It is very important that federal contractors, especially those new to federal contracting, understand that only contracting officials (KO) can modify an existing contract. That means that only they can:

•    Change the scope of the work (approve additional or new work)

•    Change due dates or formats for deliverables

•    Authorize additional payments

•    Change the FAR clauses that are part of your contract (add or delete)

•    Change how you must invoice for payment

•    ANYTHING TO DO WITH YOUR CONTRACT!

The point is that your "customer/client/PM" can't do any of the above without going through the KO. Where businesses get in trouble is usually getting caught between wanting to provide outstanding customer service (the "rock") and the actual scope of work in the contract (the "hard place"). It is great to expand existing work on a contract but you also want to get paid for doing that work. If you do work without the proper KO authorization the government is not obligated to pay you.

So what should you do? If your customer wants to expand your work:

•    First, tell the customer that you are more than willing to do the work on the third floor and ask her to contact the KO responsible for your contract to request a modification.

•    Send an email to your customer verifying the conversation and the details of the proposed additional work.

•    Send an email to the KO to give them a "heads up" that the government customer should be contacting them to modify the contract for additional work.

•    The KO may require that you submit a price quote for the new work. If so, respond quickly.

•    When the KO issues the modification, acknowledge it and start working.

All communications should be in writing and/or verified in writing by email.

The Obama administration has proposed combining the functions and staff of the Small Business Administration; the Office of the U.S. Trade Representative; the Export-Import Bank; the Overseas Private Investment Corporation; and the Trade and Development Agency.

This proposed restructuring is being pitched as a way to ease the regulatory burden on businesses and a savings $3 billion over 10 years is being claimed. That said, there are some trade groups who are concerned about the execution of the proposed restructuring and they are concerned that the move could strip resources from entrepreneurs rather than reinforce the needs of small businesses.

Such a massive reorganization will face difficulties getting approved in an election year and Congress may be less likely to approve the idea because several of the affected agencies currently report to different Congressional committees.

Many small business groups are concerned that the restructuring will take resources away from small-business programs. Several of the agencies in the proposed consolidation concern themselves primarily with large firms and although small businesses tend to be skeptical of government in general, they have a favorable impression of the SBA and don't want its influence diminished.

Personally I am worried that small contractors would be disoriented by the change. With fewer resources, the new agency might not be able to adequately educate small contractors on how to pursue government dollars. As I told the Washington Post, "If you change an entire agency, how are they going to put together the outreach? Where is that money? The confusion it's going to cause in the market place is my number one concern,"

To read more on the proposed government consolidation at the Washington Post click here

I was recently asked to provide my thoughts for a Washington Post article titled, Small federal contractors feeling the pinch of reduced government spending, concerning how contracting "batting averages" have declined for both primes and subcontractors. American Express Open provided data that showed that the success rates, or "batting averages" for prime contractors bidding on government work have declined in 2008-2010, from 2007-2009. The decline has been greater for subcontractors than for primes.

As all small businesses know, providing services for the federal government has always been hard work, and now it's getting even harder. Small business owners are having less success in securing federal government contracts even as they go after contracts more aggressively, according to data from a new report released this week by American Express OPEN, which polled 740 small business federal contractors in an online survey.

According to the survey, active small business contractors reported that they spent an average of $86,124 seeking federal contracts in 2009, but they spent $103,827 doing so in 2010 - an increase of 21 percent. The costs include both staff time and expenses such as travel, mail and meetings.

The success rate declined even more - by 27 percent - for subcontractors, who tend to be smaller. The AMEX OPEN research team thinks this might be because prime contractors are holding on to more of their work as government spending dries up, rather than doling it out to subcontractors. "Large primes are not opening up for as much subcontracting activity," an AMEX OPEN research advisor said. "Federal spending is down, and it's impacted big contractors, which then has a ripple effect on small businesses that are suppliers to the larger primes."

My point of view is that a small contractor should network with agencies and prime contractors, attend all industry trade shows and build a stellar Web site that showcases examples of past work.

My rule of thumb is that a contractor should "say 'no' more than they say 'yes' to decisions to bid" so as to ensure that they're not wasting resources on contracts they likely won't get. The AMEX OPEN survey found there are diminishing returns for those taking a scatter-shot approach. Bidding on more than six contracts in a three-year period actually caused a business's "batting average" to decrease suggesting companies are better off trying for just two or three contracts each year.

To read more about the AMEX OPEN study and the Washington Post article go to:

http://www.washingtonpost.com/business/on-small-business/small-federal-contractors-feeling-the-pinch-of-reduced-government-spending/2011/12/12/gIQACpcwrO_story.html

In May of 2006, President Bush signed into law the Tax Increase Prevention and Reconciliation Act (TIPRA) (Public Law No. 109-222). The measure was a combination of small tax provisions, including extension of capital gains tax rates, increased expensing provisions for small businesses and some alternative minimum tax relief. To offset these revenue-negative provisions it also contained sixteen "revenue offset" provisions to make the bill revenue neutral.

While most of the provisions of the bill were debated in both the House and Senate, there was a provision that emerged from the conference committee that had never been part of the original bills and never discussed in hearings on the chamber floors. Section 511 mandates that federal, state, and local governments withhold 3 percent of their payments for goods and services (the "government withholding regime") starting in 2013. Assumptions are that it was added into the bill to help reconcile the bill and make it "revenue neutral."

Implementation was delayed until 2013 largely due to the fear that many contractors would increase bids on projects to account for the delay in payment, increasing the overall cost of projects dramatically. An increase in project costs on a local level could have been devastating to communities that are struggling to finance projects while dealing with deep budget cuts.

Because the profit margin for many businesses working with local and state government is often less than three percent, the withholding tax would have created significant cash flow problems for day-to-day operations in addition to reducing capital that could be invested in job creation and business expansion. Many planning, architecture, landscape architecture, and engineering firms work extensively with government agencies and would have been negatively affected by this change.

This provision was repealed as a part of a larger bill (HR 674) that contained several elements of President Obama's jobs bill. Introduced by Reps. Wally Herger (R-Cal.) and Earl Blumenauer (D-Ore.), the bill was a bipartisan effort with 269 co-sponsors. It was passed unanimously. The Senate previously approved the bill on a 94-to-1 vote.

Learn more at www.govtips.biz

During tough and challenging business times your main goal becomes survival….staying alive! At this time there are three key areas of your business that you must examine and focus on in order to ensure your survival. These areas are:

• Make core competency your Brand
• Business Processes
• Marketing-go to Market Strategy…not just selling

Your core competency must be your brand and can be defined in the following areas. Intangibles… what are you known for? I hope one intangible is being known as an ethical business. Do your customers trust you and is your word your bond? What are you known for? On-time delivery or low cost, high quality? What do you and your customers get as their return on investing with you?

Another key to survival is to make sure that you have all your critical business processes defined and documented. You need to ensure that your business data is secure and that you are managing the knowledge that defines your business. The key processes that must be defined and documented are proposal management, contract management, and financial management. These three all have important elements of data that must be created, tracked and maintained to ensure that you are ready for opportunities that come your way.

During these tough times do you need to re-examine your go-to Market Strategy? How you have positioned your firm in the marketplace can be referred to as your go to market strategy. Are you a Sub or a prime contractor to the government? Do you have key customers you have served that no longer seem to hold potential? Have you teamed with a partner who seems to have changed direction and no longer includes you in their strategy? These may all be signs that you need to step back and re-examine how you survive and thrive in this economy. Your examination and the plan developed from that review should result in a strategy that allows you to turn around the circumstances and sue your strengths to re-position your small business for survival and possible even growth you had not considered in the past. In many instances this forced examination will result in a new beginning with surprisingly good results!

This is part of a presentation I made at the Virginia Beach Minority Business Council "Connect and Grow Your Business" conference and Expo. To learn more go to the link below.

http://govtips.biz/media/22803/vambc%20presentation.pdf

Often businesses seeking information on doing business with the federal government are referred to or discover by "Google" government agency websites. While these are usually good sources of information, especially on process questions such as how to apply for a small business certification, they are not the only sources of very valuable information and insight.

Consistently, when asked, small business owners state that the most important information they can get is from other business owners who have gone through the trials of doing business with the federal government and who can provide them with "been there, done that" knowledge and, more importantly, the aspect of "here's what I did wrong" so that you can learn from that.

Many, many organizations provide this type of information either to their members or to the public at large. One great example is American Express who through their AMEX OPEN program provides articles, blogs, podcasts, and online training activities all dedicated to helping the small business succeed. In particular for those interested in doing business with the federal government go to www.openforum.com/governmentcontracts.

This is a great gateway into a wealth of information about how to do business with the federal government and for doing business in general. So log-on, dig-in and let the learning begin.

On September 14th - the Administration announced that the President is ordering all federal agencies to pay small businesses faster to spur hiring and job growth. The memorandum was issued to all executive branch departments and agencies. The Federal Government pays small businesses nearly $100 billion each year for goods and services. By taking actions that will enable these payments to be made as promptly as possible, it will improve cash flow for small businesses and provide them with a more predictable stream of resources, thereby preserving and increasing small business participation in Federal contracting.

To the extent practicable, Federal agencies shall establish a goal of paying small business

contractors within 15 days of receiving proper documentation, including an invoice for the amount due and confirmation that the goods or services have been received and accepted by the Federal Government OMB recognizes that agencies, in their implementation of this accelerated-payment policy, will not be able to guarantee that they will make payments to small business contractors within the accelerated (15 day) period.

Moreover, the establishment of this accelerated-payment policy, and its implementation by Federal agencies, does not change the application of the PPA's late-payment interest penalty provisions.

In order to take advantage of this make sure that your business is fully prepared to receive electronic payments and invoice using systems such as WAWF. Also, if you are not registered in the CCR you will not get paid at all, much less faster.

Read more at http://image.exct.net/lib/ff001071716006/m/1/Memo_Accelerating+Payments.pdf

The Obama administration has proposed changing how the government sets limits on the reimbursement of salaries of contractor companies' senior executives.

The current formula for reimbursement sets the cap using a survey of commercial compensation but the administration wants to tie the cap to the salaries of senior-most federal officials - specifically, Executive Schedule Level I, which currently pay $200,000 a year

Congress will have to pass new legislation to make the change.

The Office of Federal Procurement Policy is legally required to determine the amount of compensation, such as salaries and bonuses that the government will reimburse for, based on available surveys on executive pay at publicly traded U.S. companies with more than $50 million in annual sales

In 2010, the OFPP allowed reimbursements for contractors' top five executives to reach a total of $693,951. The Obama administration now is concerned that, based on surveys reimbursements could reach $750,000 in 2011.

"It's that payment that strikes us as excessive," Dan Gordon, administrator of the OFPP, said Sept. 20.

Gordon said no one anticipated that the salary cap would increase as quickly as it has when the formula was designed. But at a time when federal employees' salaries are frozen, "it seems unreasonable to continue to dramatically increase the amount that we compensate."

So now, the administration wants to reset the Executive Compensation Benchmark to equal out pay between federal and contractor executives' compensation.

Although this will not affect small businesses at this time it is an example of unwarranted intrusion by the federal government into the private sector. There are multiple regulations in both the F.A.R and the DCAA accounting manual that make contractors justify their rates or salaries and their G&A and Overhead costs. These all impact a contractor's cost competitiveness and are a "self-regulating" tool for executive salaries. That is, it is not in the best interest of contractors to pay their executives an "excessive" amount unless they want the marketplace to judge them as not cost competitive.

Bottom line: Should the federal government establish what an "excessive" salary is for contractor executives or should they let the marketplace determine executive salaries as it will "punish" those which might be "excessive"?

American Express is providing great information and support to small businesses through their American Express Open Forum, www.openforum.com, and especially through Victory In Procurement (VIP) free conferences on government contracting. The Open Forum web site and links are full of timely pertinent information for small businesses but I'll focus on just two opportunities: Crash Courses for learning; and, the VIP series.

The "Crash Courses" presented by AMEX OPN are a new way to learn and cover topics important to all small businesses. There's plenty online on how to keep current on business trends. But is there too much? Crash Courses are a different way to learn. Answer a question right and move on. Answer incorrectly and we'll help you learn more. This is a very interactive approach and the learning is fast and you retain what you learn. In fact, in the coming weeks I'll have a Crash Course on government contracting that you can access through the Open Forum web page.

If you are interested in learning more about government contracting opportunities, visit OPEN for Government Contracts: Victory in Procurement (VIP) for Small Business, a program American Express OPEN launched with WIPP, Business Matchmaking, and SCORE. Through mentoring, networking, and online resources, this program helps businesses owners prepare for and register on the CCR and obtain the proper certification(s). I also encourage you to visit American Express OPEN Teaming USA, for more information on teaming and to find potential teammates and government contract opportunities.

The Federal Government awards nearly $100 billion* in contracts annually to small business owners. This day-long event-featuring buyer/selling matchmaking, workshop breakout sessions, expert speakers and networking opportunities-is designed to help get small business owners on the path to securing these contracts and help boost profits. I have been one of the subject matter experts for the VIP series and will in Dallas in October for the next conference.

Breakout sessions include:

• Researching and Forecasting
• GSA (I facilitate and teach two sessions on GSA)
• Teaming
• Certifications

Learn more today and register at vipgovtcontracting.com

This is the fourth and final blog in a series of blogs that I will do related to the recently issued memorandum detailing the Department of Defense (DoD) Source Selection Procedures for acquisitions utilizing FAR Part 15 procedures (see links below). The purpose of this new document is to standardize the methodology and approach that DoD uses to conduct competitively negotiated source selections. The procedures defined are effective as of July 1, 2011.

The contracting official must debrief an offeror upon receipt of its written, timely request (See FAR 15.503 and 15.505). The debriefing serves to assure offerors that the Government properly evaluated their proposals and made the award determination in accordance with the RFP. Since each offeror puts considerable resources into preparing and submitting a proposal, fairness dictates that the contracting official promptly debrief offerors and explain why a proposal was excluded from the competitive range or was successful or unsuccessful. Timely and thorough debriefings increase competition, encourage offerors to continue to invest resources in the Government marketplace, and enhance the Government's relationship and credibility with industry. The debriefing also provides feedback to offerors to assist in improving future proposal submissions. Always request a debriefing! Win or lose. Be prepared in order to get the most from your debriefing. Below are examples of questions you might ask.

•    Please explain the basis for the strengths, weaknesses, or deficiencies in our proposal for each evaluation factor and sub-factor.

•    Were there any solicitation requirements that we failed to address? If so, what were they?

•    Please explain how past performance was evaluated. What was our rating? How was that rating applied to the source selection process?

•    Was there anything not required by the solicitation that we could have offered that might have made us more competitive for the award?

•    What were the most critical evaluation criteria that proved to be tiebreakers in the evaluation of proposals?

Subpart 15.1-Source Selection Processes and Techniques

https://www.acquisition.gov/far/html/Subpart%2015_1.html#wp1095855

DOD Source Selection Procedures

http://www.acq.osd.mil/dpap/policy/policyvault/USA007183-10-DPAP.pdf