Federal agencies that rely on user fees to
generate part of their income are now faced with the possibility of lay-offs,
just like some private sector companies. Being closed for
business may result in furloughs. The US
Citizen and Immigration Service announced such a possibility last week in a
plea for emergency Congressional funding.
While there is no word from other agencies, like the National Park
Service, that also generate a large portion of their income from user fees, contractors
need to know that this issue can easily become a distraction to federal
customers. People concerned
about furloughs may not be concerned about getting your task order issued right
away. Similarly, as the US eases
its COVID-19 lockdown, federal agencies may gradually re-open, causing concern
and confusion in a workforce that may still harbor fears about being in public
and whether they will have the ability to continue to work at home. While agencies will, for the most part,
follow local guidelines on re-opening, it is noteworthy that the Pentagon is
not. All of this means that your federal
customer may be dealing with a lot more than the transaction of federal
business. The pace of business is
likely to be slowed as workers focus on basic questions like whether they should
report to work and, if so, where that workplace might be. Some of these distractions may unfortunately
last through the end of the fiscal year.
Contractors may not be able to control much of what is happening, but
they can remember the relationship-driven aspect of their work and act
accordingly when working with customers who may have other things on their
minds. Empathy and understanding
may help drive business nearly as much as the latest technology solution.
GSA Multiple Award Schedule contracts will
be awarded under separate NAIC’s codes where needed,
according to GSA, pursuant to a final rule being incorporated now into all MAS
contracts. Similarly, federal agencies will
be required to list all applicable NAIC’s codes when issuing a Schedule task
order if the task has a scope of work that crosses beyond one NAIC’s
classification. This could lead to a reduction in “NAIC’s code shopping” where
both industry and government representatives look for a way to set-aside a
piece of work for a particular small business.
Contractors may want to adjust their NAIC’s listings so that they
include all applicable goods and services the company provides.
Contractors may also note that these changes have been promised for some
time. They now, however, have a specific
effective date of October 1, 2022, the date by which federal IT
systems are thought to be capable of operating under the new rules. Contractors may be classified as both small
and large businesses, depending on the applicable NAIC’s code. Task orders with multiple NAIC’s codes may
cause confusion if they are totally set aside for small businesses, an
important factor contractors must consider when discussing potential acquisition
approaches with federal prospects.
Significantly, Schedule
task orders below the Simplified Acquisition Threshold (SAT) will not be
set-aside for small businesses.
While the FAR Council received several recommendations on this matter,
they determined that the Small Business Act allows only for the ability to
set-aside specific task orders, but contains no mandate to do so. The Council pointed out that recent case law,
including the landmark Kingdomware decision, is based on other
statutes. Schedule contractors can
expect continued activity on this issue, however, as small business
groups push for mandatory set-asides under the SAT whenever the “rule of two”
in FAR 19 is met. Other changes
coming to Schedule contracts include updates to Service Contract Act wage
determination rates and fourth party logistics capabilities that are
primarily of interest to companies offering commodity-type contracts.
The post-COVID-19 economy will look different from the one we left
behind according to a trio of University of Chicago economists, two of who are
Nobel laureates. This change will
almost certainly have an impact on contractors and those they work with
in government. The report states that
government policies may delay the reallocation of labor and try to hold onto
the past, delaying an inevitable change that should be allowed to run its
course. Agencies may seek support
from contractors to execute programs intended to restore as much of the pre
COVID-19 economic and social fabric as possible. As George Will points
out in his Washington Post article on the Chicago study, “the status quo
has many constituencies; in democratic societies, the status quo has government
on its side.” Second, federal agencies may modify their missions over
time to reflect any new economic or social realities that do emerge. This, too, will impact how contractors
support such agencies. Even beyond
these factors, though, government contractors, themselves, may have to adapt to
a post-COVID-19 economy with decentralized workforces and workers that must
have both similar and different skills from what was needed in the time before.
How quickly and smoothly
contractors can execute these changes could lessen the impact of reallocation
shock on their businesses.
Don’t look now, but the last quarter of the federal fiscal year is just
one month away. While there will likely
be the annual “race to the finish” in terms of available business, how you
pursue and close opportunities has undeniably changed. Here are three things to focus on now to make
sure your business in shape for the sprint:
1. Relationships Matter: Now, more than ever, good relationships
matter. It’s difficult to develop new
relationships virtually, especially when your customer is being pulled in
multiple directions at once. Whether
the relationship belongs to you or a partner, success this year-end will hinge
on making the most of established, available relationships. Remember, too, that your relationships with
other contractors are key. Use all of
your relationships to help stay focused, but also to look for opportunities
with those your relationships know.
2. Make It Easy To Buy From
You:A customer that is
working remotely, socially distancing, supporting critical missions quickly, participating
in “regular” agency meetings, and balancing kids out of school for the summer
has little time to initiate an open market buy. That’s why this year is likely to see an
increase in the use of existing IDIQ contracts like the GSA Schedule and similar
contracts. Also, small business
set-aside use will almost certainly accelerate.
Whether it’s your Schedule, your size status, or your ability to accept
a government purchase card, ease of access is key to closing the sale this
year. 3. Use Your Common Sense: Unscrupulous companies and people have
already contacted many contractors trying to use their contracts and
relationships to “sell” products and other solutions that they either don’t
have or are authorized to sell. The
lure of easy money can be very tempting, but remember that if something sounds
too good to be true, it likely is.
You’ve built a reputation and relationships over time that have made you
a successful company. Don’t let that all
evaporate by taking a shady deal from someone that vanishes as quickly as a
Redskins fourth quarter lead. Prepare
now for the end of fiscal year and you can take that vacation just as
everything opens back up.
What if they re-opened the office and nobody came? While things may not yet be that extreme, it
is becoming more and more obvious that widespread telework is here to stay. With it comes the need for contractors to be
able to master on-line teleconference and webinar platforms in order to market
and sell effectively. Comments from two federal Chief Information
Officers show that their workers are at least as productive when working at
home vs. the office. Agriculture CIO Gary Washington was quoted in Federal
Times recently saying, “We are preparing for a different kind of work
environment. “We will see what that is, but we have proven that it is possible
to support” telework on a larger scale.Contractor workforces will have to
become similarly productive. Being
able to deliver the same message and sense of urgency in a virtual setting that
has been delivered in person is essential.
Contractors should consider changing training and education plans
now to incorporate “virtual selling”.
This not only means increased use of and expertise with collaboration
tools, but ensuring that a contractor’s own workforce remains productive when
teleworking. It is way too premature to
say that we will be in a virtual work world in perpetuity. People still need to interact in physical
spaces and some work cannot be done remotely.
Still, making sure that you can reach your federal customer
wherever they are working is essential.
Contractors should be thinking about such approaches now as part of their
strategic, and not just tactical, planning.