Introduction to Federal Government

Contracting and Subcontracting

Matthew Haws
Joe Smith
Carla Weiss
June 21, 2012
Today’s Discussion
1. “Should I do this?” Things to Consider Before
Getting Started as a Federal Government
Contractor
2. The Legal Stuff: Unique Federal Government
Contractor Rules
3. “Okay, how do I get started?” Getting Started as a
Government Contractor
4. Additional Resources

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What is Government Contracting?
The federal government is the largest consumer of
products and services in the world, spending billions of
dollars each year on everything from office supplies to
janitorial work and computer repair services

A government contractor is a private company that

[Note: this is different from a Federal Grant Recipient]

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Should I do this? Five Reasons to Sell
to the Federal Government
1. The federal government represents a big market
2. The federal government wants to work with small
businesses
3. Federal government spending is consistent
4. The federal government pays its bills
5. Contracting decisions are transparent

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 The Federal Government Represents a
Tremendous Market for Small Businesses
• Annual spending by government agencies on small
businesses reached $83.27 billion in FY 2007 and
is expected to keep growing
• Top Five Spenders:
– Department of Defense, $383.4 billion
– Department of Energy, $24.6 billion
– NASA, $14.8 billion
– Department of Veterans Affairs, $14.6 billion
– Department of Homeland Security, $13.8 billion

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What the Federal Government Buys
1. Professional, administrative and management
support services, $64.1 billion
2. Research and development, $57.8 billion
3. Construction of structures and facilities, $42.3
billion
4. Aircraft and airframe structural components, $31.1
billion
5. Motor vehicles, trailers, and cycles, $29.6 billion

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Focus on Small Businesses
• Goal: 23% of Federal contracting dollars to small
businesses
• Small businesses are eligible to bid on any size
contract.
• Set asides: nearly all contracts between $3,000
and $100,000 for small businesses unless it cannot
get competitive offers from two or more small
businesses

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Things to Consider Before Getting
Started as a Government Contractor
Securing government contracts requires investments
of time and money
• A proven track record of success (2 years in
business)
• Secure working capital to get into process
• Resources to research government agencies and
submit proposals
• Commitment to investments in compliance and
management

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What’s your strategy?

•Subcontracting can be a good way to get into Federal

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Subcontracting as a way to get your feet
wet
•Large procurements have subcontracting
requirements, so prime contractors are looking for you
•Opportunity to build capability and gain experience
•Subcontract is closer to a commercial negotiation
 Look out for flowdowns

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Commerciality reduces burdensome
requirements
“Commercial” goods and services are comparable to
products and services available to non-government
customers under essentially the same terms and
conditions
 Commercial items: “of a type customarily used by the general
public and sold or offered for sale to the general public”
 Commercial services: “offered or sold competitively in the
commercial marketplace based on established catalog or
market prices for…tasks”

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 Government Contracts for Commercial
Goods and Services
Government contracts and subcontracts for
“commercial” goods and services benefit from a
significantly faster and less costly contracting
process
• Significantly reduces required contracting
regulations (even fewer if a commercial item
subcontract): see FAR 52.212-5

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GSA Schedule Contract

•Significant effort up front to obtain a schedule

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 The Burden: Federal Government Contractor
Rules and Responsibilities
• Federal government contractors must comply with
special rules and regulations
• The Federal Acquisition Regulation (FAR) is a
complex set of rules governing the federal
government's purchasing process
– The FAR applies to all agencies in the executive branch
– The most recent version of the FAR is available at
https://www.acquisition.gov/FAR/loadmainre.html
– Supplemental regulations for individual agencies are available at
https://www.acquisition.gov/agency_supp_regs.asp

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 Federal Government Contractor Rules
and Responsibilities Cont’d
• Federal government contracts differ from ordinary
commercial contracts in important ways:
– Contract termination
– Contract changes
– Payment
– Contract specifications
– Inspection and testing rights
– Protests and contract disputes
– Audits

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 Key Labor and Ethics Regulations
• The FAR contains information on labor and ethics
regulations that apply to government contractors
– Labor Standards
Equal opportunity
Wage and hour requirements
Employment eligibility verification
Buy American Act
– Improper business practices
Code of business ethics
Gift-giving and the “$20/$50 Rule”
Anti-Kickback Act

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“I’m ready!”: Getting Started
1. Find your North American Industry Classification
System (NAICS) number, which the government
uses to categorize products and services
• Find the NAICS code that best describes your products or
services at http://www.census.gov/eos/www/naics/
2. Determine whether your business qualifies as a
small business
• Visit http://www.sba.gov/content/table-small-business-size-
standards for information on size standards

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Getting Started Cont’d
3. Obtain a D-U-N-S Number
• A D-U-N-S Number is a unique nine-digit number used to
identify your business
• Visit http://fedgov.dnb.com/webform to apply for a number
4. Central Contractor Registration (CCR)
• CCR is the federal government’s primary vendor database
• Registering allows you to send your business's "resume" to
government agencies
• Visit http://www.ccr.gov to register (note: switching to
“System for Award Management” at the end of July 2012)

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Getting Started Cont’d
1. Focus on a manageable number of agencies
whose business you are most likely to secure
2. Review forecasts for agency procurement
• https://www.acquisition.gov/comp/procurement_forecasts/ind
ex.html
3. Review each agency’s prior history of awards
• Visit https://www.fpds.gov
• Visit http://ssq.gsa.gov/

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 Finding Opportunities
1. Visit https://smartpay.gsa.gov/ for information on
micropurchases
2. Visit http://fedbizopps.gov to explore all business
opportunities valued at $25,000 or more
3. Visit http://www.gsa.gov to become a GSA
Schedule Contractor
• Becoming a GSA Schedule Contractor allows your business
to be considered for Governmentwide Acquisition Contracts
(GWACs)
• GWACs are used to buy commonly used goods such as
furniture and office supplies across agencies

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 Finding Opportunities Cont’d
4. Visit http://web.sba.gov/subnet to search for
subcontracting opportunities
5. Contact agency offices for small business
assistance
 Individual agencies maintain government contracting
websites
– For example, visit http://www.justice.gov/jmd/osdbu/ to reach the
Department of Justice’s Office for Small and Disadvantaged
Businesses website

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 Additional Opportunities
1. 8(a) Business Development Program for
businesses owned by socially and economically
disadvantaged individuals
• Visit http://www.sba.gov/content/8a-business-development-0
2. Historically Underutilized Business Zones
(HUBZone) Program
• Visit http://www.sba.gov/hubzone/
3. Green Businesses
• Visit http://www.sba.gov/content/green-contracting-
opportunities

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 Additional Opportunities Cont’d
4. Women-Owned Small Businesses
• Visit http://www.sba.gov/content/women-owned-small-
businesses-program
5. Veteran Owned Businesses
 Visit http://www.sba.gov/content/service-disabled-veteran-
owned-small-business-concerns-sdvosbc

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Keys to Success
1. Network
 Attend the annual General Services Administration Expo
– http://www.expo.gsa.gov
 Visit the Small Business Administration’s DC office for
information on local networking opportunities
– http://www.sba.gov/about-offices-content/2/3106

2. Document your success

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Keep Going!

Small businesses submitted an average of

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 More Resources
1. Small Business Administration
• A one stop shop for small businesses interested in
government contracting. Local offices provide one-on-one
counseling services and training sessions
• http://www.sba.gov/category/navigation-structure/contracting
2. Procurement Technical Assistance Centers
• Nominally priced counseling for small businesses planning to
do business with the federal government
• http://www.dla.mil/SmallBusiness/Pages/ProcurementTechni
calAssistanceCenters.aspx

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