Government Contracting for A&E Firms
by Nancy Davis, CPA
How Firms Get Started In This Lucrative Arena
The American Recovery and Reinvestment Act passed was designed to stimulate the U.S. economy by funding projects and programs throughout our country in such areas as education, healthcare, science, transportation, infrastructure reconstruction and environmental protection. With billions of dollars in federal government disbursements through federal and state grants and contracts, now may be a good time to explore new opportunities for your business or organization. Easier said than done?
Start with the Basics: Properly Identify Your Company
Before beginning the process of responding to Requests for Proposals (RFPs) and filling out vendor forms, you must first establish your company’s identity, beyond the basic federal Tax ID number or SIC code. Here are three different types of codes you will want to consider obtaining in order to compete for government contracts:
- DUNS Numbers: Dun & Bradstreet’s nine-digit DUNS (Data Universal Numbering System) code is a standard business identifier for both the government and the private sector.
- NAICS Code: The North American Industry Classification System is a standard used by Federal statistical agencies in classifying businesses for the purpose of analyzing and publishing statistical data. However, this 2-to-6 digit number it is frequently used by federal, state and municipal government agencies to classify potential vendors by industry.
- FSC and PSC Codes: Federal Supply Codes and Product Services Codes are used in government procurements to classify and identify the products, supplies and services bought by the government. It is important to understand which codes apply to your business to help you do searches for procurement opportunities on federal web sites.
After properly classifying your business, you are ready to register with the government in order to bid on or be awarded many government contracts:
The CCR: The Central Contracting Registry (www.ccr.gov) is the primary registrant database for the U.S. Federal Government. Both current and potential federal government registrants are required to register in CCR in order to be awarded contracts and assistance awards by the federal government. It is a one-time registration that is must be updated annually. CCR collects and validates registrant information and electronically shares it with federal agencies’ finance offices to facilitate paperless payments through electronic funds transfer (EFT).
Once registered in the CCR, your business will also need to register in ORCA, the Online Representations and Certifications Application used in federal solicitations as a part of the proposal submission process. ORCA (https://orca.bpn.gov/) is an e-government initiative to replace the paper-based Representations & Certifications (Reps & Certs) process. Registration in ORCA is required if the solicitation being responded to requires an active registration in CCR.
Finding the Opportunities
The federal government launched a web site (www.recovery.gov) that will serve as the portal to provide education about the Recovery Act, transparency on how the money is being spent, and ultimately accountability on the progress and impact of these funds. State and local governments are encouraged to leverage their existing web sites to achieve the same goals as the federal web site.
To find the State Recovery Sites, go to www.recovery.gov and click on State Progress and Resources. The state web sites will be where information can be found about state grants and contracts opportunities. For example, the Recovery Site for the State of New Jersey (www.recovery.nj.gov) provides its citizens with information about the amount of recovery funding New Jersey expects to receive and what program and project areas will be funded. Federal government agencies are working very hard to get the money and guidance out to the states, so check your State Recovery Site periodically as these sites will become much more robust with information on business opportunities over the coming months.
The federal government has designated that all its direct Recovery Act contract procurements will be advertised on the Federal Business Opportunities (FedBizOps) web site (www.fbo.gov). For vendors new to the site, there are three on-line videos available that explain the site and how to search for government solicitations. The video on General Overview & Searching for Opportunities is a good place to start to get familiar with how to find opportunities based on your type of business or industry. It is not necessary to register to search for opportunities, but registering will allow you to save your search criteria to expedite future searches. Once you locate a procurement solicitation of interest, it can be downloaded directly from the FedBizOps site.
The web site of the Small Business Administration (www.sba.gov) also provides information on Business Opportunities: A Guide to Winning Federal Contracts that guides small businesses on how to do business with the government and includes a data base of some of the prime federal contractors currently doing business in your state. State and local governments also have similar small business subcontract programs. From your State Recovery Site do a search for small business bidding opportunities to learn how the small business programs work in your state.
DO…. KNOW WHAT YOU’RE GETTING INTO.
Government RFPs can be long and comprehensive. Proposals may not only require considerable time but also a careful analysis to assess compatibility with your business model. It is important to understand every element in the statement of work, what deliverables are required, how and when you will get paid, and any other specific or unusual requirements. Make sure the RFP meets your own objectives for securing the work. For instance, if you’re looking to generate some quick revenue, the RFP’s specified payment cycle may not fulfill your goal. Or, if you have some downtime in your business and want to pick up a government contract as extra work, it may demand certain deliverables or milestones that you simply don’t have the resources to provide.
Questions on the RFP? There will be a window of time after the solicitation is advertised when bidders can submit questions to clarify aspects of the solicitation. The questions received from all potential bidders along with the answers are usually made available through a modification to the solicitation.
PAY ATTENTION TO THE “FINE PRINT
Read each solicitation carefully. By law federal contracts must include certain regulatory contract clauses contractors must adhere to. The language used frequently comes from the Federal Acquisition Regulations (FAR). Doing business with the government can limit your exposure to loss in some areas, but may increase your risk in others. Consider the types of problems that arise in the normal course of your business. How would those circumstances to be addressed under the contract? For example, service contracts may contain stipulations about delays, while products contracts are more likely to have contract language regarding delivery of the wrong product. While writing your government proposal, pay special attention to these risk management clauses – you should anticipate how you will handle them should any of them arise.
RECONSIDER YOUR ORGANIZATIONAL STRUCTURE
If you are serious about doing government work and want to make it a major part of your business model, you may need to think about your existing infrastructure. Do you have the right manpower – management, proposal writers/research support, technical staff and management to handle this kind of work? Do you need to consider other mergers or strategic partnerships to achieve these goals? Remember that while large government contracts can require significant resources to manage, many smaller contracts do not. What’s important is that you honestly evaluate your company infrastructure against bid requirements to ensure you have the resources you need to be successful.
ENLIST THE RIGHT RESOURCES FOR PREPARATION.
To secure government work, success lies in preparation, plain and simple. “We have found that companies and non-profits that have the biggest challenge managing government grants or contracts are those that are not adequately prepared when an award is made”, said Nancy “If you are a business who maintains sufficient, organized records throughout the year, tax returns are simplified. The same principle is true for government contractors and grantees.” If a company carefully reviews the necessary reporting requirements and ensures its company systems are properly set up at the inception of the award, government work will not be a painful process. The facilitation and collection of financial and performance information in compliance with federal regulations and contract requirements ensures that accurate, timely invoices and reports for the government can be readily prepared. Unsure if your records are sufficient? Lack understanding about federal cost principles and procedures (including indirect cost submissions) to be followed in pricing contracts (FAR Subpart 31.2)? Need a better financial system? Enlisting an expert such as a CPA who is well-versed in government work can navigate you through this process.
For more information on Government Contracting:
Whether you’re a veteran or new to the Government Contracting community, download the free Deltek GovCon for Dummies book and stay ahead of the competition!
About the Author
Nancy Davis, CPA, CGFM, is Partner and Practice Co-Leader of WithumSmith+Brown’s Government Services Group discusses the in’s and out’s of doing business with the government now.
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