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Georgia Tech Procurement Assistance Center

House subpoenas four agencies for small-business noncompliance

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Four federal agencies were issued subpoenas by the House Small Business Committee on Oct. 20 for not complying with the Small Business Act’s procurement policies, according to a committee staffer.

The departments of Justice, Agriculture, Treasury and State were summoned to appear before the the Small Business subcommittee on contracting and workforce on Nov. 1 to testify why they are in noncompliance.

At issue is the “structure” of these agencies’ Small and Disadvantaged Business Utilization Offices (OSDBU) and “the fact that they are not reporting to the agency head or deputy head,” wrote Darrell Jordon, house committee spokesman, in an e-mail to Washington Technology.

OSDBUs were conceived in 1978 with the purpose of having federal agencies set aside contracts for small and disadvantaged businesses. The Small Business Act also has requirements that agencies report their procurement activities with small and disadvantaged businesses.

Justice, Agriculture, Treasury and State were warned of their missteps and given a chance to remedy the situation after a June Government Accountability Office small business contracting report found seven agencies not in compliance.

Following that report, letters to agencies were sent by subcommittee Chairman Mick Mulvaney (R-SC). As a result, the Interior Department and Social Security Administration are now in compliance, and a third, the Commerce Department, was pardoned due to an administrative issue.

In September, agencies were reminded of their noncompliance by memo and a hearing was held on Sept. 15 by the subcommittee to examine the GAO report and the economic impact of noncompliance.

As part of the subpoena procedure, the four agencies must produce a number of documents, including paperwork relating to their small business procurement programs, attainment of small business goals or challenges to decisions not to restrict competition to small business between Jan. 20, 2009, and Sept. 30, 2011.

About the Author: Alysha Sideman is an online content producer with 1105 Government Information Group.  Published by Washington Technology – Oct. 21, 2011 at http://washingtontechnology.com/articles/2011/10/21/small-biz-committee-subpoenas.aspx

SBA planning to add vets, women and HUBZone firms to mentor-protégé program

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The Small Business Administration will expand the reach of it mentor-protégé programs it was announced during testimony on Sept. 15 during the House Small Business Committee Subcommittee on Contracting and Workforce.

At a hearing titled “Helping Small Businesses Compete: Challenges Within Programs Designed to Assist Small Contractors,” Joseph Jordan, SBA’s associate administrator for government contracting and business development, testified that the Small Business Jobs Act of 2010 gave the SBA authority to implement additional mentor-protégé programs for HUBZone, women-owned, and service-disabled veteran-owned small businesses.

In the past the SBA’s program was only open to disadvantaged businesses that participated in the 8(a) business development program.

“We are in process of implementing these new programs,” Jordan said at the hearing. “We conducted robust public outreach via a 13-city Small Business Jobs Act Tour and have held several meetings with various agency and public stakeholders to collect input and feedback on the implementation of these programs.”

SBA is now drafting proposed regulations for public comment.

The mentor-protégé programs arranges relationships between experienced contractors and inexperienced small businesses to provide them business development assistance. The program provides incentives for mentor participation, such as credit toward subcontracting goals.

This hearing reviewed three recent Government Accountability Office reports including one that criticized the mentor-protégé programs for not tracking the results of the mentor-protégé relationships after they are formed.

About the Author: Alysha Sideman is an online content producer with 1105 Government Information Group.  Published by Washington Technology on Sept. 16, 2011 at http://washingtontechnology.com/articles/2011/09/16/sba-to-expand-mentor-protege-program.aspx?s=wtdaily_190911.

Government gets a B in 2010 small-business contracting

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•The Small Business Administration gave the government a B grade for its attempts to reach small-business contracting goals, including the annual 23 percent overall goal, an agency official said June 23.

The government awarded 22.7 percent of its contracting dollars to small companies in fiscal 2010, compared to 21.9 percent the previous year. It awarded $97.9 billion to small businesses in 2010, compared with $96.8 billion in 2009, a $1.1 billion increase.

The B grade means that the government met 90 percent to 99 percent of its goals for the year.

In 2010, the government improved in four of the five categories of small businesses compared to SBA’s previous score card. There were increases in contract dollars and performance against statutory goals, except in the Historically Underutilized Business Zone (HUBZone) category.

Small disadvantaged businesses received $34.4 billion, or 8 percent of contracting dollars. The government surpassed the 5 percent goal for the category, as it did in 2009.

Woman-owned small businesses received $17.5 billion, or 4 percent of contracting dollars, in 2010. It was less than a point short of the 5 percent annual goal. In 2009, such companies received 3.7 percent of contracting dollars.

Small businesses owned by service-disabled veterans received $10.8 billion, or 2.5 percent of contracting dollars. The government was 0.5 percent below the 3 percent goal for such companies, although the percentage increased from just under 2 percent in 2009.

The HUBZone small-business category was the only one to experience a decline in 2010. Such companies received $11.97 billion, or 2.77 percent of contracting dollars. The goal is 3 percent. In 2009, the government had awarded HUBZone businesses $12.41 billion, or 2.81 percent of contracting dollars.

Joe Jordan, associate administrator of government contracting and business development at SBA, said the parity issue played a part in the HUBZone decrease.

Last year, Congress settled a disagreement among the administration, lawmakers, the U.S. Court of Federal Claims and the Government Accountability Office about whether agencies are required to offer small-business set-aside contracts to HUBZone companies first. The debate was over the word “shall” in the law. In legislation passed toward the end of the year, Congress replaced the word with “may,” clearing up any confusion about the equality of small-business categories. Read more about the debate.

“I think the confusion around parity during 2010 had some contracting officers skittish around HUBZones and what they should and should not do,” Jordan said. “And that’s why it’s so great that parity is now the law of the land. There is no more confusion.”

About the Author: Matthew Weigelt is acquisition editor for Federal Computer Week – June 24, 2011 at http://washingtontechnology.com/articles/2011/06/24/sba-small-business-score-card-2010.aspx?s=wtdaily_270611

SBA considering mandating set-asides on multiple award contracts

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The federal government finally could reach its goal of awarding 23 percent of all contract dollars to small businesses by allowing, and possibly mandating, agencies to set aside orders against the General Services Administration’s Multiple Awards Schedule and other indefinite delivery-indefinite quantity contracts, according to a senior Small Business Administration official.

Currently, agencies are not required to, and they often are discouraged from setting aside small businesses task and delivery orders that are placed against multiple award contracts. But the Small Business Jobs Act, signed by President Obama in September 2010 instructs SBA and the Office of Federal Procurement Policy to develop guidance that would reverse that policy.

To further its policy deliberations, SBA met with hundreds of small business owners on Wednesday in Manhattan as part of its Small Business Jobs Act tour. The event, one of 13 scheduled in locations across the country in March and April, is designed to provide the public with information about the provisions in the legislation, including 19 focused on contracting.

Arguably the most important, and potentially difficult to implement, provision would dramatically alter how agencies use the GSA schedules and IDIQ contract vehicles, which now represent 28 percent of the federal procurement marketplace. In 1990, IDIQs represented just 14 percent of the total contracting dollars spent by agencies.

SBA and OFPP have held five outreach events in recent months seeking feedback from the public on the best way to implement this provision. The crux of the issue, according to Joe Jordan, associate administrator for government contracting and business development at SBA, is whether to mandate small business set-asides on multiple award and IDIQ contracts, or to allow agencies the discretion to use them.

“We need to get the ‘shall’ versus ‘may’ language right,” he said.

SBA’s decision could make the difference in whether the government finally meets its small business contracting goals. In fiscal 2009, small businesses won 21.9 percent of all small business contract dollars, amounting to $96.8 billion. To meet its 23 percent goal, agencies would have to spend roughly $5 billion more on small businesses, Jordan said.

Mandating small business set-asides could push agencies over that threshold. About $40 billion in contracts was awarded last year off GSA’s Multiple Awards Schedule, and another $150 billion was spent governmentwide through IDIQ contracts.

But the Obama administration also is weighing whether a mandate would discourage agencies from using these contracts, particularly the GSA Schedules. One possible solution, Jordan said, is developing a hybrid solution in which agencies could be required to set aside task-and-delivery orders if they do not meet their small business goals. The agencies that are meeting those goals then would be allowed, but not forced, to use the set-asides.

“The question is how to make this happen without taking away from the speed and efficiency” he said.

The jobs act also establishes a mentor-protégé program to assist small businesses owned by women, service-disabled veterans and those operating in Historically Underutilized Business Zones in competing for contract opportunities. The initiative would be modeled after the 8(a) mentor-protégé program and also take into account the staffing and resources SBA has devoted for these programs, Jordan said.

But these new joint ventures bring possible perils, including opening the door for mammoth contractors, such as Lockheed Martin Corp. and Boeing Co., to begin winning a high percentage of contracts that are intended for small businesses.

“How do we balance that?” Jordan asked. “These can’t be pass-throughs. We can’t let companies play that way.”

SBA expects to submit a proposed rule creating the mentor-protégé programs by the end of May.

Other job act contracting provisions include:

  • Requiring OFPP to establish a governmentwide policy for contract bundling — a process in which several small contracts are consolidated and awarded to one firm, often out of the reach of small businesses. (Before bundling a contract, procurement officials would be required to conduct market research and to have a senior acquisition official sign off on the decision. The rationale for bundling then would be publicly disclosed, either on a federal database, or on the agency’s website. )
  • Establishing a pilot program for collaboration and joint ventures involving small business contractors. (Under the five-year program, $5 million in federal grants will be awarded to nonprofit groups that would then collaborate with small business teams seeking to compete collaboratively for larger procurement contracts. Thus far, 80 to 90 grant proposals have been received, and SBA expects to choose from 10 to 20. Proposals must be received by April 11.)
  • Mandating small businesses to recertify their size status annually. The law also establishes a governmentwide policy for prosecuting companies that fraudulently disclose themselves to be a small business. (The policy would allow an agency to keep the product or services the fraudulent company provided and still sue the business for the entire sum the agency paid through the contract.)
  • Requiring SBA to re-examine its size standards in each of its business categories every five years.

 — by Robert Brodsky – GovExec.com –  March 30, 2011

SBA makes first major revision to 8(a) program in a decade

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The Small Business Administration has finalized the most comprehensive changes to its 8(a) small and disadvantaged business contacting program in more than a decade, with a sharp focus on reforming and improving the transparency of Alaska native corporations.

The long-awaited final rules, published Friday in the Federal Register, closely mirror — except for minor technical changes — the proposed rules offered by SBA in October 2009.

The lengthy final rule, which takes effect on March 14, attempts to tackle a host of 8(a) concerns, from the threshold to enter and remain in the program to tightening the rules for joint ventures and mentor-protégé relationships.

“SBA has learned through experience that certain of its rules governing the 8(a) [Business Development] program are too restrictive and serve to unduly preclude firms from being admitted to the program,” the rule states. “In other cases, SBA determined that a rule is too expansive or indefinite and sought to restrict or clarify those rules.”

The agency conducted public meetings in 10 cities and consulted with tribes in two others. SBA received more than 230 comment letters.

“Through public meetings held in cities throughout the country, SBA gained valuable input from members of the small business community on ways to strengthen the program to provide the best opportunities for eligible firms, while also stepping up efforts to combat waste, fraud and abuse,” said SBA Administrator Karen Mills.

Arguably the biggest change affects ANCs, controversial 8(a) subentities that can win sole-source contracts of any size. For the first time, firms owned by ANCs or by Indian tribes, Native Hawaiian organizations and community development corporations will be required to report the financial benefits flowing back to their communities. Several recent news reports and congressional investigations have questioned whether the profits from ANCs are reaching disadvantaged Native Alaskans.

Each firm now will be required to submit information relating to their funding of cultural programs, employment assistance, jobs, scholarships, internships and subsistence activities, SBA said. In a change from the proposed rule, only the parent company, rather than the individual businesses or subsidiaries, will be required to report. Also, the agency delayed implementation of this provision for six months to allow further meetings with the tribal and ANC community, said John Klein, SBA’s acting director of government contracting and assistant general counsel for procurement law.

Devon E. Hewitt, a partner in the Washington law firm of Piliero Mazza, said the change recognizes the intense scrutiny ANCs are facing from Congress and watchdogs. “The question is whether they have done enough,” Hewitt said.

But some lawmakers want to go further in reforming the ANC program. On Thursday, Rep. Bennie Thompson, D-Miss., ranking member of the House Homeland Security Committee, introduced a bill that would put ANCs on equal footing with all other small businesses operating in the 8(a) program. The bill is a companion to legislation previously introduced by Sen. Claire McCaskill, D-Mo.

“All too often, small businesses are crowded out of opportunities by Alaska native corporations that receive uncapped, no-bid contracts under a special provision of the 8(a) program,” Thompson said. “This bill will assure that ANCs cannot continue in a privileged status that both protects them from legitimate competition from other businesses and fails to return a fair share of profits to Native Alaskan shareholders.”

The SBA regulations make other attempts to regulate the behavior of ANCs. Firms graduating from the 8(a) program no longer will be allowed to hand off contracts to a new subsidiary owned by the same ANC. “There is a perception that these contracts are being passed from one firm to another,” Klein said.

Several ANCs that have proposed changes to the 8(a) program applauded the rules change. “The rule-making process has been long and difficult for the Alaska native community,” said Rex Rock Sr., president and chief executive officer of Arctic Slope Regional Corporation. “The SBA struck a meaningful balance by protecting government and taxpayer interests while continuing to provide economic opportunities for disadvantaged businesses.”

The final rule also makes several significant changes to the rules guiding joint ventures, which are created when a small business partners with a non-8(a) firm, typically a larger business. These joint ventures are considered small businesses eligible to receive high-value contracts without competition.

The rule attempts to assure that the nondisadvantaged firm does not unduly benefit from the program. The 8(a) partner of the joint venture must now perform at least 40 percent of the work, including those awarded through a mentor-protégé agreement. The previous statutory language required only that the small business perform a “significant portion” of the work, Hewitt said.

Joint ventures awarded to an 8(a) firm also will not be allowed to win more than three contracts during a two-year period, and these entities cannot subcontract work to a non-8(a) joint venture partner. Plus, mentors who do not provide assistance to their protégés could face consequences ranging from stop-work orders to debarment.

Other proposed changes would clarify the size, income and familial determinations needed to be eligible for the 8(a) program, including those:

  • Excluding the individual retirement accounts from the strict net worth calculations that are used to determine eligibility for the program;
  • Raising the adjusted gross income to enter into the program from $200,000 to $250,000 (the total value of the participant’s assets needed to enter the program was increased from $3 million to $4 million);
  • Increasing the adjusted gross income for continued eligibility for the program from $300,000 to $350,000 (the asset level was bumped from $4 million to $6 million);
  • Allowing immediate family members of a current or former program participant to own an 8(a) firm if they are qualified to run the business and are judged not to be a front for their family member’s company;
  • Requiring that a firm’s size status remain small for its primary industry code during its participation in the 8(a) program;
  • Limiting the type and amount of fees an agent or representative can charge for assisting an 8(a) firm (the rule prohibits unreasonable fees as well as arrangements in which the fees are a percentage of the contract award or revenue); and
  • Allowing owners of 8(a) firms called to active military status to elect to be temporarily suspended rather than lose any of their nine-year term in the program.

— by Robert Brodsky – GovExec.com – February 11, 2011

Free workshops and webinar explain SBA’s new woman-owned business contracting rules

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If your business is a Woman-Owned Small Business, you will be interested in this!

The Georgia Tech Procurement Assistance Center (GTPAC) proudly announces a series of in-depth briefings to help you determine whether your business qualifies to participate in the Small Business Administration’s new “Women-Owned Small Business Federal Contract Assistance Procedures,” as published on October 7, 2010.

The new SBA regulation takes effect on February 4, 2011, so now is the time to get ready!

Already, GTPAC has held five briefings in Atlanta, Athens, and Warner Robins in December 2010 and January 2011 on the new WOSB program, and all were held to near-capacity crowds.  Scores of business people also participated in GTPAC’s live webinar on this subject on January 14, 2011.  Check our schedule at the bottom of this article for our schedule of additional briefings and webinars.

Here are the topics covered in the GTPAC briefing: 

  • How federal contracting officers will set aside certain procurement requirements for competition solely among women-owned small businesses (WOSBs) and economically disadvantaged women-owned small businesses (EDWOSBs).
  • The differences between WOSBs and EDWOSBs.
  • The ownership, control, and financial net worth standards.
  • The 83 NAICS codes eligible under the WOSB Program.
  • The set-aside rules, and that fact that there are no sole-source awards.
  • The Third-Party Certifier and self-certification procedures.
  • SBA’s WOSB Program Repository where WOSB/EDWOSB documentation is to be uploaded.
  • The documentation and registration that WOSBs and EDWOSBs are expected to maintain.
  • The limitations on subcontracting.
  • The fact that there is no term limit on program participation.
  • Protests, SBA “eligibility examinations,” and penalties.
  • And much, much more.

Right now, this may be the only free opportunity there is — anywhere — to receive detailed, expert instruction on the federal government’s new WOSB contracting rules.

Don’t miss out!  To register, go to http://www.gtpac.org/ and click on the “Training” button.  Then, from the list of classes, click on “Briefing on SBA’s New Woman Owned Small Business (WOSB) Program” on the date of your choice. 

At present, several live webinars on the WOSB topic are scheduled to be held in the coming months.  The webinars will be held on Mar. 10, Apr. 12, and June 15, 2011.  Use the link in the preceding paragraph to register.

Alaska Native subsidiary got $250 million Army contract

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An Army contract worth as much as $250 million awarded to a subsidiary of Cape Fox Corp., an Alaska Native corporation in Southeast, is drawing attention two years later, according to The Washington Post. The newspaper, which has been reporting on special federal contracting privileges for Alaska Native corporations, says United Solutions and Services, known as US2 and co-owned by Cape Fox Corp., got the no-bid federal contract to help the Army in “a global campaign to prevent sexual assault and harassment, without seeking outside bids.” It was an odd contract to award US2, The Post reports: US2 “had just three employees and several small contracts for janitorial services and other work. It was based in a four-bedroom colonial, where the founder worked out of his living room.” With the Army contract, US2 needed help to complete the work:

With the Army’s knowledge, the firm subcontracted the majority of it to more established companies, a Washington Post investigation has found. Federal rules generally require prime contractors on set-aside deals to perform at least half of the work, something US2 did not do on more than $100 million worth of jobs, according to interviews with Army officials and an analysis of federal procurement data. In response to The Post’s findings, officials at the Department of the Interior, which managed the contract for the Army, said proper procedures were followed in the contract award. But they said in a statement that they have asked the department’s inspector general to investigate.

It’s not the first time Cape Fox has come under scrutiny this year. Alaska Dispatch reported in May that Cape Fox and two companies it owns — APM LLC and 1CI Inc. — were suing two of APM’s former CEOs and four of those men’s companies for $27 million in damages. Last fall, the Air Force expelled 20 contractors from its procurement list, citing an extensive scheme to exploit and deceive an award process designed to assist small and disadvantaged businesses — businesses which, if Native-owned, are given preferential treatment. Six of the companies named had direct ties to Cape Fox. The rest had ties to former APM chief executive Townsend Jackson, his brother Craig Jackson, and other family members.

Cape Fox and other Alaska Native corporations have been under fire for benefiting from a special federal contracting program. Many Native corporations have created subsidiaries that are involved in what are called 8(a) contracts with the federal government. For years, critics have claimed Native corporations have received unfair advantages compared to other small businesses and that the Small Business Administrations 8(a) program lacks oversight.

The program creates preferences for economically disadvantaged small businesses. Alaska Native companies enjoy the lion’s share — 74 percent — of federal 8(a) awards, according to a 2009 report by the U.S. Senate Subcommittee on Contracting Oversight. Native corporations can go after federal contracts without facing competition. They can also subcontract to larger companies that aren’t Native-owned but have the expertise to fulfill the contracts.

— Alaska Dispatch – Nov. 27, 2010

Congress restores small business contracting parity

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The small business contracting parity debate is finally over.

On Monday, President Obama signed legislation that re-establishes equality among each of the small business subcategories that competes for government contracts.

The 2010 Small Business Jobs Act, which also provides tax cuts for undersized firms and creates programs to support private sector lending, makes a technical revision to the 1953 Small Business Act by replacing the word “shall” in the Historically Underutilized Business Zone statute with the word “may.”

The old language in the Small Business Act stated that a procurement officer shall award contracts based on limited competition to HUBZone small businesses. But, the statutes creating the service-disabled veteran-owned small business program and the Small Business Administration’s 8(a) Business Development Program used the word “may” when referring to set-aside contracts.

The Government Accountability Office and the U.S. Court of Federal Claims determined the difference unambiguously established a preference for HUBZone firms.

The Small Business Administration lobbied lawmakers for months to support legislation that would place contractors in the 8(a) and service-disabled veteran-owned small business programs — and the pending women-owned small businesses program — on equal footing with HUBZone companies. HUBZone companies are located in economically depressed neighborhoods.

“This clarification will help federal agencies meet each of the government’s small business contracting goals,” said SBA spokeswoman Hayley Matz.

The agency now will work with the Federal Acquisition Regulatory Council to “put in place, as expeditiously as possible, provisions implementing parity among all of SBA’s contracting and business development programs,” Matz said.

But, some small businesses are worried the new legislation could spell the end of the HUBZone program. “This is going to seal the fate of the HUBZone program,” said Jim Slagle, executive vice president for sales and marketing at Mission Critical Solutions, a Tampa, Fla. HUBZone firm that first challenged the parity statute in court. “They are not going to prioritize HUBZone firms. I don’t know that we will survive this.”

The federal government has not met its goal of awarding 3 percent of all contract dollars to HUBZone small businesses, while it generally exceeds its 5 percent goal for small disadvantaged businesses — a category that includes the 8(a) program.

Sen. Olympia Snowe, R-Maine, and ranking member of the Small Business and Entrepreneurship Committee, sponsored the parity language in the Small Business Jobs Act. Snowe, however, did not vote for the overall legislation because of its cost and questions surrounding the structure of several lending programs.

The jobs act also:

  • Directs SBA to establish a mentor-protégé program to assist small businesses owned by women, service-disabled veterans and those operating in HUBZones. The initiative would be modeled after the 8(a) mentor-protégé program.
  • Requires OMB’s Office of Federal Procurement Policy to establish a governmentwide policy for contract bundling — a process in which several small contracts are consolidated and awarded to one firm, often out of the reach of small businesses. Prior to bundling a contract, procurement officials would be required to conduct market research and to have a senior acquisition official sign off on the decision. The rationale for bundling then would be publicly disclosed.
  • Instructs OFPP to develop guidance that would allow agencies to set aside orders placed against multiple-award contracts exclusively for small businesses. The policy would apply to indefinite delivery-indefinite quantity contracts and task and delivery-order awards.
  • Establishes a pilot program for collaboration and joint ventures involving small business contractors. Under the five-year program, $5 million in federal grants will be awarded to eligible small business teams seeking to compete for larger procurement contracts.
  • Mandates small businesses recertify their size status annually. The law also establishes a governmentwide policy for prosecuting companies that fraudulently disclose themselves to be a small business.

 

The parity controversy was sparked in May 2009 when Mission Critical Solutions, which had lost out on an Army IT contract to an 8(a) minority-owned small business, filed a protest with GAO. The company argued, and GAO agreed, that HUBZone firms were legally at the top of the small business pecking order and the government should have given Mission Critical Solutions the first crack at the contract.

The ruling sparked a fury of activity, with the Office of Management and Budget and Justice Department issuing rare contradictory memos instructing agencies to disregard GAO’s nonbinding decision because it could “significantly limit the discretion” of contracting officers.

In a separate case, the Court of Federal Claims, a body whose rulings are binding, later decided in favor of Mission Critical Solutions. Justice has appealed that decision, although it is unclear how the new legislation will affect that case.

GAO since has ruled in favor of two HUBZone firms that filed similar contract protests. And in August the Court of Federal Claims issued its second ruling on the matter, arguing the Air Force first should have considered DGR Associates Inc., a HUBZone firm, before awarding a contract at Eielson Air Force Base in Alaska to an 8(a) small business.

— By Robert Brodsky – GovExec.com – September 27, 2010

8(a) certification assistance available

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Government contracting opportunities can become more accessible through 8(a) certification. 

The “8(a) Business Development Program” is a program of the U.S. Small Business Administration (SBA) to ensure equal business access for socially and economically disadvantaged business people, including American citizens who are Black, Hispanic, Native American, Asian Pacific or Subcontinent Asian, and in some cases women.   

Companies which qualify for 8(a) status must go through a formal application and certification process administered by the SBA.  This process is detailed and multi-faceted.  Fortunately, the SBA and its Small Business Development Centers, offer training and assistance with the 8(a) process.

Prior to applying for 8(a) status, businesses are urged to take an on-line training and self-evaluation course, which is accessible via the following link: 8(a) Business Development Suitability Tool.

Following the on-line self-evaluation, company representratives should consider attening “8(a) BD Certification Step by Step,” a training class offered by Georgia State University’s Small Business Development Center.  The next time this class is offered is on Sept. 23, 2010 in Atlanta.  Pre-registration is required and may be accomplished at: http://web.sba.gov/calendar/public/index.cfm?rc=0405. 

To view the complete calendar of upcoming SBA events, visit http://www.sba.gov/localresources/district/ga/eventscalender/index.html.

SEWP IV’s customer service spurs rapid growth; sales to top $2 billion in fiscal 2010

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Joanne Woytek, program manager for the NASA Solutions for Enterprisewide Procurement (SEWP) IV governmentwide acquisition contract (GWAC), says that increasing its revenue is not her goal. “We’re not trying to grow or be the biggest contract vehicle, but to offer something that people find useful,” Woytek said.
    
But as Woytek and her staff are discovering, being useful – that is, providing top-of-the-line information technology service to agencies that use SEWP IV to buy IT products and software – leads inevitably to growth. SEWP IV has grown consistently since it began in May 2007, and the revenue generated through the program jumped from $1.358 billion in fiscal 2008 to $1.875 billion in 2009, an increase of nearly 40 percent. The program is on pace to exceed $2 billion in 2010, according to Woytek.

Joanne Woytek “The key to our success is that we are not a contract. Rather, we are a program that supports a contract. We try to make sure that every piece of the program – products, tools, outreach and service delivery – fits together.”

Joanne Woytek, SEWP IV program manager

“SEWP is absolutely a valuable asset to federal agencies,” said Kevin Plexico, senior vice president of research and analysis at Input. “Why would purchasing officials from across government – who have a choice where they go – go to this vehicle if they didn’t view it as a valuable vehicle?”

SEWP IV is an indefinite-delivery, indefinite-quantity GWAC consisting of 38 competed prime contract holders, including 21 small businesses. All federal agencies can purchase a wide variety of advanced IT products and product-related services, including hardware and software, maintenance, warranty, installation, and product training, at fixed prices through SEWP IV. Although the contract is not a services contract, agencies can purchase the services they need to install products and software, as long the services do not exceed 10 percent of the overall contract price. About 70 agencies and 10,000 people are using SEWP IV, according to Woytek.

SEWP IV also has a contract ceiling of $5.6 billion for each of the 38 contract holders, so there is no danger that the ceiling will be breached. The contract is expected to generate $10 billion to $14 billion in sales over seven years, according to SEWP IV officials.

SEWP IV Numbers

“The key to our success is that we are not a contract. Rather, we are a program that supports a contract,” Woytek said. “We try to make sure that every piece of the program – products, tools, outreach and service delivery – fits together.”

The SEWP Advantage
Several key factors explain SEWP’s popularity among agency procurement officials, according to government and industry officials.  A major attraction is SEWP IV’s low fee of 0.5 percent, which is calculated against the order price. In addition, all fees are capped at $10,000 per order. The self-funding program uses these fees to pay for the 38 program managers and staff and other overhead expenses necessary to run the SEWP IV program.

When SEWP I was launched 17 years ago, the program charged customers 2.6 percent to use the vehicle. But SEWP’s growth has enabled the program to reduce its fee steadily over the years while also expanding customer services. Because of the cap, the actual fee percentage charged to customers in 2009 was 0.42 percent, according to the SEWP IV website.

“NASA doesn’t give us any money and we don’t give any money back to NASA. So we’re not trying to make a profit,” Woytek says.

Another appeal is SEWP IV’s broad scope and ability to add new products quickly. Customers do not search for what they need from the SEWP catalog. They search for products and solutions from SEWP contract holders. If a contractor has what the customer wants, the products and solutions are then added to the catalog after SEWP officials review them to ensure they are within the contract’s scope and are being offered at a fair and reasonable price. Typically, it takes just a day to add a new product.

Small businesses thrive under SEWP IV

Many federal agencies use the Solutions for Enterprisewide Procurement (SEWP) IV governmentwide acquisition contract to help meet their small-business goals, say program officials, who point to two important statistics to make their case:

*35 percent of SEWP IV spending goes through SEWP’s small businesses.

*6 percent of SEWP IV spending goes through SEWP’s Service Disabled Veteran-Owned Small Businesses (SDVOSB).

“These statistics show that our small businesses are widely used by government,” said Marcus Fedeli, a support contractor who serves as SEWP IV business manager.

Joanne Woytek, SEWP IV program manager, also regards the spending on veterans’ businesses to be significant. “Most SDVOSBs provide [information technology] services, so we are quite pleased with how our SDVOSB resellers are doing,” she said.

Of the 38 SEWP IV contract holders 21 are small businesses: six 8(a) small, disadvantaged businesses and 10 veteran-owned small businesses, including seven owned by service-disabled veterans. SEWP IV has set-aside authority for small businesses and SDVOSBs.

But SEWP IV’s pool of small businesses also includes those owned by women or Alaska Natives and those that are situated in historically underutilized business zones. Agencies can hold competitions but then give preference to these other subcategories in addition to 8(a) companies.

Automated Processes, One-Day Service
The watchword at SEWP is “one business day.” Program officials strive to add products, process orders, respond to inquiries and complete other tasks within one business day. “That’s our metric for everything we do,” Woytek said.

And the program typically meets this goal, contract holders said. “If you we send in an e-mail inquiry, you can expect an answer within an hour or so,” said Andy Lausch, vice president of federal sales at CDW Government LLC, a SEWP IV contractor. “Challenges are resolved quickly.”

Officials are able to quickly review and approve orders because their processes are highly automated, said Steve Charles, co-founder of and executive vice president at immixGroup, another contract holder. Charles said SEWP IV officials have been able to automate processes such as “fair opportunity,” which requires that all contract holders be given a fair opportunity to respond to requests for quotes, because the procedures are crystal clear.  “You can’t automate ambiguity,” he said. As a result, “hiccups in the system get resolved within 24 hours.”

SEWP IV Sales

The fast turnaround got even faster in April, when SEWP IV added a chat feature that enables contractors and customers to communicate live with the SEWP program office via instant messaging. Three to four customers already use the chat tool each day. The program office is also using a commercial tool to track questions so that it builds a knowledge base to provide comprehensive answers to frequently asked questions.

Interestingly, Woytek implemented a chat function for SEWP nearly 10 years ago but withdrew it because chat tools at that time lacked the sophistication the program required. But she watched the developing technology and implemented the current tool after her own experience and some additional research showed that a chat tool could provide the level of service she demanded. Woytek said she is watching the new application closely. “It appears to be working even better than we hoped with regard to customer interaction and service,” she said.

SEWP IV’s automated services also include a Request for Quote tool that allows procurement officials to send their requirements online. SEWP officials review the returned quotes from contractors and, after approving them, send them to agency customers with documentation verifying that the order is within the contract’s scope and properly priced and that contractors received a fair opportunity to bid. The SEWP program recently added credit card ordering to the tool.

SEWP IV Snapshot

After orders have been placed, the automated tools assist with reporting, tracking and communication to ensure that customers obtain the products and solutions in a timely manner and that problems are resolved within one business day. Contractors’ performance is also monitored by an online Program Performance system with ratings in performance categories such as customer satisfaction and adherence to the contract. In addition, the SEWP IV program office publishes the average delivery time for each contract holder. All of this information is available on the SEWP IV website.

With contractor performance publicly displayed, companies are working to keep their ratings at “excellent” or “very good.” This is not surprising to Woytek. “One of the reasons we selected these companies for SEWP IV was because they rated highly on past performance. We expected them to be good,” she said. 

SEWP IV Recognized for Customer Focus

How committed are SEWP IV officials to processing purchase orders within one day? When federal agencies flood the SEWP IV office with end-of-the-fiscal-year purchases each September, SEWP officials extend their hours to meet their self-imposed 24-hour goal.

“On September 30, we’re here until midnight or until the last delivery order gets processed that day,” said Joanne Woytek, SEWP IV program manager, adding that her staff once processed 800 orders in one day. “Everyone in the office pitches in and helps out.”

This commitment to customers has not gone unnoticed. Washington Technology last year called the SEWP program “the gold standard for customer service,” and named SEWP IV as one of nine contracts that have changed how federal agencies buy technology. “The managers running the contract see both agencies and their contractors as customers,” Washington Technology said. “The focus on service has helped SEWP survive and thrive into its fourth generation.”

Similarly, in a survey of 160 federal IT and procurement professionals by MeriTalk, SEWP IV was named as the “Federal IT King of the Contracts.” SEWP IV was the top rated federal contracting vehicle with a 93 percent approval rating from survey participants. SEWP IV’s approval rating was 7 percentage points higher than the second-ranked contracting vehicle, the General Service Administration’s 8(a) Stars program.

Among their top recommendations, survey respondents said that contracting vehicles should provide more transparency into the past performance of their contract holders. SEWP IV does precisely that with its online performance rating system. 

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