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.

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.

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.

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.

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.

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.”

A Word from Kip Nicely

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.

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!

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.

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.

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!

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.

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.

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.

Obama Charges Administrators to Reform Contracting

President Barack Obama on Wednesday ordered a much-needed look at and reform of the processes surrounding government contracting and procurement. This is to include virtually all agencies and branches of the federal government, including the Department of Defense, usually exempted from such measures. The following quote is from President Obama via the White House executive memorandum:

“I hereby direct the Director of the Office of Management and Budget (OMB)… and the heads of such other agencies as the Director of OMB determines to be appropriate… to develop and issue by July 1, 2009, Government-wide guidance to assist agencies in reviewing, and creating processes for ongoing review of, existing contracts in order to identify contracts that are wasteful, inefficient, or not otherwise likely to meet the agency’s needs, and to formulate appropriate corrective action in a timely manner. Such corrective action may include modifying or canceling such contracts…”

What does this mean for the small business owner?

Well, that depends. If you have a long-term contract currently in place, immediately make sure that your processes are well documented and defensible. Excess waste should be cut out proactively and inefficiencies need to be addressed – nobody wants a contract canceled so be sure to take a look at what you can do to prevent it.

On the other hand, for companies looking to break into contracting, this is potentially a tremendous opportunity. As of July 1, 2009, existing long-term contracts will begin to be reviewed. Many incumbent contractors could be hoisted out of their positions, which means that many contracts will have to be refilled. Over the coming year many businesses will be tapped to replace the companies who have their contracts cancelled, so now is a great time to start positioning your business to take their place!

Obama also said he wants to “open up the bidding for contracts to small businesses,” which will help drive even more potential growth to the small business owner!

What’s Up, Doc?

If you’ve been watching the news at all lately, you have probably noticed the trend towards discussing the finer points of the stimulus package. The Obama Administration has successfully pushed their plan through both the Senate and the House in order to pump more money in the declining US economy. Among the issues many federal employees are fearing is that with the passage of this package their jobs will be outsourced, as the Bush administration did in 2003.

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!

Hassles with Uncle Sam

This morning I woke up and was excited to do my job. I know, that's an odd statement, but I was. Today is a good day to be a government contractor. The Obama stimulus package is unleashing hundreds of billions of dollars into the U.S. economy in the coming months and years, and now is a great time to get started. However, businesses that want to become government contractors need to be aware of the risks and difficulties involved.

We are often asked what ‘hassles’ are involved in government contracting. Many business owners have never tried to do work with the government before and so don’t truly understand what is involved. What benefits are there to using a program like ours? What $70,000 are people talking about?

Our goal is to help small business owners become government contractors without all the hassle of actually having to be one. There are quite a few difficulties that can make it impossible for many small business owners to be able to reasonably do it on their own (hence only about 2% of small businesses DO!). There is the lengthy waiting process – certification can take quite a while, and then it will likely be months before you get a contract. Just doing the paperwork and qualifying for the certifications can take more time than a lot of business owners have.

Add to this the cost of training and hiring someone (like me!) full-time to handle the contracts and you are starting to look at a serious investment. Training courses and materials can and do run as high as $15,000 – no paltry sum for anyone. Many small businesses simply can’t afford to float the cost – months of preparation, overhead, and paychecks before a single contracting dollar comes in. Your business would have to learn what to bid on, how bidding works, who to talk to, how to process payments… The list goes on.

Gateway to Government has done this already. We already have the certifications, the course material, and the experience to get your small business contracts and recognized within the community. We don’t look at just Federal government contracts either – Gateway to Government is registered and looks at contract opportunities within larger contractors as well (such as Lockheed Martin, Boeing, etc.) so that all available opportunities are scoured. In fact, some of these names are usually the ones associated most with government contracting and most in the public eye.

Photo illustration by J.P. Trostle

As a small business aide, we know that the government wants to focus on businesses like yours for the next several years to help stimulate the economy. Statements by President Obama and many others in the administration have said time and again that small businesses are the future of government contracting.

Gateway to Government cares about the small businesses that come to us. Each of our partners wants to grow and expand their business – and it is both our job and our desire to help with that. You are all a part of the Gateway to Government family and if you need help on a contract, we’ll be here, eager to help.

Step 7: Final Thoughts

Hello again readers, and welcome back yet again to Gateway to Government, the small business resource for government contracting. Over the past week I have been writing a new tip each day on government contracting. Well, it has been a long seven days but I think everyone should have learned something from our Seven Steps series! Today we finish up with the final, and in many ways most important step to being a successful government contractor.

Step 7 – Relax!

In the past I have noticed that business owners and employees tend to start to panic as the prospect of government contracting is raised or comes near. Don’t! Stress causes mistakes, difficulties, and shorter life-spans. If you are reading this, you know that contracting is a valuable step for any business to take, but it doesn’t have to be as difficult as you think – Gateway makes contracting easy for you.

We’ve taken all the necessary steps to make sure your contracting experience is as painless as possible. Don’t worry, with Gateway the process is simplified and we eliminate the hassle of bidding, as well as give you some major competitive advantages in the federal contracting arena. We can provide answers or solutions to any questions, comments, or concerns you may have. Gateway guarantees that contracting through us will be as simple as 1, 2, 3 – so stay calm, relax, and get ready to get started!

Remember:

"The question is not and should not be whether or not the government buys your products, because they do. The question is whether or not they buy it from you."

Gateway will help you to make sure that they do!

Step 6: Don't Use the Deadline

Welcome back to Gateway to Government’s blog and the Seven Steps series! I hope everyone had a pleasant weekend and is ready to continue learning how to do business with the government through the Gateway program. Today we will take a look at how deadlines can impact government contracting.


Step 6 – Don’t Wait Until the Last Second

Though this may seem like another obvious idea, time and time again we have seen people submit their information just minutes before the deadline – only to find a major problem with no time to correct it. Every government bid and every bid we send you will have a deadline – a date and time – prominently displayed. This 'timestamp' is the absolute last chance to submit your information – if the bid is not full, complete, and accurate or is not received by that deadline, all of the time and effort you have put into your project will have been to no avail. The government will NOT accept late bids! Delivery or sending timestamps are also not important – it is when the document is received that matters, not when you mail it. If your bid gets delayed in the mail, or you get a flat tire trying to deliver it just before the deadline... Too bad! For this reason it is highly recommended that none of our clients use the final deadline.

By sending your details in well ahead of this time, we can work out any kinks or issues there may be with your submission. We review all of the bids and make sure they arrive on time in the right hands. This will help to ensure that your bid is submitted in the best possible fashion and that your experience is as painless as possible!