wrap rate

Five Years; time to give back to our wonderful readers! Part 1 of 4:

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!

What will GFY14 Bring for Government Contractors?

shocked-monopoly-man-t-largeHappy? New Year? As we have seen, we can’t rely on the predictability of the government. Even if we hear or believe something may or may not happen, we can probably agree that as government contractors, we take it all with a grain of salt.  With what I call round 1 of sequestration behind us, a government shutdown, and new health care reforms this past year, it has been tumultuous to say the least.  I have read reports that usual spending frenzy of Septembers past was more of a murmur this past September, with some of the lowest spending levels ever seen for the last month of the fiscal year.

We obviously didn’t get off to a good start and are facing another budget battle and round 2 of the sequestration.  Last fiscal year the DoD was spared, however this year, key DoD dollars are on the chopping block.  So what is a government contractor to do with what we’ve been through and what lies ahead?  Don’t hope for dollars, go find the dollars.

Being in Q1 of the new fiscal year means it is typically quiet – here are five things you can do as a government contractor during the quiet time to put yourself in the best possible position for the year ahead:

  1. Dust off your approach. Are you still knocking on the same doors, still lopsided on where your contract dollars are coming from, and maybe using stale methods to reach government customers?  If you’ve been in the business for a bit, then maybe.  Take a fresh view, see potential customers from a new perspective and find ways to reach them that set you apart.
  2. Do your research.  Find out who will most likely have money and who may not. Understand the programs that could be impacted (e.g. NIH grant money is going to be insanely competitive in the coming year, maybe not a great place to put limited BD dollars).  Who won the contract dollars in years past? Can you unseat them or can you partner with them? How does the agency procure goods and services? Do you need a GSA Schedule?  All questions to consider and answer.
  3. Team up.  Use your network to gain intel and to find unique things to offer the government. Collaborating sometimes provides the government customer with a great offering.  With unknowns and uncertain budgets, the government still needs to buy things, make sure you offer things they can’t pass up.  Also, this will help you get into doors maybe you couldn’t get into on your own.
  4. Check your rates.  Are you competitive in price? Are you lean enough in your overhead to allow you to offer a better price to the government than the next guy?  Really take a look at how you build your pricing and know the government will want to be saving money and if you make it easy for them, they’ll look to you. Can you get that wrap rate lower?
  5. Prepare.  The longer you wait around, assume things will come to you, rely on shotgun approaches and poor data, and stay in your office, the less likely you will have success in GFY14.  Get out, get educated, and find the money.

Still have more questions? Call or email Arrowhead Solutions, and we’ll share with you our insight on how to most successfully navigate FY2014. Consultations are 30 minutes and completely gratis!

Ph: 720-515-0527

Top 5 Wrap Rate Pitfalls a Small Business Should Avoid – By Linda Mahnke of Mahnke Consulting

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.