Dedicated reader M. Obama of Washington D.C. writes, “My new company sells to state governments in addition to our federal business.  Our state prices are all over the map.  Could this impact our GSA federal business?”  Indeed they can, M.  Making it worse is that state reps can fail to understand why their business is your business.  When a company obtains a GSA Schedule contract it must usually tell GSA about its discounting practices, including those to state governments.  While prices that are “all over the map” can pose a challenge, taking the time to accurately tell GSA about your standard and non-standard discounts practices can mitigate that risk.  Further, your company may want to recommend a Basis of Award customer class that is not state governments for purposes of complying with the Schedules Price Reductions Clause. Trying to keep track of unfettered discounting for Price Reduction Clause compliance is a nightmare and puts you at a high risk for fines and penalties from non-compliance.  Your senior management should insist on regular, thorough communication inside your company so that the GSA Schedule contracts manager knows about all of your current discounting practices, state or otherwise.  It should also be clear that fines your company pays for non-compliance will be borne equally by the federal team and whatever division caused the miscommunication.  GSA Schedule compliance is everyone’s business.

Allen Federal is debuting a new course – “Selling IT to the Federal Government” – in Orlando this March at the Federal Publications Seminars Orlando Contracts Week!  Learn all about selling IT to the feds and/or sharpen your other professional skills.  Bring a friend and get TWO classes for ONE price!  If you want total immersion, FedPubs is also offering a full week of classes at a SPECIAL DISCOUNT!.  Come get training and warm up!  See the details here:  https://www.fedpubseminars.com/Training/Orlando-Government-Contracts-Week/

The breakdown in talks between the White House and Congressional leaders last week has left many senior Congressional members believing that the partial government shutdown could be with us for several weeks.  Both political parties seem to have substantial unity for their respective positions – at least for now.  While the House has voted on passage of individual agency spending bills, Senate leaders have said that they will not consider any measure to re-open the government until a bi-partisan deal has been worked out with the White House.  For contractors, this means that the payment on invoices already sent to closed agencies will continue to be delayed, closed agencies will not be able to have their employees travel or meet with industry, and, importantly, that employees that work on federal sites that are now closed, will not be paid via their usual charge numbers.  It is highly unlikely that contractors will receive “back pay” when closed agencies eventually re-open. Additionally, agencies that are closed, with only essential employees at work, are highly unlikely to take meetings with contractors for business development purposes.  The situation continues to shift in some “closed” agencies as well.  Those that generate their own user fees, such as the Interior Business Center, are at least somewhat open, for now.  When user-fee money is spent, however, some of those agencies may shift to closed, or reduce operations from what they are currently.  The US Courts office has announced that this is the course they are likely to follow.  Some contractors have also reported disruptions in offices that should be open as they have their FY’19 funding.

Allen Federal continues to predict that the partial shut-down will last at least until the end of January.  Financial markets, contractors, federal employees, and – importantly – those who depend on government programs such as SNAP, will begin to be seriously impacted after that time.  Once that happens, pressure will only grow on Congress to develop its own solution, with or without White House support.    

DOD agencies could risk losing some of the money they’ve already been appropriated if it is not spent or committed soon, according to knowledgeable sources with whom Allen Federal has spoken.  These agencies are not accustomed to receiving their full-year appropriations relatively close to on-time and, as such, had not planned to commit appropriated money until later in the fiscal year – about the time they’ve received it the past two fiscal years.  Acquisition offices recently finished all of the work needed to get FY’18 money full accounted for, but now must work quickly on FY’19 money.  If not, DOD financial officials may sweep uncommitted money from certain accounts beginning in mid to late March.This presents an opportunity for contractors who have small or “ready to go” projects that DOD customers can act on quickly.  The more these projects match with overall DOD priorities like security, cyber, cloud, and mission support, the better your chances for closing short term business.  It may be, however, that easier to execute projects that don’t precisely align with priorities will be funded as program managers race to commit dollars before they are lost.  Indeed, failure to spend allocated dollars now may mean that offices receive reduced allocations in future years.  As such, the pressure could be on.  Make sure that your DOD teams are speaking with customers about “shovel ready” projects that can meet real needs quickly.  You can help your customer and yourself. 

Talented workers with special skills always have options.  Sitting at home not getting paid is not an option they need to endure, especially if there are readily available alternatives.  As the partial-shutdown stretches on, the risk of a brain drain from both the ranks of federal and contractor employees increases.  Younger feds aren’t wedded to the idea that they have to stay in government for some number of years to get their retirement.  They’re more mobile as a group then their older counterparts.  Plus, many want to be seen as actively contributing.  Contributing to high score on Grand Theft Auto IV doesn’t count.  Contractors workers feel the same way, and their retirement packages tend to be more portable.  Add to this competition in specific markets – like Amazon’s move to suburban Washington – and a scenario where government agencies lose experienced, talented workers becomes much more possible.  Contractors have a slight edge here in that they can shift workers to overhead accounts, at least for some time, and can offer other incentives.  Companies need to think broadly about this, too, because it’s no longer the case that a worker will jump from contractor to contractor.  Talented workers can, and will, jump right out of the federal space entirely if they perceive other segments to be both more meaningful and reliable.  This isn’t an issue companies can ignore, even though it can be an expensive one when revenues are down.  Maintaining a talented, experienced, and well-known workforce is key to having an edge now and when government agencies do re-open.