GovCon : Government Contractor Business Practices

Midsize firms hardest hit by new requirement

czmuda — Fri, 13 Feb 2009 18:18:00 GMT

Alice Lipowicz posted this article in Washington Technology on February 12th, 2009

Midsize federal contractors with $5 million to $500 million in annual revenues are likely to be hardest hit by the new mandatory self-disclosure requirements in the Federal Acquisition Regulation, according to a government contracts expert.

“This means the most to companies in the middle,” said Tony Fuller, a partner at Beers and Cutler law firm, during a forum in Washington today. “They have further to go to comply.”
Under new provisions that went into effect Dec. 12, 2008, federal contractors must report in a timely fashion when they have credible evidence of violations of federal criminal law, fraudulent acts and receipt of overpayments. Failure to do so could result in suspension or debarment from federal contracting. The rules apply to most federal contracts valued at $5 million or more.

Contractors also must institute ethics compliance and anti-fraud controls and train their employees about those programs. Midsize contractors’ ethics and anti-fraud systems tend to be at varying levels of maturity, Fuller said. Some firms will need to take additional actions toward setting policies and procedures, training employees, and establishing control systems and documented processes to comply with the new rules, he said.

Grant Thornton - M & A Roundtable Recap - May 29th

czmuda — Fri, 30 May 2008 03:41:00 GMT

Technorati Tags: Business Development

I was fortunate enough to attend the M&A Roundtable sponsored by Grant Thornton LLP. It was a very well attended session with high level industry executives attending.

While there was a lot of good information shared, one interesting trend I learned about was the increased interest in foreign companies looking to acquire US based Defense firms. As you can probably guess this makes a lot of sense, given the devaluation of the US Dollar . This economic factor is making this acquisitions more easily attainable. For companies located within NATO based companies this is a great way to drive collaboration across the defense industry and this teaming is welcomed by our US Government.

This slide taken from Richard Knop, Sr Managing Director of BB&T's International Investment practice remarks shows that overall the M&A market remains strong for the government contracting technology firms and cites New Entrants as one of several factors driving growth in acquisitions.

Doing Contracting Business in Maryland May Get More Expensive

czmuda — Fri, 14 Mar 2008 19:58:29 GMT

Here is an excerpt from Nick Wakeman, Tech Editor of Washington Technology.com on the proposed sales tax on computer services done in the State of Maryland. If you are interested in actively fighting this issue, there is a grass roots effort via www.fightthetechtax.com.

The Maryland information technology community is fighting hard against a new sales tax scheduled to go into effect July 1.

Although it is a state tax, any government contractor doing business with a federal agency in the state will feel its impact, said Julie Coons, chief executive officer of the Tech Council of Maryland. The council and the Maryland Chamber of Commerce have formed the Fight the Tech Tax coalition to push for a repeal of the tax. Other members include the IT Association of America and Computing Technology Industry Association.

The state legislature passed the sales tax in November; it requires companies to pay a 6 percent tax on the sale of computer services. For the full article, please click here.

DOD Issues New Contractor Rulings

czmuda — Sat, 12 Jan 2008 02:47:00 GMT

This article was posted on Washington Technology.com on 1/11/3008 by Matthew Weigeit, author for Federal Computing Week. It has some interesting implications for systems integrators. See Below for the an excerpt from the article;

"Systems integrators will no longer be able to provide support to the Defense Department on the awarding of contracts that the integrators have a financial interest in, under a new interim rule.

The rule is a response to congressional concerns in the fiscal 2007 Defense Authorization bill. Lawmakers said they are concerned about conflicts of interest and the potential for a company to end up evaluating itself or its competitors in making contract awards, according to a Senate report on the bill.

The potential for problems grows as DOD contracts out more work relating to acquisition, engineering and managing major programs, the report said.

The Government Accountability Office discourages agencies from letting lead systems integrators have too much influence in contracting decisions. Agency officials must be vigilant about protecting their agency’s interests, a 2006 GAO report said.

Proposed rule would establish contractor code of ethics

czmuda — Wed, 05 Dec 2007 02:17:00 GMT

Interesting Tidbit shared by Secaf.org

A new rule has been proposed which would require contractors to establish a code of ethics and put internal controls in place to detect and prevent improper conduct in contracting.

The Civilian Agency Acquisition Council and the Defense Acquisition Regulations Council jointly proposed the rule, which would amend the Federal Acquisition Regulation. The Justice Department had requested the proposal.

The councils had previously proposed a rule that would address the requirements for a contractor code of ethics and business conduct. Although the councils still plan to issue a final rule based on that proposal and the responses it elicited, the Justice Department’s request goes beyond it. The new proposed rule covers additional aspects of contractor ethics.

The new elements include:
• Adding the contractor’s record of integrity and business ethics as relevant past performance information.
• Exempting small businesses from requirements for a formal ethics awareness program and internal control system to reduce the burden on small firms.

Suspending or debarring contractors from government work for not reporting violations of federal criminal law — including violations by other companies — in connection with the award or performance of a federal contract.

The proposed rule, published November 15th in the Federal Register, is open for public comment until Jan. 14.

For Contractors in War Zones, Business Will Keep Growing

czmuda — Tue, 20 Nov 2007 03:37:00 GMT

Defense Watch's own Sandra I. Erwin posted an article about increases in spending - see below......

The constant sniping in Washington about military contractors — particularly those doing business in Iraq — ignores the inescapable conclusion that the privatization of government functions not only is here to stay, but is going to get bigger.

By the government’s own estimates, of the Pentagon’s $300 billion annual procurement outlays, half is for private-sector service contracts. Read more

8a, Hubzone and Womens Procurement FAQ

czmuda — Sat, 17 Nov 2007 07:29:00 GMT

Interesting FAQ that was published by www.Secaf.org

8(a) Program:

Q: Why hasn't SBA raised the net worth requirements through regulations?

A: SBA and the SBA's own Office of Inspector General have had a longstanding disagreement about this issue. While it may be problematic in some industries, SBA has not seen a drop in applications or evidence that this has created a barrier to entry. The current standard provides a maximum financial worth no more than $250,000 at entry into the program and a maximum of $750,000 during program participation. The IG continues to have concerns over the nature of economic disadvantage and its use by the agency to provide opportunities to 8(a) businesses. A recently released study commissioned by the Congressional Black Caucus does not relate to economic disadvantage. According the Federal Reserve, the median level of wealth of all families in 2001 was $86,100. In addition, the family net worth for persons in the top 10 percent of this income group is $833,600. This figure includes the value of the family's house and business. The Census Bureau's report on income in the United States in 2004 stated that the median household income was $44,389.

Q: Is it true 90% of 8(a) contracts are concentrated in firms that have graduated the 8(a) program?

A: That number is incorrect, it is based on data extrapolated by Committee Staff. The data is incomplete as clearly noted on page 24 of the 8(a) report. In 2006 we had 9,490 8(a) firms and 4,186 contracts. We show that roughly 45% of firms received contracts.

Q: Are ANCs receiving a disproportionate number of 8(a) Contracts?

A: The SBA is following the law set out by Congress in 2002. In response to a GAO report, we are taking steps to increase our oversight of the program and are following necessary procedures prior to drafting any changes to the underlying regulations. We have also rewritten the partnership agreements with procuring agencies to monitor their use of ANCs and tribal-owned firms. According to GAO, 8(a) ANC firms received a total of $2.9 billion between 2000 and 2004, never more than 14% annually.

Q: Why isn't SBA overseeing the 8(a) contracting process?

A: We are overseeing the process. We recently rewrote the partnership agreements to increase our oversight of delegated 8(a) authority and are having regular meetings with agency contracting officials on their use of that authority. A new requirement for SBA to oversee the contracting process would remove SBA's current ability to delegate 8(a) authority to other agencies. This is authority we have delegated in order to streamline the contracting process, cut unnecessary government red tape and reduce costs to the taxpayer.

HUBZone Program:

Q: The IG reports that 98 percent of HUBZone firms are ineligible within 3 years?

A: Roughly 30% of current HUBZone firms are less than two years old. The failure rate is proportional to that in young firms. Many firms do drop out, but that is not a sign of fraud. The IG made five recommendations to help SBA clarify and update its recertification process and we have implemented or are implementing all of them, including improved referralsto the IG of fraudulent HUBZone activities.

Q: Why is there rampant fraud in the HUBZone program? For example, 40% of awards are going to non-registered firms.

A: SBA has a pending change in the FAR regulations to require a HUBZone firm to certify at the time of the contract award, as well as when the firm submits its bid and that the firm is attesting to their continued eligibility during the life of the contract. The Federal Procurement Data System (FPDS) has also been modified to prevent a HUBZone contract from being entered unless the awardee is a certified HUBZone firm. Firms must reregister on CCR annually and update their ORCA certification. We are currently looking at how we can further modify the recertification process even further to reduce any other avenues for potential fraud.

Q: Under the Committee's new proposal, HUBZone companies would be prohibited from bidding on construction contracts more than 150 miles from the main office. Does the SBA support this proposal?

A: We understand that the program may have some unintended results in more heavily populated areas, but a restriction such as the one in the proposed legislation does not take into account the realities of many HUBZone eligible firms located in rural parts of the country. In such rural areas, population centers are spread out over great distances, leaving opportunities for HUBZone contractors with greater distances to travel before reaching the job site in the next town. This proposed restriction would exclude many such qualified HUBZone businesses from bidding on construction projects.

Examples - Global Construction of Kinston, NC with a contract in Memphis, TN; NASCO services of Smelterville, ID with a contract in Augusta, GA; Ceres Caribe in Puerto Rico with a contract in New Orleans.

Q: How are HUBZones established?

A: The HUBZone eligibility criteria were established in statute and based on data supplied by the decennial U.S. Census data. The IRS and HUD analyze the census data and then provide that information to the SBA to map- out the zones. SBA does not have a role in analyzing the census data. The next review of the HUBZones will occur after the 2010 census.

Women's Business Regulation:

Q: When will the SBA implement the WOSB regulation?

A: SBA has submitted a proposed rule for interagency review and, under the requirements of the Administrative Procedures Act, is unable to comment. As part of the clearance process, at least 24 federal procuring agencies,each with their own Office of General Counsel, will have the opportunity to review and suggest changes to the rule. WOSB contracts accounted for 11.6 billion in FY 2006 and 3.4% of federal procurement, an increase of $1.4 billion or 0.3% from FY 2005. SBA's executive team is committed to increasing federal contracting dollars to WOSBs