With the usual departures of people from key positions, the specter of a debt ceiling fight, and uncertainty over international events, there’s a lot to distract a government contractor right now. As always, the key is to stay focused on the work at hand. Here are three things that contractors should focus on now.
1. Closing & Lining Up Current Business: While this may not be the busiest time of year for federal buying, plenty of deals are getting closed now. Agency customers should have their money by now and have plans on how they want to use it. Any Read more
President Biden indicated in his recent State of the Union speech that his administration will expand Buy America/Build America (BABA) requirements for iron and steel to other products used in infrastructure projects. Contractors that do not work on such projects, however, should be on guard. Anytime an issue like the Buy American Act (BAA) receives considerable political attention there is the definite potential for provisions to be misapplied in attempts to show support for the overall objective. This is especially true for contracts covered by the Trade Agreements Act (TAA), an act that applies to most multiple award Indefinite Delivery Indefinite Quantity (IDIQ) contracts. Few political leaders know that there is a Trade Agreements Act, and fewer still know what it says. Contractors must be prepared to work with agency contracting officials who may have been told by leadership to follow BAA rules even when TAA clearly controls a contract. A review of the basics may help. First, for non-construction contracts, the Buy American Act only applies to open-market purchases up to $183,000. This level is set every other year by the US Trade Representatives office. The current level will stay in place until the end of calendar year 2023. Open market purchases are acquisitions that are not made against a standing contract, such as multiple award IDIQ. Second, the Trade Agreements Act applies for all non-construction open market purchases above $183,000, again through the end of the 2023 calendar year. Third, the TAA applies to all purchases made through GSA Schedule contracts, most other GSA IDIQ’s, the NASA SEWP contract, and similar vehicles. Fourth, if the TAA applies to an acquisition, the BAA usually does not. The only consistent exception is in the case of Schedule buys when a company quotes open market items up to the $183,000 BAA threshold. Open market items up to that dollar amount are covered by BAA, regardless of whether those items are being purchased in a package with Schedule items. Stories of agency contracting officials attempting to add BAA requirements to TAA-covered purchase orders are legion. Companies should always attempt to remove extraneous clauses, whether BAA or something else. There is already plenty with which companies need to comply and no company should get in trouble for failing to comply with a contract clause that should not have been added to a task order. The best defense for contractors is a good offense. Be prepared with a one-page overview of how the BAA and TAA work, using applicable FAR sites if necessary.
The Biden Administration has already stated its goal to award 15% of all federal prime contract dollars to small disadvantaged (SDB) businesses by 2025. The recently-issued executive order promoting diversity, equity, and inclusion in the federal workforce requires OMB to develop a plan to meet either that goal, or one very close to it, a full year earlier. How this push to increase spending in one small business area will impact other small businesses is unknown, but small business leaders need to understand that this effort could very well have a negative impact their own firms. The overall goal of awarding 23% of all federal contract dollars to small businesses has not changed and, while some agencies exceed individual goals, few do so by more than a few percentage points. If the federal government hit all small business subcategory goals for women-owned, service-disabled veteran, and HUBZone businesses, total small business contracting would hit 29%, without even counting business awarded to small firms that have no specific socio-economic status. Total small business awards would soar to nearly 40% or more when all small business categories, including 8(a) and Alaska-native contracts are considered. This outcome is highly unlikely given historical spending patterns and the realistic nature of some government projects. There are only so many that are suitable on which small businesses can compete. All of this indicates that competition for small business contracts may intensify over the next few years with carve outs for favored groups leaving a smaller market in which others compete. Small businesses will not only have to be exceptionally competitive, but will also have to comply with many of the same rules as larger firms. Is it any wonder that small businesses leave the government market each year, even before the political class anoints a new set of favorites?
Well, it was fun while it lasted. The heyday of commercial item acquisition and a “commercial first” approach to government acquisition is fairly well over. While products and solutions sold in the federal space may technically meet the definition of “commercial item” in that they in many ways look like items that are offered for commercial sale, or are services “of a type” that are sold commercially, each must meet an increasing number of federal unique standards. Do you want to do business with a government agency? Before you raise your hand, you must conduct a review of all of your company’s telecommunications solutions to ensure that they are Read more
Debt held by the public is seen climbing to $46 trillion by 2033, amounting to 118% of GDP—the highest in US history – according to a recent Congressional Budget Office (CBO) report. Bloomberg Government reports that CBO also projected that the total debt limit will be worse than earlier projections, at a total of $1.41 trillion. These numbers will definitely have an impact on budget ceiling negotiations, as well as FY’24 spending numbers. They suggest that federal spending, especially discretionary spending that funds most government contract actions, will be trimmed. “Mandatory” spending, such as Social Security, Medicare, Medicaid, and service on the existing debt, is either logistically or politically untouchable, despite the fact Read more