To give back, we’d like to share some government contracting tips and tricks so that you can be the best government contractor possible. Each week, throughout the month of March, we’re have posted 5 tips to celebrate 5 years. Time for the drumroll as we share our last set (for now)…
This week’s post: Government Contracting Tips and Tricks
Part 4 – And not to forget…
#16: Analyze your approach to government marketing. Need help with strategy?
#17: Know your niche. Why?Trust us – it’s most important in determining direction of efforts.
#18: Know your resources. Did you know you can go to your local Business Development Center and the SBA for resources?
#19: Make sure to reach out to past teammates regularly. Ask about new opportunities.
#20: Don’t get discouraged! The government contracting cycle is LONG. The effort to go after a contract can be exhausting. However, heading the previous 19 tips will really help you become a successful government contractor. As, always, feel free to contact Arrowhead Solutions. Now, go get ’em!
Don’t forget to follow Arrowhead Solutions on Twitter (@arrowheadllc) for daily tips, too!
Thanks for tuning in! All of these tips will “live” here on our blog for quite some time. We look forward to many more years to come and helping out small businesses in any way that we can.
As Arrowhead celebrates our 5th anniversary, we realize that we could not have done it without all the support from you – our readers and clients!
To give back, we’d like to share some government contracting tips and tricks so that you can be the best government contractor possible. Each week, throughout the month of March, we’re going to be posting 5 tips to celebrate 5 years. Cheers!
This week’s post: Government Contracting: Tips and Tricks Part 1 – DCAA and Government Accounting
#1: Ask “How would we fair during a DCAA audit?” Not sure? Try a mock audit with Arrowhead’s experts on the other side of the table before there is DCAA in the picture.
#2: Make sure you know what wrap rate means. Need a refresher?
#3: Be familiar with indirect and direct rates. Read On…
#4: Read RFQs carefully – response instructions must be followed exactly as stated.
#5: Make sure to time your GSA proposal right (if you have one). Not sure? Just call Arrowhead and we’ll help you sort it out. Don’t know if you really need a GSA? You could be right. Not all companies can benefit from being on a GSA Schedule. Arrowhead will also help you sort this out.
Don’t forget to follow Arrowhead Solutions on Twitter (@arrowheadllc) for daily tips, too!
See you next week!
Boulder, CO (March 3, 2014) – Stephanie Mueller Amend, Founder of the boutique consulting firm, Arrowhead Solutions, LLC, announces the company’s five-year anniversary. With specialties in supporting small businesses with the processes and cycles relating to government proposals, GSA Schedules, contracts, accounting, compliance and marketing to the government, . Arrowhead continues to experience significant revenue growth year over year. Focusing on quality and effectiveness differentiates Arrowhead as a top-rated, government contractor consulting firm. Positive reviews of Arrowhead from current clients are well documented, and continue to lead to the company’s growth supporting clients from coast to coast. Diversification into commercial support for clients and placing emphasis on strengthening client marketing efforts has allowed Arrowhead continued success; even as a recession, funding cuts, government shutdowns, and sequestration nearly paralyzed the industry of government contracting.
Marching with the rhythms of the government has been one key to Arrowhead’s continued success. Slow periods in government spending translate to “focus time” for Arrowhead clients’, as well all Arrowhead’s own, business development; hence the birth of the ArrowBD service and addition of the government marketing division of the business in 2013. Arrowhead’s next major advance, coming in 2014, will continue to propel Arrowhead and their clients forward for years to come.
About Arrowhead Solutions:
Arrowhead Solutions, LLC has been serving Boulder, Colorado area, the Denver Metro area, and clients across the nation since 2009. Stephanie Mueller Amend, founded Arrowhead after seeing a need for assistance in the small-business government contracting arena. Five years later, Arrowhead has fostered the ability to assist in every area of government contracting and grown to support a diverse roster of clients nationwide. For additional information about Arrowhead Solutions, LLC call 303-515-0527, email Lindsy Bentz, email@example.com, or visit the website at: www.arrowheadsolutionsllc.com.
From time to time we will be spotlighting guest bloggers in order to provide expanded insight into the world of government contracting. Today’s guest blog comes to us from Linda Mahnke of Mahnke Consulting. Linda’s experience in government accounting provides her with the background to discuss the topic of wrap rates.
Top 5 Wrap Rate Pitfalls a Small Business Should Avoid – By Linda Mahnke of Mahnke Consulting
1. The small business wins the award, at a loss to the company.
Many small businesses bid a wrap rate they believe rivals competition, with no understanding of the actual costs (e.g., bookkeeping, rent) included in that rate.
2. The small business does not follow directions.
The solicitation (e.g., RFB, RFP) details what is and what is not included in the wrap rate. Usually, materials and travel are bid separately – but might be included in the rate.
3. The small business sees more value in technical quality than in managing the business.
By their nature, small businesses have room for few top executives – at least one of whom should be an administrative professional. Providing the customer better quality than expected, does not prevent suspension, debarment, and/or bankruptcy.
4. The small business is not prepared for a DCAA audit of the Accounting System and the Estimating System.
Even if all current awards, funded by the U.S. Government, are competitive, Fixed Price – growing small businesses want options. Consistent practices that reflect “the Government way” open opportunities for more types of awards. Actual incurred costs must be compliant (e.g. FAR, FAR supplements, labor laws, etc.), before using them as a basis for proposed estimates, especially wrap rates.
5. The small business builds the wrap rate on managers’ experience.
Build the wrap rate on supportable, auditable, general ledger data that both a) uses Job Cost Accounting (not accounting for the whole company), and b) a Chart of Accounts that encourages compliant recording of unallowable costs (per FAR 32.2).
Summary – The overall suggestion to avoid all five pitfalls above is to understand what should and should not be included in a wrap rate, understand the necessity of a solid wrap rate, and be able to support that wrap rate.
Yesterday, I had the opportunity to attend McKenna Long & Aldridge LLP’s 2012 Government Contracts Briefing in Denver, CO. The firm hosted an excellent day of speakers, topics and breakout sessions. The Keynote Speaker was Shay D. Assad, Director, Defense Procurement and Acquisition Policy and Strategic Sourcing. His keynote address on “Better Buying Power Implementation” was definitely noteworthy, in that a) I took a lot of notes and b) it seemed to be contrary to what government contractors are seeing happening in practice. I thought I would share some of the highlights of Mr. Assad’s address with our industry to gather thoughts.
Here are my notes – in bullet format. DoD’s perspective and future plans….
- Profitability is an incentive to get contractors to reduce costs. DoD does not want to reduce contractor profit.
- There is no FFP mantra. There is a better way to buy services and that may be using Cost Type contracts.
- The DoD is reviewing how they buy services to ensure they get low-cost and contractors still profit.
- Business systems will be crucial. There will be two camps of contractors; those that have adequate business systems in place (and will be liked by the government) and those that don’t (and will be disliked).
- New government contractors will have to be much more prepared for what they’re getting into.
- There will be more of a “should cost” focus.
- DCMA will become the central provider of cost/price analysis for COs.
- A new repository, the Contractor Business Analysis Repository (CBAR), will be populated so that all DoD agencies can see the rate history for contractors.
- To avoid conflicting opinions, if DCAA has audited a contractor’s rates, DCMA will adopt that position. DCMA will have final authority on rate approvals.
There was discussion regarding the acquisition workforce’s competency. Surprisingly to me, it was acknowledged by Mr. Assad that there is room for improvement and that they are working on it. From our perspective, a competent workforce is the only way to reach the goals the DoD is pushing from the top. Without it, we’ll continue down the frustrating path that we’ve been seeing recently with inappropriate contract types, mishandled solicitations, and barely-worth-it margins.
You see that the DoD’s high level executives are envisioning a win-win world and some streamlining, but, as I gathered from the remainder of the event and from colleagues, there is a long way to go before reality catches up to the vision. Which of course at that point the vision would have totally changed I’m sure.
Last year we had a post regarding those sections of the DCAA Contract Audit Manual (CAM) that were updated. It seemed to be a helpful reminder to government contractors that the CAM is not a stagnant document and is also a helpful document in compliance.
DCAA took another look again and the CAM has many sections updated recently. It is always a good practice to have at least one person in your company be familiar with the current CAM. Not the most exciting read in the world of course, but you could pick up on something critical to your success as a government contractor. Here is a list of sections that have been updated already in 2012.
- Chapter 3 – Audit Planning (2/21/12)
- Chapter 6 – Incurred Costs Audit Procedures (2/17/12)
- Chapter 7 – Selected Areas of Cost (2/10/12)
- Chapter 8 – Cost Accounting Standards (2/23/12)
- Chapter 9 – Audit of Cost Estimates and Price Proposals (2/17/12)
- Chapter 10 – Preparation and Distribution of Audit Reports (3/2/12)
- Chapter 14 – Other Contract Audit Assignments (3/6/12)
- Chapter 15 – Other DCAA Functions (2/27/12)
- Appendix B – Statistical Sampling Techniques (2/9/12)
(note that most of the remaining were updated in late 2011, so might as well read the entire thing!)
This topic really seemed to get some folks fired up!
There seem to be no obvious conclusions from the discussions except to say “it depends” …on:
1. Volume of commercial business vs. government
2. Identifying the Allocability of costs
3. Materiality of costs such as advertising and BD
4. On site vs Off site work
5. Cost / Benefit of taking the effort to manage these buckets separately.
Thanks for all of your input!
Have you ever heard of a potential customer being “wowed” by a company’s policies and procedures ?
NO of course not!
Customers are impressed by slick technology, impressive office space and well spoken business development directors.
Few small businesses ever want to spend their precious working capital on something as uniquely unglamorous as accounting and contracting policies and procedures.
So why bother investing the time and resources in developing them?
Because if your customer is the federal government, you not only have to “wow” them with your products and services but also with your adherence to the compliance requirements mandated in the FAR and other oversight regulations.
A message that we drive home with our clients and potential clients, is that the cost of compliance is significantly cheaper if compliance is addressed early in the company’s life cycle.
It is far (no pun intended of course) less expensive to develop and implement compliant policies and procedures while the company is young and has not become entrenched in business procedures that are not compliant and that have to be re-tooled completely.
This harkens back to the cost of quality adage that you can a spend a dollar today doing things right or a hundred dollars down the road to rework was what implemented poorly the first time.
Administrative “details” are the last thing that entrepreneurs want to focus on when building their products and delivering their services. This goes for everything from setting up well thought out accounting systems to implementing timekeeping systems or subcontracting policies.
Certainly the compliance requirements become increasingly more stringent the larger your contracts in value or diverse in contract vehicle, but assuming the goal of every young company is to grow, then the complexity and requirements will naturally follow.
If you understand the basics of compliance and have an idea of what the progression of requirements will be then you can manage the cost of implementation over time –
Spend the dollar today to prevent the necessity of spending the hundred when you realize after a visit from DCAA that you are out of compliance and that it will be a major fire drill to get your house in order or risk losing your contracts.
The scientist/engineer/mathematician has a truly brilliant idea and pitches it to the government through an SBIR.
Government loves the idea and awards the Phase I award.
Ok – not too much stress administratively – it’s fixed price, short term and defined deliverables.
Great – you deliver, you get paid.
Now they really want you to take that idea further and you propose on a Phase II. You are required to propose specific costs – direct and indirect so you just sort of make them up.
Despite the fact that your TPOC loves your concept and wants to fund your Phase II, the process comes to a screeching halt.
DCAA / DCMA wants to get their hands on you! Now, you have to do through a pre-award systems audit and you have to get approved indirect rates in order to bill your CPFF contract.
So now you find yourself in the uncomfortable position of trying to find help getting your systems compliant and your rates approved.
Don’t wait until this is the case.
If you are at all interested in pursuing Phase II funding or working as a prime contractor to the government, talk to an expert now and understand what the process looks like and what it will take to obtain & maintain compliance.
Take the time to talk to industry peers about their experiences and talk to multiple solutions providers.
Developing a relationship with a provider who can explain the processes succinctly and who can grow with your organization over time is key to your success.
From a budget (and sanity) perspective, it will be much easier for you to undertake the processes over time so you can spread the costs out over time.
Don’t wait – invest early in your success as a government contractor !