Georgia Tech Procurement Assistance Center

The 2 most important parts of a gov’t solicitation — and why you should pay attention to them

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When you receive a government bid or proposal solicitation, what’s the first section you read?

If you’re like most people, you immediately focus on the “Scope of Work.”  This is the section — referred to as the SOW — which describes the work that’s to be performed once the government awards an actual contract. 

“What’s wrong with concentrating on the SOW first?” you might ask.  “After all, it’s certainly necessary to have a thorough understanding of the government’s expectations.”

That’s logical, of course. 

But have you ever thought about the dynamics of concentrating too much on the SOW? 

Convincing Yourself You Can Do the Work — A Bad Approach

Most folks, as they read the SOW, not only gain an understanding of the government’s needs, but also begin to convince themselves that they can perform the work scope. 

There’s a big problem with that.  Convincing yourself that you can do the work is vastly different from meeting the government’s criteria for being selected to be awarded the contract.

That’s why the Georgia Tech Procurement Assistance Center (GTPAC) recommends that while you certainly should read the SOW, you initially should concentrate on the section of the solicitation that describes the proposal selection criteria. 

Most government solicitations — especially those that involve the provision of professional services — will spell-out the selection criteria.  Typically, this section of the solicitation will be labeled “Proposal Evaluation Criteria” or “Selection Criteria.”  Basically, what this section discloses are the criteria the government will use to “score” or evaluate the proposals that are submitted.  In essence, the government is telling you how they will grade your bid proposal.

Convincing the Government You Can Do the Work — The Right Approach

Believing you can perform a government contract is irrelevant to the selection process.  You may, in fact, be able to perform the work (and do it well), but you won’t be awarded to contract unless and until the government is convinced you can do the work better than anyone else, and at a fair and reasonable price.  How the government makes this determination is through application of the propopsal evaluation criteria.

Thus, what’s really important to being selected for a government contract award is scoring well against the government’s evaluation criteria.  When selection criteria are outlined in the government’s proposal solicitation document, they not only tell you what’s important to the government but also which criteria are more important than others.  In other words, selection criteria are often weighted.

For example, a solicitation might list three selection or evaluation criteria: past experience in performing similar work, adequate financial resources, and credentials of personnel assigned to perform the work.  In this hypothetical example, the three criteria may not be regarded as equal in importance to the government.  If that’s the case, the criteria also will indicate the order of importance or the “weight” each criteria is assigned.  For instance, past experience may be assigned 35% importance, financial resources may be given 20% importance, and project personnel might be assigned a weight of 45%.  This gives you clear guidance as to how the government will evaluate your proposal should you decide to submit one.  Moreover, the criteria and the weights assigned to them give you clear guidance on what you should emphasize and elaborate on in your proposal.

Make a “Go-No Go” Decision

In the example just given, if your firm has plenty of past relevant work experience but you are unable to commit experienced staff to the government’s project, you won’t be able to score well against a major selection factor.  If you are not able to assemble a qualified team — and commit to using them if awarded the contract — then you may want to take a pass on submitting a proposal.

On the other hand, if you can “nail” each of the selection criteria (i.e., your firm prosesses relevant past work history, you have strong financial backing, and can assign highly qualified personnel to the project), then you should, by all means, proceed with the preparation of a proposal.

Score Yourself!

Concentrating on the selection criteria early in the proposal preparation process will force you to be much more objective about evaluating your chance of winning an award.  Remember, winning is all about convincing the government you can do the work, and not about convincing yourself.

Counselors with the Georgia Tech Procurement Assistance Center (GTPAC) suggest that bidders and proponents score themselves, early on, against the selection criteria.  If you score high, proceed with the preparation of your proposal, emphasizing throughout your document how you match-up with the criteria.   If you initially don’t score well, you may wish to take a pass.  Or, if time permits, you may choose to team up with another firm who can boost your firm’s overall credentials in relationship to the selection criteria.

Whatever you do, don’t ignore the selection criteria or fail to address in your proposal how you stack-up against them.  As the government evaluates the proposals submitted, each one is scored against the criteria.  Proposals that don’t score well enough are eliminated from consideration.  So, the most qualified firm in the world won’t be awarded a contract unless its proposal scores high in relation to the proposal evaluation criteria.

Tip: Score your firm against the criteria initially — and be sure to score your proposal throughourt the proposal preparation process — to make sure you are “speaking to” the criteria.

What Else Is Important?

The title on this article says there are two important parts of a government solicitation.  We’ve just outlined the importance of a solicitation’s proposal evaluation criteria, so what is the other important section?

It’s called “Instructions to Bidders” (sometimes called “Proposal Preparation Instructions” or something similar).

The Instructions section of the solicitation is a test of your appreciation for attention-to-detail.  The government’s proposal preparation instructions must be followed to the letter, and you should provide no more and no less information in your proposal than that which is specified in the solicitation.

Bidders and proponents are often influenced by their own opinions about that the government “must really mean” or what they “actually need.”  Resist the temptation to think that way.  If you have a suggestion regarding the scope of work or some other aspect of the work to be performed, voice it early, before the actual solicitation document is issued.  If a “comment period” is provided for, submit your thoughts and suggestions within the specified time frame, and not later.

When the final solicitation document is issued or is “on the street,” it’s usually too late to offer your opinions.  At that point, you must focus on being responsive — exactly — to the Instructions to Bidders in order to be given serious consideration.

Bid proposals which do not conform to the Instructions typically are declared “non-responsive” by the government and are literally discarded.

The Instructions section of a solicitation often spells-out such things as the maximum number of pages a proposal can consist of, how the proposal is to be organized, how it is to be packaged and delivered, and even the font style of the text.

Don’t risk your otherwise-well-qualified proposal being rejected — make sure you follow all instructions to the letter and be sure to meet the delivery deadline, not a second late!

© 2010 Georgia Tech Procurement Assistance Center – All Rights Reserved.

Contractors Must Begin to Update Integrity Database

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Since 2007, government contractors have seen a series of new provisions added to the Federal Acquisition Regulation to promote business ethics and contractor compliance.

The National Defense Authorization Act of 2009 added yet another feature, which now requires the government to develop and maintain an information system containing specific information on the integrity and performance of federal contractors and grantees.

This database system will be known as the Federal Awardee Performance and Integrity Information System (FAPIIS). The proposed rule for FAPIIS (74 Fed. Reg. 45,579) discusses additional obligations for contractors and government contracting officers. Many contractors this year must prepare information for the database, and certify compliance with FAPIIS requirements for bids and proposals. Contracting officers will review FAPIIS when making the key “responsibility determination” for all contract awards, including delivery or task orders.  

The proposed rule provides that FAPIIS will cover essentially all significant government contracts, including those for commercial and commercially available off-the-shelf items.

The FAPIIS database will incorporate information from existing government sources, such as the Excluded Parties List System of suspended or debarred contractors. The Past Performance Information Retrieval System and Contractor Performance Assessment Reporting System, both contain past performance reports from federal agencies, and will provide information for the database. Contracting officers will be asked to report non-responsibility determinations and default terminations to FAPIIS. Suspension/debarment officials will be sending information on any administrative agreements with contractors that resolve compliance issues. Finally, the proposed rule requires larger contractors to report their own information to FAPIIS relating to criminal, civil and administrative proceedings.

To protect against misuse of the information, the rule proposes that only government personnel will view FAPIIS data. However, a contractor can see its own information. Data is accessible for a period of five years and thereafter will be archived for another year to allow an audit trail. Significantly, a contractor can post comments regarding its FAPIIS listings and these explanations will remain part of the database unless the contractor revises them. The intent also is to provide an automatic notification to a contractor when new information is posted to the contractor’s record.

A FAPIIS provision will appear in solicitations where the contract value is expected to exceed $500,000. The proposed rule also would require any contractor with federal contracts and grants totaling over $10 million to add information. This includes whether the contractor and its principals have within the past five years, been involved in criminal, civil or administrative proceedings in connection with the award or performance of a federal or state contract or grant, which resulted in a conviction, or payment of a fine or penalty of $5,000 or more, or reimbursement, restitution or damages in excess of $100,000.

Even absent a contractor payment, settlements with acknowledged fault would be reportable to FAPIIS. Knowing that a wide range of matters might end up in FAPIIS, contractors will need to take this into account when resolving any criminal, civil or administrative matters. Also, what constitutes an “administrative proceeding” subject to reporting may not always be clear, particularly where all federal and state proceedings potentially are covered.

Since FAPIIS will contain information covering a five-year period, some of that information may no longer be relevant. One example is a prior administrative action such as debarment or suspension that has expired or otherwise been resolved. One recommendation is that a statement be posted on the FAPIIS screen that might read: “Certain past performance in FAPIIS may no longer be relevant.” A contracting officer also should consider the magnitude and seriousness of any reported matters in FAPIIS, as well as the contractor’s corrective actions and comments. Moreover, contracting officers obtaining relevant adverse FAPIIS information are required to request additional information from a contractor demonstrating its responsibility, and document each contract file at to how the FAPIIS information was considered.

Although contracting officers must consider the FAPIIS information when making the responsibility determination for a contract award, the proposed rule is not clear on using FAPIIS for past performance as a competitive evaluation factor, or for periodic past performance evaluations as contract work is completed.

The proposed rule creates a new contract clause requiring larger contractors to update their FAPIIS information semi-annually throughout the life of contracts that are expected to exceed $500,000. As noted, contractors with over $10 million in contracts and grants must self-report, but the rule does not specify what information goes into the database for smaller businesses. The proposed rule does not prescribe penalties for contractors that fail to comply with FAPIIS reporting, although as a contract term and indicator of responsibility, it is difficult to ignore. But at a minimum those contractors with legal troubles that end up in FAPIIS will have a harder time winning contracts. Contractors can attempt to manage the FAPIIS database entries to provide context and a fair report. The proposed rule does not address a government contractor’s private sector work.

FAPIIS is requiring the government to collect information from multiple databases, as well as information that never before has been collected and centralized. There are many questions left unanswered with the proposed FAPIIS system, but because this is a statutory requirement, it will be implemented in one form or another.

by Dorn C. McGrath – National Defense magazine – May 2010 – Dorn C. McGrath is a shareholder in the Greenberg Traurig, LLP government contracts practice group.  The views expressed are solely those of the author.

Why Do Corporate Giants Land Federal Contracts Meant for Small Businesses?

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Few would disagree that federal contracts set aside for small businesses should go to small businesses — not corporate behemoths.

And yet it seems to happen again and again. Take one recent example: in late December, an IT company named QSS, a subsidiary of Dell Inc., landed a small-business contract for nearly $21 million from the U.S. Coast Guard.

What’s more, QSS — which in 2006 was purchased by Ross Perot’s “Perot Systems” before Perot was gobbled up by Dell last year — is listed in a federal database as a “self-certified small disadvantaged business.”

How can this be? After all, Dell employs some 76,000 people, and the government’s definition of a small business is one that, in this particular industry, employs no more than 1,000.

The answer depends on whom you ask. The most vocal small business activists insist that the government is acting negligently, even nefariously. Regulators in the federal Small Business Administration counter that the issue is mostly the byproduct of coding mistakes and mergers — human errors that the agency purports to be addressing aggressively under the Obama administration.

Whatever the case, the example with QSS — which Hispanic Business Magazine found through a simple search in the federal contracting database FedMine.Us — isn’t an isolated event. [GTPAC note: fedmine.us is a privately-operated, not government-operated web site.]

Other companies that have landed small-business contracts include General Dynamics — the fifth largest defense contractor in the world — Xerox, Office Depot, John Deere and McGraw Hill, according to a 2008 report from the Department of Interior’s Office of Inspector General. As for QSS, in 2008 it was the nation’s 28th largest recipient of small business federal contracts, according to FedMine.Us.

The 2008 report found that large corporations received $5.7 million in awards that should have gone to small businesses. But that was just within the Department of Interior. The total amount of small business contracts getting diverted to large corporations every year is difficult to ascertain, given the inherent murkiness of the issue. Some activists say it is well into the billions.

In October, the government organization in charge of watching over the SBA — that is, the SBA’s Office of Inspector General — said this issue is among the SBA’s most serious problems.

“Audits and other governmental studies have shown widespread misreporting by procuring agencies,” the report said. “Many contract awards recorded as going to small firms have actually been performed by larger companies.”

The issue is drawing more and more attention as politicians, economists and pundits talk about boosting small businesses in an effort to create jobs, reduce the unemployment rate and stimulate the lagging economy.

At least two bills are working their way through Congress to address this issue. One is co-authored by a duo of Senate moderates, Democrat Mary Landrieu of Louisiana and Republican Olympia Snowe of Maine; the other, by the lesser-known Congressman Henry Johnson, a Georgia Democrat.

By law, the federal government must strive to spend 23 percent of its entire purchasing budget for goods and services on small businesses. That’s a lot of money, seeing how the federal government spends more than half a trillion dollars every year. But by the government’s own admission, it hasn’t been meeting that mark.

It claims to come close. The federal government says it hit 21.5 percent in 2008. (The official report for 2009 hasn’t come out.)

But the American Small Business League, perhaps the nation’s most vocal critic on this issue, scoffs at this contention. Chris Gunn, ASBL’s communications director, insists the true amount is somewhere between 5 and 10 percent.

“The numbers speak to a very different reality,” he told Hispanic Business Magazine.

For starters, he said, the government exempts about a fifth of its purchasing budget from the goal, with the explanation that some contracts are too large for small businesses to handle. This alone, Mr. Gunn said, brings the true percentage down to 17.5 percent.

But Mr. Gunn says the bigger problem is that examples like the case of QSS are happening all the time. And those contracts, like QSS’s $20 million job with the U.S. Coast Guard for homeland security, count towards that 23 percent goal, he said.

In October, the ASBL ran a report, and found that eight of the top 10 small business contract awardees in 2008 were large businesses coded “small.” The ASBL further estimates that at least half of the $93 billion the government says is going to small businesses is actually being diverted to large businesses.

Officials with the federal Small Business Administration, which helps regulate federal contracting to small businesses, say the ASBL’s claims are exaggerated.

“We’re not going to stand for any large business that masquerades as a small business and tries to engage in any malfeasance,” Joe Jordan, the SBA’s associate administrator for government contracting, told Hispanic Business Magazine.

The problem, he said, has more to do with human error. For instance, he said, oftentimes a small business working on a small business contract gets consumed by a corporate giant, and the contracting officer forgets to go back into the database and re-code the business as “other than small.”

Also, after 2012, the problem should abate at least somewhat. That’s because, in July of 2007, a law passed forbidding large corporations from keeping the small business contracts of the small companies swallowed up in acquisitions. But the law grandfathered in, for five years, merger deals made prior to that date. This is what happened with QSS group, which, despite what the federal database says, no longer even exists as a company. (It is really just “Dell.”) That company’s five-year contract with the Coast Guard — which has been renewed every year — expires in late May, said Frank Islam, QSS’s founder and former owner, speaking to Hispanic Business Magazine.

Nonetheless, the phenomenon is a widely recognized problem, and reform efforts have thus far failed to catch hold. This owes in no small part to how the reform advocates themselves are divided. In short, the most vocal and visible activists — such as the ASBL — are out of synch with the most powerful and influential lawmakers putting forth their proposed solutions, such as Senators Landrieu and Snowe.

Ms. Landrieu and Ms. Snowe are the chair and ranking member of the Senate Committee on Small Business and Entrepreneurship.

When introducing their Small Business Contracting Improvements Act in February, Ms. Landrieu said it would create at least 163,000 jobs.

“In this past year, small businesses accounted for more than 85 percent of job losses,” she said on the floor. “When large businesses get new work they typically spread the work among existing employees. When small businesses get these contracts they must staff up to meet the increased demand.”

But where ASBL is often knocked for being too extreme, Sen. Landrieu’s effort is being criticized by some for being too mild.

Most notably, although the bill includes strong language about the illegality of large companies landing small-business contracts through misrepresentation, it exempts the Department of Defense, which by many accounts has the worst record on this matter.

“DOD is seriously challenged in its contracting to minority and small enterprises,” David Ferreira, vice president of government affairs for the U.S. Hispanic Chamber of Commerce, told HispanicBusiness Magazine. “They often rely on very large businesses and award them small-business contracts because of loopholes in the law.”

However, Mr. Ferreira said the U.S. Hispanic Chamber is pleased with some aspects of the bill, such as its focus on reducing a phenomenon known as contract bundling. This is when the federal government, for the sake of efficiency, will consolidate several contracts into one super-contract. This often precludes small businesses from competing because they lack the resources for such large jobs.

One particularly unsavory practice related to this is known as “bait and switch” sub-contracting. The term refers to when large corporations, under mandate from the feds, promise to hire, on bundled contracts, sub-contractors that are small businesses or minority-owned, and then renege after winning the job.

It’s a tactic with which Bill Miera, owner of a Hispanic-owned engineering and IT firm in New Mexico with 50 employees, is all too familiar.

For years, Mr. Miera’s Fiore Industries had been winning bids and working on two separate contracts with the U.S. Air Force, worth between $5 million and $10 million a year each.

About 10 years ago, the Air Force bundled one of the contracts into a mega-contract worth around $50 million — far too big for Miera’s firm to handle.

A Fortune 500 company put in for the bid, and in its proposal told the federal government it would be hiring a minority-owned small business — Fiore Industries — as a sub-contractor. (Mr. Miera declined to name the company, citing a reluctance to burn bridges in what is a relatively small industry.)

When the large company got the job, it dropped Fiore Industries and went with another firm, which was Caucasian-owned.

Mr. Miera, a former board member on the U.S. Hispanic Chamber, was forced to lay off five employees. A few years later, it happened again, with another Fortune 500 company, which went even further.

“They started hiring our people to work for them,” he told Hispanic Business Magazine. “They said, ‘If you want to keep your job, you’ve got to work for us.'”

As a result of these two bait-and-switch examples, Fiore Industries’s annual revenues dropped to about $5 million from $8.4 million. It lost about 10 of 50 employees.

Thanks in part to a contract with NASA, Fiore’s revenues have since climbed back to $6.5 million. But the company’s original plan was to be earning $50 million annually by now.

“That hurts, especially when you’ve done good work, and then lose your contract, but not because you’ve done a bad job or your prices are too high,” he told Hispanic Business Magazine.

Mr. Miera said the problem is that the law, as written, has no teeth to punish those who engage in such tactics.

“The large businesses know that,” he said.

For the entirety of the Bush administration, the ASBL, headed up by its colorful leader, Lloyd Chapman — a frequent pundit on cable news networks such as Fox, MSNBC and CNN — carped on the federal government on these issues. It also filed — and won — several lawsuits.

Mr. Chapman claims the Obama administration has been no better.

“I say it’s getting worse, because Obama has refused to close the existing loopholes that all Fortune 500 firms use to get small business contracts,” he told Hispanic Business Magazine.

Mr. Chapman is advocating the federal contracting bill sponsored by Rep. Johnson of Georgia. Mr. Chapman says he helped write the bill, and typically refers to it as his own.

“My bill has 20 co-sponsors,” he told HispanicBusiness Magazine. (They are mostly House Democrats, but the list does include two Republicans: Ralph Hall of Texas and Ileana Ros-Lehtinen of Florida.) “It will solve a 10-year-old contracting scandal, won’t increase the deficit and it’s permanent.”

Mr. Chapman and the ASBL are also highly critical of almost every other advocate on this issue. Senator Landrieu’s bill, they say, while well intentioned, gives recalcitrant corporate giants “a pass.” The U.S. Hispanic Chamber of Commerce is “backed by Fortune 500 companies.” But Mr. Chapman is particularly critical of U.S. Rep. Nydia Velazquez, (D-NY) — chair of the House Small Business Committee, whom he believes has done nothing to address the issue.

“She has chaired the small business committee for three or four years,” he said. “How come she hasn’t proposed legislation to address it?”

He added that Boeing, the world’s largest global aircraft manufacturer, is a major campaign donor to Velazquez and other small business committee members.

“My bill will take $100 million a year in federal small business contracts away from Boeing,” he said.

(Ms. Velazquez’s office did not provide a comment for this story, despite repeated requests from Hispanic Business Magazine.)

For its part, the federal SBA insists that it is working aggressively to fix the problems. By March, of the eight top awardees of small-business contracts that ASBL had highlighted in October, most had been re-coded as “small.”

Also, President Obama has proposed doubling the budget of the SBA, bringing it back to about $1 billion — which is where it was at the start of the Bush administration.

But despite their contention that the problem is most attributable to human error, SBA officials don’t deny that fraud is a factor.

“The U.S. Small Business Administration is making a tremendous effort to combat abuses in the federal contracting program,” SBA spokeswoman Hayley Matz told Hispanic Business Magazine in an email. “SBA recognizes the significant benefits of the program, but also acknowledges that instances of errors and potential abuse have occurred and resulted in negative consequences.”

Source: HispanicBusiness.com. All Rights Reserved – April 8, 2010 – by Rob Kuznia, Staff Writer

How the Government is Failing Our Disabled Veterans

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Seven years of war in Iraq and nine years of conflict in Afghanistan have taken its toll on the men and women who have served there, with the number of disabled veterans jumping by 25 percent, or 2.9 million people nationwide, since 2001.

Of those, 181,000 are veterans of the two wars in in Iraq and the current conflict in Afghanistan, while nearly one million are veterans of the Vietnam War. Once they left the service, many of these disabled veterans wanted nothing more than to get on with their lives, and the government, in many ways, has stepped up to help them. But there are still roadblocks and bureaucratic shortcomings that haven’t given our vets the support they need to thrive post-service.

For instance, Congress enacted The Veterans Benefits Act of 2003 which established a program, administered primarily by the Small Business Administration, that awards set aside and sole-source government contracts to small businesses controlled by one or more service-disabled veterans.

For all of its noble efforts, the program, and many like it has fallen short of its promises, and in some case have become victim to scandal. Late last year, the Government Accountability Office released a scathing report that found the program vulnerable to widespread fraud and abuse.

Millions of dollars in taxpayer money that should have gone to honest disabled veteran-entrepreneurs were instead pocketed by imposters, who broke the rules and gamed the system to get contracts, according to House Small Business Committee Chairwoman Nydia M. Velazquez, D-NY.

“When you consider the sacrifices our service-disabled veteran entrepreneurs have made, the findings of this report are nothing short of appalling,” she said when the report was released last November.

The 10 firms indentified in the GAO investigation had received roughly $100 million in contracts earmarked for disabled veterans through fraud or abuse of the program (or sometimes both). In most cases, disabled veterans were used as fronts for large and even multi-national companies, yet in one instance, the firm’s owner was not even a service-disabled veteran.

Widespread fraud in the program was only half the problem. The GAO investigation also found that the SBA and other agencies involved in the procurement process had few or zero safeguards in place to prevent fraud and abuse. In one of the bitter legacies of the Bush administration, the SBA’s fraud prevention efforts had been decimated by budget and staffing cuts.

In a separate hearing last month before a subcommittee of the House Veterans Affairs Committee, Scott Denniston testified on behalf of the National Veteran-Owned Business Association (NaVOBA), which represents more than 2,000 small business owners across the country, who are veterans.

Denniston, who is NaVOBA’s director of programs, noted that the 2003 law set aside 3 percent of all federal contract awards for disabled-veteran small businesses, but the statute never provided guidance or mechanisms to achieve the goal. To address that shortcoming, the Veterans Administration, on its own, established the Center for Veteran’s Enterprise to bring together veteran-owned small businesses, federal agencies, and prime contracting communities.

But the VA has never embraced the program from an “institutional” standpoint and hasn’t provided the resources to expand the program despite demand for its services growing from the influx of Iraq and Afghanistan veterans, Denniston said.

In another festering problem, the VA was tasked with setting up a computer program to certify disabled-veteran-owned firms as well as veteran-owned firms. The process is supposed to curb the fraud and abuse uncovered by the GAO report.

But getting verified “is burdensome, overbearing and so untimely as to cause serious financial strain on [the firms it’s supposed to serve],” Denniston testified. “Some of our members share stories and frustrations of the process taking over six months to complete, with the veteran applicant never being told where his/her application is in the process,” he explained.

The drastic recession has made the program’s problems even more acute. In the most recent hearing before the House Small Business Committee this week, Justin Brown, a lobbyist for the Veterans of Foreign Wars (VFW) highlighted the seriousness of the problems veterans face in the current economy.

As of February 2010, more than 1.1 million veterans are unemployed. The jobless rate among the youngest veterans is a staggering 21 percent, he said. More veterans are unemployed than are currently serving in both Iraq and Afghanistan.

For returning veterans, the prospect of starting a business is appealing. An SBA survey found that 22 percent of veterans were either purchasing or starting a business, or considering doing so. “However, for a veteran interested in entrepreneurship, the reality is quality resources are scarce, disjointed, and available to few,” Brown said.

Like any budding entrepreneur, access to capital is the biggest problem. The SBA has two loan programs targeted at veterans: the Patriot Loan Express and the microloan program.

The Patriot program makes up to $500,000 available for most uses, features low interest rates and qualifies for up to an 85 percent guarantee from the SBA. So you would think veterans would be flocking to the program. But since its inception, only 155 loans have been made nationwide, he said. One would speculate the lack of participation is most likely due to layers of red tape and low demand.

Microloans up to $35,000 are available to any small business that qualifies according to size guidelines, but since last October, only 53, or 5.32 percent, of the 997 loans have been made to veterans. Even more alarming is the fact that only three loans have gone to disabled veterans, according to Brown.

What’s more, although the 2003 law required the government to award 3 percent of all contracts to firms owned by disabled veterans, it has yet to meet that goal. Ironically, the Defense Department is one of the biggest laggards, Brown noted.

To their credit, lawmakers have attempted to address these problems. Two years ago it passed a law ordering the SBA to create an interagency taskforce to coordinate veteran small business programs. But the agency has yet to follow through.

In some case, however, Congress itself is the problem. The House recently passed the Job Creation through Entrepreneurship Act of 2009. Among its provisions, it would increase the number of veterans’ business centers around the country. But the bill has been stalled in the Senate by political infighting that is clogging the legislative agenda.

For veterans to succeed not only with federal contracts, but as small business owners, they need: training, capital, compliance, and interagency cooperation, Brown said. But today, despite their sacrifices, their options are limited. Federal agencies continue to ignore their public mandates and programs are still starved for funds. Surely, those who have given so much to their country deserve better.

by Keith Girard – April 8, 2010 – Copyright © 1999-2010 – AllBusiness.com, Inc. All rights reserved.

4 Tips for Bidding on Your First Government Contract

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Consumer demand may remain sluggish, but the federal government is still pouring stimulus dollars into the economy, to the tune of more than $500 billion annually. And though most government contracts go to big corporations—the GEs and Boeings of the world—23 percent of all government spending (some $115 billion) is set aside specifically for small businesses.

The process of winning a federal contract can be painstaking, long, overwhelming, and certainly competitive, but the potential payoff can be huge. If you are interested in government work, how can you get started?

American Express OPEN’s Victory in Procurement program for small business recently conducted a survey of 1,500 entrepreneurs who were government contractors or actively pursuing a contract. A panel of three small business owners and two government officers gathered as part of an all day event organized by OPEN at the Grand Hyatt Hotel in New York on March 31 to discuss the survey’s findings with more than 400 small business owners and to offer their tips to make government contracting easier for your business. Here’s what they had to say:

Start small. This was the No. 1 tip from successful small business contractors. Government agencies view past performance as a key indicator of potential success, and to get your foot in the door, you should bid on projects worth as little as $3,000. A good strategy is to start by subcontracting. More than half of all the surveyed federal contractors said they got their start by pursuing these opportunities. “Find out who the larger prime contractors are, and offer to provide your services to them,” says Julie Weeks, president and CEO of Womenable, a business consulting firm based in Empire, Michigan, that focuses on enabling women’s entrepreneurship.

Do your research. “Many small business owners think that the government’s not going to buy what they have,” says Susan Sobbott, president of American Express OPEN. “[But] they buy almost everything.” Much of your research can be done online. The first place to start is registering yourself on the Central Contractor Registration (CCR) database, where you can create a profile making it easier for government procurement officers to find your product. Then, get on the pre-approved bidder list on the General Services Administration (GSA) schedule, where you can also look up what your competitors are doing. For a complete list of all Federal Business Opportunities, visit fbo.gov. Knowing your specific target market will help, says Randall Lebolo, president of Lebolo Construction Management, a construction company in Boynton Beach, Florida, whose business is now 90 percent government contracts.

Stay persistent. In the survey, contractors reported that it took almost two years on average to win their first federal contract. “Preparing for a government contract is like training for a marathon,” Sobbott says. The most successful contractors unsurprisingly invested the most time and money in the bidding process—an average of $86,000 in cash and resources during 2009, according to the survey.

Cultivate relationships. “You think of the federal government as this cold entity, and that it’s all about putting together a big proposal, but it’s still all about relationships,” says Maureen Borzacchiello, president and CEO of Creative Display Solutions, a trade-display company in Garden City, New York, that has bid on five contracts. Relationships with government procurement officers are crucial. Agencies also have liaisons from the Office of Small and Disadvantaged Business Utilization (OSDBU) who will lobby on your behalf. Partnerships with other small contractors are also important; bidding for contracts as part of a team is another good strategy for getting started.

by Peter Vanden Bos – INC Magazine – Mar 31, 2010

Federal Acquisition Regulation change issued on “retainage”

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The Federal Acquisition Regulation Council (FAR Council) has published a final rule revising a clause applied to federal contracts for architecture and engineering (A&E) services that mandated that 10 percent of fees be withheld or retained from a firm, regardless of the quality of the firm’s performance.

In publishing the final rule, the regulations body said, “FAR Case 2008-015 amends the clause at FAR 52.232-10 “Payments Under Fixed-Price Architect-Engineer Contracts”, to revise and clarify the retainage requirements. The contracting officer can (but is not mandated to) withhold up to 10 percent of the payment due in any billing period when the contracting officer determines that such a withholding is necessary to protect the Government’s interest and ensure satisfactory completion of the contract. However, withholding the entire 10 percent is not required, and no withholding is required if the contractor’s performance has been satisfactory. The changes clarify that retainage is optional and any amounts retained should not be held over beyond the satisfactory completion of the instant contract.”

“This rule was an unbearable burden for the A&E community,” according to Patrick Olson, P.E., L.S., (AERO-METRIC, Inc., Sheboygan, WI), president of The Council on Federal Procurement of Architectural and Engineering Services (COFPAES).  “The 10 percent retainage meant A&E firms were bankers to the government, providing interest free loans that often exceed a firm’s profit margin on a contract.  We had reports from member firms of millions of dollars in retainage, held for several years, on contracts where the firm receive the highest possible performance ratings.  We are delighted this regulation has been changed.”

COFPAES Administrator John Palatiello noted, “Given that architect-engineer contracts, including surveying and mapping contracts, are awarded on a qualifications based selection process, and a firm’s experience and past performance are paramount factors in winning a contract, the retainage provision has little value to the government.  Moreover, it was a severe cash flow burden on our member firms, particularly small businesses.”

The retainage rule was identified by the Small Business Administration’s Office of Chief Counsel for Advocacy as one of the most burdensome for small business in the office’s 2008 Regulatory Review and Reform (R3) initiative (http://www.sba.gov/advo/r3/r3_services08.html).  The revision to the FAR on A&E retainage is the first regulation to have gone through the entire R3 process, from nomination, through Advocacy endorsement, and to final regulatory revision.

To view the final rule, go to: http://edocket.access.gpo.gov/2010/2010-5991.htm

Federal Contractors Must Use E-Verify

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Federal contractors and subcontractors are required to use the E-Verify system to verify their employees’ eligibility to work in the United States. This requirement applies to all contracts awarded after September 8, 2009 which include the Federal Acquisition Regulation’s E-Verify Clause.  The ruling does not apply to contracts awarded before this effective date.

It’s especially important to note that there is no charge for employers to participate in E-Verify, and there is no need to pay to attend a briefing or seminar to learn about E-Verify.   While it is very important that businesses educate themselves about regulatory obligations like E-Verify, this is something that is relatively easy to manage.

Here’s what you need to know.

Prime Contractors who have accepted federal contracts after September 8, 2009 that 1) include the FAR E-Verify clause, 2) extend over 120 days and 3) are valued at $100,000 or more, must:

  • Enroll in the E-Verify program within 30 days from the date of contract award,
  • Begin verifying all new hires within 90 days of enrolling in E-Verify, and
  • Initiate verification of all existing workers assigned to a new federal contract within 30 days after the initial 90-day enrollment time frame.

Subcontractors accepting subcontracts for services or for construction with a value greater than $3,000 must follow the same guidelines if the Prime includes the FAR E-Verify clause.

You can watch the E-Verify demonstration video by clicking right here.  You can enroll is the program here.

I-9 Self Audit

Even if you do not yet have a contract which includes the FAR E-Verify clause, you may wish to do a self-audit of your I-9 process.  The I-9 form is the Employment Eligibility Verification Form.  Here are three steps for conducting a self-audit:

1. Completion

  • Make sure all I-9 forms are filled out completely and correctly. Follow directions on the I-9 form exactly.
  • If changes are made to the I-9 document, change them on the original form and initial and date the changes. Don’t fill out a new form.
  • Re-verify expiring temporary employment authorizations and do not allow the employee to work if their documentation has expired.

2. Records Retention

  • Employers must keep each employee I-9 Form on file for at least three years, or for one year after employment ends, whichever is longer.
  • Keep and make copies of the original documents supplied by your employees — this is not required, but recommended. Keep only the minimum number of documents required.

3. Records Separation

  • Store the I-9 forms and document photocopies separate from your employee files. This will help you to respond promptly to any notices from the Social Security Administration or investigations by Immigration officials.

Auditors crack down on ‘independent contractors’

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If your business uses independent contractors, get ready for new scrutiny. Hoping to boost tax revenue, the IRS and many state governments are cracking down on how companies classify their workers.

When employers report wages for independent contractors on IRS form 1099, rather than a W-2, they aren’t required to pay unemployment insurance, worker’s compensation insurance or payroll taxes for them. But the rules governing which workers are genuinely “independent” are strict — and often flouted.

The Internal Revenue Service launched a program last month that will randomly examine 6,000 companies over the next three years for employee misclassifications. The federal government estimates it will raise $7 billion over the next 10 through tighter enforcement.

The IRS audit program is just the beginning of what will be “a new era of compliance,” says Gene Zaino, president and CEO of MBO Partners,  a services firm that specializes in the independent contractor market. “Most states are now sharing data with the IRS, and many have set up task forces specifically [to address] misclassification. It used to be that if a business ran into trouble with a state labor department or with the IRS, the issue was isolated. Now, any kind of audit or compliance finding can set off a domino effect where the other agencies will get in on the action. ”

Getting audited can be scary even for businesses that keep everything by-the-book. Chris Daly, co-owner of Kinespirit fitness studios in New York City, got an audit notice in January from the New York State Department of Taxation’s Unemployment Insurance Division, which wanted to probe Kinespirit’s use of contractors. Like more than 30 states, New York has run out of money in its unemployment compensation fund and is borrowing from the federal government to keep paying claims.

“We knew we were doing it right but that doesn’t mean we weren’t concerned,” Daly says. “We understand the situation states are in; unemployment insurance is a needed tool, and we understand the need to fund that tool. And there are companies out there that don’t want to fund their share.”

Kinespirit classifies its managerial and administrative staff as employees and its fitness trainers and instructors as contractors. The audit process was exhaustive, but the company emerged clean.

Following the rules: So what’s the correct definition of an independent contractor? It depends on who you ask.

Some business advisors say a true independent contractor is employed by a separate corporation or legal entity, either one they own or a third-party firm. That rules out freelancers who don’t formally set up a business structure to house their 1099 income.

But hewing to that definition didn’t work for Mega Builders, a Chicago-area construction company that got hit with a $328,500 state fine in December on the grounds that it had misclassified 18 of its employees as independent contractors. The company allegedly forced its workers to incorporate, even though they didn’t operate bona-fide businesses, says Jeffrey Risch, an attorney familiar with the case and a partner at the St. Charles, Ill., firm SmithAmundsen.

In his audit, Daly says the state examiners seemed most interested in whether his so-called independent contractors were able to control their own schedules and the manner in which they perform their work.

But for 352 Media Group,  a Gainesville, Fla.-based Web development firm that recently reorganized the way it handles independent contractors in order to ensure compliance, one of the important issues was where the work is completed and who owns the equipment used.

“We used to have contractors working in our office on regular schedules and using our equipment, which was cause for concern,” says Geoff Wilson, 352’s president and CEO. “Thankfully, when we hired a new HR director, she discovered this problem and worked with our contractors to either convert them to employees or make sure they were doing the proper things to maintain their contractor status.” That included using their own equipment, working out of their own home or office and taking on jobs for other clients.

While the IRS publishes guidelines for determining worker classification, the IRS factors are “similar, but not identical, to tests relied upon by other agencies, such as worker compensation and unemployment insurance agencies,” says Susan Bishop, attorney at Campbell, Calif.-based Pratt & Associates.  “Factors from all applicable agencies should be considered when making a decision.”

If you’re not sure whether your independent contractors are properly classified, review the appropriate guidelines from your state and the IRS, or — better still — consult a local tax attorney or accountant to help you sort it out. You can request a determination by the IRS by filing Form SS-8, Bishop notes. Third-party firms like MBO Partners also advise employers on contractor issues for negligible fees.

Like Mega Builders, firms that are audited and found to be incompliant can face steep fees. The best course of action is to examine your worker classifications now, before a government entity gets involved.

“Using contractors offers a lot of benefits, but you have to make sure you’re doing it right,” says 352 Media’s Wilson. “You don’t want the government to come calling and decide you owe a lot of back taxes for classifying contractors incorrectly. Be vigilant about reading the government’s contractor classification guidelines and make sure your contractors actually fall within them.” To top of page

– by Nancy Mann Jackson – CNNMoney.com – Mar. 29, 2010

How To Request One-On-One Assistance from GTPAC

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By now you know that the Georgia Tech Procurement Assistance Center (GTPAC) offers assistance to Georgia businesses seeking information about and help with government contracting issues.

The question you are probably asking yourself is how do I arrange for some one-on-one assistance?

GTPAC Counselors addressed over 8,000 counseling requests last year. Because of the high demand for our services, we take a systematic approach to providing help.

Here’s the best way to obtain our help:

  • If your need for government contracting assistance is general in nature (“How do I register?”  “Who buys what I sell?”), then you should first consider attending one of GTPAC’s classes.  Take a look at all the topics covered (click on the TRAINING tab at the top of this page) and pick the one most relevant to your needs.  By attending a class, you’ll benefit from several hours structured instruction, plus handouts and other class resources which will be made available to you.
  • Remember, in order to receive our counseling in any comprehensive way, you must become a registered client of GTPAC.  You can find details on how to become a client at ABOUT US .
  • If, after taking relevant classes, you feel you need individualized help, consider sending an email to one of our Procurement Counselors.  If you have a question about a particular government solicitation document, be sure to give us the solicitation number and identify the government agency.  Make sure the “Subject” line of your email is relevant to the topic you are addressing, as that will help us identify the category of help you need and prioritize our response.  Also, be sure to identify yourself and your business name.  All of these points constitute good email etiquette — something that’s very important when you begin to communicate with government contracting officials.  We promise you a prompt response to your email; if you don’t hear back from us wihin a day or two, inquire again — remember, email is not foolproof.
  • Going over your draft bid or proposal in response to a government solicitation is an ideal reason for meeting one-on-one with a GTPAC Counselor.  Call or email the Counselor nearest you to set up an appointment.  Here are some other tips to make the meeting productive:  1) Provide us with a copy of the government solicitation in advance of the meeting (email the document or provide us with the URL where it’s posted) and note your questions or the points you don’t understand; and 2)  Make your best effort and us your first draft of your response (digital documents via e-mail attachment).   If you follow these preparation steps, your Counselor will be prepared to meet with you and can give you the maximum amount of assistance. 

Remember, mastery of government contracting comes about as a result of lots of reading as well as trial and error.  The first bid proposal you prepare will be the hardest.  Each one you prepare after that will become a little bit easier.  Government language and requirements will become more and more familiar.  GTPAC will provide you with the instruction and tools along the way.  Take heart, be tenacious … and you will succeed.

© 2010 Georgia Tech Procurement Assistance Center – All Rights Reserved.

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