qualifications and cost buildup.

WHO IS THE COMPETITION?

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 the System For Award Management (SAM)  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.

PROFILE YOUR COMPETITOR

Check the Competitor’s  General Services Administration (GSA) Schedule.  Most 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, SAM 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

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

SUMMARY

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.

"EVMS" Drives True Project Status, By Integrating Project Cost, Schedule And Estimate At Completion

Image:  Wikipedia.org

Recently a question regarding project management  prompted me to recommend a simple application of an Earned Value Management System (EVMS) to deal with a project management problem.

The question and my answer are as follows:

Question:

How do you keep yourself on task and on budget during a start up?

What are some techniques that you use to keep you (and your team?) on task, and on budget, during a business start up?

Answer:

Plan to measure your "Bang for the Buck". Establish tangible tasks in the form of a plan. Set milestones for them in time at a budget value for each milestone tied out to the total budget. The milestones should be things you can look at and say, "That's done".

Status your plan regularly. When milestones are completed, credit the budget value as earned. Tasks may cost more than their budgets to complete. That is cost variance for completed tasks.

If milestones are not completed by their scheduled date do not credit their budget value as earned. Behind schedule tasks are thus contributing to a cumulative budgeted schedule variance in time.

If you are running an unfavorable schedule variance for incomplete tasks and an unfavorable cost variance for completed tasks you are in trouble.

Corrective action, additional resources or a work around plan will be necessary to recover from negative variances. You will investigate the tasks behind schedule and over cost to determine the problem, the cause, the resolution, the corrective action and the likelihood of overrunning your total budget or being late due to events at time now. You will have time to do something about it.

The above technique can be used for starting a company or running a project. This technique is commonly referred to as Earned Value Management. It should not be driven to a level of detail that is unmanageable.

Prudently used this approach gives insight into the dynamics of physical accomplishment driving project status as opposed to plan versus actual cost tracking which tells you only that you are spending money.

Several approaches were recommended in response to the question for keeping a new start-up company on track with regard to staying within budget and time constraints. EVMS is the most effective project management technique to achieve that sort of objective.

Please visit the below Wikipedia article from which the graphic leading this post was downloaded for an excellent explanation of EVMS and its application on projects:

http://en.wikipedia.org/wiki/Earned_value_management

In short, the technique:

1. Ties budget to schedule

2. Establishes measurable means to track project status

3. Accounts not only for the money being spent but also for what is being accomplished with the expenditure.

4. Allows in-process cost and schedule corrective action in time to favorably influence the project outcome.

I have utilized the EVMS technique from the smallest of projects to large-scale systems programs. It is well worth learning and practicing. If you become involved in large enough government projects EVMS will be required under your contract by government and prime contractor customers.

Many companies recognize the benefits of EVMS project management and apply it without being required to do so by contract. It produces excellent results.

Vital Tips for Project Management in Small Business Federal Government Contracting

Effective small business project management focuses the resources on a plan for contract execution, the schedule, budget and customer requirements baseline and the status of a given effort among other concurrent projects to give visibility into problem solving and management trade offs.

If you are a small enterprise selling off-the-shelf commercial items under FAR Part 12 or marketing commercial products on a GSA schedule, you may be initially challenged by the government contracting venue. With persistence you will establish selling relationships through agencies and prime contractors. Your project management challenge is minimal.

A service contractor faces a far greater challenge in understanding the nature of government contact project management and succeeding at it
.
PLANNING IS KEY

Strategic thinking must be applied to structuring a government service contract project management capability in your company. It must involve long term planning and designing a business system as well as establishing rates and factors to bid new work and control it while interfacing with the customer.

A Framework For Small Business Federal Government Contracting Business Systrems

When one plans in detail to define the product or the service one reduces performance risk

The project management challenge is not to launch significant and costly resources before the specification for the product is sufficiently defined, obviating the need for costly revisions or abandonment, yet knowing when the product definition and plan are suitable for release.
Good project management starts early.

Without a well written Statement of Work (SOW) and associated supplies  and services specifications there is unacceptable risk in the future  contract and is it exceptionally high risk to bid or contract the job. 
Both the contractor and the customer must come to an understanding regarding the scope of effort to be performed. That understanding is conveyed in the Statement of Work (SOW) and confirmed in the specifications referenced therein.  A good SOW should have the following principal attributes:

* Clear identification of the products, services, skills, materials and performance factors required to complete the contract

* A description of the conditions under which the contractor will be required to perform and any related environmental or location factors

* Specific references to product specifications that govern an acceptable product or services performance outcome and delivery  acceptance

* A schedule for the contract that identifies discrete delivery dates for products and specific start and end dates for supporting labor.

* A precise description of customer furnished material or facilities required and when it will be made available to the contractor.

If your customer does not provide the above, offer the document during the comments period, during your proposal or during negotiations that represents a version to which your company will commit. 

Do not let the fact the program is competitive sway you from the facts. Signing off on a poorly written SOW results in a difficult contract to manage, a high probability for disputes during the  contracting period and a poor past performance record you will have to  deal with in the future on other jobs.

PROJECT MANAGEMENT RULES OF THUMB

A secondary and related challenge is managing the baseline for the product or service to avoid scope creep, superfluous bells and whistles and other diversions that risk the basic completion objectives. 

Set a baseline for what can and cannot be achieved for the resources and time that have been committed to the job and present to the client.  Use it as a bench mark for discussion to establish a plan going forward. Then control it using sound baseline management. 

Stay away from "Scope Creep" that can kill a contract, a customer relationship and a past performance record, all of which are important to your business. Stay in front of "Scope Creep" by communicating positively with the customer to control the baseline, keeping cost, schedule and technical performance integrated and synchronous.

Use the below rules of Thumb to control "Scope Creep":

KNOW - The contract value and its ceiling amount

KNOW - The incurred cost to date and commitments

KNOW - The scope of work and whether or not your current efforts are supporting it or some other objectives

KNOW - The estimated cost at completion based on where you are at today

KNOW - Your customer and who among the customer population is prone to direct out of scope effort.

 KNOW - WHEN TO SAY "NO" to "Scope Creep" and say it officially in   writing to the contracting officer specified in your contract.

For baseline management and earned value techniques in achieving the above, please see the articles linked below:

Baseline Management In Small Business Contracting

Earned Value Management Systems

CAREFULLY SELECT YOUR PROJECT MANAGER(S) OR PERFORM THE ROLE YOURSELF

The following are the more esoteric project manager attributes necessary in the government contracting industry:

DEVELOPING the ability to cross organizational lines and make disparate groups or functional organizations work together with only a power of persuasion and a contract.

EVOLVING the art of directing resources without having them as direct reports while keeping home departments and functional bosses happy at the same time.

MANAGING to convince the executives in the company that specific project (s) are the most important in the firm.

LIVING with the prospect that if the project is late, fails or otherwise disappoints the powers that be, replacing the project manager will be the designated corrective action.


GROWING to crave the satisfaction that comes from succeeding at the above challenges and you would not have any other job because no other pursuit makes your day go as fast, grows you skills as sharp and totally occupies your intellect.