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.
Showing posts with label obama. Show all posts
Showing posts with label obama. Show all posts
Tuesday, May 19, 2009
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.
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.
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
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
Tuesday, March 10, 2009
Trending Towards Transparency – How the Internet is Forcing People to be ‘Real’
Twitter, Facebook, MySpace, YouTube, and LinkedIn. What do all these sites have in common? They have created a startling new trend among people – being transparent. More and more there are adults on these sites and they are sharing with the world many things that only true friends would know about them. For instance, on Twitter I follow people that I have never met in person; I can tell you where they live, their style of music, what makes them laugh, and their favorite animal. It isn’t just ‘regular folk’ either; politicians, corporations, artists and more are on these sites in an effort to connect with the public and make their business seem more real and trustworthy. I commented about our recent post on innovation on twitter and within an hour I had an UPS employee contacting me to tell me that he has given up left turns in his real life as well!
The best part is that when politicians do anything, others pass along the information. Good, bad, funny—we’ll all know before the 6 o’clock news. That’s a scary thought. President Obama used Twitter and YouTube to his advantage during his campaign by keeping them constantly updated and personal. Someone in his employ understood the importance of instant, transparent access to information, giving him a decided advantage. President Obama has continued using these ideas to be more transparent now that he is in office as well.
According to Las Vegas Sun, the administration has created multiple ways for the public to monitor the stimulus spending. The president thinks that the public must know how government is spending the tax-payer’s money. “The White House created a Web site — www.recovery.gov — for citizens to track progress of spending. And the stimulus bill… contains $330 million for oversight, including $221 million to strengthen the inspectors general and $25 million for the Government Accountability Office…” Another way that the Obama administration is monitoring spending is through the creation of a special faction called the Accountability and Transparency Board, which will be headed by Earl Devaney, former Interior Department inspector general. Devaney states that he will work to stop fraud and waste, not merely detect it as previous administrations have.
This is a huge improvement from previous administrations that have been known for trying to hide what they’re actually doing. Maybe Obama is learning from some of the best Social Media experts who stress constantly that the best way to gain people’s trust and respect is to simply be yourself and hide nothing. Contrary to comedian Lewis Black’s popular skit, Americans don’t want to be lied to anymore. With the internet providing so many sources of instant information, people don’t want to wait to know anymore. While not everyone approves of the action taken by the Obama administration, they aren’t hiding anything; they let everything show on the internet in a wide variety of venues.
The best part is that when politicians do anything, others pass along the information. Good, bad, funny—we’ll all know before the 6 o’clock news. That’s a scary thought. President Obama used Twitter and YouTube to his advantage during his campaign by keeping them constantly updated and personal. Someone in his employ understood the importance of instant, transparent access to information, giving him a decided advantage. President Obama has continued using these ideas to be more transparent now that he is in office as well.
According to Las Vegas Sun, the administration has created multiple ways for the public to monitor the stimulus spending. The president thinks that the public must know how government is spending the tax-payer’s money. “The White House created a Web site — www.recovery.gov — for citizens to track progress of spending. And the stimulus bill… contains $330 million for oversight, including $221 million to strengthen the inspectors general and $25 million for the Government Accountability Office…” Another way that the Obama administration is monitoring spending is through the creation of a special faction called the Accountability and Transparency Board, which will be headed by Earl Devaney, former Interior Department inspector general. Devaney states that he will work to stop fraud and waste, not merely detect it as previous administrations have.
This is a huge improvement from previous administrations that have been known for trying to hide what they’re actually doing. Maybe Obama is learning from some of the best Social Media experts who stress constantly that the best way to gain people’s trust and respect is to simply be yourself and hide nothing. Contrary to comedian Lewis Black’s popular skit, Americans don’t want to be lied to anymore. With the internet providing so many sources of instant information, people don’t want to wait to know anymore. While not everyone approves of the action taken by the Obama administration, they aren’t hiding anything; they let everything show on the internet in a wide variety of venues.
Friday, March 6, 2009
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!
“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!
Tuesday, March 3, 2009
Budget Cuts and Penny Pinching – Why the Government Isn’t Like Everyone Else
March marks the first time that I have ever actually forced myself to plan a budget. I recently bought a car (Bambi thought my old one wasn’t hip enough and totaled it for me). I’m also looking for a home to purchase; if I stay in my apartment past May, rent increases almost by half! Over the past month’s I’ve found that with my car insurance spiking, rent payment, and everything else, I can’t afford to eat out as much or purchase frivolous items such as bottled water, funny shirts, or DVDs. So, I’m hunkering down, forcing myself to stay in on Friday nights to play monopoly, drinking lots of tap water, and watching cable that’s already paid for.
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.
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?
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!
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!
Wednesday, February 11, 2009
Step 3: Price Yourself to Perfection
Hello everyone! Welcome yet again to another installation of Gateway to Government’s Seven Steps for Successful Contracting. Each day this week I will focus on ways you can gain an advantage over competitors and maximize your small business’s chances of getting government contracts. Each step will examine different aspects of federal contracting, all with the goal of increasing your business. Today is Step 3 of 7, focusing on how to price your bids for government work.
Step 3 – Realistic Pricing
As it would be with any business venture, the pricing of your product or service for government contracting is very important. With government, pricing is not always the only factor (some contracts are based on ‘best value,’ but it is always a strong consideration. Contracts worth thousands, even millions of dollars have been won or lost literally by a one-cent difference in bid price. Research your product and know what it is worth – but don’t cut so thin that you aren’t going to make any money! Remember to include your costs, overhead, time, and profit into the price, just as you would any other contract. However, be careful – in some circumstances, the government can come back to you and ask for documentation explaining how you can to your pricing.
The government always expects a discount; however, they don’t want you to sell yourself short. President Obama recently said “small businesses are the backbone of our nation's economy and we must protect this great resource.” His statement affirms that while the government does expect you to give a good price for your service or product – generally under the MSRP for goods, for example – it doesn’t have to be under its value. Many contracts are awarded solely on price, so be sure that you can be competitive! However, as you know, not all of them are. Gateway will indicate which projects are based on price, and which are on ‘best value,’ meaning that other factors are evaluated, and what they are. Factors can include delivery time, performance history, and a wide range of other possibilities, but all will be detailed in the bidding documents.
Step 3 – Realistic Pricing
As it would be with any business venture, the pricing of your product or service for government contracting is very important. With government, pricing is not always the only factor (some contracts are based on ‘best value,’ but it is always a strong consideration. Contracts worth thousands, even millions of dollars have been won or lost literally by a one-cent difference in bid price. Research your product and know what it is worth – but don’t cut so thin that you aren’t going to make any money! Remember to include your costs, overhead, time, and profit into the price, just as you would any other contract. However, be careful – in some circumstances, the government can come back to you and ask for documentation explaining how you can to your pricing.
The government always expects a discount; however, they don’t want you to sell yourself short. President Obama recently said “small businesses are the backbone of our nation's economy and we must protect this great resource.” His statement affirms that while the government does expect you to give a good price for your service or product – generally under the MSRP for goods, for example – it doesn’t have to be under its value. Many contracts are awarded solely on price, so be sure that you can be competitive! However, as you know, not all of them are. Gateway will indicate which projects are based on price, and which are on ‘best value,’ meaning that other factors are evaluated, and what they are. Factors can include delivery time, performance history, and a wide range of other possibilities, but all will be detailed in the bidding documents.
Thursday, January 29, 2009
Here's Hoping, Obama
Barack Obama has become a rock star with all the attention from the media. One of CNN.com hot topic links is “Obama’s First 100 Days.” CNN.com is even selling a shirt that says, “Obama raises a hand, lifts a nation. I just saw it on CNN.com 1.20.09.” CNN isn’t alone; Yahoo! News’s top story is Obama signing his first bill - the Lilly Ledbetter Fair Pay Act - and MSNBC, aside from the eight articles on the stimulus plan, has a political cartoon slideshow where out of twenty cartoons eighteen are strictly Obama. He’s everywhere and he’s been everywhere since he decided to run for President. Over a year ago, one of my friends went to see him at a rally and was convinced he was going to be the face of change. I know many individuals believe that; there is more hope in this President than there has been in a while. (I can’t help but wonder how George W. Bush feels!)
But where is all this hope going to get us? Good intentions are grand, but they’re just that… intentions. Action is what this country needs; Obama’s first hundred days are directly related. The trend for using the first hundred days as a benchmark for the rest of a presidency began with Franklin D. Roosevelt. The media loves to compare FDR to Obama, stating that the economy has reached similar lows as the 1930's and that the nation needs a President to push legislation through Congress to help stimulate the economy.
I wouldn't want this waiting for me.
Yee of little Faith.
But where is all this hope going to get us? Good intentions are grand, but they’re just that… intentions. Action is what this country needs; Obama’s first hundred days are directly related. The trend for using the first hundred days as a benchmark for the rest of a presidency began with Franklin D. Roosevelt. The media loves to compare FDR to Obama, stating that the economy has reached similar lows as the 1930's and that the nation needs a President to push legislation through Congress to help stimulate the economy.
I wouldn't want this waiting for me.
There’s no arguing against the need for change in this country and Obama’s $819 billion economic stimulus package will hopefully bring some. Originally, it was $825 billion. So, what was cut out? Expanding family planning, re-sodding the National Mall, and a proposed tax credit for businesses for each job they create or save. Most of the money will go to help expanding the education sector, health care, tax breaks for individuals and couples, and energy.
But what does this package mean for small businesses? According to MSNBC.com, the business breaks include “…allowing [businesses] to claim tax credits on past profits dating back five years instead of two. It also would offer bonus depreciation for businesses investing in new plants and equipment; double the amount small businesses can write off for capital investments and new equipment purchases; allow businesses to claim a tax credit for hiring youths and veterans.”
His plan correlates with a statement he made back in February 2008 when the American Small Business League publicly supported him. Obama’s comments on the subject in the days following help shed light on how much he will promote small business growth through the economic stimulus plan and other ways in both the public and federal sector. "…98 percent of all American companies have fewer than 100 employees. Over half of all Americans work for a small business. Small businesses are the backbone of our nation's economy and we must protect this great resource. It is time to end the diversion of federal small business contracts to corporate giants."
Sounds great, right? One can only hope. FDR’s New Deal did boost the morale of the country and did create jobs, but as most of us know, it wasn’t the only thing that saved this country. A war economy helped the US recover. However, Ronald Reagan helped the US economy more than most people acknowledge. His trickle-down economic actions in the 80's helped the economy later - as late as the Clinton administration - flourish. Like most economic plans, and like this one will, it took time for it to work.
But what does this package mean for small businesses? According to MSNBC.com, the business breaks include “…allowing [businesses] to claim tax credits on past profits dating back five years instead of two. It also would offer bonus depreciation for businesses investing in new plants and equipment; double the amount small businesses can write off for capital investments and new equipment purchases; allow businesses to claim a tax credit for hiring youths and veterans.”
His plan correlates with a statement he made back in February 2008 when the American Small Business League publicly supported him. Obama’s comments on the subject in the days following help shed light on how much he will promote small business growth through the economic stimulus plan and other ways in both the public and federal sector. "…98 percent of all American companies have fewer than 100 employees. Over half of all Americans work for a small business. Small businesses are the backbone of our nation's economy and we must protect this great resource. It is time to end the diversion of federal small business contracts to corporate giants."
Sounds great, right? One can only hope. FDR’s New Deal did boost the morale of the country and did create jobs, but as most of us know, it wasn’t the only thing that saved this country. A war economy helped the US recover. However, Ronald Reagan helped the US economy more than most people acknowledge. His trickle-down economic actions in the 80's helped the economy later - as late as the Clinton administration - flourish. Like most economic plans, and like this one will, it took time for it to work.
Yee of little Faith.
President Obama is trying. He is pushing legislation that he thinks will help the US
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