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The FAR is Not Far Away for Small Businesses

We get it. You are a small shop, and the Federal Acquisition Regulations (FAR) is just another acronym in this hectic GovCon space. You are busy drumming up business, and who has time to think about FAR compliance? You might think the FAR is far, far away from you since you are a small business. Wrong! The applicability of the FAR to you as a government contractor (or subcontractor supporting a government contract) is not based on your business size.

Why?  Well, it all comes down to public policy.

In a recent case, the 9th Circuit summarized:

that the Federal Acquisition Regulation (FAR) provisions “while undoubtedly extensive, permit the government to maintain fairly uniform contracting standards in the many contracts it enters into with parties located in the United States and around the world…To allow contractors and subcontractors, foreign or domestic, to evade the FAR provisions because a subcontractor was too unsophisticated or inexperienced to fully understand them would potentially cripple the government’s ability to contract with private entities and would violate controlling federal law.” Aspic Engineering and Construction Company v. ECC Centcom Constructors LLC; ECC International LLC, No. 17-16510, D.C. No. 4:17-cv-00224-YGR, 13 (9th Cir. Jan. 28, 2019) (“Aspic”).

In short, public policy wins.

The government needs to be able to buy with a level of risk mitigation in place. Do you want your tax dollars going to a deal that turns bad because the guys building the new facility failed to follow their FAR flow downs? Not really.

Yes, it is challenging to compete in the GovCon space, but there is a sense of serving the public that makes the challenge worth it. However, that means you have to play by Uncle Sam’s rules. Even the one-man-bands building souped-up servers with robots attached to them in their garages have flow downs to contend with if they are going to sell to the federal government under traditional acquisition mechanisms.*

In the name of public policy, even if certain FAR clauses are not “flowed” into your contract, a judge will find them applicable to your contract “by operation of law.” G.L. Christian & Assoc. v. United States, 160 Cl. Ct. 1 (Cl. Ct. 1965). The famous Christian Doctrine was applied to Federal subcontractors in UPMC Braddock et al., v. Harris, No. 1:09-cv-01210 (D.D.C. Mar. 30, 2013) (“UPMC”).

One of the traditional avenues for small businesses to gain a foothold in the GovCon space is through subcontracting, often thinking it is easier because they do not have to follow all the same rules as their prime contractor counterparts. However, based on UPMC, following the FAR, is required no matter what. There is no free pass for small businesses.

Even though we just threw a whole lot of legal ease at you, we don’t want you to be stressed about FAR compliance. If you need a plan to get your act in gear, BOOST LLC has experience setting small businesses up for success in the lean-and-mean style.

*There are Other Transactions Authorities that exist purposely to allow the federal government to pursue non-standard government contractors without the application of the FAR. There is good news! We know a great OTA Consortium Management group.

 

 

MilSpouses | Value for Business

As the local unemployment numbers continue to be a record low rates and we all talk about the war for talent, unicorn candidates and the ridiculous salary expectations for some of the workforce, there is a pool of talent that is often overlooked…the Military Spouse (also known as: MilSpouse).

Why should you consider these folks?  Our initial response is why not?
Off the top of our heads:

• Change agents
Businesses change quite a bit and who better to understand and go with it than someone who is used used to packing up their stuff and moving to a completely new environment every few years?  These folks don’t scare away from change…they sometimes crave it.

• New Environments
MilSpouses go into completely new environments all the time.  They can adapt and mold to their new circumstances, quickly.  They don’t waste months trying to figure out the new clients or getting up to speed on new technology.  They immerse and they adapt.

“Figure it Out” mindset
Often MilSpouses are on their own while their spouse is serving.  They don’t know all the answers, but they can figure stuff out in a hurry.  This extends directly to their work.  We don’t hire folks who know everything…we hire folks who are smart enough to know where to get the information needed.

• Community
While a MilSpouse can absolutely figure it out, they also are great at adapting and relying on others in their community.  Need something done?  They will organize and support with precision.  There is nothing a group of MilSpouses can’t tackle.  This extends to their teamwork approach.  MilSpouses are unique in that they can be a rock star individual contributor, but also play quite nicely on a team.  Did we mention that they are adaptable?

As you struggle to fill your team, ask yourself if you’ve overlooked one of the best sources of employees in the business.

And a quick note to MilSpouses out there – There are employers out there who value the above.  Not every job needs to be 40 hours a week, nor does it need to be done in person.  Don’t put your own career on hold because you feel there aren’t companies that understand your needs.  Work with employers who understand your value.  “MilSpouse” does not equal unemployed or even underemployed.  Know your value, keep your skillset up to date and seek employers who get it.

 

Corporate Housekeeping

As we turn our attention to back to school sales, last summer vacays, finishing up our trashy beach novels and start shifting towards the fall, it’s a good time to take a minute and do some general housekeeping. Face it – it will be the holidays before you know it!

GovCons, you are in the lull between the storm – proposals are submitted, awards are forthcoming but not here yet. Tt’s a great time to catch up on some of the mundane, but necessary parts of doing business.  It’s boring, and always gets pushed to the back burner as more revenue-generating opportunities come in.  But ignore these at your peril – they always come back to haunt you at tax time, during a transaction or with any litigation.

We’re kind of like sour patch kids, here at BOOST. Now that we’ve given you a bit of a gut punch, here’s a quick checklist to keep you sane:

1. Org Chart
When was the last time you actually updated it?  Do it now before you onboard all the new contract wins.  This way it’s readily available.  Now might also be time to consider if folks are really in the right positions/titles.

2. Articles of Incorporation
Time to dust it off and make sure it’s still legit and up to date

3. Board meeting minutes
For privately held companies, this can feel like an administrative task you don’t want to do.  Remember that these board meeting minutes come in handy when you are looking toward a sale, are in litigation/disputes and are just plain good practice.

4. Tax Filings
Given all the changes, are you structured the way you should be?  If your uncle is still providing all of your advice, it might be time to get a second opinion.  Are you maximizing your tax status for your long-term strategy?

5. State filings
We always forget that when we add new employees in new states, we suddenly must start filing taxes.  Be proactive about registering and don’t let it be a nasty surprise year in arrears.

6. Insurance
When was the last time you sat down and went through what you are covered for and where you might have gaps?  I absolutely HATE this practice but make myself (and another person to get a different perspective) sit in the excruciating meeting and review everything.  Line by freaking line.  It’s horrible, my broker hates us, but we’ve discovered multiple things that weren’t covered or that we didn’t need to pay for.  It’s worth the investment of time (and sanity) once a year to know your risks.

 

If you need help with anything, we’re happy to give you our advice or introduce you to others that have that specialty.  Don’t slack off as we head towards the fall.  It will only come back to haunt you when you least expect it (or have time to deal with it!).

What is a CPSR and Why Should You Care?

We recently told you about the Contractor Purchasing System Review (CPSR) process, and today we will (attempt to) convince you to care about this mega-compliance hurdle. If you want to read more about a CPSR, check out our white paper here.

There appears to be a trend in government evaluations looking for CPSR compliant contractors. CPSR compliance was an extra 500 points for the recent OASIS bid.  Many of our competitors will happily sell you a CPSR package without blinking at the cost or whether you actually needed it.

Who needs CPSR?
First, the main factor we tell our clients is to assess how much subcontracting work they do.  If your business weighs heavily on issuing a myriad of subcontracts or large procurements in support of your prime contract awards, then you have checked the first box to “needing” a CPSR compliance plan.  The remaining boxes are comprehensive.

Second, if a majority of your work is with the DoD, you may want to consider checking out DFARS 252. 252.244-7001, the regulatory birth of what a CPSR compliant system looks like. Finally, if your contract says you have to be CPSR compliant – we hope you already have systems in place to pass an audit before signing the dotted line.

Finally, most organizations do not like or want a CPSR compliance plan because of the heavy administrative burden it places on corporate processes.  Think about the last time you waited for a large GovCon to issue you a subcontract that was allegedly “on fire.”  In most cases, the subcontractor is issued a letter subcontract or works at-risk with an authorization to proceed (also part of the CPSR compliant program) before the “real” subcontract is issued.  This is because nearly all GovCons with CPSR compliance programs have to take several steps to coordinate awarding a procurement.  These steps were put in place to comply with CPSR requirements.

If we have not talked you out of it and you are ready to start the box-checking, administrative hurdles of CPSR land, consider an organization like BOOST that will tailor a compliance plan to fit your organization. We will not open a canned manual and serve it to you on a platter. We exist to add value. We can provide a customized CPSR plan; if you need it.

Lowering Your Wrap Rate

Did you make it into your desired beach bod state this summer?  Or was time for the gym illusive?  Did you cut back on the dessert or did you enjoy a ton of gelato?

Much like dieting and maintaining good health, government contractors must maintain a “sexy” multiplier/wrap rate.  Even if you are in a less competitive field or have a unique offering for a customer with a ton of funding (if you are, good on you), you must still monitor and maintain your wrap rate.

Companies can sometimes view this exercise as an annual corporate budget, where you occasionally look at how you are doing and often look back and ponder “what were we thinking?”  This is not enough by a long shot.  Best practice is to review your financials each month and include analysis on how you are performing on your wrap rate.  Review monthly, adjust quarterly, consider a complete overhaul semi-annually.

Most companies find that they need to tighten the belt a smidge, especially as we push into the fourth quarter.  For some, it may be too late to rein it in this year, but that doesn’t mean that you shouldn’t start pushing for the 2019 indirect diet.  For others, it may be a great time to lose a few pounds before the year-end festivities.  Here are some suggestions for both year-end and next year:

  • Space – do you really use it; do you need it and what is your company culture? Larger System Integrators are shedding their bloated infrastructure.  Don’t build one unless you’ve got 5-year POP’s with all contractor site rates.  And even then, keep it lean.
  • Wellness – When was the last time you competitively shopped your benefits? Or even your broker?  Don’t get tied up in the same old “we only have a 2-5% increase, so that’s great” mentality.  Depending upon your size, self-funding in some capacity may be of interest.  Does anyone actually use the vision policy?  What about dental?  Have you considered reducing your contribution?  Not always popular but it may lead to new work.
  • Training – with all of the online options these days, does your team really need individualized training or would an online package work? You could offer this benefit to more employees at a lower overall cost.
  • Education – consider reducing the tuition reimbursement if very few people are using it. It’s nice to tout to potential new hires, but in reality, it’s not a deal-breaker.  If it is, bonus the employee out to cover the costs.
  • Business Development – is the team on track to meet their goals this year or has performance been underwhelming? It is time to take stock of what’s working and what isn’t and shed a quarter’s worth of labor costs for non-performers.  Let them go now while the job market is still firing up.  Layoffs or terminations after Veterans Day essentially mean no job until after New Year’s.  Make the hard call now.

Keep working at the wrap rate and make sure it’s as lean as you can survive on.  Not bloated, but not extra thin either – you need a little wiggle room to ensure a healthy company.

GovCon Voices: A Culture of Compliance

As seen on SmallGovCon.com

When we talk about the federal contracting industry, one of the first things that comes to mind is compliance. We are an overly regulated industry with a ton of laws to abide by, FAR changes to keep up with, legislation of which we need to stay on top. None of it is particularly easy or straightforward, and it sometimes takes experts to keep your organization in compliance. In short, no one can claim they are 100% compliant, nor can they claim to know everything with regards to this industry, especially a GovCon CEO. That’s the bad news.

The good news is that no one expects this of the CEO. However, your attitude towards compliance goes a long way within the organization. The example you set at the top will filter throughout the organization and will go a long way towards establishing and maintaining a company culture that follows the rules of this industry. We all talk about making sure that the company is not on the front page of the Washington Post for getting into hot water with the law or for debarment.

How can you contribute to that as a CEO?
How can you build your organization to take it seriously?
How do you keep from bogging down the wheels of progress and allow the mission goals for you and your clients to be met?

Lead by Example. It sounds so easy, is in every leadership book, and is touted on every trending article on LinkedIn. But ask yourself, who fills out your timesheet? Do you throw 8 hours of your time into G&A and call it a day? Do you have your admin fill out your timesheet? Do you approve your direct reports? Every GovCon has a timekeeping system that requires daily input and ultimately, signature submission and approval of direct reports time.
Do you travel according to JTRs and/or within the per diem rates? Do you expect your folks to abide accordingly? As a GovCon, you just don’t travel extravagantly. Ever.

Put your Money where your Mouth is.  How many emails from the Timekeeping Goon have you received? Do you ever take the time to find out who the repeat offenders are and to speak with them about these transgressions? Ever told your top sales person that they could have their pay docked or lose their jobs if they continue to be non-compliant? It’s that type of discussion (and action) that shows that the company values compliance and takes it seriously.

Have you had your HR folks scrub through your labor categories and the folks associated with them…proactively? Have you righted any salary discrepancies to ensure that your workforce is fairly and consistently paid according to skill set and experience? These suggestions all are dictated by FAR compliance and laws, but in general, they emulate good advice.

Be the leader that the GovCon industry needs and keep your company on the front pages for the work you are contributing to this country; not for running afoul of the rules.

See the original article: http://smallgovcon.com/govcon-voices/govcon-voices-a-culture-of-compliance/#sthash.4Ahp75Xd.dpuf

Green

Do the right thing. It will gratify some people and astonish the rest.
-Mark Twain

In today’s environment of competition, LPTA, race to the bottom (insert any other overused term we throw around in the GovCon world), we all talk about “greening the staff” as a way to cut our costs on proposals. But who really does it and more importantly, who does it successfully?

Typically, we say that in the execution of a 5-year contract, we can move the more seasoned employees to other contracts and replace them with more junior employees who will learn from the best, and do their jobs more efficiently and at less cost. In reality, this means we replace seasoned and expensive employees with less expensive employees under the guise of “career advancement.”

Contractors bet that a year into execution, the government will absolutely LOVE their seasoned SME’s, and therefore will cough up more funding in the out years not requiring the transition of staff.

What happens if that isn’t the case? 

Contractors tell their seasoned SME that they have to take a 20%+ hit on their base salary or they yank them to a more profitable contract and backfill to the minimum labor category requirements with little to no transition or cross-training. The result? A bad taste in everyone’s mouths, most importantly the government.

What if we did what we claimed we would do in our management plans?

What if we told our SMEs in contract kick-off that we were going to start grooming their replacements and incentivized them to help train them successfully?

What if we spent the time to recruit the right person for the transition? A person wanting to work with the agency and grow professionally. What if we made our government customer part of the transition plan and they knew all along that there would be new teammates in the out years?

Imagine if we actually provided the career growth for our SMEs, built our workforce with energized, well-trained folks who could help win the re-compete and, topping it off, actually *gasp* saved the government money?

Yes, it means forethought and planning. Yes, it is harder than just asking for more funding. If you want to grow your company and your team successfully and thoughtfully – try greening the staff.

Just do it the right way, the first time.

Goals

New year, new you?  Yup, been there, done that.  How many GovCon business owners start with the best of intentions for the new year?  Any of these sound familiar?

  • This is the year I’m going to break $XM in revenue!
  • This is the year we’re going to follow a formal BD process.  No more bluebird bids!
  • This is the year we’re going after (huge IDIQ).  We’ll have our team solidified 30 days before the bid.
  • This is the year we’re going to invest in our employees.  We’ll do brown bag sessions and offer training courses.
  • This is the year we’re going to have and follow a strategic plan.  We’ll review it quarterly and assess our progress.

I’d venture to say every CEO in this industry has thought at least one of the above in the past week, with the best of intent.  Before this becomes another boring blog on goals and how to attain them, let’s stop and get real.   One of my mantras is that small business owners don’t have time or money to waste.  I know I don’t.  Achieving all of these goals this year would be great.  But in a world of tactical day to day operations, it’s hard to come out from the emails, status meetings, business development, and management of our people.  Let’s face it, running a company is not for the lazy!

So let’s focus on one goal.  One little goal.

Here it is – one goal every business owner should make (and actually do) is to THINK.  This sounds so simple.  I know.  But when was the last time you actually made time in your schedule to think about your company and its future?  When did you last turn off your phone/email/life and spend some time with your thoughts and plans?  Do you remember why you got into your field?  What your end game is?  Are you moving toward your goals?

As owner/CEO it’s on you to have a direction and focus toward which your company is moving.  How can you provide leadership and oversight if you don’t know yourself?

Imagine what a few hours a week or even a couple days a month would do for your company if you took a step back and actually spent time thinking.  You’d know where you were on your goals.  You’d have time to think about the future, competitive landscape, trends, growth potential.  You would also feel like you had a better grasp on the company’s direction.  With a roadmap in front of you, you can spend the other time leading and executing effectively.  Who knows, you may even finally get to those training sessions.

Business owners spend too much time focusing on portions of their to-do lists that can be delegated to others. Every CEO wants to be an expert on all things, but let’s face it, sometimes we need a bit of guidance. Luckily some of us seek to assist leaders in creating plans and moving forward to reach their goals. In fact, if you have questions, I’m happy to offer support.

Need help building your corporate strategy in the federal GovCon space?  Feel free to shoot me an email at [email protected]