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Keith R. Scott Associates Introduction to the Federal Contract Market Presentation To Federation of Israeli Chambers of Commerce August 20, 2014. - PowerPoint PPT Presentation
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Keith R. Scott Associates
Introduction to theIntroduction to the
Federal Contract Federal Contract MarketMarket
Presentation To
Federation of Israeli Chambers of Commerce
August 20, 2014
Keith R. Scott Associates Proprietary
The Executive Branch of the Federal market consists of 15 departments, 70 independent agencies and government corporations, as well as numerous agencies of the Executive Office of the President
The Executive Branch supports both civilian and defense functions
The Executive Branch out-sources much of its work to the commercial and nonprofit sectors through contracts and grants
In Fiscal Year (FY) ’13, the Federal government spent over $461 billion on contracts: $308 billion for DoD, $153 billion for civilian agencies.
What is the Scope of the Federal What is the Scope of the Federal Market?Market?
Keith R. Scott Associates Proprietary
Overall market size: Federal marketplace is a multi-billion dollar industryContract size: Federal contracts range from small
purchase orders up to billion-dollar contracts:• Micro Purchases are defined as any purchase of $2,500
(in some cases $3,000) and below and can be made without obtaining competitive quotations. Purchases in this category are open to small and large businesses and are usually purchased via a credit card or Government Procurement Card (GPC)
• Simplified Acquisition Procedures (SAP) apply to acquisitions between $2,500 and $150,000. The majority of these purchases are set aside for small businesses
• Purchases over $150,000 are considered large purchases that require a sealed bid process
Why Compete in the Federal Why Compete in the Federal Market?Market?
Keith R. Scott Associates Proprietary
Contract length: Federal contracts are usually long-term, often 5 years in length
Preferences: Federal contracting rules require that agencies set aside a percentage of contracts for
small and disadvantaged businesses. Set-aside goals include:
• 23% for small businesses
• 5% for small disadvantaged businesses
• 5% for woman-owned businesses
• 3% for HUBZone small businesses
• 3% for service disabled veteran-owned small businesses
Why Compete in the Federal Why Compete in the Federal Market?Market?
((continuedcontinued))
Keith R. Scott Associates Proprietary
What Does the Federal What Does the Federal Government Buy?Government Buy?
A wide variety of products and services classified in two main systems (http://www.naics.com/search/):
SIC Codes: The Standard Industrial Classification (SIC) codes are used by the Federal Government to identify and classify specific categories of business activity that represent a company’s primary line of business.
NAICS Codes: The North American Industry Classification System (NAICS) industry codes define establishments based on the activities in
which they are primarily engaged. The Small Business Administration (SBA) uses NAICS as
a basis for its size standards. Keith R. Scott Associates Proprietary
NAICS Codes That May Be of NAICS Codes That May Be of Interest Interest
NAICS Type of Business
31-33Manufacturing
51 Information (IT)54 Professional, Scientific & Technical Services56 Administrative, Support, and Waste
Management and Remediation Services61 Educational Services62 Health Care and Social Assistance
Keith R. Scott Associates Proprietary
Is the work in your area of expertise? Are you offering services under the listed NAICS code?
Have you marketed the agency or department in which the opportunity resides?
Have you been tracking the opportunity or is there still sufficient time to track the opportunity and establish a capture management plan?
Is there a small business (SB) preference or an small disadvantaged business (SDB) preference for which you qualify?
Do you have the financial capacity to manage the opportunity?
Do you have the financial and staff capacity to bid the opportunity?
How To Assess Federal MarketHow To Assess Federal MarketOpportunitiesOpportunities
Keith R. Scott Associates Proprietary
How To Assess Federal MarketHow To Assess Federal MarketOpportunities – More Questions to Opportunities – More Questions to
AskAsk
Does the work require personnel and/or facility clearances?
Is the work requirement in a locality where you have or can reasonably secure resources?
Can your firm ‘go-it-alone’ in supporting all work requirements, or do you need a partner to fill in gaps in your capability?
Should you be seeking to prime or to subcontract the opportunity?
Is there time to seek an appropriate partner(s)?
Have you bid anything similar? If so, what was the outcome of your prior similar bids?
Keith R. Scott Associates Proprietary
Building relationships with project, contract and Small Business Program staff in target agencies
Building relationships with incumbents, large contractors and other potential teaming partners
Submitting capabilities statements well in advance of sources sought,pre-solicitation or other notices of forthcoming bids
Gathering intelligence about incumbents, agency forecasts, contract histories and client future needs
Defining pricing strategies that are effective and competitive in each individual agency market
Using Federal Supply Schedules as a marketing tool and contract vehicle
Marketing and Capture Marketing and Capture ManagementManagementApproachesApproaches
Keith R. Scott Associates Proprietary
Types of Federal Types of Federal SolicitationsSolicitations
Request for Information (RFI)
Sources Sought
Invitation for Bid (IFB)
Request for Quote (RFQ)
Request for Proposal (RFP)
Keith R. Scott Associates Proprietary
Analyzing Solicitation Analyzing Solicitation Requirements:Requirements:
What Does Your Firm Bring to the What Does Your Firm Bring to the Table?Table?
Technical expertise with scope of work (SOW) requirements
Recent past performance and current experience in your areas of expertise within: commercial, other government, academic and Federal marketplace
Size, NAICS and area(s) of set aside requirements
Focus on what matters to the program and to the contracting office (examples: in-place quality management plan, proven past performance, methodology for minimizing risk)
Keith R. Scott Associates Proprietary
Understand Federal RFP SectionsUnderstand Federal RFP Sections
Section A – Information to Offerors or QuotersSection B – Supplies or Services and Price/Costs
Section C – Statement of Work (SOW)
Section D – Packages and Marking
Section E – Inspection and Acceptance
Section F – Deliveries or Performance
Section G – Contract Administrative Data
Section H – Special Contract Requirements
Section I – Contract Clauses/General Provisions
Section J – Attachments, ExhibitsSection K – Representations/Certifications and Statement of Offerors
Section L – Proposal Preparation Instructions and Other
Section M – Evaluation Criteria
Keith R. Scott Associates Proprietary
Keys to Successful Keys to Successful Technical Proposal PreparationTechnical Proposal Preparation
Make bid/no-bid decision as early as possible – even before release of the solicitation
Download and review solicitation and revise bid/no bid decision based on final assessment of ability to support requirements
Prepare outline and schedule for proposal within 48 hours of reviewing solicitation
Assign proposal responsibilities within 72 hours of solicitation review
Update corporate “boiler plate” materials
Write to the solicitation evaluation criteria and instructionsKeith R. Scott Associates Proprietary
Pricing bids for the Federal Market must consider:• The type of contract• The competitiveness of your pricing elements
Main Types of Federal Contracts:• Fixed Price• Time and Materials/Labor Hour• Cost Plus Fixed Fee
Elements in Pricing Contracts (What Comprises Your multiplier):• Labor Rates• Frings• Overhead• General and Administrative (G&A• Fee (Profit)
Financial Background to Bidding Financial Background to Bidding Federal Contracts Federal Contracts
Keith R. Scott Associates Proprietary
Fringe BenefitsFringe Benefits
Holiday labor cost
Other paid leave labor costs (such as jury duty, family leave)
Employer payroll taxes (FICA taxes, state unemployment taxes)
401(k) employer match or contribution
Health insurance and similar benefits
Keith R. Scott Associates Proprietary
Examples of Overhead CostsExamples of Overhead Costs
Non-billable staff: such as Human Resources (HR), accounting, salesProportionate share of total facilities costs:• Business development efforts and to manage or
perform administrative functions
• Office supplies
• IT services
• Telephone
Overhead costs support the efforts of the direct labor workforce, not necessarily related to a specific contract
Keith R. Scott Associates Proprietary
Examples of G&A CostsExamples of G&A Costs
Non-billable staff: such as HR, accounting, salesBusiness development efforts and to manage or
perform administrative functionsProfessional fees, such as legal, accounting, payroll processing feesTravel – perhaps in support of business development effortsBusiness insurance (general liability)State & local taxes (not federal taxes!)Conferences, business meetingsDues and subscriptions
Keith R. Scott Associates Proprietary
The 2012 Grant Thornton Survey of the government contracting industry showed multipliers of 1.9 for offsite labor and 2.2 for onsite labor
Gross profit rates shown in that survey are between 1%–5% of revenue
Typical profit ranges bid:• Fixed price = 10%–15%• Time and Materials = 5%–8%• Cost Plus Fixed Fee = 3%–5%
Multiplier RatesMultiplier Rates
Keith R. Scott Associates Proprietary
NextNext StepsSteps Prepare 12-month strategic plan for the Federal Sector and
incorporate into overall corporate strategic plan
Identify corporate lead and Federal BD management team to manage implementation of Federal Sector plan
Begin implementation of capture management approaches based on plan
Review progress at least monthly if not biweekly
Maintain strong lines of communication between :• Corporate lead and Federal BD management
team• BD team and potential clients • BD team and teaming partners• Corporate lead and current clients
Keith R. Scott Associates Proprietary
SBIR Program: History and GoalsThe Small Business Innovation Research (SBIR) program is a U.S. Federal government program aimed at encouraging domestic small businesses to engage in research and development (R&D) activities and projects that have the potential for commercialization.
Currently, 11 Federal Agencies participate in the SBIR program.
The program’s main goals are to: (1) stimulate technological innovation; (2) meet Federal
R&D needs; and (3) increase private-sector commercialization of innovations derived from Federal R&D funding.
Keith R. Scott Associates Proprietary
SBIR Program: Phases
Phase I: Establish the technical merit, feasibility, and commercial potential of the proposed research or R&D efforts. Phase I awards normally do not exceed $150,000 total costs for 6 months.
Phase II: Funding is based on the results achieved in Phase I and the scientific/technical merit and
commercial potential of the project proposed in Phase II. SBIR Phase II awards normally do not exceed $1,000,000 total costs for 2 years.
Phase III: Pursue commercialization objectives resulting from the Phase One and Two. The SBIR
program does not fund Phase III.
Keith R. Scott Associates Proprietary
SBIR Program: How Do Israeli Companies Participate?
While a wholly-owned and operated Israeli company cannot participate in the SBIR program: it
could (1) set up a U.S. entity or (2) form a joint venture with an existing American company that will make it eligible to apply for an SBIR grant.
For example, an Israeli company could establish an American subsidiary, and the American
subsidiary could apply for an SBIR award as long as it is more than 50% directly owned and controlled by a U.S. citizen or permanent resident.
The SBIR program could also be a good option for an Israeli company whose owner is a U.S. citizen
residing in Israel.Keith R. Scott Associates Proprietary
Barbara J. Zakheim, PresidentOffice: 240-638-2757Mobile: 301-675-4652Email: [email protected]
Corporate Headquarters:8403 Colesville Road, Suite 1100Silver Spring, MD 20910Website: www.keithrscott.com
Keith R. Scott Associates Proprietary