The BDO GovCon Week Ahead - October 2019

October 2019

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October 21, 2019

How Efficient Can an Organization Be If It Doesn’t Speak with Its Stakeholders?  Under Secretary of Defense for Acquisition and Sustainment Ellen Lord told an Association of the United States Army (AUSA) audience this week that her office continues to look for places to cut and become more efficient.  Everyone wants an efficiently-run government, so what’s the potential problem with Lord’s statement?  Efficiency that comes at the cost of minimizing, or in some cases eliminating, opportunities for discussions with stakeholders isn’t really efficiency at all.  A lack of communication can often result in less-efficient, more isolated, operations.  This has already started to happen in parts of Lord’s organization where fewer people remain to do just as much, if not more, work than before a 2018 round of cuts was implemented.  Industry has seen its opportunities for meaningful dialogue reduced to a handful of association meetings with pre-approved agendas.  Try to get a question answered by DOD Acquisition outside of an association event and you may be met with silence.  In one case, industry officials were told that, if it were up to them, DOD Acquisition wouldn’t meet with industry at all.  It’s not entirely their fault.  Congress continues to add reporting requirements to each year’s Defense Authorization bill while simultaneously demanding cuts in “4th Estate” budgets.  There’s only so much time to respond to Congress, internal DOD customers, and industry.  The past 25 years have seen impressive improvements in DOD acquisition precisely because of opportunities for robust dialogue with industry.  These changes have unquestionably benefitted the warfighter.  Reducing opportunities for discussion may slow further progress, or even result in backsliding.  Neither outcome could be called “efficient”.  See the story here for more.
 
The Role of Market Intelligence Services in Federal BD:  Whether an experienced contractor, or new federal market entry, having the right information on federal spending trends and upcoming acquisitions is key.  The federal market is too big for a shotgun approach to marketing.  Companies must be able to focus business development opportunities in areas where they are most likely to win.  There are several services providing market intelligence assistance among which contractors can choose to help focus their sales activities.  Despite the ready availability of both historically-based and future-opportunity looking services, some companies choose not to use them.  A common complaint is that everyone who subscribes to a service has access to the same information.  While that is debatable based on how search priorities are set-up, it misses a fundamental point that we recently covered:  What separates successful companies from others is what they do with the information.  Expecting an on-line search tool to do all your BD work for you is unrealistic.  Contractors must dedicate the resources necessary to use the information a service provides to determine which opportunities best match their abilities and then develop a capture plan on how to win that business.  Companies that don’t have access to even basic information on prior spending trends or that follow only FedBizOps are at a competitive disadvantage.  Market intelligence services can be an important part of a company’s federal business strategy if they are properly used.  These services may not be a GPS directly to business, but they will make sure you stay on the best road.
 
Was That Sale Commercial or Federal? How the Feds View Subcontractor Sales:  Many companies conduct the bulk of their federal business as subcontractors.  Most smaller businesses are better off acting as a subcontractor as they may lack the resources to take on the tracking and compliance issues that come from being a prime contractor.  When a subcontractor seeks to obtain a GSA Schedule contract, it becomes critically important to understand how the government views sales where the end-customer may be a federal agency, but the sub sells to a prime contractor.  Such sales are almost always considered to be commercial sales by federal contracting officers and the federal contract compliance community.  For Schedule purposes, that means classifying such sales as commercial transactions when filling out the Commercial Sales Practice Format sheets.  It is also important to understand how giving a lower price to a prime contractor after a company is awarded its own Schedule contract could cause a compliance issue.  If the prime you sell to is within your Schedule Basis of Award customer class, a lower price or higher discount could trigger the Price Reductions Clause.  It does not matter if the final customer is a federal agency.  To the feds, your company is selling at a lower price to a company that is within your Basis of Award customer class.  Unless an exception applies, you must give the government fair opportunity to buy from your Schedule contract at a proportionally lower price to compensate.  More than one small Schedule contractor has been tripped up by this and has had to pay thousands in fines to the government.  Make sure your company knows that, when it comes to federal sales, what matters is who you invoice.
 




October 14, 2019

What Separates Successful Government Contractors from The Rest?  Success in the federal market is not assured due to a competitive marketplace.  It takes the right mix of process knowledge and key relationships to succeed.  Focus too much on process, and you’ll lose business to companies with good relationships.  Focus only on relationships, and eventually the compliance shoe will drop – expensively.  These are two elements that differentiate successful government contractors from the pack.  It’s not so much information that holds people back.  We live in the information age where companies have access to enough information about the government market to get started.  Having a hot product or solution certainly helps, but not everyone with the better mousetrap succeeds in the federal space.  They key delineator is a commitment of resources and people to be successful.  Everyone has access to consultants, lawyers, proposal writers, etc.  As good as these resources can be, none of them know your company as well as you do.  Successful companies get the help they need, and then they act on the information and recommendations from outside sources.  If the need is to have two Washington, D.C.-based sales reps, successful companies find a way to make that happen.  If it’s keying on relationships with Lead Systems Integrators, smart companies will hire people with experience in what grabs, and keeps, the interest of such companies.  Trying to succeed in the federal, or any other market, with just one foot in it is a recipe for frustration.  Successful federal contractors are in the market to stay and ensure they make the commitments necessary to grow sustainable business over time.      
 
DISA DEOS Protests Re-Affirms How Protests Can Be Effective:  GSA and the Defense Information Systems Agency (DISA) have agreed to pull back their original award of the DEOS cloud contract after a protest alleged that the agencies did not make the original award based on their stated evaluation criteria.  This action points out just how effective a timely protest can be in government contracting.  Protestors had an effective win rate of 44% in Fiscal Year 2018 when “corrective action” and protests that were sustained are added together (2018 GAO Protest Report to Congress).  That means that a protestor got something that they wanted, frequently the chance to bid again, almost half of the time.  While frivolous and frequent protests will definitely damage your customer relationships, it is vital to understand that protesting is your right as a government contractor.  Your company spent a lot of time and money to put its offer together on a procurement, which can add up to more than seven figures for large acquisitions.  A GAO protest, on the other hand, can be done effectively for about $50,000.  Agencies expect protests on larger acquisitions and build in time to handle a protest when they do their acquisition planning.  There is a very low risk that a protest based on any sort of reasonable grounds will damage a customer relationship.  Knowing when and what to protest is key, as is the need to be timely.  A well-timed protest can often give your company the chance to compete again.  If you end up winning the business, your protest costs will be returned many times over.
 
DOD Sets-Up Nonprofit to Review Contractor Cyber Security:  Think the Department of Defense isn’t serious about making sure your company isn’t a cyber risk?  The Pentagon is putting its money where its mouth is when it comes to ensuring that contractors meet DOD’s new Cybersecurity Maturity Model Certification (CMMC).   A new nonprofit will be responsible for running the contractor accreditation process under the CMMC.  Although still in draft form, the certification process is intended to push the Pentagon’s extensive network of vendors to strengthen their digital defenses, or at least adopt protections that are appropriate for the sensitivity of their work.  DOD officials estimate that there may be as many as 300,000 companies that require accreditation, most of them small or medium sized businesses.  There is no word on how much the accreditation process might cost, but accreditation for other federal standards, such as FedRAMP for cloud solutions, can be expensive.  Companies selling to DOD may want to engage them in a discussion on the potential cost impact to their companies now.  Investing in cyber defense and protection solutions, while also costly, is an increasingly essential requirement for doing business with DOD.  Civilian agencies, especially DHS, likely aren’t far behind, meaning that government contractors of any size or stripe must pay attention to the need to be cyber safe in order to continue doing government business.  See the story here for more.

Attend The BDO Year-End Update!:  Looking for the latest information on the federal M&A market, Privacy,  Digital Transformation, or Cybersecurity?  Join us at the BDO Greater Washington D.C. 2019 Year-End Update.  This year’s update is December 3rd at the Hyatt Regency in Reston VA.  Get the latest information that will shape both your company and its federal business. 


October 7, 2019

Thomas’ Departure from FAS Signals Start of Possible GSA Slow Down:  GSA FAS Commissioner Alan Thomas’ resignation this week was a much-anticipated, though not particularly desired, event.  Thomas, who will return to the private sector to better care for his young family, had been an architect or supporter of many key GSA acquisition improvements, such as the Schedules consolidation project, enhancement of Schedule contracts, and the substantial upgrading of internal IT systems to assist GSA CO’s in managing contracts.  Thomas has been a key ally of GSA Administrator Emily Murphy.  He and Murphy often appeared to be on the same page regarding needed reforms to improve FAS’ total business portfolio.  His resignation now puts the spotlight further on Murphy, who may also leave GSA prior to next year’s Presidential election, but who will almost certainly move on from GSA after it.  The unique pairing of Murphy and Thomas brought about positive changes for GSA contractors and customers.  Long-time GSA watchers know that this was never something to take for granted.  How much gas is left in the reform tank remains to be seen.  Thomas is being replaced, on at least an interim basis, by Julie Dunn.  Dunn has been a special advisor in GSA, with most of her background in acquisition coming as a staffer on the House Government Reform and Oversight Committee.  Like Thomas and Murphy, Dunn is a political appointee.  Tom Howder remains as the acting Deputy Commissioner.   See more on the story here.
 
Happy New (Fiscal) Year!  Three Things to Focus on Now That FY20 Has Arrived: We hope that your federal business holiday stockings were full of last-minute business, and that the Grinch did not steal your year-end.  It’s time to switch gears now that a new year is underway.  Here are three things your firm should be focusing on right now: 

  1. Get Out and Network:  October and November are prime months for conferences, summits, and other networking opportunities.  These events are great ways to obtain information that can help your career.  They also provide a forum through which you can make critical new contacts in government and industry.  Some contractors will spend the bulk of the next six weeks going from event to event.  There is definite value in expanding your knowledge and contacts, and no better time to do it than now. 

  2. Release Your 2020 Lineup:  Just as car manufacturers come out each year with a new fleet, your company should be preparing glossy new marketing materials to distribute at the events you attend, or to form the basis for one-on-one meetings that are easier to get in November, December, and January. 

  3. Schedule Your Compliance and Ethics Training:  Annual ethics training is a best practice in government acquisition.  The best time of year to get this done is before the holidays so that you and your sales team stay compliant with federal gift-giving rules.  Compliance refreshers are also important.  Spending time on compliance is literally a pennies on the dollar investment.  Just like delaying the oil change, the longer you go without it, the bigger the damage to your engine.  Invest in these three action areas, and you will set the stage for a successful 2020 when agencies have money to spend.

Thornberry’s Departure Could Impact Congressional Interest in GSA’s E-Commerce Initiative: Congressman Mac Thornberry (R-TX), the primary supporter of GSA’s commercial e-commerce platform initiative, has announced that he will not seek reelection next year, ending his Congressional career.  Thornberry was the Chairman of the House Armed Services Committee when the GSA commercial e-commerce pilot was enacted by Congress. He shepherded the provision through the legislative process, believing that such acquisition methods could more quickly and efficiently get commercial items into the hands of government agencies.  While GSA has stated its intent to have a pilot up and running by the end of the 2019 calendar year, there was no active Request for Proposals (RFP) as of October 1st, making it doubtful that the agency will meet its goal.  Thornberry’s departure may dampen enthusiasm for the commercial e-commerce platform initiative on the Hill, especially if GSA has trouble putting a successful pilot in place sometime in 2020.  Right now, the agency is believed to be struggling with the competing goals of meeting Congressional intent, while still including a passel of government-unique terms in an RFP.  Another potential issue would be if pricing on such platforms turned out to be higher for products available for less on the GSA Schedules program.  Thornberry’s announcement means that at least 20 Republican incumbents will retire at the end of this term between the House and Senate. Currently, only four Democrats have announced similar plans.  The new people coming in may have their own priorities and ideas for how government, including government acquisition, should run.  See the story here for more.

 
Mail Bag: Federal Curve Balls – Make Sure You Are Prepared for Whoever Comes To Your Next Federal Meeting:  Regular reader E. Litella of New York, NY writes, “My Vice President and I were scheduled to have a meeting with an existing federal customer and his boss.  Instead, two people we’ve never seen before sat in, claiming a conflict for the others.  What were we supposed to do?”  This happens more than you think, E.  Agency representatives set a meeting with you and your team, only to defer to others in their agency for the actual discussion.  You sometimes won’t know this until you arrive at the agency site.  Be prepared to discuss all aspects of your program, and it won’t matter who shows up.  This means being ready to review small business issues, timing schedules, pricing, performance, or any other topic related to your company’s performance.  The federal reps in the discussion may be there precisely because they have concerns in one or more of these areas.  While no company can prepare for every scenario, conducting a thorough internal review before the outside meeting can help identify potential concern areas and enable your firm to develop a response.  No one likes to be caught off guard and federal officials will only take so many “let me get back to you on that” statements before they feel that your firm was just not ready to meet.  It does seem true that these types of meetings happen just at the time you’re bringing a senior executive in to show them how well you’re performing.  Plan and review ahead of time so that there are fewer surprises for the executive team – or you.