Wednesday, May 6, 2009
Contract Bundling and Your Small Business
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, March 3, 2009
Budget Cuts and Penny Pinching – Why the Government Isn’t Like Everyone Else
I’m not here to give finance advice – I’ll leave that to the experts. But I am noticing a trend amongst my friends and coworkers. We’ve all cut back on things that cost money that we used to do on a regular basis without thinking and are saving money as if it’s a precious commodity. Well, for many (and more each day) it is! I’ve been reading more and more in the news about middle-aged individuals losing their jobs and dipping into their 401(k) accounts early or draining their savings to make ends meet. Getting a job isn’t easy either right now, especially when I know people who have applied to dozens of jobs and if they get a response at all it is a rejection. Like many people, I’m planning for the worst and squirreling away anything I possibly can.
So why is the government implementing an economic stimulus package that entails spending nearly a TRILLION dollars instead of saving money?
Many conservatives on www.twitter.com frequently tweet about the stimulus package and how it “oddly” reminds them of the German attempt in the late 20s. I don’t agree. Even though the Obama administration in many cases isn’t putting in formal checks and balances to ensure that the money isn’t misappropriated or poorly handled, many Senators are doing what they can to increase transparency and oversight. Michael W. Brubaker (R-PA), for example, wants to create a nine-member panel in Pennsylvania made up of state officials to manage the economic stimulus money. His state alone is set to receive $10 billion of the money set-aside for state building. If his bill is passed, which hopefully it will be, this panel will help prevent corruption and boost the local economy within the state. However, PA is ahead of the senator and has created a website that will allow the public to monitor the spending.
One of the benefits of posting the spending online is the level of transparency it creates. The stimulus bill is something that the American people have heard about non-stop for the past several months. With the aid of the internet people have access to developing stories 24/7, letting those who are interested keep up-to-the-minute on the progress of governmental affairs, especially with www.CSPAN.com’s streaming feed to the House and Senate debates. This week some of the first expenditures from the stimulus package are happening, focusing mostly on information technology support and staff. Michael Carleton, Health and Human Services Department’s head officer, said, “There are provisions in the law that require the money in the Recovery Act to be subject to a higher level of transparency than is the convention.” Carleton thinks that these expenditures will help make that happen.
I like to compare the stimulus bill to Franklin Roosevelt’s New Deal, designed to create new jobs in the 1930s. Vast swaths of American infrastructure, schools, and even the Appalachian trial exist today because of that plan. States are spending wisely if they invest in IT first because in today’s society, information is the key to getting anything done. Without the necessary support of technology, the spending could in many cases go awry and unchecked. FDR focused on projects that kept the American public busy, while providing future generations with something free to enjoy when there is an economic hardship. We can still enjoy those trails today even though we are budgeting and that should make all of us happy. It makes me forget that I can’t see the latest movie, buy the newest computer, or eat out three times a week.
While it seems ridiculous to many people that the government is spending such tremendous quantities of money during a time when the general public has had to cut back, I think it’s necessary - as long as there is enough transparency with this act. It’s our money, we should see to it that it is properly spent on rebuilding our economy, eventually letting us spend our money as we wish again, hopefully leading us back into prosperity. Right now, the main reason we need the government to put money back into the public is that we can’t spend money to help other businesses out. As much as I would like to, I can’t go down the street to buy from the local farmer’s market; the huge grocery store chain is cheaper, and every penny counts. Businesses will benefit tremendously from the surge in money, especially those involved in government contracting. The more money the government spends on us, the more we’ll have to spend later, which will eventually boost everyone up, even those not involved in contracting who don't get it directly from the government.
The stimulus plan will work because we aren’t just printing money off and hoping for the best; we’re opening Excel, discussing, managing, and making everything transparent so the best decision is made. I’m glad the government is spending money, because I believe that it will lead to me being able to spend mine in the future on what I want, instead of what I need.
Thursday, February 26, 2009
What’s Up, Doc?
President Obama has stated numerous times that he will not outsource federal jobs. The stimulus package, for instance, is pumping money into repairing government buildings and facilities, actions that are traditionally contracted out and not completed by federal employees anyway. With that in mind, now is a great time to be a government contractor! However, on the flip side, it is also a difficult time to be one. As stated in The Washington Post by Joe Davidson, “The stimulus package will generate more business for government contractors at a time when government contracting is coming under greater scrutiny.” This scrutiny, which all contractors must face, is due to the past ten years of abuse that was allowed during the last administration. It is inevitable, but is much worse for companies that have already encountered difficulties within the field.
But how will the Obama administration fix and prevent the abusive tactics that many contractors have implemented? On Tuesday, February 24, 2009, President Obama discussed how lawmakers will be implementing different procurement processes for government contracting. The specifics have not been stated yet, but there is talk of cutting back significantly on overpaying individuals and on greater monitoring of award decisions and amounts.
There is a bright side to this scrutiny, though. For instance, bigger names have a harder time winning contracts, especially the smaller ones. Small businesses will be favored throughout the bidding process even more. However, and I cannot stress this enough, it is critical that contractors are aware of their market and product prices. In many cases, the federal employee goes into the negotiations with a set price range that he is allowed to purchase within that we the contractors are unaware of. One must ensure their price is competitive; if your price is above what the government is asking, they’ll automatically disqualify you and move on to the other bids. If it is too high, you may not even be eligible to compete on future contracts!
Recently, Senator Carl Levin (D-Mich) proposed a bill that would require defense contracts to be reexamined if they are over the original cost estimate by 25% or more. Many large contracts can be recalculated as needs change and over time, but the government wants to crack down on excessive increases. The Department of Defense awards contracts based mostly on weaponry and technology; if the government is taking a stand against overspending on DoD contracts, then ones awarded in other departments are undoubtedly soon to be significantly be cut back as well.
The government generally decides the price range based on what they feel the material and labor costs should be. Usually, the federal employee assigned to the contract has appropriate estimates. The government wants contracts to be done easily and cost-efficiently, however, they understand that there needs to be a profit or small businesses won’t work with the government any more.
While the Obama administration is cracking down on the problems typically associated with federal contracting, there is nothing stating they will stop hiring contractors. In fact, time and again they have explicitly stated they want to hire MORE small businesses. If anything, the process might involve more paper work or red tape, but for the most part, contacting will continue. So long as the small business contractor follows the bid guidelines and offers competitive prices, there will be no shortage of contracts for the small business owner!
Friday, February 13, 2009
Step 5: Bid to Your Capabilities
Step 5 – Don’t Bid on Something You Can’t Do
This may seem like common sense, but sometimes what one thinks is expected in a contract isn’t. Review everything and make sure that your business is capable of all of the elements, both technically and financially! I have heard of many cases where small companies put in a bid and won a great government contract but ended up going out of business because they couldn’t support the finances while waiting to get paid (in most instances, the government pays after job completion).
Once you have read the fine print and asked all of your questions, review the entire contract again. For instance, one contractor (not one of our members!) lost over $18,000 on a bid because they hadn’t realized that they needed to train others to help with installation of their product. They though that they were going to be able to do all the work themselves!
Again, reading the bid requirements is vital to knowing what your company can and cannot fulfill. Examine the requirements and compare them to your capabilities, then review your business’ financial situation – can you afford to float the full cost of the contract potentially for months while awaiting completion and payment? While Gateway does its best to send bids related to your business, it is ultimately up to you to review the bid and decide whether or not your company can handle the contract.
Wednesday, February 11, 2009
Stimulus Plan Benefits Small Businesses
• $16 billion for construction and renovation of schools
• $2.4 billion for "family friendly" military construction projects — family housing, childcare facilities, etc.
• $500 million to secure dams, bridges, and tunnels
• $4.6 billion for water and hydro power projects
As he states in his article, it's not just construction businesses that can partake at the government trough; look at:—
High Tech
• $9 billion to increase access to broadband, especially in rural communities
• $ 5 billion to computerize health records
Transportation
• $8.4 billion for investments in public transportation
• $160 million for investments in maritime transportation
• $160 million for investments in maritime transportation
• $160 million for investments in maritime transportation
• $160 million for investments in maritime transportation
• $1.3 billion for investments in air transportation
• $1.1 billion for investments in rail transportation
• $160 million for investments in maritime transportation
• $830 million for repair and restoration of roads on park, forest, tribal, and other public lands
Housing
• $2 billion for redevelopment of foreclosed homes
• $2 billion for affordable housing
Green Technology
• $6.4 billion for environmental cleanup
• $6 billion for sewer, and drinking water systems
• $40 billion to for development of clean, efficient, "American" energy
• $6 billion for repair of federal buildings using green technology
• $613 million for energy efficiency upgrades and construction of alternative energy projects, including wind and solar
Now, as many as you already know, Gateway to Government can help your business take full advantage of this opportunity. Steve is right; there has never been a better time than now to join federal contracting. However, getting these certifications, the right connections, and all the other bits of red tape involved with contracting can take a lot of time. One of the many benefits of working with Gateway is that we take the hassle out of bidding. We can help your business get contracts NOW instead of later. Why wait? Gateway can offer your business a solution that will increase your profits. Don't hesitate; contact us TODAY to get your fair share of the stimulus plan.
Thursday, February 5, 2009
Federal Contracting: Terrifying Prospect or Lucrative Opportunity?
The first United States government purchase was performed in the 1770s, when General George Washington directed Philip J. Schuyler to buy weaponry from Major Duncan at Schenectady, with a guarantee to pay for the goods upon delivery. Since then, opportunities to sell to the federal government have expanded greatly; though a large portion of the federal contracting budget is still set aside for military and defense purposes, more money is spent on a much wider range of opportunities that most people realize.
Believe it or not, currently only about 5% of businesses in the United States actually do business with the government. This is despite the fact that it generally spends, on average, over a billion dollars a day, on everything from janitorial services to dog treats to IT services to research. Why is that?
The rules governing the federal procurement process are incredibly intricate. If the contracting field is new to you, you are going to find out just how difficult it can be – this is one of the most complex arenas that there is in business. Fortunately, there are plenty of people and businesses willing to help, and it is possible to acquire a working knowledge of the process, policies, and procedures that apply to your business and how to navigate the government contracting arena.
One piece of good news is that the government tries to do a lot of its business through small contractors. The U.S government has federally and legally mandated goals and procedures designed to favor small businesses. Every federal agency has a small business contracting goal – a percentage of its budget each year is ‘set aside’ specifically for a variety of types of small businesses, ranging in amount depending on the agency. Businesses are eligible for these set-aside goals if they fit the description, be it small, woman-owned, minority-owned, or any in a wide array of other categories.
Small contractors can work with the government without a large office staff or support system, but only if they understand how everything works. Unlike other customers, you cannot simply walk into a government office and make a sales pitch. There is a huge array of protocols that must be met before you can do business with the government – but if you know your rights and are familiar with government programs, contracting can be extremely lucrative for anyone willing to accept the time, effort, and expense of getting started. You also don’t have to do it alone – there are many companies out there willing to direct you along the correct path and to help you get going.
Everyone knows about the current declining economy, said by some to be the worst since the Great Depression. Small businesses should definitely consider utilizing government contracting as a source of income. The federal bailout means that there are going to be hundreds of billions of dollars of extra contracting money spent in the next few years. These dollars will have to be spent somewhere – and not all of them are going to be on the multi-million dollar contracts – the companies that win the large contracts started out winning small contracts. Your business sells products or services that the government buys, and the time to get started with federal contracting is now. In short, federal contracting is both: a terrifying prospect AND a lucrative opportunity. Navigating the maze can be dangerous but the risk is well worth the potential reward!
Working with Gateway to the Government, your business can penetrate the complex web of doing federal contracting. Through our partnership program, you gain access to everything – all of the advantages of the small business set-aside programs and the lucrative field of contracting – without having to accept the huge amount of time, effort, and expense of getting started.
Monday, January 19, 2009
Poker Night
I couldn't help but comparing the novice poker players we had over with businesses having to take the same risks with government contracting. I know I had difficulty the first time I played. I didn't know what combination of cards were the best, I didn't know when to fold or place my bets, and I really couldn't tell if people were lying to me or not. When our contracting business first opened its doors, we had no idea how to read the contracts. In most, there were dozens of pages of instructions, and half the time we weren't sure which were worth bidding on. We also didn't have any contacts at the time and when we made friends in the industry, we weren't sure who we could trust. We've grown since then, having completed contracts and found trustworthy individuals within the contracting community and hope to help others grow as well through Gateway to the Government.
One thing that I learned from my recent poker night, as I'm sure my friends did too, is that planning ahead makes everything better. My roommate had taken the precautionary steps: talked to everyone involved to find the best time to host, figured out what needed to be worked on, and set everything up ahead of time. Because of all of these steps, the night went very smoothly. No one was upset by the end of the night, nothing was broken or lost, several people had learned a new game, and there wasn't any confusion regarding who had won or why. I found out that my roommate had hosted many such friendly poker nights during his college days and knew exactly what needed to be done. Government contracting is the same way - having someone who has experience and knows what needs to be done can ensure that everything moves smoothly. Businesses can benefit from taking risks - just like a poker player - but until the player knows the rules, it can be a great way to gamble and lose, especially to the experienced players. A friendly contractor such as Gateway is willing to take the "gamble" out of contracting, allowing your business to use our winning cards.