The Week Ahead - January 6th, 2014



While federal contracting budgets should remain relatively stable during the rest of FY’14, that doesn’t mean there won’t be winners and losers. According to a recent Deltek webinar, although total federal discretionary dollars are falling somewhat, overall money obligated to contracts has not fluctuated to the same degree. Winners in priority areas continue to be areas such as cyber, data center optimization (note: it’s no longer consolidation), and spending related to the implementation of the Affordable Care Act. Winning agencies are similarly aligned, with Education and Health and Human Services expected to continue spending increases. Deltek also points out that spending caps are expected to increase by 1-2% a year starting in FY’15. That may not sound like much, but when you consider that the baseline is in the hundreds of billions a small percentage increase adds up. Interestingly, Deltek’s analysis also validated anecdotal evidence many had long suspected: More companies are leaving the federal space than entering it. As such, companies that have good experience in the market and solid contracts are best positioned for future success.



Companies never think that bad things can happen to them, yet they do happen all of the time. The most recent example of this is the case of Micro Tech Inc. Micro Tech received the proverbial lump of coal in its Christmas stocking December 20th when the Small Business Administration suspended them and announced its intent to place the company on the debarred list – the death penalty for government contractors. In addition to the company itself, the CEO would also be placed on the list. There was no intermediate government action in the Micro Tech case; the SBA went right for the maximum. Even if the company is not debarred (an official decision won’t be made until at least late January), the firm can do no new federal business while it remains on suspension. In the meantime, they will incur hefty legal fees as they fight for their corporate life. If all of this sounds unappetizing to government contractors, it should. Paying scant attention to compliance, size rules, and other requirements always costs companies that are caught more than if they’d invested properly in the first place. Think you won’t be caught? That’s a bet many a whistleblower will take with your company anytime.



The Trade Agreements Act will apply to all open market procurements with a value of more than $204,000 for the next two years under a final rule issued December 31st. This means that companies responding to such solicitations must ensure that their products or services are made or substantially transformed in the US or a designated end country. The rule makes no change to how the TAA applies to GSA Schedule purchases, yet contractors should be aware of the varying thresholds that apply to countries with which the US had a bi-lateral trade relationship, but are not signatories to the WTO’s Government Procurement Agreements – I.e., not every country has the same dollar threshold. In addition, contractors need to be clear that either the Trade Agreements Act or the Buy American Act apply to open market procurements. The BAA will now apply to contracts under $204,000. This fact, though, is not well understood among many government contracting officers who may insist on both TAA and BAA adherence on the same order. Don’t sign your company up for more rules than you already have to deal with. See the final rulehere



If your contract compliance program isn’t up to date, the government could make tater salad – or worse – of your company’s contract profits. Making sure that you, A. have a compliance program and, B. that it is up to date, really are the very best preventative medicines you can buy. While “pre-existing conditions” are o.k. with Obamacare, that’s not so with contract problems. Call Allen Federal. We have extensive experience in working with companies to ensure they can comply, and sell, through their Schedule contracts. Contact Allen Federal today at to see how we can make your New Year safe and happy!