Government Contractor

Say Hello to Your New Best Friend “Fear”

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So what is keeping us from taking control of life and choosing our own path? Perhaps it’s our old nemesis Fear with a capital “F”. Fear has derailed the dreams and potential of too many for far too long, but there is a way to turn fear on its head and use it to your advantage.

Fear as we all know can take on may forms, but for the entrepreneur, artist, or and others wishing to live with personal integrity and self fulfillment, fear can hide in the shadows and is not always as obvious as a thumping heart, cold sweats, and an urge to flee.  Fear can be much more subtle and may not be recognized as fear, but it is crippling just the same.  For example, when we sit on the couch and waste time either watching another mindless television program or some other diversion, it could be fear rather than boredom keeping us from pursuing the life we wish for and deserve.

Why is this and how can it be overcome? By simply paying attention to those little things that keep us from moving forward.

What are some clues to fear’s presence?  Whenever we say, I don’t have enough time right now; once I have more experience, education, money, etc then I can move forward; once I finish this project or after this event happens, then I’ll do it – do these sound familiar?

Anything that keeps us stuck someplace that no longer serves us…that isn’t in line with who we really are, may be routed in fear – fear of failure, of the unknown, of not wanting to discover the unfounded truth that we are not good enough or smart enough to succeed.  This is the fear we must be hyper vigilant to recognize.  When we realize we are sitting on the couch rather than doing whatever it is to become our best selves, it is time to take action.  Awareness of incessant, low-level fear is your beacon to get off the couch and move forward.

This is why fear is a friend; it reminds us to take action to move toward our dreams.

As always, take action and show gratitude everyday!

With Love and Respect,

Gary

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Who Starts a Business?

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The person reading this post does!

So what type of person takes the initiative and risk to start their own business?  There are several books and website that state the type of personality that is required – self motivated, disciplined, risk taker, expertise in a certain field, and etc.  According to these sources, if you do not have these essential qualities, you should stay in your job and let someone else take that role.  The real message is that you should allow someone else determine your future and value.  Do not believe it!

The simple truth is what one person can do anyone can do; the trick is to realize truth of the previous statement for each of us.  Each one of us is capable of achieving much more than we may be capable of realizing.  When you truly believe you have the potential to do anything, you see life differently and life begins to change. Self motivation and discipline automatically begin to replace inaction without a conscious effort.  You feel more alive because you are living in a world of possibilities versus a life of limits.  This is not about achieving outward facing success –  financial and material gains, but about your internal success – how you feel about yourself and life.  Life can be full of promise and excitement…and the possibility of achieving outward success.  All you need to do is start.  Take the first step and believe in yourself and wonderful things will follow.

We do not need to live a life scripted by others, even if those other people, such as family and friends, love us. No one truly feels your pain or joy more than yourself. No one truly knows what you need from life more than yourself.  No one can know you more than yourself and no one can live your life for you except you.  Living for yourself changes everything.  More energy, joy, and a deeper sense of self materialize along with a sense of purpose and that purpose is ultimately you. Never ever undervalue yourself.  You have everything you already need to live the life you want.

Do you feel that there is something missing, maybe a vague dissatisfaction with life or perhaps you find yourself complaining about virtually everything?  These are indicators that you have taken on the role of victim and living based on someone else’s concepts.  You do not have to feel desperately unhappy to start living for yourself. Whenever you create — be it art, a garden, or a business — you live a fuller more meaningful life.  It’s a life long pursuit and it starts with you.

Starting a business, developing an product, or idea are some ways, but not the only ways, of living by your own set of principles and beliefs.  By taking responsibility for the potential of your future, it opens you up to you.

Here’s to taking action and showing gratitude everyday!

With Love and Respect,

Gary

NDA’s, TA’s, and SubK’s…Really?

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Greetings Entrepreneurs –

Good news for Whetstone Security Group (WSG Inc) and our teammate Ruiz Protective Service!  We were one of three awardees of a Department of Homeland Security contract.  I’m very proud to have had WSG Inc serve as a significant contributor to our team’s win.

The win reminded me that I should share with you the documents you will need to become familiar with when you team with other companies and the jargon used in the federal contracting world.

In this post, you learn a bit about Non-disclosure Agreements (NDAs); Teaming agreements (TAs); and Subcontractor Contracts (SubKs) — see this stuff really is not that complicated; well, the acronyms are not that difficult.

As you begin working in the Federal contracting world, some of the documents you will become to become familiar with are NDAs and TAs.  These documents set the ground rules for partnering with other businesses.

Before most companies will discuss proposal and proprietary information concerning contract teaming opportunities, an NDA is established.  The NDA states that any information discussed is proprietary and will not be shared with other entities outside of the two companies in discussion.  It’s said by some Federal contractors that  NDAs are about as enforceable as a handshake and really do not protect information from disclosure, so there are some companies no-longer requiring NDAs; however, it remains a standard business practice.

You can find an example of an NDA here: http://www.nolo.com/legal-encyclopedia/sample-confidentiality-agreement-nda-33343.html

Teaming Agreements:  TA’s are fairly standardized.  The list below is not all encompassing but is in most TAs:

Purpose – Who is teaming and for what purpose.

Exclusivity – Whether the subcontractor is exclusive to the prime or can team with other companies.  It is often beneficial for a small company to subcontract with different companies to increase the opportunity for work; however, it becomes a challenge to the prime as your price may be the same, higher, or less for other companies and you are privy to their propriety information.  It is reasonable for companies to ask you to be exclusive when signing with them.  This is why guaranteed work share becomes important.

Work share – the percentage of work or revenue that your company is guaranteed or can compete for based on your price for services or labor as a subcontractor.  If at all possible try to avoid a TA that requires you to compete for work (often called “Best Athlete) after a contract has been awarded.  The best scenario is to have guaranteed work share in the event that the team wins an award.

 Proposal Preparation –  The Contractor will act as the prime contractor and will prepare and submit the Proposal and requires the subcontractor to agree to provide proposal support.

Allocation of Cost – Normally states each party is responsible for its own costs and expenses for proposal preparation.

Termination – Sets the conditions for when the TA can be terminated.  Such as when:

  • The contract is awarded to another company
  • Cancellation of the program
  • When the team cannot reach agreement on the terms and conditions of the SOW (price, schedule, and terms
  • The parties mutually agree to terminate this Agreement.

Intellectual Property –  States that any ideas, designs, concepts, techniques, inventions, discoveries or improvement made in performance belong to whom.

Limitation of Liability – Simply states that either party is liable to the other for any lost revenues, lost profits, incidental, indirect, consequential, special or punitive damages.

Enforcement – States where the agreement will be governed in regard to legal action (Usually the State where the Prime is registered).

There are several other articles that may or may not be included in the teaming agreement.  It is highly recommended that you consult your attorney or a contract specialist.  As I have stated previously, you need to have your team (legal, financial, insurance, and others) established to help guide you.

Subcontracts (SubK): The final document will discuss is the SubK.  This is the document that is issued by the prime after a win.  It spells out the terms and condition.

The basis of the subcontract is the Government’s contract with the Prime Contractor.  The Prime will normally “flow down” clauses from the Prime Contract to subcontractor.  Some of these clauses require the subcontractor to following laws regarding federal contracts and are related to the Federal Acquisition Regulation (FAR) and the Defense Federal Acquisition Regulation (DFAR) as well as the Government’s requirements set forth in their Statement of Work (SOW).  Some of the website to review are:

The Department of Labors – Federal Contractor Compliance Adviser:  http://www.dol.gov/elaws/esa/ofccp/determine.asp

Federal Acquisition Regulation: http://www.acquisition.gov/far/

The Defense Federal Acquisition Regulation Supplement: http://www.acq.osd.mil/dpap/dars/dfarspgi/current/

The Small Business Administration has a online learning center with an introduction to Government Contracting.  http://www.sba.gov/tools/sba-learning-center/training/government-contracting-101

I hope this blog added a bit of illumination to NDAs, TAs, and SubKs.  I bet you know what they are now!  Until next time, pursue your dreams and take action each day to reach them.  You can do this.

With Love and Respect,

Gary

What are Wrap Rates?

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Ah, price-to-win strategies, cost volumes, cost narratives, wrap rates and spreadsheets, some of the simple joys of Government contract proposal development.   Okay, I think I literally heard some snores coming from across the blogisphere.

When I first tried figuring out wrap rates, my mind practically seized up from the shear effort of trying to understand them.  The purpose of this post is to hopefully help you avoid some of the same lost in the lost in the woods feeling I had; I could find almost nothing on the internet about building up labor costs or a definition of wrap rates.

In this blog, I will attempt to guide you through some contractor pricing jargon such as wrap rate (indirect rate) [If anyone happens to be a honest-to-goodness pricer, please feel free to correct me; I will make no assumptions that the information is error free, but it is a good starting point].  I will also show you how to build up a fully burdened labor rate.

As discuss in a previous blog about Government proposals, “Sections C, L and M – What the Heck?” http://wp.me/p4xkC1-2Q, a cost volume is one of the documents you will develop and submit when you pursue a Government proposal.  The price volume normally consists of a cost narrative and spreadsheet(s) showing your cost buildup and price to the Government.

Government contractors closely guard what is commonly referred to as wrap rates.  Wrap rates are those costs that go into the final price you charge the Government for your services or products.  The wrap rate is the total percentage of indirect costs that are multiplied to by base cost to determine a sale price.  Contractor compete against each other, so having a low wrap rate is an advantage over your competitors.  FYI -aggressive contractors try to get close to a 1.6 percent wrap rate.  So what costs go into wrap rates (indirect costs)?

Overhead (O/H) cost – Costs associated with your business such as overhead salaries, recruitment, utilities, equipment, travel, office supplies.

General and Administrative (G&A) cost –  Cost for infrastructure support such as human resources, pay roll services, rent, and etc.

Fringe –  cost of employee health insurance, paid days off, holiday pay, employer sponsored retirement plan (401K) and etc.

Fee – Fee is simply your profit.

Miscellaneous cost – some companies have additional wraps they place against their price such as Material and Handling (M&H); however, what wraps you use depends upon how your company’s financials are structured.

Now you know some of the costs that go into building your price, let’s take the following example. if you are bidding on a proposal that requires the contractor to provide the labor category of administrative assistance, you will need to determine:

1.  The salary your company will propose for the admin assistant.  In our example, let’s say the average salary you can hire an admin assistant is $45,000 a year.

2.  You will divide the salary by 2080 hours.  2080 is the standard for a man year (the total hours a  person would work during a 12-month period).  This give you the hourly unburdened (no wrap) labor rate of $21.63.

3.  Let’s suppose you have the following wrap rates.  They are multiplied against the unburdened hourly labor rate:

Fringe is 30% * $21.63 = $6.49
OH is 10% * $21.63 = $2.16
G&A is 10% * $30.29 ($21.63 (Unburdened Labor) + $.6.49 (Fringe) + $2.16 (OH)) = $3.03
Fee is 10% * 33.32 = $36.65

Wrap Rate:  1.694 percent fully burdened

*You multiply the percentages by the hourly rate and then add the amounts to the hourly labor rate to develop the fully burdened rate.

The formula is $45,000.00 ÷ 2080 =$21.63+ $6.49 (Fringe)+ $2.16 (OH) +$3.03 (G&A is applied to the base plus fringe and OH) =$36.65

The bill (sell) rate of $36.65 is your fully burdened rate.

*Note: there are various ways that wraps can be applied.  This is just how I learned to build up rates.

The Government usually specifies the number of hours that they expect a contractor to work each year.  They can vary but are normally between 1860 hours at the low end to up to 1920 hours.  The difference between the allowable hours and the full man year are usually placed against the fringe cost.  Vacation and holiday hours are normally paid by the contractor.

So this is how you deconstruct a man year between billable and non-billable hours to meet a Government requirement of 1920 labor hours :

2080 (Normal man year)
-1920 (Billable hours)
= 160 (non-billable hours)

160 (non-billable hours; Fringe cost)
– 80 (vacation hours)
– 80 (holiday hours)
= 0 (all hours accounted for)

Wasn’t that fun?  As I may have alluded, I am no pricer, but as a contractor, I need to understand how rates are built up and what will be competitive and you do too.

For simple proposals, I develop the costing myself, but for complicated proposals or efforts where I need to ensure that I am not placing the company in financial jeopardy,  I hire a professional to build the proposal spreadsheets.  They can also offer strategies on reducing your wrap rate and lowering costs.  The bottom line is do not risk under pricing a proposal that may break the bank and endanger your company’s financial health.

Proposals can be a huge drain on a start-up’s limited financial resources, so if you have someone build your spreadsheets for you, try to understand how the spreadsheet works so that you can reuse it on various bids.

Besides labor costs, there may be Other Direct Costs (ODCs).  ODCs are costs such as travel, vehicle rental, housing, allowances or special overseas workman compensation type insurance know as Defense Base Act (DBA). The Government does not allow fee on ODCs — only allows G&A and M&H cost to be applied.  Fee is only applied to labor for service type contracts.

As I stated earlier, along with the pricing spreadsheet, you will need to provide a cost narrative.  This is a text document that explains how your OH, G&A, and other costs are set up.  It also states whether you are Defense Contract Audit Agency (DCAA) compliant.  You can find checklists and tools that may be helpful here: http://www.dcaa.mil/checklist_and_tools.html

This is a link to a sample spreadsheet from the US Army.  It may scare you more than help! http://www.google.com/url?sa=t&rct=j&q=&esrc=s&source=web&cd=1&ved=0CDMQFjAA&url=http%3A%2F%2Fwww.smdc.army.mil%2FContracts%2FSETAC10%2FRFP%2FATTACHMENT%252010%2520-%2520COST_PRICE%2520PROPOSAL%2520WORKSHEET.xlsx&ei=Kl6WU6DzA8ymyASsv4DIBw&usg=AFQjCNHzl3zYems__18y23SfZzDqQM6LtA&sig2=vXzrvKzGCtNGg0dXsVJGTg&bvm=bv.68445247,d.aWw&cad=rja

This is my down and dirty primer on wrap rates and labor cost build ups.  I hope it is of some use to you as you make your way to the world of a Government Contractor.

Remember:  take action each and every day to keep your dreams alive.  Stay persistent and you can achieve great things!

With Love and Respect,

Gary

Sections C, L and M – What the Heck?

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This blog post is a primer to  guide you through the Government request for proposal (RFP) process.

Starting out as a Federal Contractor can be an intimidating experience, but the rewards can be substantial.  There are very few businesses that can go from a start up to having a multimillion dollar contract in a very short time span.  And with the Government’s sudden shift to Low-Price, Technically-Acceptable (LPTA) proposals and small business set-asides, your business can be competitive without past performance — a major advantage to a newly launch business.  The evaluation factors for LPTA proposal and winning comes down to who has a technically acceptable proposal and the lowest (realistic) price.

Now that you’ve located an opportunity under your NAICS code where you believe you can be competitive, what are the next steps?

You will need review the Request for Proposal (RFP).  The RFP is a document that informs you of the requirements the Government is looking to have a contractor perform.  Try not to be overly intimidated by the size of the RFP; you do not need to read the entire proposal although, you may want to be familiar with the standard contract jargon that goes into Government RFPs.  After going threw a few RFPs, before long you will be able to quickly determine what is important to know.  For now, all you need is the most critical information found on the cover page and in  Sections C, L and M.

The cover page will inform you of the type of contract, Cost plus, (CP) Firm Fixed Price – Level of Effort (FFP-LOE), or Time and Material (T&M) or derivatives of these types of contracts.  You should also become familiar with the the Federal Acquisition Regulation www.acquisition.gov. You can look up and review the FAR references that apply to the proposal.

You have already determined if the proposal falls within your NAICS code, so now see if the proposal is Full and Open (meaning it is open to all contractors) or a set-aside contract (set asides are only open to those companies qualifying, such as SDVOSB, WOSB, 8(a), and etc.)

If you are not familiar with Federal Contracting, please see my previous blog posts on building a pipeline http://wp.me/p4xkC1-16 and competing for Federal Contracts http://wp.me/p4xkC1-Q

After downloading the Request for Proposal (RFP), you will need to:

1. Review Section C – the Statement of Work (SOW), this is the Government’s requirements for the service they are expecting a contractor to perform.

2. Look at Section L – this is where you learn the Government’s requirements for formatting (font size and type; page count, and etc.) and the organization of the proposal volumes (Technical, Program Management, Past Performance, Security, and Cost) of the proposal you will deliver to the Government.

3.  Closely review Section M – this is where the Government lists the criteria they will evaluate each proposal volume .  Failure to follow all the Government’s requirements could result in a non-compliance proposal which will automatically be taken out of competition.

4.  Develop and Outline – Once you have reviewed the RFP, you will need to develop an outline for each volume you will be writing.  You will want to provide an outline that will provide you with the best organizational flow for how you will meet the Government’s requirements.  Sometimes it can tricky to combine the SOW and evaluation criteria so it flows logically and smoothly but you should include both both Section A and M in your outline.

Below is a sample of a Technical Volume outline I developed for a recent Department of Homeland Security (DHS) proposal.  Remember, you are providing the Government what they are requesting, not what you believe they should have.  Make sure that you following L & M to the letter and combined them within  your outline.  Beautiful writing does not win proposals — compliant and technically sound proposals win when combined with price.  Also be aware that various sections are assigned higher weighted values for the overall evaluation of the proposal.

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NOTE:  This is the sample outline with guidance taken from the RFP combining sections L & M and guidance for Volume I, Technical.  The outline decomposes the Government’s requirements to include page count limits.  Anywhere you see “writer’s directions” this was added by me to help the writer know the Government’s criteria.  RFP guidance varies based on the Government customer and the type of procurement.

Writer’s Directions: The information provided from the RFP provides overall guidance for the proposal submission. This information will be deleted after the guidance is no longer needed by the writers.

III.1       52.212-1 INSTRUCTIONS TO OFFERORS — COMMERCIAL ITEMS (JUL2013)

(a)   North American Industry Classification System (NAICS) code and small business size standard.  The NAICS code and small business size standard for this acquisition appear in Block 10 of the solicitation coversheet (SF1449). However, the small business size standard for a concern which submits an offer in its own  name, but which proposes to furnish an item which it did not itself manufacture, is 500 employees.

(b)  Submission of offers. Submit signed and dated offers to the office specified in this solicitation at or before the exact time specified in this solicitation.

(1)  The solicitation number
(2)  The time specified in the solicitation for receipt of offers;
(3)  The name, address, and telephone number of the offeror;
(4)  A technical description of the items being offered in sufficient detail to evaluate compliance with the requirements in the solicitation.
(5)  Terms of any express warranty
(6)  Price and any discount terms
(8)  A completed copy of the representations and certifications at FAR52.212
(9)  Acknowledgment of Solicitation Amendments;
(10) Past performance information
(11)    If the offer is not submitted on the SF1449, include a statement specifying the extent of agreement with all terms, conditions, and provisions included in the solicitation.

(c)   Period of acceptance of offers.  The offeror agrees to hold the prices in its offer firm for 30 calendar days from  the date specified for receipt of offers.

Volume I – Technical Proposal

This volume must not contain any reference to price; however, resource information (such as data concerning labor hours and categories, materials, subcontracts, etc.) must be contained in the technical proposals or that the Contractor’s understanding of the requirements may be evaluated.

This volume shall consist of the sections described below.

1.0   Section 1 – Transmittal Letter

A letter that formally transmits the proposal and states in general terms how the offeror meets the solicitation requirements. (not to exceed 2 pages)

2.0   Section 2 – Executive Summary and Table of Contents

In this section, the offer will be summarized, highlighting salient features of the proposal, including a description of the offeror’s approach and plans to satisfy and support requirements of this solicitation. Any technical and schedule risks should also be detailed. The summary should indicate the offeror’s complete acceptance of the technical requirements or specify any exceptions. A clear table of contents with page numbers referenced should be included. (not to exceed 5 pages)

3.0    Section 3 – Technical Approach

The technical approach should be in as much detail as the offeror considers necessary to fully explain the proposed technical approach or method and must demonstrate a clear and concise presentation that includes, but is not limited to, the requirement of the technical proposal instructions. The Technical Proposal shall be tabbed as indicated below and each tab shall not exceed the maximum page limit identified after the title of each tab. The Technical Proposal should reflect a clear understanding of the nature of the work being undertaken. The technical approach should discuss any perceived areas of risk and risk management. If subcontractors are to be utilized, the offeror shall submit the same information pertaining to the subcontractors.

The offeror should state all assumptions, exceptions, and deviations at the end of this section. For every instance where the offeror does not propose to comply with or agree to a requirement, the offeror shall propose an alternative and describe its reasoning therefore.

For requirements that describe a mandatory feature, the response may consist of a reference to the offeror’s technical literature. Any technical literature used as a reference must be furnished as an attachment to the proposal. If the reference contains the required technical detail, it is not necessary to restate such detail in the proposal itself. All references must clearly identify the volume, page and line number of the referenced material. For requirements that describe an optional feature or function, the offeror must provide a response on how this optional requirement is to be satisfied.

Elaborate brochures, binders and the like are neither required nor desired. Legibility, clarity and completeness are important. The submission of brochures or flyers alone without an accompanying explanation specific to this proposal is not acceptable.

Page limits have been established for each tab. If the offeror includes more pages than are allowed, all pages that exceed the page limit will be removed from the proposal prior to the evaluation.

4.0     Tab A: Corporate Experience and Assessment Methodologies (not to exceed 5 pages)

The offeror shall provide a detailed description of their experience, qualifications, and technical knowledge, as it pertains to the requirements outlined in the solicitation. This should detail the number of years of experience in providing polygraph services, any major accomplishments, and how they can contribute to CBP.

4.1     Description of Experience, Qualifications, And Technical Knowledge

5.0     TAB B: Polygraph Examination Processes, Methodologies, and Quality Assurance (not exceed 20 pages)

The offeror shall fully-describe their polygraph examinations process. This should completely outline all steps and processes for the Law Enforcement Pre-Employment Test (LEPET) polygraph examination format. This should outline all pre-test preparations, the polygraph exam, any other additional procedures, and correspondence measures with CBP.

The offeror shall describe their methodology to ensure quality polygraph examinations. Details need to be provided that clearly explain their processes, methodologies, strengths, and how it contributes maintaining our timelines for delivery.

5.1         The Law Enforcement Pre-Employment Test (LEPET) Polygraph Process

5.1.1      Pre-test preparations

 5.1.2     The Polygraph Exam, Additional Procedures, and Correspondence Measures

 5.1.3     Methodology to Ensure Quality Polygraph Examinations

 6.0        Tab C:  Facility Resources:

6.1          Detailed Description of Current Facility Resources/Locations

6.1.1      Details on the Number of Polygraph Rooms and Total Square Footage

6.1.2     Additional Facility Locations to Meet Capacity

6.1.3     Steps for Procuring Additional Facilities

6.1.4     Resources/Locations and the Anticipated Timeline

7.0         Tab D: Equipment Resources and Training (not to exceed 15 pages; process flows and screen shots can be included in a separate appendix and are not included in the page limit)

7.1         Detailed Description of Their Current Equipment Resources

7.1.1     Meeting DHS CBP’s Requirements for Conducting Polygraph Examinations

7.1.2     Staff’s Experience using Software and Equipment.

7.2         Steps for Procuring Additional Equipment to Meet An Increased Capacity

7.2.1     Procurement Timeline

7.3         Training Program

7.3.1     Timeline to Complete Training

8.0         Tab E:  Staffing Representation and Training: (not to exceed 15 pages)

The offeror shall provide the extent of their current polygraph examination workforce and their ability to provide qualified candidates that will be utilized for purposes of this contract.

8.1         Our Polygraph Examination Workforce and Ability to Provide Qualified Candidates

Name Current Certification Years of Experience Time Away to Maintain Certification

Figure 8.3-1. Polygraph Examiners Current Certification(s) and Experience

8.1.1        Anticipated Number of Examiners and Estimated Yearly Workload to Meet Contract Requirements

8.1.2        Recruitment strategy for increased capacity

8.1.3        Recruitment timeline

9.0            Tab F:  Approach to Security Requirements (not to exceed 10 pages)

Provide a detailed description of the approach to maintaining all security requirements related to this contract.

10.0        Tab G: Communication (not to exceed 5 pages; process flows and screen shots can be included in a separate appendix and are not included in the page limit)
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Once you have your outlines completed, double check to ensure you capture all the proposal requirement.  For the most part, try to ensure the outline is easy for a Government evaluator to follow; if you follow the evaluation criteria it will make the evaluator’s job easier.

Here’s to writing your first Government proposal … and a win!

With Love and Respect,

Gary