The federal government is, hands down, the largest contractor in the United States. Add local and state government work, and these heavily regulated government contracts have been a major source of work for security and other low-voltage contractors. But contractors who do the work know they must navigate their way through regulations intended to avoid misappropriation of funds and ensure uniform policies and practices across agencies.
The U.S. General Services Administration (GSA) Multiple Award Schedule (MAS) Contract is one of the best avenues toward these government contracts, and a recent series of events might make it easier for contractors to bid or even obtain GSA licenses. New GSA administrator Lurita Alexis Doan, Washington, D.C., has made a commitment to make the process easier and faster for contractors seeking a contract with the government.
While securing government contracts has traditionally taken plenty of time and money, GSA announced this year its plan to cut the usual paperwork processing time to obtain a GSA MAS Contract to a fraction of what it was.
“The GSA is saying, let’s do this in 30 days,” said Don Erickson, director of government relations, Security Industry Association (SIA), Alexandria, Va. GSA’s pilot program, Multiple Award Schedule (MAS) Express, pledges to process applications limited to certain schedules and categories, most notably Schedule 70—general purpose information technology equipment, software and services for SINS 132-8 and 132-12 only; Schedule 67—photographic equipment: cameras, photographic printers, and related supplies and services (digital and film based); Schedule 58 I—professional audio/video, telecommunications and security solutions; and Schedule 81 I B—shipping, packaging, and packing supplies.
A prerequisite for participation in the MAS Express Program is the successful completion of the “Pathway to Success” education seminar. Vendors may attend either a live presentation or complete the Web-based presentation posted on the Vendor Support Center (VSC). The seminar intends to eliminate a common problem: Often, the long paperwork phase of a bid results from mistakes on the part of bidding vendors unfamiliar with the process. The presentation provides background information on the GSA schedules program and encompasses a variety of other topics.
Through the use of the centralized Schedule Program Express Evaluation Desk (SPEED), GSA intends to standardize and expedite the initial review and qualification of offers. Then, upon completion of its initial review and qualification of an offer, the SPEED Desk will notify the vendor of whether the offer meets the minimum criteria for consideration under the MAS Express Program and, if not, what options the vendor has. By expediting this turnaround time for the initial review and qualification of an offer, as well as providing the vendor with rapid feedback, the overall time to review, evaluate, negotiate and award a GSA Schedule Contract should be greatly reduced, according to those at the GSA.
While MAS Express is only a pilot, Lynn de Seve, president of GSA Schedules Inc., Bowie, Md., predicted it will shorten paperwork processing time, despite the fact that complex contracts are unlikely to ever be accomplished in 30 days.
“It’s a good idea,” she said, “but more complex contracts will require more time than that.”
Defense Authorization Act
Another recent ruling that could signal good news for contractors is a 2007 bill that will permit purchasing by local and state governments for recovery efforts after a presidential-declared national disaster or solutions before a disaster actually happens. Known as the Defense Authorization Act, the law could open up a vast amount of purchasing for emergency preparedness for states and cities. State and local agencies can purchase security technology and other services in advance of a disaster. It actually is open to all GSA Schedule programs.
“For those with GSA schedules, that’s incentive enough to stay there. For others, it’s an incentive to get in,” SIA’s Erickson said.
“This is exciting,” de Seve said. “We think it’s going to generate a lot of business.”
Another trend contractors need to watch is the Cooperative Purchasing Act. Under the current law, passed in 2002, E-Government Act, Section 211, authorizes cooperative purchasing for any GSA projects, including state agencies, schools and any other government facility that can buy products at GSA prices and conditions. This gives them the best prices and access to a host of products. For contractors, it means they, too, have greater exposure to products and easier access. Administration is easier as well, and no longer do contractors or vendors need to go state by state or to each local agency to obtain what they need. This helps companies trying to sell equipment, allows more business opportunity for a variety of those vendors and is administratively easier for contractors. According to Erickson, however, the act applies only to Schedule 70. And, although the act has been in place for more than four years, many are still unaware of it.
“If this could extend to Schedule 84, this is a huge issue,” Erickson said. There is an effort by some lawmakers to have Schedule 84, however, which includes services covering homeland security as well as law enforcement, firefighting and other security services, added to the act.
These products and services may be found within three programs: Security and Law Enforcement Solutions, National Wildfire Protection Program and 1122 Counterdrug Program.
“We need legislation to put into the bill for Schedule 84,” which would include homeland security, Erickson said. “A lot of decisions are made about homeland security products on a local level.”
There is other legislation that still hampers contractors in government contracts, and SIA is lobbying to turn them around. One is a Nixon Administration memo that prohibits government entities from using grant funds for their projects. The argument was the grants would allow large companies to unfairly compete with small businesses. That thinking has been disproved, according to Erickson. He estimated 83 percent of contractors with the GSA are small businesses.
Taxes are yet another concern. Section 511 of the Tax Increase Prevention and Reconciliation Act of 2005 mandates that federal, state and local governments withhold 3 percent of all payments to contractors for goods and services. This provision was enacted after some contractors failed to comply with their tax obligations. The new withholding requirement applies regardless of whether the government agency making the payment is the recipient of the property or services. However, the requirement won’t apply to state and local government contracting expenditures of less than $100 million. It also does not apply to classified contracts. The withholdings begin after Dec. 31, 2010.
This has proven to be the least popular of all the GSA contract-related laws. Contractors from Lockheed Martin down to the smallest shops have been making their opposition known.
“We vigorously oppose it,” said Chris Braddock, privatization and procurement council director for the U.S. Chamber of Commerce, Washington, D.C. “There’s a $100 million threshold per year on the local level, but we could reach that $100 million fairly quickly,” Braddock said.
The broad scope of the effects extends to Medicare as well as farm payments and requires a change in accounting systems for every contractor to allow for the 3 percent withholding.
“For smaller companies, you take 3 percent out of the revenue stream. They have to increase their credit at high interest,” Braddock said. This is not, however, a tax increase because the money is returned when taxes are paid at the end of the year.
There is a bill before the House and Senate to repeal 511 led by Sen. Larry Craig, (R-Idaho). “We support that,” Braddock said. “There’s still a lot of work to do, but we’re making progress.” As it stands, 511 is expected to generate a $7 billion increase in government revenue between 2011 and 2015.
A growing number of contractors are teaming up to meet some of these requirements. A GSA Schedule Contractor Team Arrangement (CTA), an arrangement between two or more GSA Schedule contractors, simply prepares a CTA document between team members detailing the responsibilities of each team member. The CTA allows the contractor to meet the government agency needs by providing a total solution combining services and/or supplies from the team members’ separate GSA Schedule contracts. In addition, the CTA enables contractors to complement each other’s capabilities to compete for orders for which they may not independently qualify. A government agency benefits from a CTA by buying a solution rather than making separate buys from various contractors.
Relationships are tightly defined and controlled by the prime contractor in prime/sub arrangements, whereas in CTAs, the team defines the roles and responsibilities, as accepted by the government.
In the Department of Defense (DoD), the procurement contracting officer is in charge of awarding contracts, while an administrative contracting officer monitors performance of the contract, and a termination contracting officer represents the government in the event of a contract termination.
Ultimately, contractors have more opportunities with the GSA’s new openness than they have had before. All the same, education is a good place to start, and ensuring the company is prepared for a contract before leaping into government work could save a costly mistake.
SWEDBERG is a freelance writer based in western Washington. She can be reached at firstname.lastname@example.org.