Government Contracting Survival Guide

Thursday, September 13, 2012

GSA Administration: Is it Worth the Effort?

Welcome to all... To the Premier Blog for the most boring of subjects: Federal Government Contracting. The good news is that you will find nuggets of information that you can trade in for payments from the government. Hey, send me a question or two and I'll have more fun blogging! GB. September, 2012

Many times a prospective client asks me how much of a burden (OK, how much of a pain) is maintaining a GSA contract. Below I describe the basic responsibilities of the vendor (you). By the way, I use the common acronyms, so bear with me on that.

Yes, there is a definite effort related to working with a GSA contract. Besides the initial effort of getting on schedule, an individual from the vendor would have to be assigned as Administrative Point of Contact (POC). This person would be the interface to GSA, prepare reports, and ensure that GSA receives the Industrial Funding Fee (IFF), which must be filed quarterly even if there are no sales.

Although this article is about maintaining the schedule after award, the up-front effort is not trivial.

Making the Offer: The process required to win an award obviously takes work and time up front. Although consultants like GM Beckert would do the bulk of the work, the vendor (you) will need to provide pricing data, and get a Past Performance Report from Open Ratings. You would also have to provide financial information (P/L and Balance Sheet) as part of the offer. This could take a few hours or longer depending mainly on pricing. Pricing is usually the hardest thing to nail down and will take management time as well as administrative time, but this is where a good consultant can really save time and money.

Clarifications and Negotiations: Once the offer is made, GSA will ask for clarifications; perhaps more invoices or more descriptive documents. Finally, there are negotiations, which also involve management and our involvement as a coach. Once all this is done and the contract is awarded, the vendor would go into the contract maintenance phase.

Maintenance: Now, when a GSA Contract is awarded, you will work with two GSA contracting officers. A GSA Administrative Contract Officer (ACO) will be assigned. The vendor POC will work with the GSA AOC for IFF payments, scheduled visits, audits, and contract modifications. The vendor will also work with the GSA Program Contracting Officer (PCO) for technical tasks, such as pricing and modifications. Important tasks for the vendor are:

• Filing Forms Quarterly - Reporting sales and paying the IFF. Even if sales are zero, the forms must be filed. The information is filed electronically, which saves paperwork!.

• Tracking GSA transactions - ensuring that the accounting system accurately tracks GSA sales.

• Calculating the IFF and remitting it to GSA Quarterly. The IFF is .0075 (.75%) of the GSA sales.

• As needed, responding to GSA requests for updates and information.

• Being available for an "introductory visit" and subsequent visits (usually bi-yearly) by GSA personnel.

• Responding to "Mass Modifications" where GSA changes a contract and vendors must respond and accept the changes.

• Initiating Contract Modifications - raising prices, adding/deleting items, etc. However, this is non-trivial and a service we provide at an extra charge.

• Maintaining the the vendor government information on the "System for Award Management" (SAM) website. This was formerly Central Contractor Registry (CCR) and On-Line Representations and Certifications (ORCA). Note that part of my service initially is to set all this up for you so you have a turnkey system. But on-going maintenance is up to the vendor.

• Last but not least is Marketing. the vendor must make a time and money effort to market its services to the government. Without on-going marketing, sales will be minimal.

Although this list seems extensive, many items are done rarely or very intermittently. Once the tracking system is established, it is easy to prepare the report. The administrative day to day effort is mostly in keeping track of GSA activities and ensuring the proper forms are filed quarterly. Marketing is usually handled by a marketing person or team. The good news is that the IFF reporting is now done electronically, where you would fill in the quarterly sales and IFF payment on line.

Based on these tasks, we estimate the on-going administrative burden to be around 4-8 hours per week or less, again, depending on the amount of GSA activity. At times the work load will increase, for example when GSA makes a visit (one initial visit, and then more visits if the sales are low), or an audit (usually about every two years). Of course, more activity means more work, but also more sales revenue. GSA wants to know that you have a system in place for tracking sales and IFF payments.

Administrative tasks are usually assigned to an hourly individual who has skills in record keeping and dealing with clients. It could be a member of the accounts staff, for example, or a skilled secretary. At 10% (4 hours per week) the yearly labor load will be about 200 hours, depending on level of activity.

This has been a short overview of the administrative burden a company faces when working with GSA. To me, the Return on Investment (ROI) is simply valued on the revenue received. The revenue received is a function of marketing and sales. The question is: Is it worth it for you?

My answer is that administrative costs are small compared to the revenue that can be generated by GSA, and can be calculated into the prices offered to maximize profitability. All prices offered to GSA are fully bundled, which includes Costs of Doing Business, Administrative, Management, Overhead, Profit, and so on.

I hope that this has been helpful, and our only caveat is that the statements here are based on our experience working with GSA but could vary depending on the organizational structure and level of GSA Activity. If you make sales, the administrative effort is worth it! Best wishes and good luck!

Tuesday, June 5, 2012

GSA Modifications and Why They are Good for You

Welcome to all... To the Premier Blog for the most boring of subjects: Federal Government Contracting. The good news is that you will find nuggets of information that you can trade in for payments from the government. Hey, send me a question or two and I'll have more fun blogging! GB. Summer, 2012.

Are you ignoring an opportunity to make more money with GSA? Once you get on contract, you can update your prices yearly with a contract modification (mod). And if you don’t update prices regularly then you are losing money, simply due to inflation. For example, the Department of Labor (DoL) publishes a yearly cost of living index used to help calculate salaries and wages. If you don't adjust prices, you are falling behind. And if you sell products, chances are that your suppliers have increased their prices.

In fact, you can update prices up to three times per year under special circumstances, such as rising prices of fuel or raw materials. Always check with your contracting officer first to see if a contract modification is right for you at this time.

There are plenty of other reasons besides pricing why you might want to mod your contract, such as personnel changes, moving your business to a new location, adding products, deleting products, and so on. You can even lower your prices to be more competitive (it happens).

The following list comes right from GSA eMod, the electronic portal for contract modifications. Note that you will need a “digital certificate” to access eMod; one of our earlier Blogs talks about digital certificates. Fortunately, we can use the GM Beckert digital certificate while you obtain yours, so there is no delay in processing the modification.

We can’t cover every one of the contract mod types here, but this list will give you a good idea of things you can do. Since there are different mod types, the information required for each one is different. You will need supporting information and maybe a revised “Commercial Sales Practices” (CSP) form. The mods need not take too long, if your modification package is complete. We use the Rapid Access Modification (RAM) for most changes, so let me know if you need to make more money from GSA.

Additions

• Add Labor Category
• Add Product(s)
• Add SIN
• Add Service Offerings

Administrative

• Contract Administrator/Point of Contact (POC)
• Authorized Negotiator
• Email Address Change
• Fax Change
• Point of Contacts for Manufacturers, Dealers, Resellers, Agents
• Telephone Change
• Website Address Change

Cancellation Or Deletions

• Cancel Contract
• Deletions
• Delete Labor Category
• Delete Product(s)
• Delete Service Offerings
• Delete SIN

Legal

• Change of Name Agreement
• Novation Agreement

Pricing

• Temporary Price Reduction
• Economic Price Adjustments (EPA) with Commercial Price List (increase)
• Economic Price Adjustments (EPA) without Commercial Price List (increase)
• Permanent Price Reduction (Based on Most Favored Customer)
• Permanent Price Reduction (Industry Partner requested)
• Wage Determinations

Technical

• Change in geographic coverage (scope)
• Part(s) Number Change
• Product Descriptive Change
• Service Descriptive Change

Terms And Conditions

• American Recovery and Reinvestment Act (ARRA)
• Create/Manage Clause Exception(s)
• Disaster Recovery
• E-Verify
• Re-representation of Non-Novated Merger/Acquisition
• Re-representation of Business Size
• Revise Terms and Conditions

Of course, you can do a modification yourself, and the GSA web site at www.eoffer.gsa.gov gives an overview of the process, especially on the digital certificate. Just remember each schedule has its own unique requirements, and each mod type needs specific information.

If this seems like a lot to do, and a little difficult to navigate the process; contact GM Beckert at (321) 795-3849 or email gmbeckert@gmail.com for more information. We handle all mods for one low fixed price, so there are no surprises. Even if you just have a quick question, give us a call for no-charge advice. Take care, and stay tuned for more fascinating information on government contracting and the magic of GSA!

Thursday, May 31, 2012

SAM is Coming! Get Ready

Due to be released in the next few months, the System for Award Management (SAM) combines eight federal procurement systems and the Catalog of Federal Domestic Assistance into one system.

Of particular interest to vendors is the change to CCR (Central Contractor Registry) and ORCA (On-Line Representations and Certifications (ORCA).

Fortunately, If you are registered in CCR, your company’s basic information will be automatically imported into SAM. Be sure that your CCR profile is completely up to date! Then you just need to set up your SAM account a little bit further as described at the SAM web site.

Those not in CCR will need to register with SAM. Even if you are in CCR, you will need to learn how to love and use SAM!

As you can see, SAM will require even more information than CCR and ORCA. However, it will help expedite the registration process and help prevent fraud.

Note: SAM is not entirely implemented at this time although web site has information you can use now. The following instructions will apply after the site is complete. Save this newsletter for future reference.

1. Go to www.sam.gov

2. Create a Personal Account and Login

3. Click “Register New Entity” under “Manage Entity” on your “My SAM” page

4. Select your type of Entity

5. Select “Yes” to “Do you wish to bid on contracts?”

6. Complete “Core Data”

Validate your DUNS information
Enter Business Information (TIN, etc.)
Enter CAGE code if you have one. If not, one will be assigned to you after your registration is completed. Foreign registrants must
enter NCAGE code.
Enter General Information (business types, organization structure, etc)
Financial Information (Electronic Funds Transfer (EFT Information)
Executive Compensation
Proceedings Details

7. Complete “Assertions”

Goods and Services (NAICS, PSC, etc.)
Size Metrics
EDI Information
Disaster Relief Information

8. Complete “Representations and Certifications”

FAR Responses
Architect-Engineer Responses
DFARS Responses

9. Complete “Points of Contact”

Your entity registration will become active after 3-5 days when the IRS validates your TIN information. Remember that this system is being implemented as we speak.

Expect changes and delays... but SAM is coming, and by getting ready now, you will save yourself a lot of frustration. Stay tuned for our next fantastic blog! Now get back to work! ;-)

Tuesday, March 27, 2012

What you Must Know about Service Disabled Veteran Certification

Tuesday, March 6, 2012

Federal Contract Types: What You Need to Know

This little article can really help your business grow, because it is important to understand the different types of contracts the government uses. Each contract type has its own uses, and entering in to the right type of contract is essential to making a profit.

There is where I give a little self-serving advice: At this level of competition, it is always good to have professional help “as much as you are able to afford”. For example, if you enter a “Cost Plus Incentive” contract, you will need to accurately track allowable and unallowable costs. A good CPA will do this for you and end up saving you money. The same thing applies to legal issues, intellectual property rights, Trade Agreement compliance, proposal writing, GSA contracting, and so on. This is a primary reason why the Government Contracting Advisory Team was created. Check it out at: http://www.mygcat.com .

Now, let’s get back to subject of contract types. Here is a real-life example of why you need to pay attention – big time. Years ago I worked as a training manager for a Fortune 500 company. The project was huge, and the relatively tiny training budget was more than $8M with a period of performance at about six years. Needless to say, a huge amount of work went into preparing the proposal and writing the bid. In the solicitation, the government asked for a “Firm Fixed Price” (FFP) bid, which I thought was ridiculous. Fixed Price means the vendor states a given price and takes all the risk… if the bid is not accurate, tough cookies. When the contract is large with many unknown variables, FFP is dangerous country indeed.

However, following our orders we spent many evening and weekend hours estimating everything – even down to the number of sheets of paper we would need over the six-year period! If you know anything about training you know there are many variables, such as number of students, how many courses, what kind of training is held, student media, and so on. And the product had not even been designed or built yet.

We won the contract! Then hard reality struck. All of the estimations had been pure guesses, based on assumptions that were not really verifiable in the first place. When we met with the government to kick off the training program, it was clear to everyone that what was needed was a “Cost Plus Contract” where the vendor gets paid project costs, plus an agreed upon fee (profit). We could have saved thousands of hours writing the proposal if the government had specified the proper contract type to begin with. The actual cost of the completed training program was north of $11M.

Following is Gary’s simple summary of the contract types, based upon my experience and reading the applicable Federal Acquisition Regulations (FAR). If you need more detail and the exact definitions, refer the FAR (Subpart 16 - Definitions). For your enjoyment, I have a linked PDF file available along with this article. If you don’t see the download here, just send me an email. The best place to see and download the FAR is http://farsite.hill.af.mil/.

Caveat: Obviously, the FAR can be changed at any time. My notes are accurate as of this writing, but always be sure to refer to the current FAR to help make and confirm your decisions. Here is a short synopsis of each contract type:

· (FAR 16.2) Fixed Price: No ambiguity; but the risk is all yours. Typically used for products, this where understanding your cost structure becomes so much more important. If you don’t understand your costs, your offer is probably going to be either too high or too low. If it’s high you won’t be competitive; if it’s low, you may lose money. What are all the costs incurred in getting your product to the customer; labor, shipping, insurance, credit card fees, rent, power, and so on. To further understand your prices, remember most products are somewhere on a GSA schedule. Go to www.gsaadvantage.gov and search on product keywords. Study the pricing to make sure you can be competitive. You may have to cut costs, and your cost structure will help you see where you can trim. Subtypes include:

o 16.203 Fixed-price contracts with economic price adjustment.

o 16.204 Fixed-price incentive contracts.

o 16.205 Fixed-price contracts with prospective price redetermination.

o 16.206 Fixed-ceiling-price contracts with retroactive price redetermination.

· (FAR 16.3) Cost Reimbursement: You get paid for your expenses; less risk for you but lower profits and more record keeping. You will need to provide all your costs to the government for approval before you get paid, so record keeping is critical. You also need cash for your employees’ pay. Your fee (profit) depends on your negotiations with the government. There may not be too much profit in it for you, but over the long haul, these are nice contracts to get. Subtypes include:

o 16.302 Cost contracts.

o 16.303 Cost-sharing contracts.

o 16.304 Cost-plus-incentive-fee contracts.

o 16.305 Cost-plus-award-fee contracts.

o 16.306 Cost-plus-fixed-fee contracts.

· (FAR 16.4) Incentive: You get a fixed price, plus an incentive (in dollars) for finishing early or on-time. This is just what it says, and is typically used for construction projects. It give the builder and their employees) an incentive to do the work as fast as possible. Subtypes include:

o 16.403-1 Fixed-price incentive (firm target) contracts.

o 16.403-2 Fixed-price incentive (successive targets) contracts.

o 16.404 Fixed-price contracts with award fees.

o 16.405 Cost-reimbursement incentive contracts.

o 16.405-1 Cost-plus-incentive-fee contracts.

o 16.405-2 Cost-plus-award-fee contracts.

· (FAR 16.5) Indefinite Delivery: This is the type GSA uses (see subtype 16.504). There is no promise to buy; they will buy if and when they need it (and have the budget). GSA uses the Indefinite Delivery, Indefinite Quantity (IDIQ) contract type. Note that just getting on schedule is the beginning. You have to actively market, and GSA is a very competitive environment. If you don’t make a marketing effort, you won’t get sales. Subtypes include:

o 16.502 Definite-quantity contracts.

o 16.503 Requirements contracts.

o 16.504 Indefinite-quantity contracts.

· (FAR 16.6) Time-and-Materials, Labor-Hour, and Letter Contracts: These are similar to Cost Reimbursement, but are based strictly on labor and materials used. The government pays for the labor and materials, but not indirect costs (running your company). You get a fixed profit based upon negotiations. Subtypes include:

o 16.601 Time-and-materials contracts.

o 16.602 Labor-hour contracts.

o 16.603 Letter contracts.

In summary, knowledge is power in government contracting decisions, and the better your decisions, the better the outcome. In order to make the best decisions you need to understand the basic structures of government contracting and how they are used. Take a little time to look at the FAR sections referenced here. I hope you see that understanding Contract Types (and knowing where to find related regulations) will help you prosper.

Good luck and stay tuned for more survival training! Next time: Managing Contract Requirements: A systematic method for not losing your shirt.

Friday, November 4, 2011

Major Myth of the Month: GSA Only Buys Products

GSA Myth: GSA Only Buys Products

Over the years, I have been lucky to have taught many GSA and government contracting courses for the Small Business Administration (SBDC) and many other organizations. I love training, and I believe in the "no question is too dumb" rule. But there is one question that always surprises me:

"Does GSA buy services? I thought they only bought products".

This may be the largest myth about GSA. In fact GSA has several Schedules that are strictly for services, and many other schedules combine products and services. For example, Schedule 70 (IT Services) has categories for both products and high-end engineering services.

But I can understand the confusion. Pricing for products can be pretty straightforward. Services however, must be carefully priced with an eye on the market, the competition, and your cost structure. You do know your cost structure, right? But that's another topic.

Let's take a quick tour of the most common GSA services schedules. I work with these schedules all the time, and while they are similar, each has its "peculiarities". Also, each schedule is administered by a different GSA group, and each contracting officer has their own hot buttons. For now, let's talk about GSA services in general.

You can offer stand alone services or hourly professional rates. For example, you can offer "system integration" as a stand-alone service at a fixed price. You could also offer professional labor by the hour, such as "program manager" or "engineer" at a fixed price per labor hour. Pricing can be challenging, but that is where a good consultant can save you a lot of time and grief.

Any GSA schedule can be downloaded from http://www.gsaelibrary.gsa.gov/ElibMain/ElibHome. Look under Quick Schedule and use the pull-down list. Select the schedule you want, and then click "Go". It will take you to FedBizOps where you will see a description of the schedule. You can then download the schedule.

Here are seven of my favorite schedules. They cover almost the full range of professional salary-based services. Note that hourly (non-salary) services are usually not offered unless they are in direct support of a product (installation, testing, etc.). When offering professional salaried labor hours, for each category you will need to include a description and duties, along with required years of experience and education. GSA typically defines a professional position as one that requires at least a BS college degree.

00CORP - The Consolidated Schedule. The Consolidated Schedule is a great contract that allows a company to offer a wide range of professional services found in other individual schedules. These include legal services, data collection, human resources, accounting, training, and so on. Instead of having several schedules, you can use the Consolidated Schedule to offer a range of services.

O3FAC - Facilities Maintenance and Management. This schedule covers a range of services required to maintain a large facility, including docks and warehouses. This is a good choice for companies offering environmental and conservation services.

871 - Professional Engineering Services (PES). This schedule includes a number of engineering disciplines, including strategic planning, program requirements analysis, system design and integration, and construction management.

874 - Mission oriented Business Integrated Services (MOBIS). Here is where you can find consulting, facilitation, survey, training, program management and many other high level professional services.

874V - Logistics Worldwide. This is a very common schedule for companies that provide transportation, importation, and material shipment tasks and services.

66 - Scientific Equipment and Services. This schedule allows for very technical and specialized services, such as electronics testing services, geophysical sciences, metrics, and so on.

70 - IT Services and Products. This comprehensive schedule allows you to offer products and/or services that relate to technology. You can offer just products, just services, or a combination.

So there you have it: GSA does buy services - and lots of them. In fact, if you are a products company, perhaps it is time to consider adding services to increase revenue. And if you are ready to play in the GSA market, remember that there are a lot of schedules to choose from. Which one is best for you? Call me and I'll help you decide. Take care, and good luck!