Tuesday, June 30, 2009

FAR Out, Man.

Some of the most important things to know about when it comes to government contracting are the Federal Acquisition Regulations, commonly referred to as the FAR. Why, you may ask? It’s simple: because the FAR are the rules that all federal agencies have to follow when they purchase supplies or services. All solicitations follow various outlines of the FAR and incorporate, usually ‘by reference’ rather than spelling out, FAR clauses within the solicitation documents. It is expected of the company bidding to understand most of the guidelines or to do some extra research themselves by asking the Contracting officer for additional documents or an informational website. All FAR clauses included must be followed or the contractor risks termination for cause.

The acquisition process that the FAR creates and maintains consists of three phrases: 1) acknowledgment of need 2) contract creation and 3) contract administration. It regulates the activities of government personnel and how they handle these contracts, not the actual purchasing activities of the bidders, unless mentioned in the contract guidelines. The full book containing the FAR is over 1,000 pages long and is updated regularly, so it is important to stay abreast of the changes. There are 53 different parts of the FAR, divided into 8 different subchapters labeled A through H. From there, it breaks down into subparts, sections, and subsections. When referenced in a contract, only the section and subsection are shown though. For example, FAR 52.222-19 refers to FAR Part 52, Section 222, subsection 19 – “Child Labor—Cooperation with Authorities and Remedies.”

The FAR is the most important single document there is when it comes to government contracting. Though it has dozens of elements, the largest and most commonly seen part of the FAR is Part 52. It contains the most-used contract clauses, certifications, notices, and other instructions for firms interested in performing a bid to abide by. However, the most heavily regulated part of the FAR isn’t about labor or production—it’s about price. The entirety of Subchapter D focuses on socioeconomic programs and their relations to federal contracts.

Even though there are regulation standards set for the entire federal government, some branches, such as the Department of Defense and the Army, have their own supplemental regulations. Also, some agencies aren’t required to follow the FAR, such as the US Postal Service or the Tennessee Valley Authority. It is interesting to note that there are agencies that are exempt or can tack on additional regulations because the original intent of the FAR was to create a government-wide set of rules in order to keep things simple. With that in mind, it is important to keep up with both the FAR and the individual agencies’ regulations to ensure that the bidding process goes in your favor. Federal regulations can be found here: http://www.acquisition.gov/far/.

In addition, while the contracting officer may answer your questions, it might be easier to keep a copy of the updated FAR in your office, or at least be able to reference it when needed. If you go to the website, you can download a PDF file which has all the current regulation standards, an explanation, and their number. Another useful tool is that they list the current bills and discussions about potential changes to the FAR which might affect your business. When dealing with the government, it is best to keep up to date on bills and other legislation that might change how contracting operates. It is important to know how these regulations change because during the bidding process, the bidder must do one of the three things: 1) comply with the stated regulations 2) demonstrate that they will comply when the contract is awarded to them, 3) claim exemption from them. One of these three things must be done or the bid will not be awarded.

Thursday, June 25, 2009

The 10 Regions of Government Contracting

As mentioned in the previous post, the most effective way to market to the government is by knowing where your product/service is needed. The Small Business Administration (SBA) has broken the country into ten different regions. There is at least one SBA office in every state which provides resources for small business survival and growth. Each region offers the same standard resources package for small businesses; however, some are more prolific than others. When logging onto the SBA website, research shows that some SBA contracting regions are more active in the small business community than others.

Below are the states that are in each region.

Region 1 - Maine, New Hampshire, Vermont, Connecticut, Massachusetts, Rhode Island
Region 2 - New York, New Jersey, Puerto Rico, and U.S. Virgin Islands
Region 3 - Pennsylvania, Maryland, West Virginia, Virginia, Delaware
Region 4 - Kentucky, Tennessee, North Carolina, South Carolina, Georgia, Florida, Alabama, Mississippi
Region 5 - Michigan, Ohio, Indiana, Illinois, Wisconsin, Minnesota
Region 6 - Texas, Oklahoma, Arkansas, Louisiana, New Mexico
Region 7 - Kansas, Nebraska, Iowa, Missouri
Region 8 - Montana, Colorado, Utah, Wyoming, North Dakota, South Dakota
Region 9 - California, Nevada, Arizona, Hawaii, Guam
Region 10 - Washington, Oregon, Alaska, Idaho

There are over 2,500 government buying offices throughout the US. Being located in one region does not prohibit you from doing business in another; many businesses – even small ones – do business across several regions. One of the many things that a business owner needs to be aware of is that while his business may be in Region 1, their services might be needed badly in Region 4 as well. Marketing to the government can help expand the business nationwide and have a guaranteed check from Uncle Sam. Working with the government doesn’t mean that your business has to be right next to the Naval Yard that needs a new refrigerator. So long as you’re able to deliver the goods per their request, your business is the most able and appealing to the government no matter the location.

There is a flip side to this, though. If your business is relatively new to the contracting game, it is best to try local contracts first to test the waters. Being local and having the ability to meet face-to-face with a contracting officer will give your business preference. Developing a more personal connection with contracting officers can help give you a leg up over your competition. Once your business has completed several contracts, you will have a good feel for the process and branching out won’t be nearly as difficult.
In addition, what type of business you are really counts. For instance, if completing a contract requires you to be on a job site, don’t bid on contracts too far away. Stick to a smaller geographical region in order to make the job easier on yourself.

With Gateway to Government, your company can use our tried and true name to help jumpstart your government contracting career. Our name is established in the Washington, D.C. area and can go nationwide, making your location unimportant as you can share the benefits of having our certifications and name.

Tuesday, June 16, 2009

Grabbing the Government’s Attention

Marketing is one of the most dynamic and ever-changing fields out there and all small business owners know it. It is the area most likely to change, on a whim, and one of the few areas that needs constant attention and research to ensure your message reaches the right crowd. Marketing to the government is different than other businesses or individuals. There is a certain way that you have to promote to Uncle Sam so you can be competitive in the government contracting arena.

One of the first things that needs to be done is market research. As we’ve mentioned multiple times, the government buys any- and everything. There is pretty much nothing that Uncle Sam has not purchased at some point and time. The main thing one has to realize is where to market your supplies and services in the country. If you’re in Georgia, you can sell your products anywherei n the US – not just that state. The federal government is looking for the cheapest vendor and if the business happens to be two states away, so be it. There are ten different regions that the Small Business Administration has created which encompass more than 2,500 buying offices throughout the US. To succeed, a contractor must research each region to see which one would be the most lucrative for their business to market to and participate in bids.

Unlike marketing to the public, there are certain rules and reglations about what you can and cannot say when selling to the government. For instance, the flowery, descriptive words one would use as a hook, line and sinker for the everyday individual aren’t allowed. What your company sells is presented in list format; there is no other description aside from the product/service title. A benefit of having every product and/or service your company offers in a list format is that the government will order more from you or select your company over another because of your larger selection. It makes more sense for Uncle Sam to purchase from one vendor, rather than multiple.

There are several different ways to let the government know exactly what products and services you have to offer. One way is to create a GSA schedule. This method allows a business to establish long-term government-wide contracts for specific services and products. Vendors with schedules are preapproved to contract with federal agencies at pre-established prices, automatically putting your company on a list of “preferred vendors.” However, these are not that easy to obtain and can take up to a full year to get everything in place. There are stacks of paperwork and red tape to go through, not to metion the research andother elements that go into having a GSA schedule awarded to your company. GSA schedules are not the right route for every company to take, but can be very beneficial to those companies making government contracting a major portion of their business.

Another way to let the government know about your services is to have and distribute a Statement of Abilities. Included are the classification codes for the company’s products/services, contact information, a statement about your company, and an extensive list of all the products and services that your company provides. Gateway to Government understands the difficulty in creating both the GSA schedule and statement of abilities – there are very specific formats and requirements for each. To make the process go smoothly, we have created a capabilities statement template for each business that participates in our program. We help you write effective descriptions about your company to help market and sell your services and products. With Gateway to Government, your foot isn’t just in the door – we’re holding it open.

Thursday, June 11, 2009

SBA Lends a Helping Hand to Small Businesses

The Small Business Administration (SBA) recently created a new program called the American Recovery Capital (ARC) in order to help struggling businesses during these hard economic times. These loans are not designed for start-up businesses, but those that have been in operation for at least three years and have supporting documents for proof. Effective on June 15, 2009, the ARC loan program will give up to $35,000 to small businesses that are suffering economically until September 30, 2010 – or until the funds have run out.

Some of the benefits of obtaining an ARC loan are that they are interest free, with no other hidden fees, and each one is a deferred payment loan. In addition, the business has 12 months after the last loan check received before payments are owed on the loan. The loan will be paid back over a period of 5 years. The funds provided are to go toward term and revolving lines of credit, mortgages, business credit cards, capital leases as well as other vendors, suppliers and utilities.

One of the main eligibility requirements to get one of these loans is that the business must have a history of good performance and their current financial difficulties are a result of the current economy. There must be supporting documents stating that in at least one of the past three years the business has turned a profit and will have sufficient cash flow to make current future loan payments over a two-year period. The SBA wants these documents and the projected cash flow in order to deem whether or not your debts are able to be paid off in a two year period as well as repaying the loan. Their logic is that it would make no sense for the SBA to give an ARC loan to a struggling business that, even with assistance, will ultimately fail due to severe pre-existing debt or lack of future cash flow.

The money is not coming from the SBA itself, which is why the loan must be repaid promptly within a two year period and only certain good standing businesses are eligible. One of the major benefits of this loan is that the banks are loaning the money to the businesses, but the SBA will be paying the interest charges, not the small businesses. By having the loans payments wait a year, the SBA is giving small businesses a chance to invest in themselves instead of pouring all their money in their debts. These loans are going to be given out in the hopes that they will stimulate the community that the business serves through creating jobs and restoring the bank’s faith in loaning to small businesses for future loans.

For more information about applying for an ARC Loan visit the SBA website: http://www.sba.gov/recovery/arcloanprogram/REC_ARCLOAN_WHERE.html

Tuesday, June 9, 2009

Veteran Owned Businesses

Veteran Owned Businesses are businesses that are owned by veterans and are another type of government classification for businesses. This certification is one of the most beneficial and is usually preferred more often than Woman or Minority owned. In addition, there isn’t only a Veteran Owned title, but three others that each offer different advantages in government contracting.

Veteran Owned Business

First, let’s define what the government considers a veteran. It is an individual who served in the active military, naval, or air service and who was discharged other than dishonorably. One of the key differences between a small business and a veteran owned business is that the size does not matter, so long as the owner and operator of the company is a certified veteran of the armed forces.

There are two other classifications that are underneath the Veteran owned business – Service-Connected Disability and Service Disabled Veteran. Service-Connected Disability is someone that received an injury in the line of active duty. A Service Disabled Veteran is an individual who served in the military and whose disability was received or aggravated during their duty in the service. In order to be eligible for the Service Disabled Veteran classification, you must have one of the following: a letter from the Veteran’s Administration, a Department of Defense form 214, Certificate of Release or Discharge from active duty, or a statement from the Service from the National Archives and Records Administration stating your service-connected disability.

The third type of Veteran owned business is a Service-Disabled Veteran-Owned Small Business, which, in addition to meeting the Veteran qualification, must also meet the Small Business Administration size requirements for a small business. In addition, at least 51% of the company must be owned, maintained, and operated by one or more Service-Disabled Veterans, as well as having a service disabled veteran holding the highest officer position in the company.

Similar to Woman-Owned Small Businesses, the Veteran classification doesn’t mean that veterans are socially or economically disadvantaged. However, the government is responsible for ensuring that these individuals receive fair consideration in agency purchases. Congress mandated that at least 3% of all government contracts are to be awarded to disabled veteran owned businesses. In addition, a group called Veterans Business Outreach Program (VBOP) helps eligible veterans build small businesses through mentoring, counseling, and business training. Another program, the Veterans’ Entrepreneurial Training (VET) offers a long-term (up to 12 months) of in-depth business training to veterans.

For more information about the Veteran classification visit: http://www.vetbiz.gov

Thursday, June 4, 2009

The Different Types of Set-Aside Programs

As mentioned in our previous post, set-aside programs are designed and intended to help disadvantaged businesses get a leg up in the government contracting arena and to make the bidding process more competitive. There are several programs that the Small Business Administration (SBA) has created to give advantages to certain types of small businesses; one that we’ve already mentioned, but today we’re going to discuss two of the biggest ones: woman- and minority-owned small businesses. Please note that businesses can only qualify as a woman or minority owned business if they also meet the SBA standards for a small business. The following two categories fall under the Minority and Disadvantaged Business Owners.

Woman-Owned Small Business

A business qualifies as a woman owned business if at least 51% of the company is owned by one or more women, or at least 51% of the stock must be owned by one or more women. In addition, one or more women must have majority control over the daily business operations and management. One of the many goals of having this certification is to help teach woman how to market to the government and bring them into the federal contracting marketplace, and the procurement benefits are usually delivered through the Office of Government Contracting.

The certification “woman-owned business” can be of significant help in the government contracting arena. In 1994 President Clinton signed Public Law 103-335, which established a government-wide goal of having no less than 5 percent of all prime and sub-contracts awarded each year given to women-owned businesses. The law added women-owned companies as a separate class for subcontract goals and required agencies to meet minimum standards.

Another benefit of being a woman-owned business (in addition to the contracting preference) is that the SBA offers training courses and counseling in owning or managing a business as a woman, including financial, management, marketing and technical assistance, and procurement training. There are at least 70 women’s business centers in 40 states and an additional location in the Washington, D.C metro area. Part of the benefit of these courses is that they will help teach women how to market effectively to the government while still having the agencies’ preference.

Minority-Owned Small Business

As a part of the small disadvantaged business development program, businesses that are owned by people of a ‘socially disadvantaged ethnic group’ are given additional procurement advantages. What the government considers socially disadvantaged individuals, completely disregarding the person’s individual qualities or talents, are those who have been subject to ‘racial or ethnic prejudice or culture bias because of their identity in relation to being a member of a group.’

To obtain the minority status, one must be able to present a clear and well-supported case. First off, the applicant, who must be a US citizen, must own at least 51% of the company. Secondly, the individual must be able to prove that they are at a social or economic disadvantage based upon their color, national origin, gender, physical handicap, long-term residence in an insolated environment away from American society, or other similar instance that was beyond the individual’s control. The discrimination the individual faced must have happened in America and not another country, and the social disadvantage must have had a negative impact on their entry into the business world. In addition, one must be able to prove that they are indeed suffering a disadvantage from the aforementioned differences and that disadvantage must be constant and chronic.

Just as women have their own centers for training and counseling, so do minority owned businesses. These small business development centers offer counseling and management advice and are in every state. Visit the main SBA website at www.SBA.gov for more information.

Some of the many ways these opportunities are presented are through contracting officers, the SBA, and from the Office of Small and Disadvantaged Business Utilization (OSDBU). Contracting officers are required to give a certain percentage of all small business contracts to minority owned businesses, both as a primary contractor and as a sub-contractor. In addition, there are different loans and advance payment structures that may be available to program participants.

A huge benefit of working with Gateway to Government is that we have both of these certifications, giving our company several advantages over many others. The preference that we have makes government contracting a breeze for your company to get started bidding on – and winning – government contracts. Uncle Sam is required to favor businesses with these certifications, so why not work with Gateway and participate in a program legally required to help your business grow!

Tuesday, June 2, 2009

Set Aside Programs

The Small Business Administration (SBA) wants all small businesses to succeed in the government contracting arena. A set-aside program is proof that the SBA takes actions in trying to help out businesses of all varieties. We already spoke of one type of program, the HUB Zone, but there are plenty more than just that.

A set-aside program is a category reserved exclusively for businesses who meet the minimum requirements. These programs generally reserve contacting dollars for small, woman-owned or minority owned businesses. These set-aside programs allow businesses that would traditionally be at an advantage to obtain favor when bidding on a contract or becoming a sub-contractor to a larger company.

While many of you may consider yourselves to be small business owners, that may not be the case with the SBA. To participate in its set-aside program, your business must follow a strict set of rules, which can vary slightly depending on the industry. As a general rule, it must be independently owned and operated, must not be the dominant company in the field of operation in which you’re bidding, and cannot have more than 500 employees. However, there are size standards that business owners need to be aware of once they receive the small business qualification. For instance, once the SBA has awarded your company the title ‘small business,’ it can be taken away if one of two things happens:

1. your business grows and exceeds the maximum employee number (over 500), or
2. the amount of annual income for each industry code exceeds its set limit.

It may seem odd that there are limitations to these programs, but they are set in place for a good reason. In order to combat fraud, the size and monetary limits help the SBA prevent larger companies (that have grown from being small) from obtaining contracts intended for legitimate small businesses, who need the assistance more. What many business owners need to realize is that these programs are not a guaranteed lifetime all-access pass to contracts – they are intended to give a temporary advantage in the arena until the company is strong enough to compete in the big leagues.

In the upcoming weeks, we will be focusing on the different types of certifications that these set-aside programs create and the lengthy process involved in obtaining them. Gateway to Government knows how painful it can be sometimes to become qualified, which is why we allow our clients to use our certifications by acting as contractors. We’re a small, woman, minority-owned business – that’s three classifications right there. Many individuals are lucky to just be one, but we’re three, giving us preference over many other businesses in the contracting arena. Gateway to Government wants to make your contracting experience a breeze, which is why with our packages you can use all our certifications to help give your business the leg-up it truly deserves.

Tuesday, May 26, 2009

The Prompt Payment Act

Given the title, I probably have everyone’s attention right now. Late payments are a bane of any contractor – the killer of cash flow and worse. Many laugh at the thought of the government paying anyone on time, but I promise you, there are laws set in place so that Uncle Sam can’t delay or rip your business off.

In response to a study conducted by the General Accounting Office in 1978 showing that the government paid at least 30% of their contractors well after the due dates, the government created the Prompt Payment Act. Passed in 1982, the Prompt Payment Act is a piece of legislation intended to force the government to pay contractors and vendors in a timely fashion, including interest fees if payment is not made within 30 days of the due date. The Act also states that the government can only take discounts if payments are made within the discount dates set in a contract.

One of the major benefits of this act is that it states specifically both how much the vendor can charge in interest fees and at what point they start to accrue when Uncle Sam doesn’t pay on time. In addition, the act encourages federal agencies to take full advantage of the prompt payment discounts, which contractors often offer to agencies making early payments. These discounts ultimately save the government money in both late fees and original cost, making this act valuable to both the taxpayer and the small business owner.

In 1993, President Clinton emphasized the importance of electronic commerce in government payments. His original intent was to make the government pay strictly electronically to help save tax dollars on late fees and increase efficiency. President Clinton’s thoughts spurred an addition to the act called the Debt Collection Improvement Act of 1996, which promoted the use of government credit cards and made the payment process much faster.

Why is this act important? One of the big frustrations for contractors of any time is not being paid on time. You can’t go to the grocery store, have the clerk ring everything up, and then hand them an IOU and neglect to pay it for a couple months. Well that’s the main purpose of the Prompt Payment Act – to protect the vendors from being abused by Uncle Sam and to be paid on time. To take advantage of this there are three criteria that contractors must meet:

1. Valid contract exists listing the supplies or services
2. The government agency accepts completion of the contract without dispute to quality, quantity, or other contractual provisions
3. The designated government billing office receives a proper invoice.

Is there is any dispute, no late penalties will be accepted by the government. It is critical that contractors file all the correct documents to the right places in order to be paid in a timely manner. It is true that the payment and invoicing systems can be incredibly complex, so it is very important that you pay careful attention when doing this. When working with the government, there is no room for documental error, which is why Gateway to Government wants to help your small business. We know where every “i” needs to be dotted and “t” needs to be crossed. Our contracting experts have worked with these systems and know the regulations like the back of their hand, meaning that they can ensure that the Prompt Payment Act works in your favor.

Thursday, May 21, 2009

A HUB Zone Is Not a Husband Hangout

The term HUB-Zone is thrown around a lot in government contracting. Many contracts include restrictions that limits bidding to businesses located within a these zones. If you are new to the game, it is easy not to know if the area your business is located in qualifies as a HUB-Zone or even if your business qualifies.

So… what is a HUB zone?

The Small Business Administration (SBA) created the Historically Underutilized Business Zone (frequently referred to as a HUB Zone) program in 1997 when Congress passed the Small Business Reauthorization Act, which included the HUB-Zone Empowerment Act. The SBA enforces the act by maintaining a list of qualified businesses for federal agencies to use. They certify businesses in these areas as Hub-Zone businesses based on the following requirements:

• The company must be a small business based on the size standards used by the North American Industry Classification System (NAICS).
• At least 51% of the company must be owned and controlled by US citizens.
• The main location of business, where most employees do work (excluding contract sites), must be located in an authorized HUB zone.
• At least 35% of the company’s employees must live in a HUB zone.

The main objective of the SBA’s HUB Zone program is to promote economic growth and create more employment opportunities by bringing them the opportunity to obtain Federal contracts. The SBA reports to Congress how much the Empowerment Act has increased employment opportunities in these areas. According to the SBA’s website, for an area to be classified as underutilized it must have at least one of the following:

• Qualified census tract criteria (areas are subject to change every 10 years due to census)
• A qualified non-metropolitan county that has an average household income of less than 80 percent of the State median household income, or with unemployment rates 140% or more above the state-wide average.
• Land within a federally-recognized Indian reserve.

There are many advantages designed to help businesses located within a HUB Zone and meeting all the requirements obtain these special federal contracts. For many contracts, there must be at least $100,000 set aside for small businesses that qualify as HUB-Zones. There can be sole-source contracts in the areas, but the value must be greater than $100,000 but less than $3 million (or $5 million for manufacturing contracts). While that may not seem like a decent advantage, HUB Zone small businesses receive what is known as a “10% price evaluation.” This means that a HUB Zone company bidding on a project (based on price) will have their bid evaluated at 10% lower than it actually is - so long as their price is no more than 10% higher than a non-HUB Zone small business, they will win.

Aside from the benefits listed above, there are plenty more opportunities for small businesses within these areas. Another example is that when larger companies that win bids need sub-contractors they are required to have at least one HUB Zone sub-contractor to help complete the project. In addition, these businesses can apply for higher surety bonds then others, tax credits, investment tax deductions, and tax-free facility bonds. For more information about where these HUB Zones are located visit the SBA HUB Zone homepage: http://www.sba.gov/hubzone.

Tuesday, May 19, 2009

What Are No Bid Contracts?

There are several things business owners need to know when joining the contracting circle. As we mentioned last week, contract bundling is a big one that many don’t know about, and this week’s topic is no different. Lucky for us regular folk, the government doesn’t create wacky acronyms for every contracting term they use and in this case the name makes sense.

Sole-source contracts, also commonly known as no bid contracts, are contracts awarded when the government feels there is only one company or business that can successfully complete all requirements of the contractual agreement. Another reason Uncle Sam feels these contracts are necessary is because if regular bidding were to be held, only one company would be eligible to successfully complete the contract, making the process last longer than it should.

Typically, the government awards sole source contracts after negotiations with the company and the sole source contracts are considered justified only if a few criteria are met:

a. only one business has a product that will meet the projects needs or only one firm can do the work (for example due to patent restrictions)
b. the existence of an unusual and compelling urgency (emergency, disaster, etc)
c. for purposes of industrial mobilization or expert services (unique or exclusive experience)
d. a sole source award is authorized or required by law, (socio-economic programs, etc)
e. national security
f. the general interest of the public, or
g. the work involved is time sensitive.

While no bid contracts may seem like a negative aspect of government contracting, there is some good to them. For instance, in a pinch, if you’re offering services that the government needs immediately, then Uncle Sam will forego the normal bidding process and award the contract much more quickly. Or, if you have an exclusive product, patent, or licensing agreement or some sort of unique experience or expertise, you are going to be very well-positioned to do business on sole-source contracts. Of course, there are instances where this type of contract backfires and corruption ensues.

In March 2009, President Obama made a promise to help cut back on the number of no bid contracts in order to save money. As mentioned before, the original intent of awarding contacts without bidding is to cut costs and to speed the process up, but not everything always goes according to plan. The President claims that by decreasing the amount of sole source contracts the government can save as much as $40 billion each year. "The days of giving government contractors a blank check are over," President Obama stated.

President Obama asked his budget director, Peter Orszag, to have a reform plan ready by the end of September 2009. The reforms will involve making more contracts open to bidding and, in the process, hopefully saving the taxpayers money by awarding the contract to an independent contractor and their sub-contractors rather than a single company that could potentially inflate the price.

Obviously, there are still circumstances in which sole-source contracts will occur. For example, if you hold the patent on a particular item that the government determines that it needs, a sole-source contract will still be awarded.

The reforms requested are important because in the past eight years the amount of money spent on contracts has increased from $200 billion in 2000 to $500 billion in 2008. Many believe that a large percentage of the increase went to no bid contracts and by eliminating the number of them in 2010, Uncle Sam hopes to create more competition to cut back costs and to help the independent contractors and small business owners gain more work.

Tuesday, May 12, 2009

Trimming the Fat – Proposed 2010 Budget Cuts

By now, everyone has thrown in their two cents on President Obama’s proposed budget for the 2010 fiscal year. Most brought up the point that while he plans to cut out $17 billion next year, the $3.2 trillion he spends this year will still hurt the country overall. Many of the articles available don’t dig deep enough to see what exactly President Obama removed from the budget for next year.

Upon opening the Termination, Reductions, and Savings report that the White House recently published online, I went straight to the government contracting section. I was interested to see how President Obama planned to reduce the contracting costs for the government for next year while increasing the opportunities for small businesses this year. The method that was chosen is decreasing the Department of Defense (DoD) budget by $0.9 billion.

While $0.9 billion may not sound like a lot considering the $787 billion Recovery Act recently passed, it will be next year. Unlike this year, the US won’t need another bill to help stimulate the economy. The money allocated from the Recovery act will still exist until August 2010, when the White House predicts that roughly 75% of the money will have been contracted out.

One of the reasons that the Obama administration selected budget cuts for the DoD and not another federal agency is that they are the largest part of the government that hires contractors. According to the Government Accountability Office (GAO), the DoD’s contract obligation spending increased 83% between the years 1998 and 2007. One government solution involves hiring 33,500 Federal civilian employees by 2015 to help complete jobs that the DoD outsourced. It is projected to save the US about 40% on contracting dollars per year.

Not all small business owners offer products that the DoD requires, so many won’t be affected by their decrease in contracts. However, if the efforts to redo the DoD contracting arena are successful, many agencies might follow suit and hire Federal civilians rather than outside contractors. An advantage of gaining work now means that once August 2010 has gone and Uncle Sam’s agencies start to reform their policies, those contractors who already have their foot in the door will be favored over others who joined the cause too late.

Wednesday, May 6, 2009

Contract Bundling and Your Small Business

Among all the concerns small business owners have with government contracting, contract bundling rarely ever comes up in conversation. Part of the issue is that many business owners are only exposed to the negative stereotypes and don’t actually know about many of the real obstacles their company faces with successfully obtaining contracts with Uncle Sam. Contract bundling can potentially be a real impediment to small businesses trying to compete in the government contracting arena.

Now that we’ve identified a possible bump in the road, let’s go into a little detail to ensure that small business owners are aware of and fully understand the problem. According to the Small Business Reauthorization Act of 1997, contract bundling is “consolidating two or more procurement requirements for goods or services previously provided or performed under separate, smaller contracts into a solicitation of offers for a single contract that is unlikely to be suitable for award to a small business concern.” What this really means is that contract bundling happens when two or more contracts intended for small businesses are combined, making it difficult for a small business to complete.

There are circumstances that allow Uncle Sam to combine small business contracts if award to a small business is deemed unsuitable. If the conditions of the contract require work spread out over a geographical region too large for one small business to handle, the total dollar value of each contract isn’t suited to a small business, the diversity, specialized nature, or size of the task at hand, or any combination of these, contracts may be bundled without issue.

However, the Small Business Reauthorization Act requires that the government try to avoid these four issues in order to give small businesses equal opportunities to participate in the bidding process. In addition, the act requires the responsible contracting specialist to do market research with an aim to justify whether or not the contract needs to be bundled. The government agency can then validate combining contracts when there are “measurably substantial benefits,” which include cutting costs, better quality, less time to fulfill the contract, or better contract terms and conditions.

So what can your small business do to prevent contract bundling? Unfortunately, it isn’t an easy task. It involves convincing the agency and those involved in the process that your small business, contrary to their research, can and will perform one or more of the contracts. If you think that it is happening, contact a Small Business Administration Procurement Center Representative (PCR). In every federal agency with major contract programs there will be one with whom you can speak. There is also a bundling report, which you can fill out and submit to the Small Business Administration.

Sometimes bundling cannot be stopped. The decision to bundle contracts comes from many hours of meetings and research that leads agency officials reluctant to change their mind. If that happens, try befriending the larger company that wins the bundled contract. Just because they’re a large business doesn’t mean they won’t hire small businesses as sub-contractors. In addition, sub-contracting is a great way to get your business’s foot in the government’s door without the hassle of doing it all yourself.

Tuesday, May 5, 2009

Uncle Sam’s Bonus Program

Many businesses offer financial incentives to their employees in order to reward hard work, promote quality craftsmanship, or compensate superb ideas; the government is no different when paying a contractor. It isn’t corrupt to give bonuses to businesses that deserve it. I’m not talking about AIG or corrupt executives from some big company. The government tries, just like any business, to reward good work.

Recently, a rumor came around that Uncle Sam planned to reward the businesses that are “green” and offer better-than-average work bonuses. According to Amory Lovins, chairman and chief scientist of the Rocky Mountain Institute, the government is creating a program that will reward – or penalize – green contractors working on federal buildings and retrofits.

How does the government judge what is “quality” work by green companies? It isn’t as easy as one would think to obtain these bonuses. For instance, say a business installed an air conditioner on six buildings. Throughout the process there are federal employees tracking how much money and time it takes for the installation and what the current non-green air conditioner costs. Once everything is complete, the employee continues to track how well the system works. If the new system cuts energy costs by 30%, then the contractor who installed it can receive half of the savings as a bonus.

The bonus doesn’t cost anything extra; the green company still installed a system that saves Uncle Sam money, therefore the reward the contractor receives is a portion of the savings and not anything extra out of the tax-payers’ wallet. Many federal buildings will be retrofitted under contracts where companies come in and replace key systems to reduce energy costs over the next few years. There is $4.5 billion allocated from the American Recovery and Reinvestment Act of 2009 towards retrofitting; that money includes these bonuses.

Another benefit of awarding bonuses to green companies it that the repairs and installations these businesses are completing require skill and experience. The bonus system will help weed out those contractors that don’t have workers with the knowledge to successfully complete the projects. In addition, Congress is trying to pass an amendment that will help prevent giving bonuses to companies that don’t deserve them. Amendment 892 states that it wants to “End Bogus Bonuses for Poor Performance by Government Contractors and Executives.” One of its main goals is to prevent businesses that complete the contract below satisfactory will not receive more money than the original contract stated.

All in all, the government planning to reward green companies is a win-win situation for those businesses with the knowledge and experience to complete the going-green contracts. Kermit the Frog had it wrong when he said, “It ain’t easy being green.”

Thursday, April 30, 2009

Telling Uncle Sam What’s What

On Saturday, April 25, 2009, President Obama announced that he wants feedback from the government employees to help make Recovery.gov a success. "We'll put the suggestions that work into practice. And later this year, I will meet with those who come up with the best ideas to hear firsthand about how they would make your government more efficient and effective."

A site that collects the ideas submitted by government workers is http://thenationaldialogue.org. On the site individuals can register and submit their ideas on how to effectively spend the stimulus money and what changes need to be made. It is interesting to see the different topics that spring up as well as the conversations that these ideas spark. Many have multiple comments suggesting minor adjustments to the original idea.

In addition to The National Dialogue.org, another site for government workers has emerged. Social media sites have been popping up a lot lately and are designed for use by anyone and everyone throughout the world. Within each site, there are groups that people can join and find others within their field or that share common interest. There are many sites that are designed for the government, not just miscellaneous groups. Govloop.com is a site where only four types of people can join: government employees (federal/state/local/international), public policy students and professors, a good government organization, or a government contractor with good intentions.

Similar to Facebook, Steve Ressler’s GovLoop provides those that work with the government a social networking community of support and information. It brings together others that understand the value of working for or with the US government on a regular basis. Currently, the site is buzzing with activity from a recent announcement made by President Obama. One of the posts discussing President Obama’s decision links to a website that asks government employees to list all their ideas. The site is packed with topics and lengthy discussions that deserve a look; it is interesting to see how those with an inside view think the government should change.

These two sites are examples of how the current government is promoting transparency and how the cooperation of the government workers will eventually fix the kinks within the operating system. "Federal employees have a lot of good ideas about how to do the work better and are eager to work with the administration to improve their agencies’ service to the American people," said Colleen M. Kelley, president of the National Treasury Employees Union. GovLoop provides a community for employees to connect with each other on a more personal level, which might help them overcome differences in the work place and solve bigger problems. The National Dialogue offers employees an opportunity to finally tell upper management what they would change and the multiple comments only support their ideas.

If you’re interested, Gateway to Government is a GovLoop member! Find us today at: http://www.govloop.com/profile/LauraGuthrie

Thursday, April 23, 2009

Committee Catching Corrupt Contractors

This past Tuesday, April 21, 2009, Senator Claire McCaskill (D-Mo) held the first meeting of the newly formed Sub-committee on Contracting Oversight. One of the hot topics for their meeting was whether the ‘guard dogs’ had the proper and necessary tools for their oversight on the awarding of government contracts.

"This is going to be about our concerted effort to identify the waste, fraud and abuse that has occurred in government contracting," McCaskill said before the meeting, which she promised would be the first of many.

The Senate Homeland Security and Governmental Affairs Committee created the sub-committee in January 2009 as an effort to prevent fraudulent spending and promote government transparency.

While it may appear that Uncle Sam has taken a backseat in the past, he is certainly making up for lost time (so to speak). In addition to the recent committee formed to prevent future corruption, there have been increasingly more and more stories of the government prosecuting contractors now for past misdeeds.

As a recent example, two executives in Chicago from the company Urban Services tried to win a $2 million dollar contract for repairing garbage carts. One of the major problems with Urban Services winning the contract was that they were politically connected with the administration at the time; throughout the Daley administration Urban Services was a favored company, having won roughly $30 million in contracts. The government today indicted Urban Services for rigging the bidding process in July of 2005 so their company won the contract for repairing all the Street and Sanitation Department’s garbage carts. In addition, the court found the company is accused of underpaying their minority and woman owned small business sub-contractors.

While 2005 may not seem like the distant past, there is another example which dates back more than 20 years. A man in Michigan began defrauding the Defense Department back in the early 1980s and was banned from performing future government contracts in 1984. John C. Curtiss, now 65, did not appear at his original hearing in 1988 and had been missing until recently, when authorities in the Bahamas picked him up for a visa violation. Curtiss then came to Richmond, VA to face charges.

Though the government banned him from government contracting in 1984, Curtiss convinced his wife and a friend to continue to bid on government contracts on his behalf. Once they won a contract, Curtiss sold poorly constructed electrical products that he made in his home in Warren, Michigan to the military. Curtiss faces 105 years in prison and millions in fines for his 1988 convictions, not to mention an additional $250,000 plus five years if he’s convicted of failing to appear for his original court date.

Curtiss is an unusual case though. Rarely do individuals committing fraud with the government mange to leave the country for 20+ years. The active steps that the government is making towards preventing fraud and punishing individuals are impressive. As McCaskill stated yesterday, "Even a very small percentage of fraud costs taxpayers dearly. That’s why we have chosen this first hearing to look at the issue of fraud." Every penny counts when it’s the taxpayer’s money on the line, and with the recent transparency of federal spending it’ll be less likely than ever that circumstances like those of Urban Services and the Curtiss family slip under the radar.

Tuesday, April 21, 2009

The Great Race to August 2010

When I mention the Stimulus package, many small business owners aren’t thrilled. Consider the number of Tea Parties held throughout the US this past month; not many people are excited about how much the government is spending. While Uncle Sam is spending money, there are benefits that small businesses can receive, whether they realize it or not.

According to a recent study, only 14% of the small business owners interviewed felt that the stimulus ‘cash flood’ would affect them positively. 31% feel it will hurt their business, another 33% don’t think it will affect anything, and 22% aren’t sure what’s going to happen. With the multiple websites designed to help track how the money will be spent, it makes no sense to think that the cash flow won’t affect the economy somehow; the only real question is how. The US is pumping $787 billion dollars into the economy – SOMETHING is bound to happen.

Many are afraid that while money is being poured into the economy, the primary focus being government contracting, that big businesses will be able to snatch up all the good contracts. Since 1999, the Small Business Administration has been meeting their goal of giving 23% of all government contracts to qualified small businesses. However, there are a few loopholes, which many small businesses are concerned will ruin their chances at obtaining the lucrative contracts sure to be posted in the upcoming year. These loopholes, though, aren’t as easy to find anymore.

Originally, if a company started as a small business contractor and then grew, it wasn’t recorded and five years later could still be listed as a small business even though their profit margins and other considerations prohibited them from being classified as such. To combat this, the Small Business Administration passed a bill that would require a business to recertify every year, making sure that companies that grew no longer received the small business benefits.

In addition, there are plenty of set-aside programs associated with the government that can help any beginning government contractor to grow. One government contractor, Lani Hay, stated that the reason her company succeeded in the beginning was these programs. "It was initially the only value proposition we had to leverage as an unknown new business startup," Hay said. She got her “foot in the door,” by using these programs, allowing her company to grow and to create a name for the business within the industry.

Businesses shouldn’t be afraid of the massive spending of money; instead they should look to their state’s funding website and see where the local stimulus money is going. According to White House estimates, by August 2010, 75% of the stimulus contracts should be assigned - those business owners who don’t act now will be left out in the cold. There isn’t a fee for writing a proposal for a bid, excluding man hours and sometimes the required technical documents. Why not try to win one or two contracts in your home state - they’re available, and it might open new doors for your business that you hadn’t dreamt of before. The contracts are staying in the US to help stimulate your area; don’t be afraid to get your share!

Thursday, April 16, 2009

It Ain’t Easy Being Green—Or Is It?

Not too long ago, my first thought when I thought about the government “going green” was of Uncle Sam and the Jolly Green Giant making some clandestine agreement in a field. Aside from that comical picture, there wasn’t really much that I knew about how environmental friendly the US government can be.

There has been some historical initiative on Uncle Sam’s part, largely originating in the 70’s with President Carter and his eco-friendly policies – does anybody else remember him turning back the thermostat and wearing sweaters in the White House to conserve energy? Today the government is taking a more active role in making their buildings eco-friendly and is looking to America’s small business owners to help their goal of making America go “green.”

These efforts are to go green are as important now as ever before. With unsure pricing on oil, the focus will be on renewable sources, energy consumption, and reusability. Environmental factors are also increasingly a concern. The Pennsylvania Energy Development Authority (PEDA) announced recently that they are using money earmarked for green initiatives to help create 155 jobs geared towards green products and services within the state. Installing solar panels on buildings is just one of the many programs funded by the recent stimulus package; most of the five projects approved by PEDA focus on reusing energy that before was wasted. In addition, Pennsylvania is offering grants of up to $1.5 million for businesses with green initiatives such as solar, wind, waste recovery, and alternative fuels for transportation.

Pennsylvania isn’t the only state that has announced its green efforts. The state of Illinois recently published a document online about their state government offerings of resources to help the community, business, and your home become more efficient and green. They even created a program called the Small Business $mart Energy (SB$E), which is a program which “…provides energy efficiency technical services for small to medium-sized for-profit businesses.”

Uncle Sam is taking active steps toward making America green. There are websites that have many links that offer tools, tips, tricks, and information on how to start a green business. There are also resources to find information on tax credits for green businesses, how to sell your green products or service to the government, gaining grants or loans in order to fund your green business. You name it, and there is a link to its “green” partner. While it may seem that the government is only rewarding efforts directly related toward environmentally friendly research, ANY business going green, even a salon, may be eligible for a grant (more information available at www.grants.gov). Simply search for related terms and plenty will come up within your state.

According to a study done in August 2008, federal agencies are still in the early phase of implementation. Many small businesses have already made the switch to purchasing and selling green products or by offering green services. Now more than ever, it is a great time to be a green business. Uncle Sam knows it is time to follow suit with the rest of America and to cut back on how much energy is wasted, and he has turned to YOUR small business to help him be earth friendly.

Monday, April 13, 2009

Don’t Feel Scammed By Uncle Sam

With any administration, there will always be a group of people that feel discontent or a certain animosity towards those in power. Especially with the complete make-over that the Federal Government has recently endured, now more than ever, people are expressing their opinions on the state of affairs. I decided to see what people on Twitter thought of when they heard/saw the words “government contracting” – something I write and read about everyday.

I wasn’t surprised with some answers. It appears that everyone’s first thoughts immediately go to mercenaries, transport, or weapons systems. Typically, people think of big businesses that are known as big business government contractors, such as Lockheed Martin or Boeing. While they do receive a large portion of the contracts, smaller businesses are reserved at least 25% of all government contracts. It just seems like a lot because when analyzing charts showing how much government contracting companies made annually, it appears drastically divided. However, I can assure you that many government agencies are looking for small business owners to work with—for example, the Air Force is actively looking for businesses to increase competition and innovation for their benefit and spends roughly $9 billion a year on small businesses.

My only argument for that is how many small businesses do you know that hire aerospace engineers? Well, there is one that I know about the created a GPS navigation system for the Air Force, and was sub-contracted out by a bigger business that had won the original contract. A problem that arose from this instance was that they were scammed out of winning the bid themselves and the prime contractor left them out of the loop. While this example might be what most small business owners fear, some good came from the experience.

A new act is being created in order to prevent something like this from happening again. United States Senate Committee on Small Business and Entrepreneurship Chair Mary Landrieu (D-La) states, “Sections 205 of the Weapons System Acquisition Reform Act will go a long way toward protecting small businesses from conflicts of interest while eliminating waste and inefficiency at the DoD. Section 203 of the bill would also help to maximize competition for defense acquisition contracts, which will help small businesses because it creates more potential opportunities for them to participate.” While this is a small victory for the technology driven sector of the small business community, it is proof that Uncle Sam is starting to force himself to take care of small business.

Another opinion about government contracting is it is an over-budget, red tape bureaucratic institution, full of earmarks, campaign donations, lobbyists, and corruption. While there is truth to that statement, there are inaccuracies as well. For instance, the US tried a contractor in Iraq who committed widespread fraud on US dime in Richmond, VA on Monday and will be required to pay back every penny to the US Government. Originally, the judge in Alexandria, VA had made two rulings that would have allowed the contractor to forgo repaying the government. The Richmond court found the contractor guilty under the False Claims Act—creating fake invoices and inflating his costs significantly. The government does not actively pursue corruption, but just like anyone doing business, finds it along it’s way. This is just one example of how Uncle Sam tries to fix his mistakes—because who is perfect?

The final opinion I came across was that government contracting is a long process, involves lots of compliance documents, long decision period, but once you get it, it PAYS! I think that’s true with any business venture. You have to build a reputation before people begin to come to you and the profits begin to show. However, with government contracting, not only do you have to show that you are willing to work with the government, i.e. prove that you can wait the 3-6 months for payment, but that you offer quality services and/or products. In addition, the compliance documents usually refers to the contracting and bidding process that we can help you with at a minimal fee, unlike other companies that typically charge anywhere from $135 to $235 per hour!

There are many negative connotations with the words “government contracting” and it really shouldn’t be that way. The US government is the largest buyer in the world and just because the media mentions the nastier sides of it doesn’t mean your business shouldn’t benefit. As this article proves, while there is corruption, red tape, and big businesses involved in federal contracting, Uncle Sam tries hard to favor small businesses, punish the corrupt, and allow the red tape be a barrier against future fraud.

Thursday, April 9, 2009

Taking “Big Jake” by the Horns

This week I visited a little place called Fort Worth, TX. We drove in at night and it didn’t seem like much; it almost reminded me of a ghost town. I’ve never been to Texas – in fact I can count on one hand how many times I’ve left my precious East coast. So on a Monday night, Fort Worth didn’t look like anything special. In fact, it scared me a little and I dreaded waking up the next day, convinced that it would be worse in daylight. The next day I wasn’t surprised so much as stunned at how much they embrace their roots: cowboy boots used as signs, longhorn heads everywhere, a cow skull hung above my hotel bed, and the Western horse saddles set-up as bar stools in the hotel restaurant. Texas is an entirely different beast from the rest of the United States.

Longhorns parading in front of the Stockyard Hotel

As a native Virginian, I’ve been exposed to the so-called “Southern” lifestyle: mud splattered trucks in the high school parking lots, camouflage jackets as daily attire and, of course, that music. However, I could escape it because not everyone in my area was from Virginia; many were from Pennsylvania, Maryland, or farther away because there is a Naval base in my hometown. Located within miles of the Mason-Dixon Line, we are an eclectic county.

It takes some time for me to adjust to change, but when I visit places I like to force myself to go outside of my comfort zone and try something new. For instance, I rode a Longhorn steer, something that was never on my to-do list or had even crossed my mind. But it happened. I knew this was probably the only time I’d ever have the opportunity to ride a steer and stay on. It helped that I wasn’t alone–I had my business coach Carrie Wilkerson standing by, having already gotten up on the bull, telling me it was simple and doable.

Once I sat on top of the rather calm beast, I couldn’t help but smile. “Big Jake” wasn’t as scary as I had thought. In fact, he just stood there, chewing cud, his tail barely lifting to flick at the flies engulfing him. Business could learn a lot from an example like that. Take the bull by the horns – try something new. Gateway aims to be that guiding light in the contracting arena – we’ve ridden the bull before and know how the beast works. We want to help your business achieve because it is simple and easy. The only thing that is preventing you from getting up on that animal is yourself. One thing I took away from Texas was that I needed to trust myself more and believe I can do it anything. With the right coaches, anything is achievable.

Tuesday, April 7, 2009

Construction Opportunities Will See Boom Due To DoD ARRA Allocation

Though we all know that many areas of the United States economy are suffering right now, the federal construction market is likely to soon see a huge boom. The Department of Defense presented a 191 page report to Congress which details how it plans to spend the money is has been allocated by the Stimulus Package, more properly known as the “American Recovery and Reinvestment Act (ARRA) of 2009.”

The Stimulus Package currently includes just under $7.5 billion allocated for the Department of Defense (less than 1% of the total). The DoD stated recently that it intends to spend its funding with “unprecedented full transparency and accountability.” www.Recovery.gov has been created in order to help citizens monitor the progress of the spending of ARRA dollars, and the DoD will be making use of this. They have also set up a website at http://www.defenselink.mil/recovery to further this initiative.

How does this apply to the construction market? The DoD has “identified specific investments in construction, facility improvements, and energy efficiency projects that will help improve the quality of life for our troops and their families.” Their report to Congress included an extremely detailed breakdown of how their share of ARRA dollars will be spent. The report includes anticipated costs, descriptions of work, and project locations for each expense they are proposing.

The Department of Defense intends to spend roughly $2.1 billion on military construction and family housing projects, including $1.3 billion to construct two new hospitals (to be located at Camp Pendleton, California and Fort Hood, Texas). DoD has also indicated that it will be “pursuing architectural and engineering services greater than $1 million for 5 projects, conducting repair projects greater than $7.5 million for 56 projects, and carrying out 45 Energy Conservation Investment Program projects, respectively.”

The DOD also provided a list of roughly 3,300 other Facilities Sustainment, Restoration, and Modernization (“FSRM”) projects costing an estimated total $3.4 billion. These FSRM projects account for over $3.83 billion of their entire Stimulus spending.

The U.S. Army Corps of Engineers, the federal agency that is the most heavily involved in construction, has also provided Congress with “informed estimates” of existing capability to perform additional work. Of that, about $2.1 billion is appropriated for construction projects.

These and other projects will provide enormous opportunities for companies acting as federal construction contractors. Time will tell whether there are enough procurement officers currently active in the government to issue this many solicitations in such a short time and whether the specific agencies have the capability to properly administer all of this work, but there is certain to be a surge in construction projects over the upcoming months!

Thursday, April 2, 2009

SBA Budget Increase: What's The Impact?

If you've been paying attention to the news and popular media in the past few weeks, you are sure to have heard about the meeting between Jon Stewart and Jim Cramer. Their debate is already going down as one of the most controversial in history. However, how many people are talking about the House decision on the SBA budget that came out at almost the same time?

Not many.

This is for the simple reason that, to most people, small business government contracting just isn't as 'sexy.' It is a dry, difficult topic which few people partake in and even fewer truly understand. However, it is just this topic with which you, the small businessperson, should be familiarizing yourself during these times.

As one of the benefits of the stimulus package, a House panel decided to approve a vastly larger budget for the SBA in 2010. This increase of over $700 million roughly triples the budget for next year, providing a wide array of advantages to the small business owners interested in doing work with the federal government.

The SBA is the small business owner’s best friend in the federal government. It is literally their job to make sure that you get contracts and money; adding to their powers is going to make it much more likely that a small business will be able to get a contract.

For one thing, the federal appropriation to subsidize SBA loans has been put back into place, which will make it easier to get funding and money from the Small Business Association. This will raise the overall amount of loans the SBA can back to over $28 billion. This is going to increase federal contracting opportunities over time.

By getting started now, your business can be perfectly positioned in time to get access to some of the stimulus billions. This decision to increase funding to the SBA is likely to add just that much more opportunity for your company!

Tuesday, March 31, 2009

Surety Bonds Sure Are Making Things More Competitive

Contracting with the government has just gotten a little more interesting. The US Small Business Administration increased the limit on surety bonds for small business contractors from $2 million to $5 million. That extra $3 million means that more small business contractors are going to be able to bid on higher paying contracts that were off-limits to them before.

For many people that does not mean anything; many are left wondering what Surety Bonds are. Most of the definitions that available online are not satisfactory and left me feeling a bit baffled. One way to look at them is that surety bonds are paid for by a third party insurance company, stating that if the contractor should default on a contract the government still gets the job done or has their money returned. A better analogy is that it is like when you buy a new car; during the loan process, you have to prove you have car insurance just in case you total the car before the loan is paid.

What does this mean though? In theory, larger surety bonds are going to help small businesses get more of the stimulus construction contracts, such as paving roads or constructing buildings. Acting SBA Administrator Darryl K. Hairston claims that “These changes will support small and emerging businesses nationwide, particularly construction contractors who have seen their markets hurt by a poor economy and lagging construction environment.” The $3 million increase in surety bonds is only one of the many changes the SBA has made recently. The SBA seems to be going all out trying to help small business gain federal contracts. One of the other changes made to the Federal Register allows the SBA to give a surety bond on a federal contract worth up to $10 million; however the SBA will only award such large Surety Bonds if the contracting officer determines that it is required.

Many contractors have a surety bonds in one form or another, however, not every company will be able to obtain one for $10 million. The range varies depending on the contract and your businesses performances. A thing to keep in mind is that when you are bidding on a contract, make sure that your business can provide what is being asked. The point of a surety bond is to prevent the government from losing money. Ideally you will never need to use one, but it is often required to have one for contracts. Obviously, you never want to default on a government contract because the likelihood of your business ever getting another is slim to none.

Thursday, March 26, 2009

Change and Business Growth – Five Steps To Success

There is an old expression that says change is one of the three unavoidable facts of life – the others are death and taxes. Change is both essential to business success and one of the most frightening things a business owner can face; market conditions fluctuate, profits rise and fall, employee turnover… All of these and many more are all an integral part of doing business in today’s world.

Building your business is hard work, and once you have the ball rolling in one direction it can be very difficult to change the course. Doing something differently can be a terrifying prospect, but the best business owners have to stay flexible in order to succeed! Resisting change and trying to stick to the old ways can lead to trouble and worse. Companies that don’t change stagnate, miss growth opportunities, and, even worse, die out.

You’ve seen this time and again. Successful businesses generally have a core area that works well for them, but regularly fiddle with what they do, tweaking and improving constantly to see what works the best for them. Take a look at McDonald’s, for example; a franchise operation that works as a standard cookie-cutter template or mold. They’ve had the same basic setup, offerings, and operations for decades, but try out new things all the time – products, promotions, marketing, everything. Not all of these changes work or are kept, but every once in a while the company finds that perfect new item that makes all the difference and then brings in millions of dollars.

Constant reinvention, innovation, and acceptance of change are what keeps companies like McDonald’s at the forefront of their market. Smaller companies can and should learn from this and be willing to take a leap into a new venture or try out a new way of thinking or doing business! Taking a leap can pay off with huge rewards, as long as you make sure of a few things and follow five steps in a fairly straightforward plan.

1) Plan Your Approach

Before you start any major change or new business venture, have a plan of attack. Know what you want to do, why you want to do it, and do your homework! Don’t go into anything without a good, strong feel for what your strategy is going to be.

2) Don’t Bite Off More Than You Can Chew

You have to be realistic. If this new venture or change is going to swamp your business, don’t do it! Keep the proportions manageable – if the resources required to do this are more than you can afford to allocate (and possibly risk losing) then it is a simple decision. Be sure to have a backup plan!

3) Don’t Be Afraid

Having steps 1 and 2 taken care of can make this easier. Fear is one of the most detrimental things to any business, and can dramatically reduce a business owner’s ability to proceed and prosper in a new venture. You have a good plan, and know that it is something you can handle – what is there left to be afraid of?

4) Take The Plunge

As a business owner, by now you have already done this many times. You’ll have to do so many more before your time as a business owner draws to a close. Have your leaps in the past paid off? Obviously, you’re still here! Remember these times and try to do it again.

5) Wait, Evaluate, Measure, And Decide

Now that you’ve had some time working in the new venture, you should evaluate your progress. You don’t want to simply close your eyes and hope; pay attention to what’s going on, tweak what needs to be changed, and keep a fluid plan of attack. Adjust your actions according to the development of what you are doing – if something isn’t working, fix it! Determine whether or not your venture is paying off, or simply burning resources, and decide if you should celebrate and keep it, or accept a loss and move on to the next big idea.

Change should be part of every business owner’s plan. Take a look at how you do business – do you anticipate the need for new ideas, products, markets, or methods? If not, carefully consider your approach; not being prepared can be disastrous.

However, if you are willing to consider expanding your business into new markets, give Gateway to Government a call! We can help you with all five steps and introduce you to a lucrative new business arena.

Monday, March 23, 2009

Stimulus Scams

It appears that nothing is sacred; if there is an opportunity to make money, certain people will take it. Some people, however, have already taken advantage of the stimulus package and are targeting failing small businesses. By making claims that they will be earning a chunk of the stimulus money eventually, small business owners are tricked into believing that by making a small payment they will receive a list of federal grants. What they don’t know about are the alarming number of other charges they will receive.

There are ways of spotting a scam-artist when it comes to the stimulus money. “We started seeing these ads pop up online, promising people could get $10,000, even before the stimulus package was passed,” Better Business Bureau spokeswoman Alison Southwick recently told the LA Times.

There are sites such as ConsumerAffairs.com that are reporting scams that involve buying a CD on obtaining government grants for only $1.98. People are reporting that once the CD has been bought unauthorized charges ranging from $30-$70 have been made on their accounts. One way that you can spot a scammer is if the person approaches you first. A good government contractor consultant knows that the right person will find you. For instance, Gateway to Government has a blog, twitter, Linkedin, facebook, and other ways to contact us in order to ask for help. We aren’t promoting our services yet. Because we know the ins and outs of the industry, we’re interested giving out free information on how small businesses throughout the US can have Uncle Sam be their customer. We don’t make promises about “free money” from the government, but rather, we offer solutions to working more effectively with the government.

These scammers are making large promises with no real proof. Statements such as “Jennifer in WA got her grant check for $10,000… Click Here to Find Out How,” or “FREE GRANT MONEY” should be clear signals that something is wrong. Another common problem is that once your check has cleared, they “disappear” and are unreachable. We’re a real business and you can contact us night or day. It’s hard for businesses such as ourselves to be able to claim “We’re not a scammer” when the scammers use similar marketing tactics to gain people. Another way of spotting a scammer is if their company is not based out of the US. Many of these scammer “companies” are in the Philippines or other countries.

One of the key things to remember is that things aren’t always as they seem online. Dig a little deeper and if you can’t find out more about the business, registered business name, contact information, or even an e-mail address something isn’t right. Also, for blogs, make sure there are actual posts in them. If there are only a few entries, all involving how much money ‘Jessica’ made, it’s a throwaway blog. Remember: even when a contractor works with the government during a contract, the payment isn’t immediate. There is always a waiting period. Don’t trust ads that promise an immediate pay out or grants. Just like when you’re writing a bid, you need to do a little research to make sure everything is in order.

We offer this blog free because we want everyone to know about the joys of Uncle Sam working for you. While we want small businesses to enjoy the benefits of working with Gateway to Government, we don’t actively promote aside from social media sites where you can talk directly with me or one of my co-workers. One of the major problems of scammers is that legitimate businesses such as Gateway to Government are being hurt. The scam-artists use similar tactics to gain people’s trust and give other companies that actually care about their clients a bad name.

Thursday, March 19, 2009

Rockin' Robin - The Rise of Social Media in Business Marketing

Have you heard of tweeting? Twittering? Tweeps? All of these and many more are terms that have been added to the internet lingo by Twitter, one of a burgeoning group of free social media service websites now being used by more than six million people around the world. The basic principle is simple – network with other ‘Tweeps’ (users of Twitter) and express what you want to say in 140 characters or less – but the effects are proving to be far more wide-ranging than one would expect.

Twitter has recently become very well known due to a few key events: some of the first eyewitness reports of the U.S. Airways plane that landed in the Hudson River were from Twitter, prominent politicians have been seen using it during meetings, speeches, and conferences, and Twitter was heavily utilized during the most recent presidential campaign. Courtesy of this micro-blogging service, news is being spread even more rapidly.

People from all walks of life are now using Twitter every day. Entrepreneurs, news anchors, bands, politicians, artists, business owners, students … All of these and many more are utilizing tweeting (posting on the Twitter website) as a networking and information tool. Charitable organizations are using it - today there is a push for Share our Strength, an organization aiming to reduce child hunger. They are trying to raise $12,000 in 12 hours using Twitter alone - currently they are five hours in and they have almost reached they goal.

An increasing number of big corporations are using Twitter now as well – HP, Microsoft, American Express, and Dell are just a few. In fact, when a coworker recently tweeted about our recent post involving UPS’s ‘no left-turn’ innovation, she was contacted by a UPS employee whose job it is to monitor UPS appearing in social media!

In the three years since its creation, Twitter has become one of the go-to places for entrepreneurs and business owners to learn about, network, and market their businesses. Social media and marketing experts are cropping up all over the place with ways to help streamline this process. People co-promote with each other and people who give good advice, are entertaining, or have some other valuable service are generally recommended to more and more people.

I just started using Twitter about a month or so ago after having heard more and more about it. I currently have about 500 followers, from a wide range of groups – many are total strangers, some are friends or family, others are business contacts. It is easy to get lost in what Twitter offers; an endless stream of interesting stories, blurbs, and thoughts from hundreds of people can be difficult to get away from. Generally, I’ve found it best to simply play the fly on the wall and jump in with a comment if I hear something interesting, or to ask a question of my followers and the ‘twitterverse’ as they come up.

While Twitter and similar social media are becoming increasingly good ways to make business connections, you have to be careful to avoid some basic pitfalls. The hard sell is incredibly unpopular on the site and will lose your credibility faster than virtually anything else. Twitter is meant to be used in a more organic fashion – by building a reputation with other users, they will be driven to use your products or services over time. Another thing to avoid is considering the number of followers you have as a popularity contest; rather than quantity, try to go for the quality of the people you interact with and make better content.

All in all, Twitter is becoming a fairly powerful tool for marketing, networking, and business development. Websites are easy to promote, especially if they have good content. There are numerous external applications that make it even easier to use (for example, one program allows you to search for key phrases in recent tweets – you can find out who is talking about small business government contracting, for example, and start a discussion!) and these can help reduce the time spent on it each day.

Don’t get overwhelmed – Twitter isn’t something that has to be used 24/7! This dynamic word-of-mouth advertising format has made marketing even easier to do, as long as you monitor what you are doing. Just remember that to get anything from it, you will have to give time, effort, and a little bit of yourself, just as you would in any other format.

If you’d like, you can always find Gateway to Government representatives on Twitter. My name is JIstvan and let me know when you get on! LauraGuthrie, my aforementioned coworker, is also worth following - she is a social media expert!