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Wide-Reaching FAR Rule Touches Every Government Contractor

Posted By Ann Sullivan, WIPP Chief Advocate, Tuesday, November 19, 2019

In the 2019 National Defense Authorization Act, Congress directed federal agencies to stop using products and services from six Chinese companies in Section 889 of the bill. Those companies include: Huawei, ZTE Corporation, Hytera Communications Corporation, Hangzhou Hikvision Digital Technology Company, and Dahua Technology Company. 


Moving quickly, the FAR Council issued an interim final rule, Prohibition on Certain Telecommunications and Video Surveillance Services or Equipment, which became effective on August 13, 2019, and broadly prohibits federal agencies from using telecommunications or surveillance equipment or services from these six companies.

AnnSullivan

Next year, step two, which prohibits any government contractor from using any components or services from these companies is expected to go into effect. Known as Section 889, this action has the potential of impacting all government contractors, large or small—even micropurchases.  


While no one doubts that these companies pose a threat to the nation’s cybersecurity, any government action that affects 139,730 small entities will have wide reaching effects. That was the theme of my participation on a panel at GSA on Section 889. I joined five other panelists to speak about how Section 889 will affect government contractors, especially small businesses.

 

 Think for a minute about complying with this new requirement. For example, do you know who manufacturers your desk phones? Do you know what brand the surveillance equipment in your building? If you travel internationally, do you know the telecom carrier you use in your office or hotel? Replacement of equipment will surely carry a cost, but figuring out usage of any components or services from these six companies will prove to be difficult.


The new FAR rules will not only impact your employees and your physical facility, it will also extend to your workforce comprised of 1099 contractors. A small business owner shared that this new Section 889 requirement could result in her contractors opting out of federal work because the new requirements will be too tough to comply with.


One of my fellow panelists joked that these new requirements will provide full employment to lawyers and compliance experts for years to come. Small businesses will likely need to hire a compliance specialist as well as a specialist to source equipment to stay in compliance with the new rule. One small business stated that it will cost them $10,000 to conduct an audit and provide governance structure, $10,000 for new equipment, and $10,000 to change all of her contracts and educate her 1099s. An audience participant estimated a cost of $150,000 just for new equipment alone.


My greatest concern is that small businesses will not understand the implications of this new requirement until it smacks them in the face—until they don’t qualify for federal work or a prime contractor demands a certification of compliance.  


So, what can the government do to increase awareness among industry about the potential impact of Section 889? First, the government can use small business offices (OSDBUs) and small business specialists to share information about Section 889. Second, GSA can do informational webinars about the impact of the new rule. Third, the government should involve the Small Business Administration (SBA) and Procurement Technical Assistance Centers (PTACs) network. And finally, the government should engage organizations, like WIPP to spread the word about the new Section 889 rule.


Staying on top of acquisition policies, like Section 889, directly affects your bottom line. That’s the beauty of WIPP – we are dedicated to keeping you informed and engaged.


Tags:  advocacy  FAR  federal contracting 

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Is it Possible to Grow a Federal Contracting Business in Tumultuous Times?

Posted By Gloria Larkin, President & CEO, TargetGov, Friday, November 15, 2019
Updated: Thursday, November 14, 2019

The federal government marketplace is facing a dramatic shift driven both by the maturity of the market and a new administration.

Most government contracting businesses are started by individuals with an area of expertise (engineering, IT services, construction, public relations, accounting, etc.), or a passion (serve the warfighter, make the world a better place, inform the public, save the environment, etc.). Armed with some validation that there is a market for these skills and knowledge, perhaps by working for another government contractor or as a government employee, they strike out to establish or grow their own businesses.

The effort to start or grow a government contracting business of any kind is overwhelming in a steady marketplace. Legal structure/filings, accounting compliance, capital funding, facilities, and hiring staff are the just the beginning. When a firm tackles the business of federal contracting there are the additional steps of registrations and socio-economic set-aside status requires even more paperwork and time.

The critical next step is the hunt for actual solid business opportunities. Which agencies are buying what the business sells? Who are those agencies currently buying from? Through which contract vehicles? At what price? How does a business distinguish itself? How does one identify and reach decision makers? Businesses that have won at least one federal contract have successfully answered most of these questions and defied the odds. In most cases, it was the founders who blazed this trail and won the initial contracts – and then performed the work to fulfill those contracts.

But today even well-established government contractors are challenged by uncertain budgets, changing agency missions, and fluid priorities.

This is the time in the lifecycle of a government contracting business when the owners must make a decision. How can the business grow beyond the individual contributions and reach of the founders? How does one adapt to this changing marketplace and win more contracts? The next usual step is to hire additional business development capacity and expertise.

 


The traditional approach has been to hire a seasoned federal business development professional, which is now fraught with risk and expense especially if that individual is expected to step into the shoes of one of the founders or key business line managers.

That manager or founder may struggle with defining business development expectations clearly, delegating authority or exhibiting the patience to allow sales and business development staff to learn, grow, develop relationships and produce results.

The federal procurement marketplace is also changing. According to Government Executive, 43% of federal contracting officers will retire between 2014 and 2018. With those retirements go long term relationships that have benefitted incumbent contractors. This is bad news for the incumbents but good news for other contractors.

The Office of Management and Budget also now requires more outreach by federal agencies to the vendor community prior to the issuance of solicitations. These outreach activities include industry days, small business conferences, sources sought notices and Request for Information. Federal procurement has become very event driven.

Relationships are still very important and they are formed by participating in the events sponsored by the agencies. They are throwing a party (figuratively speaking) and expect well-informed vendors to show up. And, the combination of rapidly growing retirements of government personnel and the recent hiring freeze enacted by the new administration severely limits opportunities for federal contractors to have one on one time with decision makers.

For those companies responding to these market changes and positioning to grow, smart government contractors are creating highly disciplined business development “engines” that leverage adaptive industry best practices and the knowledge and skills of the owners and subject matter experts. They then bring in additional outside resources to expand capacity.

 

Need to know more?

WIPP Members can access Gloria's WIPP Education Platform webinar:

Building Infrastructure to Manage Your Federal Contracts


This business development engine consists of a structured approach to gathering market intelligence on agencies, contract vehicles, opportunities and competition, executing action items related to the analysis of that data, following rules for determining whether to bid, choosing smartly when and how to team with others, and following a disciplined marketing outreach program.

If designed properly, this business development engine consists of a blend of technologies, processes and people with varying levels of business, marketing and analytical skills. This innovative structure has proven to produce incredible financial results – and is scalable and repeatable – freeing the owners or managers to take on more strategic initiatives.

Gone are the days of the lone business development professional circling the beltway, sitting in lobbies and depending upon their friends for referrals. This has been replaced by discipline, process, and results.

 

This post originally appeared on TargetGov. WIPP features guest blog posts from our members! Please reach out to the WIPP marketing department to be featured. 

 

Tags:  federal contracting  guest post  membership 

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