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Is Running a VAR Keeping You Up at Night?

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Updated 01/31/2023

Two parts of running a successful business in GovCon are knowledge and compliance. You need to know your requirements and how to follow those directives. Add to that the complexities of running a VAR/reseller and we’d bet that there are several things keeping you up at night – in addition to booking sales that is.

Below are some important compliance items that you should keep in mind.  Maybe they will even help you sleep better at night (probably not, but we’re trying!).

  1. Service Contract Act compliance – This is especially important for those offering ancillary services in support of the products (think maintenance, warranty or help desk). Many of the VAR/reseller-type services are potentially covered by a Wage Determination.  Most VARs do not provide the services themselves, but rather, the OEM.  Add this to the fact that most services are buried in the product line item, it can be challenging to determine whether or not the SCA even applies to your PO. As such, a certain level of “due diligence” needs to be conducted to ensure compliance. The last thing anyone wants is the DOL knocking on your door with an audit request.
  2. NMR – The infamous Non-Manufacturer Rule (NMR) is a thorn in any VAR’s side when it comes to GovCon and IT. The Non-Manufacturer Rule tends to cause headaches for small business owners, if only due to having to mitigate compliance with the rule while dealing with the circus of contracts already in progress for most small business owners. The NMR is an exception to the SBA performance requirements and limitations on subcontracting (LOS), which provide that on a supply contract, a firm must perform at least 50% of the cost of manufacturing the supplies. FAR 52.219-14  contains more information pertaining to compliance in this realm, including which businesses it pertains to, limitations of the clause, and which contracts it pertains to. We’d strongly recommend doing your research on FAR 52.219-14 to get the full depth and scope of the law, but if you’re getting lost in the jargon, we’re here to help. There are some large vehicles, such as the NASA SEWP, that contain the LOS. NASA SEWP is also notable for its size, as it provides government-wide IT products, meaning there’s a lot of room for contractors at the table. Practice tip – if you are selling big IT equipment, ask your CO to remove the clause from the solicitation.
  3. Efficient “vendor” management – Alongside the heavy traffic of deals streaming in and out of a VAR, it’s hard to imagine tracking, managing, inspecting, and reporting all of your vendors. Compliance requirements for counterfeit parts, data breach safeguarding, and flow downs seem like an impossible mountain to summit. Let us shine a light in the darkness here for you: BOOST can provide a framework and strategy to best manage these pieces while saving you sanity and time.

Even if you’re sleeping at night like a bear in winter, these can still cause quite the headache.  Our mission at BOOST is to alleviate your headaches by helping you with the stuff you don’t have the time, the interest, or the man-or-woman-power to handle.  Focusing only on GovCon, allows BOOST to make your life easier and more efficient.  Whether it’s FAR 52.219-14 compliance, vendor management, SCA compliance, accounting or any of the other administrative tasks that come with running a GovCon, let us help you cross another task off your list, email [email protected] and let’s discuss the possibilities.

What are CPSRs and Why Should You Care?

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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.

CPSR Compliance For Government Contractors

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. We only sell this service if it appears to be necessary for your GovCon.  CPSRs are intense and thorough, so if it seems like a reasonable concern, read on to learn about which GovCons need to prepare.

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, as you’re more likely to encounter CPSRs in the operation of your GovCon.  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 compliance plan for CPSRs 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.

CPSR Plans & Services

If we have not talked you out of it and you are ready to start the box-checking, administrative hurdles of CPSRs, consider an organization like BOOST that will tailor a CPSR 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. To find more information on our Accounting Services for Government Contractors or our overall GovCon services, please click here.