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GROWING FEDERAL BUSINESS: YOU CAN DO IT FAST, OR YOU CAN DO IT RIGHT

Succeeding in the federal market is not about doubling business overnight.  Experienced contractors know that if a company grows that quickly they will inevitably make mistakes and have to give some of that money back.  Still, either your business or partners you work with may insist that their solution is just what the government always wanted (Jeff Bezos’ credit card number?) and it’s up to you to manage expectations.  Lesson number one:  It’s a big government and there has to be focus to any company’s business efforts.  Even large companies can’t be everywhere at once.  Lesson two:  There is risk inherent in selling to the government.  This is often difficult for small businesses and subcontractors to accept, but the phenomena isn’t just limited to those groups.  Risk has to be managed, no matter what your business size or level of federal experience.  It takes discipline and resources to manage it correctly.  Regardless of a company’s size and federal experience, growth has to be done in a sustainable manner.  That means ensuring that both your company and your partners have as much of a commitment to compliance as to driving new business.  Large business primes can be an important link in the chain by educating their partners not only on business development but on the importance of having good compliance systems in place.  At the same time, any business needs to be prepared for companies that promise to deliver huge amounts of new business in a short time.  It’s more tempting than you might think.  A phone call from a previous partner about an opportunity to sell masks when you’re a furniture company should make you think twice, no matter how “easy” the money seems.  Everyone wants to increase their business, but doing it in way that stays within the rules and protects your corporate reputation is essential – no matter what your business size.

HOUSE RELIEF PACKAGE WILL CHANGE, MAY BE DELAYED

The $3 trillion “relief” package expected voted on in the House Friday contains plenty of goodies for everyone.  Don’t expect it to ever see the light of day in its current form, however, as the measure has zero chance of being passed as is in the Senate.  Indeed, Senate leaders have expressed reluctance to pass any sort of additional spending bill related to coronavirus relief.  The most likely scenario, though, is that a new measure will pass, most likely before Memorial Day weekend, but that it will be more focused.  Expect more small business loans, aid to states and the District of Columbia, healthcare funding, and related appropriations.  While little of this money is directly targeted at large business contractors, there will still likely be provisions such contractors should note.  Enhanced telework requirements may mean that face-to-face discussions will be more difficult moving forward.  Hazard duty pay is also likely to be a part of the measure, though likely not for contractor personnel.  Money to stabilize small businesses, including those doing government business, will be an important feature.  That can be good news for larger companies that rely on small partners for certain federal work.  The largest impact of the relief bills will be felt in future years.  Someone is going to have pay for all of this “relief” in the form of increased payment on the federal debt.  That will likely reduce discretionary money available for contracting and other “business of government” operations for several years to come.  DOD, for one, is already preparing for such an eventuality.  Contractors should as well. 

FORMER DOD UNDERSECRETARY KENDALL SLAMS CMMC

Allowing a non-governmental third party to decide whether a company can bid on a DOD contract conflicts with the “inherently governmental” function of the awarding government contracts, according to former DOD Undersecretary for Acquisition, Technology & Logistics Frank Kendall.  Writing in Forbes magazine, Kendall states, “Determining whether or not a contractor is qualified to bid on a government contract is, in my view, an inherently governmental function.  Under CMMC, however, a new bureaucracy created outside of government, takes on that role.”  Kendall goes on to point out that how third-party assessors will, themselves, be accredited is “a mystery”.  He recommends that DOD delay or cancel the CMMC program entirely.  DOD, in the meantime, still seems set on moving forward with the requirement for contractors to show certain levels of cybersecurity capabilities if they want to do business with the agency.  Draft RFP’s and RFQ’s already contain such language.  It is uncertain what companies exist now, however, to attest to a company’s ability to meet one or more of the five levels of CMMC status that will be required.  Another area of confusion on CMMC is its applicability to Commercial Off the Shelf (COTS) procurements.  Katie Arrington, who oversees CMMC, says that COTS acquisitions will be exempt, while other say that it depends on whether the nature of the work to be performed brings the contractor into contact with sensitive, but not classified, information. 

Kendall’s comments also raise questions about the validity of other third-party accreditation protocols already in use for government contracting.  Both the FedRAMP and Section 508 compliance programs use outside parties to determine a company’s ability to meet those standards.  Should Kendall’s view on using this approach for CMMC take hold, it could have an impact on these programs as well.  

FAR CHANGE REQUIRES SIZE CERTIFICATION AT TIME OF BPA TASK ORDER

Small businesses must actually be small at the time an agency places an order with them via a GSA Schedule Blanket Purchase Agreement (BPA) or Basic Ordering Agreement (BOA) according to a recent change made to the Federal Acquisition Regulations (FAR).  FAR 19.301-1, in pertinent part, now states, “To be eligible for an award of an order under a basic ordering agreement or a BPA issued pursuant to part 13 as a small business concern identified in 19.000(a)(3), the offeror must be a small business concern identified in 19.000(a)(3) at the time of award of the order.”  The change was made as part of a final rule issued in February to implement small business size changes initiated by the Small Business Administration in 2013.  This change is in conflict with a host of small business precedents, perhaps chief among them being that companies can certify their status based on a rolling 5-year period.  The SBA, though, has sometimes taken a dim view of the GSA Schedules program, despite the fact that it routinely exceeds the government’s own small business use goals.  While frustrating, it is not entirely surprising that they would single out Schedule BPA’s.  Whatever the reason, though, companies absolutely must be aware of this new rule and how it could impact their business.  No contractor should certify to something that it knows it is not or cannot do.  Being the target of a False Claims action is more expensive to your bottom line and reputation than the piece of business your company would have obtained.  Competent counsel can assist in seeing you through this maze – and at a price far less than a False Claims Act case.  Proceed accordingly.