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Before You Start… (and how to make the best use of your PTAC)

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Virginia PTAC (and our nationwide colleagues) are happy to welcome you to government contracting. We will do our best to help you succeed at selling to state, local, and federal agencies.

Some businesses, however, aren’t ready for government contracting, and your meeting with a PTAC counselor, or your attendance at a class can be frustrating, overwhelming, and (let’s be honest), disappointing.

So let’s get this secret out of the bag: PTAC is not intended to help you start a business. That’s outside our mission, that’s something our grant funder (Department of Defense) specifically frowns upon, and that’s the kind of assistance we recommend you seek from our resource partners, such as the Small Business Development Centers, Women’s Business Centers, Veterans Business Outreach Centers, and SCORE.

In fact, before you meet with a PTAC counselor or attend even our introductory “Basic Training” class, we recommend that your company obtains:

Legal Requirements (for any business)

  1. State entity registration if your business is anything other than a sole proprietorship (LLC, Corp, LLP….)
  2. Federal Tax ID Number (TIN / EIN) from the IRS
  3. Business license from your state / locality (in Virginia, it’s called a BPOL)
  4. Business Plan

PTAC Counselors won’t usually ask to look at your documentation, unless they’re helping you submit a certification that requires above-mentioned paperwork.  However, in order to start registering as a vendor to any government entity, businesses must meet certain basic requirements.  If you are sure that you are going to pursue government work, get these out of the way.  And as far as the Business Plan – again, while we don’t require written proof that you created one for your business, we do want to ascertain that you are serious, that you have considered the pros and cons and financials and business structure and have a plan.  We will absolutely help you refine it, give you a reality check, and assist with a proof of concept; but if you’re not serious about your business, there really isn’t much we can do to overcome that.

Government Contracting Specific Pre-Requisites

  1. Identify your NAICS and PSC Codes (Federal)
  2. Identify your NIGP Codes (State / local)
  3. Register in SAM = obtain a CAGE Code & UEI.

This is a bit more of a chicken-and-egg category.  Yes, we can help you figure out all of these codes and numbers and what you should select.  However, the best advice at the outset is that you try to identify the codes that apply to your business. See if you can register in SAM.  If you get those steps out of the way without a snag, then your meeting with your counselor can cover more in-depth, “next step” material.  And if you do have questions or run into technical difficulties, that’s absolutely an area where a counselor’s perspective will be invaluable.  (Hint: make sure the physical address for your Virginia SCC registration, Tax ID, and SAM is *identical* down to the letter and abbreviation).

You and your counselor should review your registrations during your session, and we will have some insight into additional / related / adjacent codes to consider.  You’ll hear tips and tricks in classes.  We’ll explain the purpose and utilization of all of these by your target customers. And we’ll give you next steps, like competitive and customer analysis, DSBS profile creation (and much more!) — built on the foundation of the basics you have completed.  There’s a lot more to government contracting, so the sooner we get these “pre-requisites” out of the way, the sooner we can do some real work.

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No, you can’t just “Apply” to the Mentor Protege Program

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The long-anticipated, much applauded, expanded SBA All Small Mentor Protege Program is here…not to be confused with the SBA 8(a) Mentor Protege Program … or the Department of Defense Mentor Protege Program*

So what?  What does it mean to your small business?   How do you take advantage of it?

The mechanics:  Mentor Protégé Program (MPP) is an agreement between typically a large business (mentor) and a smaller business (protégé) whereby the mentor provides:

  • Management and Technical Assistance
  • Financial Assistance
  • Contracting Assistance
  • Trade Education
  • Business Development Assistance
  • General and/or Administrative Assistance

(source: SBA)

to the protégé, essentially investing resources into the company’s growth and infrastructure.  It’s not a direct government-to-small-biz program: there’s no application that small businesses fill out to ‘get in’ – but there is a checklist.  It’s an agreement between two businesses that is regulated and approved by either the SBA (for civilian agencies) or the DOD.

A few reasons large businesses are incentivized to become mentors:

  1. Agencies will apply subcontracting “Credit” to mentors when under consideration for awards.  This can also help mitigate gaps in subcontracting requirements Mentors can get credit for their protege’s accomplishments because the implication is that the mentor’s help was instrumental in getting the company ready. For example, the protege’s wins as a prime at the same or different agency, the protege’s win as a subcontractor for other prime contracts at the same or different agencies – if the mentor protege agreement was instrumental in building capacity / ability of the protege company to win the additional work.
  2. Dept of Defense also administers reimbursement agreements (as well as credit agreements) but some DOD agencies will award dollars directly to the mentor to invest in the protégé.  The financial benefit is obvious to both – the mentor isn’t spending internal resources helping the protégé, but rather the DOD’s money.
  3. Ability to form Mentor Protege Joint Ventures that enable access to set-aside contracts without triggering affiliation rule. Win-win:
    1. Protege can pursue set-aside contracts that would’ve been otherwise out of reach of the protege due to capacity, past performance, clearances, or other requirements that they don’t have
    2. Mentor is able to participate in set-aside awards – and retain 60% of at least 50% of total contract amount.  Here’s the math: the “prime” contractor in a set-aside award has to do 50%+ of the work… the joint venture is the prime contractor.  The mentor company can do 60% of the work because it’s a mentor.
  4. Investment / Merger & Acquisition strategy (great explanation here with many more finance details, thanks Elvis Oxley!) – mentors can take up to a 40% stake in the protege company — and the ability to reap the benefits of that investment as they develop that protege’s capabilities.  In the event of a future M&A, that 40% stake of a much more substantial business makes for a decent profit margin.

There are risks and considerations, to be sure.  A meeting of the minds is essential – to ensure both parties set expectations and have a plan to meet them. Proteges are limited to 3 MPP agreements per program in their lifetime (that’s 3 SBA AllSmall and also 3 DOD); Mentors can only have 3 Mentor Protege Agreements per program concurrently. A MPP agreement is thus never formed by strangers – the companies have to have solid business reasons for entering into the arrangement; most often, there’s a prior relationship of subcontracting or other business relationships that forms the baseline of mutual interest and sets the ground for pursuing a more strategic joining of forces.

For small businesses seeking to become proteges, the essential question is: What do you bring to the table? What would be an incentive for another entity to invest their time, resources, and dollars into developing your company’s capabilities?  If you can answer those questions, you probably have a good idea of who to approach for mentorship.

 

*Changes coming to the DOD Mentor Protege Program – thank you Steven Koprince of SmallGovCon.com

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Do Your Homework!

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Tell me if you’ve heard this one before – from contracting officers, OSDBUs, SBLOs, your well-meaning networking acquaintances and teaming partners and Chamber of Commerce #govcon speakers…And you have no idea what they are talking about.

What homework? How much do I have to do? where do I start? What’s the point? Are you just letting me down easy to wiggle out of a conversation? (Well, I can’t answer that last one – but I can certainly help guide you in the homework-doing department).

What the industry experts mean by ‘homework’ is to be prepared for a conversation with a potential customer – whether it’s a government agency, a large prime, or a similarly small business who you want as a partner.  Prepared to not just to recite to them how great you are, but to speak to your value proposition. What can you do for them?

Well, what can you do for them?

If you are even thinking about responding with something along the lines of “well, I can sell them my…” – STOP.

Federal agencies, and the food chain of contractors that you want to be a part of aren’t just buying products and services, no matter how shiny and cool. They aren’t “giving out” contracts, there are no magic words that would enable a government agency to suddenly bypass decades of processes and volumes of rules just to do you a favor.[1]

So how do you figure out what your customer wants to hear?

  1. Get to know your customer

How do you even know where to start, who would be a good customer for you? You may know from experience, which puts you a step ahead. But if it’s just a hunch – test that hypothesis through solid research before venturing out – you’ll save a lot of frustration and parking dollars.

  • What have they bought before? From whom? Where? How much did they spend? What kind competition do they usually have for your products/services? What NAICS do they use to buy your gadget?  Tools like USASpending and Schedule Sales Query are a good start. If you’re in IT, familiarize yourself with the IT Dashboard.
  • What are they on the market for currently? Opportunities in FBO, Procurement Forecasts.
  • Want more? Look at GAO reports, Inspector General’s office findings. What are your customers posting on Twitter? Are the decision makers speaking at conferences on topics of interest?
  • If you’re meeting with primes, find out in advance what they do. Their websites are a great start.

  1. Present yourself

Elevator Pitch, Business Card, Capabilities Statement, and a website. Know them, have them, invest in them. You want to present yourself as an established business that isn’t risky in any way. You want to appear polished and professional, memorable and knowledgeable.  If you are even thinking about sending an email to a government customer from a yahoo or gmail account, don’t do it. Get a company website with an email @your own domain. There are tools out there that make it really easy to put together a presentable website even for non-IT folks, for not a lot of money. Wix, SquareSpace are so easy, even I can do it.

They’ll be much more likely to invest time and answer questions from someone they see potential in.  They’ll be much more likely to send a complete newbie to their local PTAC office for the basic skills.

  1. Engage and ask the right questions

Forget asking your customer “what do you do.” If you haven’t figured it out, you’re wasting your time and theirs.   Now, if you are meeting a company you haven’t heard of at a networking event, that’s a fine question.  At a planned appointment, when you’ve had a chance to pull up their website at the least, it’s a taboo question.  If you’ve done the reading, you know what they do, you know what they buy, you know who they buy it from and how much they spend annually.   The questions you ask should showcase your knowledge of their environment and challenges, a subtle indication that you know exactly how to fix things – and a desire to understand their ideal state.

There are a number of opportunities to meet your customers – yes, at their office. Also at industry days, conferences, in LinkedIn groups, in local AFCEA, NCMA chapters, industry-specific organizations, and even on social media. Where are they going to learn? Where are they going to share information?  Don’t forget that your customers are people too – and can be found at dog parks and PTA meetings and home improvement stores. I’m not advocating stalking, but there’s a lot you can learn in a casual, no pressure, non-sales interaction that can enlighten your business development / teaming / proposal strategy.

This is plenty of homework to get started. If you need help, we’re here to help you work on your pitch, review your capabilities statement, assist with market research.

[1] Yes, there are instances where companies get work faster than the usual contracting timeline. That is the stuff of legends in our field. Usually, such miracles are the result of a lot of hard groundwork and persistence.

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Common Federal Procurement Acronyms

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Download: Common Federal Procurement Acronyms

ATO – Authority to Operate
B&P – Bid and Proposal
BAA – Broad Agency Announcement
BAFO – Best and Final Offer
BD – Business Development
BDO – Blanket Delivery Order
BOA – Basic Ordering Agreement
BPA – Blanket Purchase Agreement
CA – Cooperative Agreement
CAC – Common Access Card
CAS – Cost Accounting Standards
CDRL – Contract Data Requirements List
CFR – Code of Federal Regulations
CLIN – Contract Line Item Number
CO – Contracting Officer
CONUS – Continental United States
COR – Contracting Officer Representative
COTR – Contracting Officer’s Technical Representative
COTS – Commercial Off-the-Shelf
CPAF – Cost Plus Award Fee
CPFF – Cost Plus Fixed Fee
CPIF – Cost Plus Incentive Fee
CRADA – Co-operative Research & Dev’t Agreement
DFARS – Defense FAR Supplement
DLH – Direct Labor Hour
EDI – Electronic Data Interchange
EDWOSB – Economically Disadv. Women Owned Small Biz
FAR – Federal Acquisition Regulation
FAS – Federal Acquisition Service
FFP – Firm Fixed Price
FOIA – Freedom of Information Act
FOUO – For Official Use Only
GFE – Government Furnished Equipment
GFM – Government Furnished Materials
FFP – Firm Fixed Price
GFP – Government-Furnished Property
GOCO – Government Owned, Contractor Operated
GWAC – Government-wide Acquisition Contract
IDIQ – Indefinite Delivery Indefinite Quantity
IFB – Invitation for Bids
IG – Inspector General
LOE – Level of Effort
LPTA – Lowest Price, Technically Acceptable
MATOC – Multiple Award Task Order Contract
MILSPEC – Military Specification
MOA – Memorandum of Agreement
MOU – Memorandum of Understanding
OCONUS – Outside the Continental US
ODC – Other Direct Costs
OIG – Office of Inspector General
OSDBU – Office of Small & Disadv. Business Utilization
PCO – Procuring Contracting Officer
PEO – Program Executive Officer
PII – Personally Identifiable Information
POAM – Plan of Action and Milestones
RFI – Request for Information
RFP – Request for Proposal
RFQ – Request for Quotation
SAP – Simplified Acquisition Process
SBLO – Small Business Liaison Officer
SBU – Sensitive but Unclassified
SCIF – Sensitive Compartmented Information Facility
SDLC – Software Development Lifecycle
SDVOSB – Service-Disabled Veteran Owned Business
SIC – Standard Industrial Classification Codes
SIN – Special Item Number
SOW – Statement of Work
SSN – Sources Sought Notice
TS – Top Secret
TS/SCI – Top Secret, Sensitive Compartmented Information
T&M – Time and Materials
WOSB – Women Owned Small Business

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FAR Changes to Implement Adjustments to Acquisition-Related Thresholds

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Effective October 1, 2015, one final rule amends the FAR to implement inflation adjustments to acquisition-related thresholds. Changes include:

  • The micropurchase threshold of $3,000 is increased to $3,500.
  • The commercial items test program ceiling is increased from $6.5 million to $7 million.
  • The cost or pricing data threshold is increased from $700,000 to $750,000.
  • The prime contractor subcontracting plan floor is increased from $650,000 to $700,000, while the construction threshold remains at $1.5 million.
  • The threshold for reporting first-tier subcontract information, including executive compensation, is increased from $25,000 to $30,000.
  • The cost or pricing data threshold and Cost Accounting Standard threshold are raised from $700,000 to $750,000.

The simplified acquisition threshold of $150,000 is unchanged, as are FedBizOpps preaward and postaward notices, which remain at $25,000. A proposed rule published November 25, 2014, is adopted without change. However, some final thresholds are lower due to a lower rate of inflation than projected at the time the proposed rule was published.

Source: https://www.federalregister.gov/articles/2015/06/26/2015-15668/defense-federal-acquisition-regulation-supplement-inflation-adjustment-of-acquisition-related, http://www.acq.osd.mil/osbp/councils/marc/

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The scarcest resource in government contracting

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This is the time of year for grand plans, resolutions, and strategy. An opportunity to lay out your year, set your course for some big goals, and… bury yourself in email, get overwhelmed by FBO notices, stay up til midnight answering data calls. And in December you’ll wonder where the year went, again.

So this article isn’t about market research strategies or secrets of getting ‘in’ with the Tier I prime contractor, not exactly.  Instead, let’s talk about one resource of tremendous value – and how you need to use it wisely to ensure that your government procurement pursuits are a good investment, instead of a throwaway lottery ticket.

1. YOUR time.

Is your company effectively pursuing the opportunities that you are uniquely suited to win?  Or are you chasing everything in your NAICS code?  Somewhere in between? Here’s how you can make your business development more effective:

  • Develop your “Unique Value Proposition”, also known as a differentiator.  What does your company do that no one else does?  If your reply is ‘cheap, fast, good customer service’ – start over, those are not differentiators, those are common denominators, because everyone expects that you will deliver at a good price, on time, and with good customer service.  Your uniqueness can be in the way you do business, in proprietary processes, in your team or experience, and even in your knowledge of your customer’s industry.  If there isn’t a niche, create one! That will make you appear that much more unique, and relevant.
  • Get to know your customers.  Meet with potential clients, teaming partners, and primes.  No one buys from strangers, not when they are spending large amounts of highly visible taxpayer dollars.  The point of the competitive and methodical acquisitions process is to lower the government’s risk with every buy.  Awarding a contract to a company they’ve never heard of before is a high-risk proposition.  Sure, they can call on references; they can check past performance.  But if there are bidders in the mix with similar proposals that have more familiarity, they will win most of the time. This isn’t nepotism, this isn’t unfair. It’s prudent.  What’s stopping you from identifying your buyers, talking to them at conferences, participating in their LinkedIn groups, sending them an email, asking for a meeting?
  • Develop the right opportunities. If the work you seek is not coming out on FBO, that does not mean you just respond to whatever *is* being posted.   This is where knowing your buyer starts to pay off. Once there is a relationship, you have an opportunity to find out how they buy the products and services that you are selling. Maybe it’s through Simplified Acquisitions. Perhaps it’s through GSA Schedules. Or reverse auctions. Or BPAs… all perfectly legitimate procurement avenues, none of which will appear on FBO. So if that’s the only place you’re looking, you’re missing out.

2. Your TEAMMATE’s time

Everyone wants to land a big teaming partner, because they will pave the way, they will “give you” some work. Why should they?  Don’t attempt to lecture the large primes that they have subcontracting goals to fulfill. In fact, starting a pitch by listing all your socio-economic set-asides is a deal killer.  Your partners want to know how you will help them. They can find other small, women-owned, veteran-owned 8(a) businesses in HUBZones. They haven’t had much trouble meeting their subcontracting goals in the past.  Focus on how you can benefit them – by customer knowledge? Unique expertise? Lower cost? (be careful of being the cheap one! You may get stuck there!)  Consider also pursuing the smaller whales: Tier II, Tier III companies, who are still large enough to have subcontracting goals, but aren’t as well known – therefore have a smaller pool of potential subcontractors. They are also less likely to have all the resources that they need in-house, and thus more lilkely to rely on subcontractors to help augment their offering, in addition to just meeting the subcontracting goals (or lowering their overhead).

3. Your CUSTOMER’s time

Practice your elevator pitch and do your homework.

Your customer doesn’t want to spend their time answering questions you should’ve figured out by looking at their website and strategic plan and acquisition forecast.  Nor do they want to sit through a 15-slide presentation on your resume or capabilities statement.  They want to know how you can help them meet a need they have.  Your face time with potential customers is best spent ‘digging in’ – asking in-depth questions about the projects and programs you are interested in; finding out how they buy; determining if there is a budget; and understanding how you can help them meet their mission and make their lives easier.

4. Your COUNSELOR’s or CONSULTANT’s time

There is help out there for you.  Procurement Technical Assistance Centers are funded by the Department of Defense and local universities nationwide to provide help and guidance to government contracting.  We review capabilities statements, help you with market research, assist in certifications, review proposals and prices, and teach classes on topics from the basics to legal/teaming to ISO certification.  Our counseling is free, and all our training classes are inexpensive.  However, we do expect that you do your homework, show up on time, and invest as much time in moving your business forward.

There are also many reputable consultants in the industry who are terrific resources.  They expect that you take your business and their time seriously, that you know your financials, can succinctly describe your differentiators, and articulate your business goals.

Government contracting isn’t a business pursuit many fall into; in fact, it is a long, patient road that you need to consider carefully, as you will be on it for a while if you want to see success.  Be ready to invest your time, the right amount of resources, and a fair amount of work if you want to succeed.  And we’ll help along the way.

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