The government was poised to experience a partial shut-down as we went to press. Here is the good, bad, and the ugly about conducting contracting business while some of your customers are not around.
1. GoodAgencies that control most of the discretionary spending are open and have their money. DOD, the VA, HHS, Education, Labor, and Energy are all open for business. While any inter-agency operations they share with others may be impacted, they are otherwise running on a normal basis.
2. BadDHS, Treasury, Transportation and others are mostly closed. Only “essential” operations like airport security are functional. If you’re a company supporting those essential functions, your people should be at work. When you get paid for that work, however, depends on when the agency officially re-opens. This goes for all outstanding invoices your company may have with closed agencies as well. No pay till this is resolved.
3. Ugly Uncertainty abounds on whether your service workers working on a client site can show up. Generally, unless the work they do is considered essential, the answer is no. This means that you can’t charge for their work since they’re not working on that contract. Rather than lose good people, especially when a closure is likely to be short, is not something most contractors contemplate. Instead, they shift those workers to overhead and bite the financial bullet. At press time there was no clear way or time frame out of this morass. It will likely be until January before there is. Keep the egg nog at hand and put another log on the fire.
While contractor labor has long been considered less expensive than
fully-loaded federal employee labor, or at least more flexible, a new
report states that many civilian positions at DOD can actually be filled more
cheaply by feds. The report says
that federal employees can perform “comparable” work for less in areas such as
Washington, D.C. and the Southeast.
Still, there are some valid reasons why contractor is justifiably more
expensive. The specialized
skills and capabilities of specific contractor assets are often cited by DOD
customers as a reason why a contractor needs to be hired in the first
place. Related to this, too, is that
contractors are better able to pay market rates for people that possess unique
skills, making the contractor option the only one available to DOD in many circumstances. Still, contractors should be prepared to address
the report’s claims. The
in-coming Congress may choose to reignite the debate between outsourcing and
keeping certain work in-house, especially at DOD. Contractors should definitely make sure that
their customers understand the value of the services they receive from contractor
labor. Whether its specific
expertise or immediate mission support that federal workers can’t provide,
contractors make many federal missions possible. The cost of not being able to meet those
missions is something that the report’s authors, and Congress, should consider
before making any conclusions.
New reader S. Nicks of Los Angeles, CA writes, “Our company provides a variety
of services and products to federal agencies.
Everything from Mac’s to Fleetwood guitars. We can’t tell if we’re small or not. Can you help?
While it can certainly be a benefit to be a small business, our
experience is that some companies can really break down and cry if they think they’re
suddenly large. Being “other
than small” is no reason to have your illusions of federal business shattered,
though. Right now, most businesses identify as small
based on their primary NAIC’s code.
This should be the one that most closely identifies with how your
company conducts most of its business.
That can change, of course, and GSA is working on a system to allow multiple
NAIC’s codes to be entered as a means of identification in SAM. If you’re
a Schedule contractor with a NAIC’s code that makes you small, generally you
qualify as such for business done under that Schedule. Otherwise, you’re considered small based on
the NAIC’s code used in the contract or task order your agency CO issues. If the NAIC’s code listed matches your size,
you’re small. This is one reason
why some agencies and contractors engage in “NAIC’s code shopping”, a practice
that we note happens, but do not endorse. Our
bottom line advice is not to go your own way, S., but to be the best contractor
you can be regardless of whether you’re large, small, or somewhere in
GSA leaders must ensure that they communicate
early and often with stakeholders inside their agency to ensure that the
Schedules consolidation project is best-positioned for success. This was among the recommendations shared
with the agency by industry panelists during GSA’s Federal Market Industry Day
held December 12th. Agency
rank and file employees don’t always get the message on big, new changes
leading to frustration, misinformation, and delays in achieving intended
outcomes. This can especially be the
case when industry partners may initially have more knowledge on the change
than the GSA people with whom they work.
Similarly, GSA officials must ensure that contractors with multiple contracts
understand how those assets might be affected and have all of the details
ironed out before multi-schedule contractors become part of the consolidation
progress. GSA officials agreed
on this last point. They stated that
companies with multiple contracts will be among the last to transition. They also reinforced the message that no
changes will happen now. All sides seem to agree that GSA must also
dedicate considerable resources to improving its on line Schedule resources to
give buyers a better experience when seeking solutions from Schedule contracts. Industry representatives went to call for the
end of the Price Reductions Clause and a possible reduction to the Industrial
Funding Fee. Time will tell how this
project works out.
“proof of concept” commercial e-commerce platform launch by the end of the 2019
calendar year is GSA’s aim as it works to implement
a Congressional mandate to improve government access to such platforms. This, and other details, were shared with
industry at a “Phase II” discussion last week.
Based on GSA’s announced timing, a draft RFP may be issued as early as
April, which would make a live RFP possible in June or July. Right now, GSA is planning to proceed with a
“commercial marketplace” concept first, as opposed to other types of e-commerce
concerns were raised by industry representatives during
the meeting. One is GSA’s stated desire to
require some form of pricing competition for micro-purchase level buys made via
commercial platforms. There are
currently no rules requiring a “look at three pricelists” type of pricing
competition and industry is concerned that instituting this requirement would effectively
increase rules on all types of micro-purchases as agencies followed suit. Congress, it should be noted, has had two
opportunities to say whether it believed that extra pricing competition was
needed for commercial platform buys, but has not done so. Allen Federal recommends that companies
specifically site this concern in any RFI responses or other communications
Similarly, some in industry stated concerns over the
non-applicability of the Buy American or Trade Agreements Acts. The Coalition for Government Procurement
indicated that it may call for the application of the TAA to all commercial
platform purchases, citing GSA’s precedent of applying that Act at the Schedule
level so that all Schedule transactions are TAA covered. While it is likely true that the purchases
made through commercial platforms, in aggregate, will exceed the TAA threshold,
individual purchases will, for the foreseeable future, be at or below the Micro
Purchase Threshold. Neither Buy
American, nor Trade Agreements, provisions apply to such purchases. Congress, again, has had two opportunities to
say whether the acts should apply to transactions made via commercial
platforms, but has not done so. This
area is definitely worthy of more attention and discussion.
on GSA’s current RFI are due on December 21st. We recommend a close examination of the terms
and conditions, including how GSA wants to access commercial catalog
information, monitor price fluctuations, and implement a funding fee mechanism. Make sure that GSA gets your input as they
move toward an eventual program launch.