Introduction to GovernmentContracting

January 26, 2012

Introduction To Government Contracting

Contents• About RIPTAC• Why Sell to the Government • Federal Acquisition Process• Full & Open Competition• Small Business Goals• Defining Your Small Business• Getting Ready To Market The Government• Resources for Small Business

About RI PTAC

• Established by Congress in 1982 to provide small business greater access to government contracts

• 93 Centers in 50 States + Puerto Rico & Guam

• Center is funded by a cooperative agreement between the US Department of Defense and the Rhode Island Manufacturers Extension Services

What We Do

• Provide professional consultants to advise small business on selling products and services to public agencies.

• Offer individual government acquisition training and technical assistance

• Conduct educational seminars, workshops and “Matchmaker” events

• Provide free bid listing service and free access to drawings and specifications

Active PTAC Clients• Primary place of business in Rhode Island• Sign Request For Assistance agreement• Provide data about your company operations

• Are viable government contractors• Actively pursue bid opportunities• Submit quarterly Award Report

• Submit annual evaluation survey• Call us for help before it’s too late

Why Sell to the Government?

• The U. S. Government Is The Largest Single Buyer Of Goods And Services In The World.– Over 600 Billion Dollars Annually

• State and Local governments are a very large marketplace– May be less cumbersome than Federal

Regulated– Regional preferences exist (Many portals)

Why Sell to the Government?

• They Are A Reliable Customer– The Federal Government already awards $50+

Billion in “goods and services” contracts each year to small businesses

Awards to Small Businesses by percentage:

– 33% of supplies & equipment

– 32% of services

– 7% of construction

– 13% of R&D

Why Sell to the Government?

• Define “Small Business”– Small Business Act (PL 108-447 (85-536) )– Small Business Programs (13-CFR-101et.seq.)

• Demand “Full & Open Competition”– Congress mandates goals to set aside contracts for

small business (Federal Agencies)– Federal Acquisition Regulations (FAR) “level the playing

field” (Standardize)

• Dedicated Resources To Small Business Development (PTAC)

The Federal Acquisition Process

Federal Contract LawOther Laws that Affect Contracting/ Dealing

with Government

Federal Acquisition Regulations (FAR)http://farsite.hill.af.mil

Agency Specific Regulations (DFARs, etc.)http://acquisition.gov/comp/virtual_library/regs.htm

Your solicitation and contract

The Federal Acquisition Process

Authoritative Sources• Statutes• Federal Acquisition Regulation (FAR)

– 48 C.F.R. Chapter 1 (FAR Council)– http://farsite.hill.af.mil/– Don’t forget FAR Supplements…

• Case Law—administrative cases and Federal cases

The Federal Acquisition Process

What is a Government Contract?

• Offer, Acceptance, Consideration

• Government is a party (of course)• Specialized statutes, regulations, and

case law (Not the Uniformed Commercial Code)

• Many differences from common law: e.g., socioeconomic policy, contract changes, contract terminations, etc.

The Federal Acquisition Process

• Different From Commercial Contracts– Highly regulated (FAR)– Requires Full and Open Competition

– Contract clauses are “take-it-or –leave-it”– Specifications are stringent– Government may cancel for cause or convenience– Mandated socio-economic programs– Penalties for noncompliance

– Subject to Government audit

The Federal Acquisition Process

General Categories of Government Contracts

• Supplies

• Construction

• Services • Research and Development (R&D)

The Federal Acquisition Process

• Acquisition Methods

– Simplified Acquisitions / $3000 to $150,000 • Micro Purchases / $3000 or Less

• Up to $6.5M (commercial items and construction)

– Sealed Bidding- (IFB-price)– Negotiated Procurements- (RFQ-Best Value)– Government –wide contracts(GWAC)(GSA)– Commercial Items and Services (FAR Part 12)

The Federal Acquisition Process

• Micro Purchases (P-Card )

– Purchases under $3,000 are considered micro-purchases

– They do not require competitive bids or quotes, and agencies can simply pay using a Government Purchase Card

– Micro purchases account for 85% of Government purchase actions

The Federal Acquisition Process

• Simplified Acquisitions

– Reserved for small business if purchase is above $3000 and less than $150 K

– Commercial items less than $5.5 million– Account for 90% of purchase transactions

The Federal Acquisition Process

• Sealed Bidding

• For non-commercial supplies or services greater than $150K

• Lowest responsive/responsible bidders usually awarded contract

The Federal Acquisition Process

• Negotiated Procurements

– Most flexible but most complicated procurement method

– 80% of contracts exceeding $150K– Requests for Proposal (RFPs)(RFQ)– Evaluation criteria cited in solicitation

The Federal Acquisition Process

• GSA Schedules Program– Method of simplified acquisition – helps federal

buyers purchase faster, easier, at lowest prices– GSA establishes government-wide contracts with

vendors to provide commercial supplies and services – Generally 5 years with three 5 year option periods of

indefinite delivery & indefinite quantity (IDIQ)

– Not a guarantee of sales! Contractors must market themselves

– www.gsa.gov/schedules

The Rules of Government Contracting

It’ s about “ Full & Open Competition”

The Rules of Government Contracting

• Demand “Full & Open Competition”– Congress mandates goals to set aside contracts for

small business (Federal Agencies)

– Federal Acquisition Regulations (FAR) “level the playing field” (Standardize)

• Define “Small Business”– Small Business Act (PL 108-447 (85-536) )– Small Business Programs (13-CFR-101et.seq.)

Small Business Rules

Key Small Business Parts of FAR

•Subpart 8.4 Federal Supply Schedule

•Part 13 Simplified Acquisition•Part15 Contracting Negotiation

•Part 19 Small Business Program

Every Contract Requires Competition

– Micro-purchases (under $3,000) - “reasonable price”-FAR 13.202

– Between $3,000 and Simplified Acquisition Threshold (SAT) $100,000 - “reasonable number of sources” (“Rule of 3”)-FAR 13.104

– Over SAT-Competition in Contracting Act

- Full and open competition-FAR 6.101

Small Business Rules

• Small Business Act Mandates Government-wide Goals

• SBA- sets standards, measures results and provides services

• Agency Small Business Programs• Available Resources

Small Business Goals

Small Business Category

• Small Business (SB)

– Woman-Owned (WOSB)– Small Disadvantaged (SDB) & 8(a)

– HUBZone– Veteran-Owned Small Business

(VOSB)– Service-Disabled Veteran-Owned

Small Business (SDVOSB)

23%

- 5%

- 5%

- 3%

- Best Effort

- 3%

Federal Contract Goal

% of all federal procurement dollars spent per year

Small Business Goals

• Public Laws impact small business– “Full and Open Competition” requires that

all responsible sources be permitted to compete in the acquisition process.

– Agencies may use contract “set-aside programs” and establish sub-contracting goals for prime contractors (subcontracting plans) to reach these goals

Small Business Goals

• A Set-aside occurs when Solicitations are exclusively reserved for small business- CO determines that a $3000+ contract will have two “responsible” small business bidders

Small Business Goals

• Government agency, prime contractor, and small business relationships

– Large prime contractors with contracts > $650K (1.5M for construction) are required to submit small business subcontracting plans to the Government

– Prime contractors negotiate goals in those plans and are monitored by review of bi-annual reports

– No “privity of contract” exists between the

subcontractor and the buying agency

Small Business Goals

Preferences for small business• Primes use of certain small business

categories/types as Subs may result in a source selection preference.

• When the prime contractor meets the small business participation goal and evaluation requirements identified in the solicitation they are scored higher

Small Business Goals

• Examples Socioeconomic Goals that Affect Competition– Use small business (FAR Part 19)– Pay prevailing wages (FAR Part 22.10)– Provide employment opportunities for U.S. citizens

(FAR Part 25)– Equal employment opportunity (FAR Part 22.8)– Maintain a drug-free workplace (FAR Part 23.5)– Provide preferences for veterans (FAR Part 22.13)– Provide handicapped accessibility (FAR Part 22.14)

Are you really small?

Defining Your Small Business

Defining Your Small Business

• Small businesses help Government agencies and prime contractors meet their small business goals

• Government Agencies and/or Prime Contractors need to know who and what you are

Have your answers ready:

– Know your small business category – Clearly define your product or service – Clearly define your capabilities

Defining Your Small Business

• Determining if your Business is Small – The Small Business Administration (SBA)

establishes “size standards” based on industry

– 37 categories based on North American Industrial Classification System (NAICS) Codes

– Details can be found at www.sba.gov/size

– FAR Subpart 19.102 (<500 FTE’s)

Defining Your Small Business

“Types of Small”

• Socioeconomic Programs • Small Business (SB)

• Small Disadvantaged Business (SDB)*

• 8(a) (SDB)

• Historically Underutilized Business Zone (HUB Zones)

• Woman-Owned Small Business (WOSB)(EDWOSB)

• Native American-Owned Small Businesses

• Veteran-Owned Small Business (VOSB)

• Service-Disabled Veteran-Owned Small Business (SDVOSB)

• The Small Business must be 51% owned and operated by the individual(s) who qualify for any categories.

For Example: – a "woman-owned business" concern means a business

that is at least 51% owned by a woman or women who also control and operate it. "Control" means exercising the power to make policy decisions and holding the highest Office in the company. "Operate" means being actively involved in the day-to-day management.

Defining Your Small Business

WOSB Certification:

• To participate in the Program, a WOSB or EDWOSB must meet the eligibility requirements and either 1) self-certify their business OR (2) be certified by an SBA-approved Third-Party Certifier.

• All WOSBs and EDWOSBs must register their status in the Central Contractor Registration (CCR) and the Online Representations and Certifications Application (ORCA), as well as upload required documents to the WOSB Program Repository. CCR and ORCA have been updated to allow WOSBs and EDWOSBs to register and certify.

Defining Your Small Business

• SBA Certifications– Confirmation of certification by the SBA is

required by prime contractors and federal agencies to allow them to receive credit for contract participation of 8(a) and HUBZone firms.

– All other small business categories may self-certify.

• The certification process– Contact your state PTAC or visit www.sba.gov

on how to apply for certification.

Getting Ready To Market The Government

How Does A Small Business Market Itself To The Agencies And Prime Contractors?

– All Government agencies and large business primes have goals to be met, but…

– Your SB category should not be the primary focus of your marketing pitch

– Your SB category may help get you in the door, but…

– Your ability to perform is most important

Must Have-Vendor Administrative Items

• Must have Data Universal Numbering System (DUNS) Number www.ccr.gov/pdfs/DUNSGuideGovVendors.pdf ,www.dnb.com

1-800-333-0505

• Must be registered in Central Contractor Registration (CCR) and have a Commercial and Government Entity (CAGE) Code www.CCR.gov (Small business Dynamic Search portal)

• Must utilize electronic Representations and Certifications https://ORCA.bpn.gov

• Architect and Engineer firms must submit A/E Qualifications Form (SF 330)

Getting Ready To Market

Register on Central Contractor

Registration (CCR) www.ccr.gov To register for CCR, you will need: – D&B DUNS Number: 1-800-333-0505

– Determine correct NAICS (North American Industry Classification System) code

– To renew annually by accessing your information with your DUNS No., CCR ID and User Password (SBDS- portal)

Getting Ready To Market

• Register at On-line Representations and Certifications Application– (ORCA) https://orca.bpn.gov/

– Creates a single place for your small business representation & certification info

– Eliminates entering data with each bid/proposal (update annually)

Getting Ready To Market

• Get Educated On The Process– Understand the Federal Government

contracting process

– How to find opportunities (E-portals)

– What rules apply to my participation– How to respond to a bid solicitation,

quote, etc.

– What is adequate contract performance

– Learn how to build on your success

Getting Ready To Market

• Develop a Government Marketing Plan– Determine if Federal agencies, prime

contractors (or both) buy your product or service?

– Is the pace of Government contracting compatible with your business plan?

– Can a preference program benefit you?– Are you able to compete profitably?

Getting Ready To Market

• Business Plan that includes Government Markets

• Capability Statement that includes all information relevant to government contracting (DUNS, CAGE Code, NAICS Code(s), SIC Codes, FSC or PSC Codes)

• Collateral that reflects readiness to sell to the government (web site, domain related email address, business profile)

• Electronic Procurement Opportunities – Federal procurement opportunities that exceed

$25,000 are posted electronically on Federal Business Opportunities

• (FBO http://www.fbo.gov)

– DLA Procurement Gateway• RFQ, RFP, and award postings from the Defense

Supply Centers

• EBS (Enterprise Business Systems). DLA Internet Bid Board System (DLA DIBBS, aka DIBBS) site at https://www.dibbs.bsm.dla.mil/ .

Getting Ready To Market

Getting Ready To Market

• What you need before you pursue government contracts/subcontracts– Adequate capitalization– Drive, determination, & patience– Competitive advantage– Demand for products/services– Adequate Pricing and margins– Effective quality system– Current business plan– Bonding, insurance and security clearance (if required)– Computer Literacy, Internet capacity

Present Yourself as a Successful Vendor

– Responsive, all elements of the solicitation addressed and followed

– Responsible – demonstrates capability

– Competitive pricing

– Organized and concise

Resources for Small Businesses• RI SBDC – for business plans, marketing plans, web site

developmentwww.risbdc.org 401-598-2702

• RIMES – for ISO 9000 and quality assessments, lean manufacturing, capability statements

www.rimes.org (401) 270-8896

• SCORE – for general business process & skills assistancewww.riscore.org (401) 528 - 4561

• SBA – for small business loan guarantees and Patriot Loan applications

www.sba.gov 401528-4561

• ECC – for schedule of available business training events in RIwww.everycompanycounts.com 401-278-9100

Important Information The material presented in this training and the advice given by

the trainer are intended to give you things to think about as you prepare to be a government contractor. The materials are not intended to be a substitute for the actual laws, regulations, procedures, policy and directions governing your relationship and conduct with the government or its contractors or agents. Not only are things subject to constant revision, they may also be subject to interpretation that only a competent authority or professional can provide. Do not rely on this presentation as an authority. Please read the most current law, regulation, procedure, policy, direction or contract language and if there is any question as to what it means, seek clarification from a competent authority in the government or seek the help of a competent professional.

*Nothing in this presentation should be construed as a guarantee of a contract award.