Responding to an RFP is an expensive and time-consuming process. Once your organization has decided to make that investment, it’s important to make sure your proposal is just right. Ambiguities – unclear statements or demands – in the RFP process can derail your success with the following negative consequences:
- Bids rejected for lack of compliance
- Bids less competitive for failure to follow unknown/misunderstood specifications
- Bids open to rejection for other reasons under the cover of ambiguities
In order to make your proposal as effective and competitive as possible, it’s critical to resolve any questionable statements in the RFP before you submit your proposal.
The first step in resolving unclear statements, demands, or terminology is to identify them. There are three main types of RFP ambiguities to watch out for and resolve:
- Terms & Conditions
In order to identify unclear portions of the RFP, you may need to call upon your technical specialists, project managers, and legal counsel to review the request and identify any areas of concern.
Examples of Ambiguities:
- Specification: An RFP for a new piece of technology tells bidders that they can recommend a product that exceeds specifications. In some cases, it’s easy to pick out things that would exceed specifications (e.g.: faster processing speeds or more memory). However, the waters get murky when you consider things like screen size. Would a smaller screen exceed specifications because it’s lighter and easier for employees to transport? Or would a larger screen be a preferred option to avoid taxing employees’ eyes?
- Process: The RFP specifies that all submissions must be made by 5pm on a given date. But the contracting officer is based on the East Coast, the agency is headquartered in Texas, and the work is being performed in California. Which time zone applies?
- Terms & Conditions: The language used in an RFP is the language a contractor will be beholden to once a contract is awarded. Unclear terms and conditions are subject to definition by the contracting officer, not the contractor, so it’s very important to make sure all the legal language is crystal clear before responding to an RFP.
Quick Steps to Respond to Ambiguities in an RFP
- Identify unclear portions of the RFP: Let the experts at your organization review each portion of the RFP and point out any areas of concern.
- Submit questions to the contracting officer: At this stage, it’s important to make sure that your questions are extremely clear to avoid further confusion and get the answers you need to move ahead.
- Follow up with more questions: If the contracting officer’s answers are unclear, you can follow up with additional questions. These may or may not receive answers depending on the timeframe remaining for submissions.
- No response? Consider whether a protest is appropriate.
Bid protests are time-sensitive and costly. In order to make your proposal competitive from the start, resolve ambiguities with the contracting officer as early as you can. However, if you truly aren’t able to get answers and lose an award because of ambiguities in the RFP, a protest may be the best way to obtain a satisfactory resolution. A good government contract lawyer can carefully evaluate the merits of any protest to make sure you are able to make an informed decision about your options.
Whether you’re struggling to resolve ambiguities in an RFP or considering a bid protest, Randolph Law is here to help.
Contact us to learn more.
If you have responded to a FAR Part 15 RFP or to a FAR part 16 Task Order or Delivery Order RFP, you are entitled to a debrief. You should make the most of the opportunity.
If you have responded to a FAR Part 12 Commercial Items solicitation or to a FAR Part 8 GSA Schedule Task or Delivery Order RFP or RFQ, you are not entitled to a debriefing, you are only entitled to a “brief explanation” of the reasons for the decision. You may not receive as thorough of an explanation for the award decision, but you should nevertheless use this same guidelines to make the most of that explanation as well.
Asking for a Debrief
You must ask for a debrief within three days of when you receive your notice that either you have not been selected for award, of you’ve been down-selected in an initial or multi-round selection process.
Always ask for a debrief. There is almost always no downside to ask for a debrief. The only time you may not want to ask for a debrief is if you have already decided to file a bid protest, and you’re concerned that the Agency will drag their feet (sometimes for weeks or months) on giving the debrief, leaving you unable to file you protest; since once you’ve asked for a debrief you are not allowed to protest until the debrief is completed.
Preparing for Your Debriefing
If your debriefing will take place in person or via telephone, you can prepare in advance to get the best information out of the time you have.
Think about what you want to accomplish. There are two simple questions you should aim to have answered by the time you finish:
- Why did you lose the bid?
- Why does the government say you lost the bid?
Sometimes, these answers will be the same. Other times, the requesting agency will have a favored contractor, and the government may simply say that your proposal was not as good as the winner’s. An in-person or telephone debriefing can be used to determine whether or not you have grounds to protest the award.
Once you’ve given some thought to the outcome, prepare questions that will help you walk away with the information you’re after. Your questions should be directed to the specific issues identified in the award notice. In some cases, you may choose to include members of your technical team or legal counsel in the debriefing in order to address critical concerns. Be aware of the following considerations:
- Don’t allow technical people to get mired in minutiae, and detract from your overall purpose. Make sure that anyone who attends the debriefing understands that a high-level discussion is in order.
- Bringing your attorney has the potential to help you get accurate answers from the contracting officer and translate his or her statements into layman’s terms. However, having a lawyer present may also cause the contracting officer to clam up for fear of saying anything that might lead to a bid protest. Weigh your options.
Setting the Tone & Gathering Information
As with any business meeting, a professional tone is required. You aren’t there to convince the contracting officer to award you the contract. Be mindful of your ability to work with the contracting officer and the agency he or she represents in the future. Be firm in your request for information, but maintain a positive working relationship at the same time.
Another thing to keep in mind is how to cut through the buzzwords to ensure that you leave with the information you need. Don’t use industry-speak, and challenge any buzzwords the contracting officer is using to explain why you lost the contract. Phrases like “best value” and similar terms are non-specific and therefore, unhelpful. Acronyms, too, can be a source of confusion. Demand clear, specific language.
Concluding Your Debriefing
At the end of the meeting, you should have some sense of whether or not a bid protest is in order. If it is, start your clock and get to work; bid protests are highly time-sensitive, and in most cases, you have no more than 10 days to protest, which is effectively five days if you want a CICA stay.
If you decide that a protest isn’t warranted, take the information you received at the debriefing and apply it to future RFPs. What that looks like will depend on your business and what you discover at the debriefing, but in all cases, the information will make you more competitive in the future. Remember, usable knowledge is the ultimate goal of any debriefing.
Do you need assistance preparing for a debriefing or working with the federal government in another capacity? Our experienced team can provide a legal consultation for your business. Contact us today to discuss your needs!
Randolph Law has put together a round-up of recent news and regulatory changes that impact government contractors today. Read on to learn more about upcoming compliance issues, changes in regulations, and opportunities for government contractors.
Government contractors no longer need to disclose potential labor violations when bidding on a contract, as per President Trump’s repeal of the Fair Pay and Safe Workplaces executive order. Federal contractors should be aware that the Trump administration is expected to preserve Executive Order 11246, which forbids discrimination on the basis of gender or sexual orientation. However, questions remain about how the administration will handle Executive Order 13706, which requires paid sick leave for workers on federal contracts.
While the federal government has always maintained requirements that favor buying American-made products and hiring American contractors, Trump’s April 18th “Buy American & Hire American” order attempts to strengthen those requirements and increase preference for U.S. manufacturing and employment. It’s recommended that federal contractors take care to evaluate their existing compliance policies in preparation for the order’s enforcement and the similar government contract regulations that can be expected in the near future.
In an effort to combat recent backslides in IT modernization and innovation, the federal government is preparing to increase agile acquisition efforts. The U.S. Digital Services department will be working alongside federal agencies to improve agile procurement and scale up the Digital IT Acquisition Professional Training Program for contracting officers. Ultimately, federal contractors in the IT space should have more opportunities to work with the government and influence technological innovation.
Raising a compliance issue for federal contractors, FAR 52.203-19 prohibits contractors from requiring their employees or subcontractors to sign a standard agreement that might prevent them from reporting fraud, waste, or abuse while working on a federal contract. Contractors must cease to use such confidentiality agreements and must notify all of their employees – even those not currently working on a federal contract – that the agreements no longer apply.
Do you have questions about remaining in compliance with federal regulations or expanding your opportunities with the federal government? Contact Randolph Law’s team of government contract attorneys for assistance.
We regularly take calls from people and companies that are interested in registering in the HUBZone program. Believe it or not, it’s the simplest of the Socio-Economic set asides in principle. Well, maybe the Woman Owned Small Business (WOSB) designation is simpler. Are you a woman? Do you own and operate the company? Prove it and you’re certified. Actually, so is Veteran Owned (Veteran? Own and operate the company?), and so is Service-Disabled Veteran Owned (Veteran? Service-disabled? Own and operate the company?).
Ok maybe HUBZone’s not the most straightforward, but in principle it’s fairly simple:
- Your primary business location must be located in a HUBZone
- More than 35% of your employees must live in a HUBZone
Of course, in application, it isn’t quite that easy, and that’s where we come in. Here are the requirements broken down into their component parts:
1. What’s a HUBZone?
“HUBZone” stands for Historically Underutilized Business Zone. These are tracts designated by the Census as historically under-utilized by business. You can find them on this HUBZone Map.
They are updated as often as several times a year. If you are in a HUBZone and the HUBZone is scheduled to be de-designated, you will have a period of time to move your primary business location to another HUBZone.
2. What does it mean to be “located in” a HUBZone?
That’s the easiest one. Your physical address has to be there. But, whatever the address is, whether your “primary business location,” or an employee’s residence, it has to be legit. No virtual offices (you can rent space in a place that also houses virtual offices but your office space must be big enough to house the number of people you claim work there). No employees living at relatives’ houses.
3. What’s “Your primary business location”?
That is the place of business, other than a client site, where the largest number of employees work. For most service companies, it’s the headquarters which is where all your back-office people are located, and likely where some of your on-contract people are located, too. It could, however, be a regional office if your regional employees aren’t on a client site and there’s more of them than at your headquarters.
For products and some services companies, it could be a factory, manufacturing, distribution, or warehousing facility other than your headquarters if the two are separated and if you have more workers at that location than you have at your headquarters.
4. What’s an “employee”?
Start with your W-2s. Those are all employees if they work more than 40 hours per month, which is roughly 10 hours per week (but note the requirement is monthly, not weekly). Others such as 1099s or volunteers could be considered employees depending on the type of work they do.
5. What does “35%” mean?
Just that. 35%. The difficulty is not in the percentage itself, it’s in maintaining the percentage as your company grows. For example, if a company has one employee, that employee has to live in a HUBZone. If there are two employees, one of the two has to live in a HUBZone. So if there are two partners, one should live in a HUBZone. But when those two partners hire a 3rd employee, that employee must live in a HUBZone (one of three is only 33%). The 4th does not (two of four), and neither does the fifth in this scenario (two of five is 40%).
Another issue arises when a service company gets a large contract. If you have 10 employees and five live in a HUBZone, when you get your big win for 10 more employees, you have to make sure that at least two of those 10 lives in a HUBZone to keep you at 35% (seven of 20). Plus, you may want to maintain a cushion so that an unexpected resignation does not take you immediately out of compliance.
6. What does “live in a HUBZone” mean?
Your employees’ primary residence. The meaning of this is often pretty clear, but the proof required may not be. If you have interns, employees who have recently moved, or an otherwise fluid workforce, you may have employees who don’t live at the address on their drivers’ license. You can use voter registration cards, leases, mortgages, or utility bills to prove an employee’s address, but for anything “non standard” you have to have an affidavit signed by the employee explaining why they don’t live where their identification card says they live. That can become difficult to obtain particularly in the “look-back” period I talk about below if your HUBZone status is challenged.
7. And finally, what happens next?
You file for and receive your HUBZone certification. But that’s not it. HUBZone is a perpetual program, meaning that as long as you fit all the HUBZone requirements – and you are a small business – you remain in the program.
But, there’s a catch: record-keeping. You must not only comply with the requirements, you must keep records that demonstrate your compliance. If your HUBZone status is protested, the SBA will determine that status based on two points in time: (1) When you submitted your proposal; and (2) When the contract is awarded. Those two points can be months to over a year or two years apart. If your status is protested, you will have to produce at least 4 weeks of payroll records and other records demonstrating your HUBZone status on each of those two dates.
Keep your records, and you’ll avoid a lot of difficulty if your status is challenged.
Do you have questions about becoming HUBZone certified? Contact Randolph Law to learn more about the program and how HUBZone certification can open the door for government contract opportunities.
This past Monday Judge Crone of the U.S. Court for the Eastern District of Texas granted a nationwide Temporary Restraining Order prohibiting the OMB or the Department of Labor from beginning enforcement of most of the Fair Pay and Safe Workplaces Regulations that were scheduled to go into effect on Tuesday.
This means that the labor law violation reporting requirements and the prohibition on pre-dispute arbitration agreements for Title VII or sexual harassment claims do not come into effect now, but that the paycheck transparency requirements, which are scheduled to go into effect January 1 of 2017, are still on schedule.
Contractors should still be on notice that the requirements could still go in effect, but there’s no requirement to start reporting now.
The Order can be found here, and is a very good read. It lays out plainly and in detail Judge Crone’s concerns with the regulatory requirements. As I read it, Judge Crone’s main concern is that the mandate makes complaints from administrative bodies into reportable “violations” before the contractors have an opportunity to contest those complaints. From the Judge’s Order:
“The Executive Order, FAR Rule, and DOL Guidance explicitly conflict with those labor laws that already specify debarment procedures, after full hearings and final adjudications, for contractors who violate the requirements specifically directed at government contracting, i.e., DBA, SCA, Rehabilitation Act, VEVRAA, Executive Order 11246, and Executive Order 13658. It defies reason that Congress gave explicit instructions to suspend or debar government contractors who violate these government-specific labor laws only after a full hearing and final decision, but intended to leave the door open to government agencies to disqualify contractors from individual contract awards without any of these procedural protections.” (p. 16) (emphasis added)
“The Order and Rule appear to conflict directly with every one of the labor laws they purport to invoke by permitting disqualification based solely upon “administrative merits determinations” that are nothing more than allegations of fault asserted by agency employees and do not constitute final agency findings of any violation at all.” (p. 17) (emphasis added)
The second highlighted passage gets to the heart of the matter, and the heart of the contracting community’s issue with the rule: Because the rule requires reporting of ‘administrative merits determinations’ if effectively requires the reporting of allegations of wrongdoing regardless of whether those allegations were substantiated. For example, again from the Order, the EEOC issues approximately 3,000 “reasonable cause notices” a year but only litigates approximately 150 of those and a substantial proportion of those 150 are found to be meritless. The reasonable cause notices serve effectively as complaints of wrongdoing, not as adjudication that the complained about wrongdoing actually occurred.
This dovetails with the second part of the rule, where a contractor’s “mitigation strategy” is taken into account in determining whether a contractor that has reported violations under this rule should be found non-responsible and therefore ineligible for award. As Judge Crone notes, this requirement forces contractors to potentially settle or otherwise mitigate cases that could have been found meritless had the contractor defended them before a neutral adjudicating body.
The mechanism by which the rule disqualifies contractors from participating in a specific contract is that the Contracting Officer can use violations reported under this rule to find a contractor “non-responsible” and thereby ineligible for award even if the contractor otherwise would be.
Responsibility determinations mostly consist of capacity review – physical plant, financial resources, personnel resources, production facilities, construction facilities, organization, operational processes, proper clearances, proper certifications, etc. FAR 9. 104-1. However, there is one line in the responsibility standards that asks Contracting Officers to make an ethical review. Subsection (d) requires contractors to “have a satisfactory record of integrity and business ethics.” FAR 9.104(d). The Government in its opposition to the TRO request pointed specifically to that section of the responsibility criteria as an example that Contracting Officers already review violations of law and regulation when determining responsibility: “Long-standing existing law requires contractors to make a variety of disclosures of certain tax delinquencies, criminal convictions, indictments, civil judgments, and charges, in order to enable contracting officers to make the required responsibility determination. See, e.g., FAR §§ 52.209-5, 52.209-7.” (Opposition To TRO Motion, p. 3).
Judge Crone found that while the current responsibility regulation and its enforcement requires reporting of what I’ll call “adjudicated wrongdoing” the new regulations require reporting of purported wrongdoing that has not been adjudicated.
What it all comes down to is that Judge Crone found that contractors would have to report items that are effectively nothing more than allegations of labor law violations, and directly conflict with the labor laws themselves because they side-track the judicial process by which contractors could defend themselves against the allegations.
A direct operational result of the decision is that the enforcement of the labor law reporting and prohibition on certain arbitration agreement is stayed indefinitely. Contractors should be aware that that could change and enforcement could begin. But secondarily, the decision is important reading for an understanding of the interplay between the FAR, DOL regulations, government contracting, and contractors’ obligations under other laws. It lays out very thoroughly how policy (penalize contractors who take unfair advantage of their employees) doesn’t always effectively translate to regulation (penalize contractors who’s employees file claims, regardless of the merit of those claims).
You can find the memorandum and order here.
Starting October 1, and ending whenever Congress passes the 2017 NDAA, you can no longer protest civilian agency task orders, no matter the value, except in very limited circumstances that almost never occur.
It’s conventional wisdom that you can’t protest task order awards under $10M, but you can protest task order awards over $10M.
This conventional wisdom has a basis in law. Specifically, for Department of Defense contracts, 41 USC 4106, and for civilian agency contracts, 10 USC 2304c.
These two sections of the law are identical as regards task order protests – they both say to start that you cannot protest task order awards. But, that you can protest a task order award above $10M, and GAO has exclusive jurisdiction over those task order protests, and you can protest a task order in other very limited circumstances (that almost never occur).
The civilian law, though, contains a very important additional clause. It contains a sunset provision that eliminates the right to protest a task order over $10M as of September 30, meaning that after that date you can’t protest task order awards at all (except in limited circumstances, etc., etc.)
WHAT ABOUT THE 2017 NDAA?
Congress, both House and Senate, have clauses in the 2017 NDAA that remove the sunset clause and restore the clause that allows you to protest task orders over $10M at the GAO.
By way of background, the “NDAA” is the National Defense Authorization Act. It is the bill that funds the Department of Defense, and of critical importance to federal contractors, it is often (along with the Small Business Act) the primary means by which Congress makes changes to the laws regarding federal contractors.
Reaching way back to remembering how a bill becomes a law, the House and Senate each pass their versions of a bill, then get together in what is called “conference” to work out any differences. Once those differences are worked out, the revised bill is approved again by both the House and Senate, and goes to the President for signature or veto. If the President signs the bill, it becomes a law.
Right now, both the House and Senate have passed their versions of the 2017 NDAA, and the bill is in conference for the differences between the two versions to be worked out. But…it’s an election year, and things move very slowly in Congress during an election year.
Of note, the Senate version of the 2017 NDAA makes huge changes to the GAO bid protest rules. Huge changes worthy of discussion, but that’s beyond the scope of this post, and it remains to be seen whether those changes will make it out of conference into the joint bill.
HAS THIS EVER HAPPENED BEFORE?
Yep. In 2011 the same thing happened. There existed a sunset clause in both the civilian and DoD versions of the law, except that sunset clause eliminated the entire prohibition on task order protests, meaning that for a period of time you could protest any task order – civilian or DoD, of any value – in any forum Agency, GAO, or Court of Federal Claims.
The 2012 NDAA reinstated the task order prohibition and the $10M exception and removed the sunset clause from the DoD version of the law, while setting the civilian sunset to 2016, and making the civilian sunset only apply to the $10M exception.
And here we are.
WHAT ABOUT THOSE ‘LIMITED CIRCUMSTANCES’?
You can always protest on the grounds that the task order increases the scope of the IDIQ, the period of the IDIQ, or the maximum value of the IDIQ. You’ve always been able to bring those protests in any one of the three protest forums – GAO, Agency, or Court of Federal Claims. And none of that changes.
But situations where a task order increases the value or the period of an IDIQ are almost non-existent, and situations where a task order increases the scope of an IDIQ are extremely rare.
So while you still have recourse in those situations, those situations don’t happen that often.
WHAT SHOULD I DO?
Just keep in mind that beginning October 1 for some undefined period of time, likely at least until after the election in November, and possibly through the winter, you can’t protest civilian task order awards for any of the run of the mill reasons that you’ll commonly see in government procurements.
Be extra careful in your civilian procurements this fall and winter and know that for some period of time you will have no recourse if you think you’ve been treated unfairly.
If you have questions about this or other government contract issues, don’t hesitate to contact Christopher Shiplett or Danielle Hart for assistance.
Government contract regulations and business laws are always changing.
In 2011 and 2012, as a follow up to the 2010 Census data collection, the SBA removed a large number of former HUBZones from the HUBZone designation. Because the SBA did not want to decertify HUBZone companies without giving those companies an opportunity to transition their operations, the SBA created a HUBZone status called “redesignated” for those former HUBZones that were losing their HUBZone status, and then gave HUBZone companies in those “redesignated” areas a three year grace period to move operations and re-confirm that they conformed to the HUBZone requirements. For nearly 600 companies, that three year grace period ends in 2015.
First, a little background on the HUBZone program. This program began with the HUBZone Empowerment Act, which became law as part of the Small Business Reauthorization Act of 1997. The SBA regulates and implements the program, which includes: determining what businesses are eligible to enter the HUBZone Program, maintaining a database of qualified HUBZone businesses, and adjudicating protests and issues related to the award of HUBZone contracts. The SBA designates areas as HUBZone areas based on information from several sources including, the U.S. Bureau of Labor Statistics, Department of Defense, Department of Housing and Urban Development, Bureau of Indian Affairs and the U.S. Census Bureau.
In 2000 and again in 2004 the Small Business Reauthorization Act was amended, both amendments allowing for businesses to maintain their status in the “redesignated areas.” These amendments also allowed for the 3 year grace period.
The three year window on this transition is now about to close. As a result, the nearly 600 small businesses located within these areas are set to lose their HUBZone status and the associated federal contracting benefits. There is no formal program to notify HUBZone companies of the potential future status of current, and “redesignated” HUBZones. If you are a HUBZone company, it is your responsibility to monitor the current and potential future status of the HUBZone within which your primary business location is located, and the HUBZones within which your employees live. Failing to do this could result in your business unintentionally losing its HUBZone status, whether from this specific “redesignation” or generally from some other redesignation of HUBZones.
While many HUBZones are only reviewed every 10 years, after the census, some are reviewed more frequently, in some cases as often as annually. To be safe regarding your HUBZone status, you should monitor your status bi-annually in a general sense, and should specifically review your compliance with HUBZone requirements every time you submit a HUBZone proposal, and every time you are awarded a HUBZone contract. The SBA’s HUBZone mape is a very useful tool in monitoring compliance, not only showing current HUBZones, but also each HUBZone’s history, and if known, any future planned changes in the zone’s status.
You can find the HUBZone map tool here: <a href=’http://map.sba.gov/hubzone/maps/’>http://map.sba.gov/hubzone/maps/</a>
While the possibility of a HUBZone designated area losing such status is cause for concern, HUBZone certification still offers many benefits and is considerably easier to gain access to than the other SBA small business concerns. If your firm is interested in becoming HUBZone certified or if your firm is facing issues because of expiring HUBZone designations or redesignated HUBZone districts and you would like assistance, please contact us.
This is part one of a series on the basics of Federal Government Contracting. Stay tuned for Part II – Pricing Methods, next week.
The purpose of this article is to briefly discuss pointers on preparing a successful government contract proposal. This article will also discuss contract pricing related to government contracts.
Preparing a response to a government procurement request is an important task, which should be approached with diligence and professionalism. Writing a successful proposal is about doing knowing the objective of the solicitation, preparing and responding clearly and appropriately, aligning your proposal with the government’s needs and articulating what makes you the best solution provider. These elements are critical to successful proposal writing.
First, it is crucial to carefully read the solicitation, including all applicable schedules, clauses and attachments. The solicitation is designed to provide prospective bidders with all of the information needed to write a successful proposal. The agency that prepared the solicitation expects you to read and follow it carefully. The reality is, if you do not comply with all requirements in the solicitation, your proposal may be deemed “nonresponsive”. Also of equal importance is to review and understand the FAR regulations governing the specific type of solicitation. FAR regulations are completed and it is always best to have a team of people who are well versed to assist with proposals.
A good proposal will clearly articulate how the bidder can solve the problem or fill the need outlined in the government’s solicitation. Understanding the government’s needs is important. Even more important, however is how your company plans to execute or deliver an appropriate solution. It is, after all about convincing a government review panel that your proposal solves a specific problem or need and is the best fit. Your proposal must be clear, concise and be able to substantiate the work to be performed. Some of the mistakes to be avoided are (1) mistakes in understanding the solicitation request and overall regulations that come into play (2) incomplete or late submission (3) unclear objectives and focus; too much fluff and not substance (4) not understanding best value considerations (5) unrealistic pricing (6) failure to address evaluation factors and (6) errors in the submission.
Contract pricing is an important aspect of procurement and a particularly important component in developing a strategy to win federal contracts. There are two factors that should be taken into consideration when discussing contract pricing and these are:
Government’s perspective- Understand that the federal government wants an optimal deal which is fair and reasonable for which the contracting officers and agencies conduct considerable market research.
Contractor’s perspective-A small company wanting to do business with the government is responsible for developing a contract pricing strategy that is reasonable, competitive, but profitable. Pricing therefore becomes one of the most important variables in a proposal.
The pricing you propose in response to a government solicitation will be influenced by your ability to negotiate or not negotiate as some contracts are negotiable contracts while others are sealed- bid contracts. The FAR states that any contract awarded using other than sealed bidding procedures is considered a negotiated contract. Procedures for contracting by sealed bidding (FAR 14) require the government to evaluate bids without discussions and award to the responsible bidder whose bid, conforming to the invitation for bids; will be most advantageous to the government considering only price and price related factors. Negotiations are not permitted prior to the contract award.
Procedures for contracting by negotiation (FAR 15) permit negotiations prior to contract award. However, a solicitation under procedures for contracting by negotiation may or may not actually include negotiations.
The four types of contract pricing are (1) product pricing (2) service pricing (3) best value pricing and (4) lowest price technically acceptable.
- The formula for product pricing is a sum of material costs, labor costs, estimated overhead expenses and profit margin. [Product pricing= Material Costs + Labor Costs + Overhead Expenses + Profit].
- The formula for service pricing is based on the sum hourly overhead expense, hourly wage and profit. [Service pricing=Hourly Overhead Expense + Hourly Wage + Profit].
- “Best Value” refers to competitive, negotiated procurements in which the Government reserves the right to select the most advantageous offer to the Government by evaluating and comparing factors in addition to cost or price. “Best Value” procurement enables the Government to purchase technical superiority even if it means paying a premium price.
- “Lowest price technically acceptable” is where a contract award is made solely on the basis of the lowest evaluated price of proposals meeting or exceeding the acceptability standards for non-cost factors.
As discussed above, writing a government contract proposal requires a thorough understanding of various agency rules and FAR regulations. The Attorneys at Randolph Law have extensive knowledge and understanding of the FAR regulations and can assist you with submitting a successful proposal.
ARE YOU READY FOR 8(A) CERTIFICATION?
The Small Business Administration’s 8(a) Certification is a special set-aside program for small businesses owned by disadvantaged individuals to help them compete with bigger businesses. Essentially, some government contracts require a percentage of the work to be given to 8(a)-Certified small businesses. This means that when your small business bids on the 8(a) work in a contract, you would only be competing with other 8(a)-Certified businesses for the work and not the entire pool of applicants. Because there are fewer fish in this 8(a) pond, the chances of winning a bid are considerably higher. However, just because you’re a small business doesn’t mean that you can easily get 8(a) Certification.
What is the SBA looking for?
Socially AND Economically Disadvantaged Owner
The SBA states that “Under federal law, socially disadvantaged individuals are those who have been subjected to racial or ethnic prejudice or cultural bias within American society because of their identification as members of groups without regard to their individual qualities.” Social disadvantage is presumed for Black Americans, Hispanic Americans, Native Americans, Asian Pacific Americans, Subcontinent Asian American. This only means that individuals from these groups do not need to write a narrative explaining why they are socially disadvantage. Individuals outside of these groups can also be socially disadvantaged, but must present convincing evidence in a written narrative that the SBA evaluates on a case-by-case basis. There are three critical elements that must be present in these situations:
- An objective (e.g., observable) feature that distinguishes you from others,
- Personal experiences of social disadvantage (e.g., discrimination) in American society because of that distinguishing feature, and
- A negative impact on getting jobs or advancing your career because of that distinguishing feature.
The SBA states that “economically disadvantaged individuals are [those] whose ability to compete in the free enterprise system has been impaired due to diminished capital and credit opportunities.” Unlike social disadvantage, there is no presumption of economic disadvantage for individuals and all who apply must write a narrative explaining their economic disadvantage. These narratives are often very similar to social disadvantage narratives, but must demonstrate that a lack of assets or credit inhibited your ability to get jobs, advance your career, or compete with other businesses.
Tips for Writing the Narratives
Make it personal! Reliving the past can be painful, but the SBA needs to know exactly how you’ve been hurt in order to compel them to give help you by awarding 8(a) Certification.
Be detailed! Generic statements about being discriminated or disadvantaged is not persuasive. Your narrative must include facts about your life. There may never be concrete evidence of discrimination if someone is good at hiding it, but the SBA needs you to provide enough evidence so that they can plausibly connect the dots.
Small Business WITH a Likelihood of Success
Ownership and Control
The disadvantaged individual must directly own at least 51% of the business. There can be no shell companies in between and there can be no restrictions or conditions on the ownership. The disadvantaged owner must work full-time as the small business’s highest office and run the business’s day-to-day operations. If a non-disadvantaged individual can give the disadvantaged owner directives or make independent business decisions without the disadvantaged owner’s consent, watch out, because the SBA may decide that you don’t exercise direct control over your company. Typical delegation of duties is fine, though, because those duties have essentially been pre-approved by the disadvantaged owner.
The limit on your business’s size all depends on the type of business you’re in. Get your NAICS code and head over to https://www.sba.gov/tools/size-standards-tool to see if you qualify. Some industries are limited by the number of employees while others are limited by the average annual receipts. In fact, “small” can still be quite large. For example, a Personal Computer Manufacturer (NAICS Code: 334111) is a small business as long as it has fewer than 1000 employees, while an HVAC Contractor (NAICS Code: 238220) is a small business as long as it receives less than $15 Million annually in receipts. Even if you don’t think you’re a small business, it never hurts to check!
Likelihood of Success a.k.a. Small, But Not Too Small
Many 8(a) applicants expect the 8(a) Certification bring it work, which it very well might do, BUT the SBA is typically only willing to award certification to businesses that are likely to succeed, meaning businesses with a successful history of prior work. This is the chicken and the egg problem for many applicants. Without the 8(a) Certification it may be difficult to find work, but without a history of successful work, it may be difficult to get the 8(a) Certification.
How much work is enough? How many clients do you need? There are no concrete minimum numbers as applications are evaluated case-by-case, but the more you have, the more likely you are to get that 8(a) Certification.
Having only a few clients represents a unique problem for the SBA’s control requirement. Think of it like this:
Let’s say you only have one client. If you don’t do what that client asks, they will probably find another business to do the work, but without them you will make no money. So what do you do if you want to stay in business? Whatever the client asks you to do.
Your economic dependence on the client allows them to control you. It is extremely difficult to argue against this, and the best counter is simply to have multiple clients to spread the risk of losing one of them.
Is Your Business Ready?
Carefully consider the SBA’s requirements and decide if your business satisfies them. If you think you are close to meeting them, but are unsure, it may be worthwhile to simply apply anyway. In the worst case scenario, your application may be rejected and you would have to reapply next year. However, your time will not have been wasted because the application process may reveal SBA concerns that you may not have considered, or you may be surprised to find yourself 8(a)-Certified before you know it.