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Leading Stories from Set-Aside Alert
By Alice Lipowicz, Editor, Set-Aside Alert
Despite objections from contractors, the government’s push for procurements based on LPTA--lowest price, technically acceptable--criteria appears to be gathering momentum, with billions of dollars in LPTA contracts in the works, according to new research from Market Connections and Centurion Research.
LPTA has been getting more popular among federal agencies in recent years, primarily at the Defense Department, which included it among several approaches in its Better Buying Initiative.
But contractors, both large and small, warn that focusing primarily on price is likely to hurt quality and performance, as vendors “race to the bottom” with steep cuts in prices. Small vendors say they are most at risk, because their margins are already so thin.
However, one consolation for small businesses is that LPTA set-asides appear to be fairly abundant as well.
Looking ahead, Centurion said it has identified $27.7 billion in LPTA actionable opportunities from a pool of $4.3 trillion in pre-solicitation federal opportunities.
Of the $27.7 billion, $7.7 billion are anticipated to be small business and socioeconomic category set-asides, the study said. The remaining $20 billion are expected to be full and open competition LPTA contracts. Another $745 billion in the pipeline are “best value” contracts.
The estimated opportunities include $6.5 billion for DOD USTRANSCOM, $5.6 billion for the Navy, $4.3 billion for the Army, $4.2 billion for Veterans Affairs and $2.1 billion for the Air Force.
About 56% of the LPTA opportunities are for construction, facilities operations/ maintenance and utilities/housekeeping. Professional and IT services are 22%.
Centurion and Market Connections also surveyed 360 government acquisition professionals and 375 industry executives about LPTA.
Respondents from both groups said they believe LPTA procurement use will rise in the next three years: 42% of the federal employees and 59% of the contractors agreed with that assessment.
Of the federal specialists, 64% were very likely or somewhat likely to issue an LPTA solicitation, while 23% were unsure and 14% were unlikely. The main reason--cited by 46%--was that LPTA saves money in a time of limited budgets.
Eighty-two percent of the vendors said they would bid on an LPTA contract, and 61% said it was because there were fewer opportunities available.
At the same time, vendors have strong objections to LPTA.
“Contractors feel that LPTA stifles their ability to innovate, propose and deliver the best solutions,” the report indicated. Nearly half of contractors (49%) said they felt pressured to offer a lower-price solution that may not be in the government’s best interest; 40% said LPTA made them less innovative and 30% said they had no chance to provide value-added solutions under an LPTA procurement.
To cope with LPTA, 63% of the contractors said they are responding to the letter of the RFP; 53% are reducing indirect rates; 47% are relying on junior staff; 39% are reducing staff; 33% are freezing or capping salaries; and 26% are reducing salaries.
More information: Market Connections/Centurion survey http://goo.gl/cj1w61
Set-Aside Alert Exclusive Report:
VA rejects claims that it reclassified $1B in SDVOSB contracts;
Department’s research shows $20M reclassified in 10 years
by Alice Lipowicz, Editor, Set-Aside Alert
The Veterans Affairs Department is disputing the recent national news reports alleging that the agency had reclassified more than $1 billion in set-aside contracts meant for service-disabled veterans over the last 10 years. When such contracts are reclassified, contractors who are not disabled veterans become eligible to do the work.
The actual value of those reclassified contracts was just $20 million, the VA told Set-Aside Alert.
The $1 billion figure is “not correct,” the VA said in an emailed statement released by VA spokeswoman Genevieve Billia.
“One billion dollars is grossly overstated. Our research indicates that there were approximately 242 actions worth a total of $20 million combined, for the VA, over the last 10 years,” the VA indicated.
The allegations of $1 billion in reclassified work were prominently displayed in articles published by the Washington Post, NBC News and other major national news outlets in late August and early September. The articles portrayed the reclassifications as contributing to difficulties for veteran-owned companies seeking to sell to the VA. NBC News got more than 100 “likes” on Facebook for its story.
The report originated from News21, a student journalism news service that operates at Arizona State University. Through sharing agreements, News21 stories are redistributed by major publications.
“More than $1 billion in government contracts meant for small businesses owned by disabled veterans have been reclassified over the last 10 years by the Department of Veterans Affairs so that the work—and almost $150 million to date—could be given to non-veteran companies, a News21 analysis shows,” NBC News reported on Aug. 31.
The stories also asserted that the reclassifications occurred partly as a result of a fraud crackdown that has made it more difficult for veteran business owners to obtain government work.
“VA crackdown on fraud among applicants for business contracts squeezing out some vets,” the WashingtonPost headline read. “”VA’s fraud crackdown becomes a burden for legit veteran-owned businesses,” NBC News wrote.
However, the alleged squeeze on veteran contracting at the VA may be much weaker than those headlines suggest.
According to official government figures, overall VA contracting with service-disabled veterans has been reaching historic highs in recent years and was higher than any other federal agency last year.
The VA awarded 20.05% of all its contracts to firms owned by service-disabled veterans in fiscal 2010, 18.22% in fiscal 2011 and 19.24% in fiscal 2012, according to Small Business Administration Procurement Scorecards for those years.
The VA’s purchases from such firms totaled $3.4 billion last year.
Overall, government-wide contracting with service-disabled veteran-owned small businesses (SDVOSBs) has been peaking as well, reaching the goal of 3% of all awards going to SDVOSBs in fiscal 2012 for the first time in at least seven years.
For the federal government on the whole, the VA estimates that over the last 10 years, there have been 2,148 set-aside contracts for service-disabled veterans that were reclassified and subsequently not awarded to a service-disabled veteran-owned small businesses (SDVOSBs). Those contracts totaled $346 million, the VA told Set-Aside Alert.
The VA also is disputing several of News21’s explanations for the alleged $1 billion in reclassifications.
News21, NBC News and others asserted that the VA’s “more stringent enforcement” of anti-fraud measures is partially the reason for the large number of reclassifications.
The VA is disputing that explanation, saying that its own data shows that the rate of reclassifications has fallen in recent years.
The VA said its own data shows that the number of reclassification actions of SDVOSB set-asides, as a percentage of the number of total awards to SDVOSBs, has fallen in recent years, from a height of about 7.1% reclassified in fiscal 2007 to only .9% reclassified in fiscal 2013.
Overall, that percentage was zero in fiscal 2005 and 2006, 7.1% in fiscal 2007, 4.8% in fiscal 2008, 3.8% in fiscal 2009, 1.4% in fiscal 2010, 1.7% in fiscal 2011, .7% in fiscal 2012 and .9% in fiscal 2013, the VA said.
“More stringent enforcement is not a reason, and the increasing award data over the last 10 years shows that,” the VA told Set-Aside Alert.
News21 also claimed that the alleged $1 billion in reclassifications at the VA was partly as a result of a lack of available small businesses owned by service-disabled veterans.
But the VA was skeptical of that explanation.
“It is highly unlikely that it would be the lack of eligible SDVOSBs, as the solicitations probably would not have been set aside if the contracting officer did not feel that there were two or more SDVOSBs that would submit proposals,” the VA told Set-Aside Alert.
Steven Rich, the News21 reporter who wrote the story and is now investigative database editor at the Washington Post, did not respond to a request for comment. Jacqueline Petchel, executive editor of News 21, referred questions to Rich.
The VA said its own research was based on data from the Federal Procurement Data System and from USASpending.gov.
More information: News21 report: http://goo.gl/XiGl4M
by Tom Johnson, Publisher, Set-Aside Alert
The HUBZone (Historically Underutilized Business Zone) program was created in 1997 to provide government contracting incentives to small firms to establish themselves in places where unemployment is above the norm, to hire employees from areas of high unemployment, and to stimulate capital investment in those areas. The goals are laudable; the execution has fallen short. It’s time to take a look at this program and reengineer it for success.
When the HUBZone program was created, federal agencies were assigned goals of placing 3% of their contracts with companies certified to be headquartered in designated HUBZones and employing residents of HUBZones. The government’s overall small business contracting goal was increased from 20% to 23% to assure that HUBZones would make their own contribution to the advancement of small business.
In FY2012, the most recent figures available, HUBZone contracts amounted to 2.01%, down from 2.35% in FY2011. FY2010 was 2.77% and FY2009 was 2.81%. Where are we going here? What is causing the decline of this valuable program?
Historic vs. Annual
The HUBZone program is intended to revitalize geographic areas that historically have faced elevated unemployment, yet the designation criteria can change annually the areas that qualify. Small business owners take on many risks in establishing and managing a small business. It takes a number of months to apply for and become certified as a HUBZone business. An interested firm faces the risk that a specific geographic area could be decertified a year or two after qualifying, or even while in the process of being certified.
One would think that an area of historically-high unemployment or low income would require a number of years to recover. If the firms that come into that area to help it improve are successful, they should be rewarded with stability, especially if they have made a significant capital investment in permanent facilities such as factories and warehouses. After all, they took on the task that the government wanted accomplished, and succeeded. Further, if those firms pull up stakes and move their headquarters to another HUBZone, unemployment may return to the place they left.
Too Many Cooks
Decisions as to whether an area is designated as a HUBZone are vested in the departments of Defense, Housing and Urban Development, Labor and Interior as well as the Census Bureau and the Internal Revenue Service. The Small Business Administration’s role is to meld these stovepipes into a comprehensive mapping tool. Yet each agency does its work and establishes its qualified areas on varying schedules. The HUBZone map tomorrow might look quite different than it did today. One would think that since the U.S. Census is done every ten years, at least that component would be stable, but that is not the case.
The prior government program, Labor Surplus Areas, used common, well-defined geographic boundaries, namely counties and independent cities. You could see the lines on most any map. But in today’s HUBZone program, most urban area designations are based on census tracts. You won’t find those lines in your local Rand McNally or Mapquest or even local street atlases. Census tracts are as small as 10 blocks. Why on earth must we use this micro-granular approach to area designations?
Worse yet, this granular approach leads to appearances of arbitrariness, such as for the current HUBZone-designation for K Street NW, a popular location for lobbying firms and law offices in Washington DC. Or for the Southern Tower apartment complex in Alexandria VA, sitting as a HUBZone across the street from DOD’s busy new headquarters. Look for your nearest college campus and chances are good that it may be in a HUBZone.
PO Boxes and Rural Routes
Despite the granularity noted above, when it comes to rural areas, you may have great difficulty getting qualified. The online mapping tool accepts traditional addresses containing house number, street, city and state. I grew up in a rural area of Northern Illinois. Half of my friends lived on farms and in small villages nearby, and they had rural route addresses. Indian reservations are a key target of the HUBZone program, and yet many tribal companies are thwarted when their headquarters and their employees’ homes are served by rural routes. While there is a provision on the online mapping tool for entering latitude-longitude designations, I am aware of companies well qualified and highly suited for the HUBZone program--even companies that previously have been certified--that are being denied certification or deterred from participation in the HUBZone program due to mapping issues for rural routes.
Call to Action
It’s time to set this program right so that it can provide the benefits intended. Here is what is needed:
by Alice Lipowicz, Editor, Set-Aside Alert
Despite sequestration--and partly because of it--the forecast for the final quarter of fiscal 2013 appears to show the annual spending surge once again.
Federal agencies typically spend a third or more of their annual contracting budgets in the final quarter that ends Sept. 30. Many contracts that had faced delays for one reason or another are pushed through to avoid expiration of existing funding.
As of July 8, the government had reported $234 billion spent on prime contracts for fiscal 2013, USASpending.gov shows. Accounting for not-yet-reported Defense Department (DOD) obligations, it’s probably closer to $300 billion spent. That is about 60% of anticipated total prime contracting this year, with 40% left to go.
Prime contracts totaled $517 billion in fiscal 2012. That fell from $539 billion a year before. This year’s total is not yet known, but most likely will be around $500 billion or less, due to sequestration.
The sequester has not only impacted total funding, but also the timing of contracts. The prolonged uncertainty about budgets from October through March delayed many federal contracts until later in the year. Delayed work most likely will contribute to a fourth-quarter rush.
Most of the pending contracts are in DOD. As of July 8 on USASpending.gov, DOD had reported $137 billion in prime contracts this fiscal year. That amount is 90 days late, suggesting a real-time total closer to $200 billion obligated. With $361 billion tallied for fiscal 2012 and a lower forecast for fiscal 2013, there could be $140 billion or so to be spent by DOD between now and Sept. 30.
Other fourth-quarter spending forecasts include Health and Human Services, $9 billion; Veterans Affairs, $6 billion; NASA, $5 billion; and Homeland Security, $4 billion.
Also, the White House’s Small Business Dashboard showed $36 billion in small business contracts for fiscal 2013, as of July 8. That compares with $90 billion in small business contracts for fiscal 2012.
It’s too early to say how this year’s surge might compare to last year’s. In fiscal 2012, federal agencies awarded more than $138 billion in contracts from July 1 to Sept. 30, an increase from $90 billion in the third quarter, according to Deltek.
but there's good news for veteran-owned firms
by Alice Lipowicz, Editor, Set-Aside Alert
For at least the seventh year in a row, the federal government fell short of meeting its goal of 23% of contracts awarded to small businesses. But it did better for service-disabled veteran-owned small businesses.
Federal agencies awarded 22.25% of contracts to small vendors in fiscal 2012, totaling $89.9 billion in sales, the Small Business Administration announced in its annual procurement scorecard. That was an improvement over the fiscal 2011 total of 21.65%.
The government has not met the 23% goal set by Congress since at least fiscal 2006.
The results were brighter for service-disabled veteran-owned businesses.
For the first time in at least eight years, the federal government exceeded its 3% goal for procurements from firms owned by service-disabled veterans. The percentage going to such firms was 3.03% in fiscal 2012, totaling $12.3 billion, the SBA said.
In addition, awards to small disadvantaged firms totaled 8%, exceeding the 5% goal.
Women-owned small businesses won 4% of federal contracts, which was short of the 5% goal, and HUBZone vendors were awarded 2.01%, failing to meet the 3% goal.
Federal agencies awarding a high percentage of contracts to small businesses included the SBA, 71%; DOI, 56%; USDA, 53%; DOT, 45%; and HUD, 40%.
On the opposite end, the agencies with relatively low percentages of awards to small firms included DOE, 5%; AID, 12%; NSF, 15%; Education, 20%; OPM, 20% and DOD, 20%.
(This breaking news story will be published in the July 12 edition of Set-Aside Alert.)
by Alice Lipowicz, Editor, Set-Aside Alert
The General Services Administration’s multiple-award schedules were in the headlines recently, and not in a good way.
In response to a House committee investigation, the GSA said it owed $3 million to 1,281 small contractors it had removed from schedules due to lack of sales.
The payments were due under the GSA’s minimum guaranteed payment clause, Federal Acquisition Service Commissioner Thomas Sharpe wrote.
“It became clear that GSA was not adhering to its own contracts and had not paid the required termination costs to small businesses for at least five years,” Rep. Sam Graves, R-MO, chair of the House Small Business Committee, wrote in a news release on May 16.
It was bad publicity for GSA, for sure. But something seemed missing; a fuller explanation was needed. Let’s take a closer look.
The payments owed arose from schedules contract clause I-FSS-106 offering up to $2,500 to contractors cancelled for lack of sales.
If small businesses were underpaid by $2,500 each, and this went on for five years, why was no one screaming about it?
“I did not hear a single complaint about it,” said a longtime specialist in the field.
“I am not sure the contractors realized they were owed money. Otherwise, they would have been yelling,” Scott Orbach, president of EZGSA consulting firm, told Set-Aside Alert.
As Orbach explained, small business owners work hard to gain GSA schedules contracts, and most strive diligently to make sales. But if they fail to sell anything, they want to move on to the next thing, and might not realize they are owed money in the fine print, he said.
But another procurement specialist felt the contractors should share some of the blame: “The minimum payments clause is in the contract and the contractor bears some responsibility for being aware of what is in their own contract.”
Then there also are questions about how exactly the contractors were supposed to apply for and receive the payments.
The I-FSS-106 clause states that for the contractors to be eligible for the minimum payment they must make a timely submission of GSA Form 72A and of their close-out sales report.
GSA officials, in followup comments to the press, have suggested that eligible contractors also would need to explicitly request the guaranteed minimum payment due. That was the practice in place for many years, they suggested.
“Because of policy dating back several years and several administrations, some businesses were not compensated because they had to request the guaranteed minimum payment to GSA,” Betsaida Alcantara, GSA communications director, told the Washington Post.
The I-FSS-106 clause, as currently written, does not appear to specify exactly whether, or how, the contractors must apply for the guaranteed minimum payment.
“There is no mechanism, or if there is a mechanism, it has not been highly publicized,” Orbach said.
Still, some observers believe that it’s common sense that the contractors should have known to send an invoice or to make a request. “This is the federal government. You just don’t get paid for anything without an invoice,” a contractor said.
Few or none of the 1,281 contractors owed payments had sent in an invoice or request, a committee source told Set-Aside Alert. The panel found 27 contractors who sent invoices under the clause, and who got paid, the source said.
The GSA now has changed that practice and will no longer require the payments be requested or invoiced. Going forward, “GSA will not require contractors to request a guaranteed minimum payment,” Sharpe wrote in a May 6 letter to the House committee.
A contributing factor to the lapse is that GSA, for years, apparently overlooked low sales. In recent months, with several strategic sourcing initiatives, the GSA has switched course and has been actively removing from the schedules contractors with little or no sales.
Of 3,330 cancelled contracts that were reviewed by the House committee, the GSA said it owed the guaranteed minimum payments to 1,334 vendors, including 1,281 small vendors.
More information: House Small Business Committee press release: http://goo.gl/lnSP1
Thomas Sharpe letter: http://goo.gl/OoTqt
(This story was originally published in the May 31 edition of Set-Aside Alert.)
by Alice Lipowicz, Editor, Set-Aside Alert
The Homeland Security Department announced it has awarded 15 contracts to small businesses for EAGLE II Functional Category 2-Small Business Track.
The $22 billion EAGLE II contract is a seven-year acquisition vehicle to provide information technology support services in three categories-service delivery, IT program support and independent test, validation, verification and evaluation.
The 15 new contracts were announced on FBO.gov. Each contract has a five-year base with an option for two additional years.
Here are the winners:
Contract HSHQDC-13-D-E2015 was awarded to Ambit Group, LLC. (DUNS #103079443), 1902 Campus Commons Drive, Suite 300, Reston, VA 20191, with Core Team Members: Comter Systems, Inc., 9524-C Lee Highway, Fairfax, VA 22031; and Teracore, Inc., 3300 Holcomb Bridge Road, Suite 226, Norcross, GA 30092.
Contract HSHQDC-13-D-E2016 was awarded to Arc Aspicio, LLC (DUNS #168719552), 3318 Lorcom Lane, Arlington, VA 22207, with Core Team Members: Data Tactics Corporation, 510 King Street, Suite 313, Alexandria, VA 22314; E3 Federal Solutions, LLC, 42606 Good Hope Lane, Ashburn, VA 20148; PPS InfoTech, LLC, 15200 Shady Grove Road, Suite 400, Rockville, MD 20854; and The Legacy Network, LLC, 2214 North Kenmore Street, Arlington, VA 22201.
Contract HSHQDC-13-D-E2017 was awarded to CLMS, LLC (DUNS #060959744), 3923 S. 16th Street, Arlington, VA 22204, with Core Team Members: Savvee Consulting, Inc., 4100 Lafayette Center Drive, Suite 390, Chantilly, VA 20151; Consolidated Networks Corporation, 722 N. Broadway Avenue, #203, Oklahoma City, OK 73116; and Business Management Associates, Inc., 1940 Duke Street, Suite 200, Alexandria, VA 22314.
Contract HSHQDC-13-D-E2018 was awarded to eGlobalTech (DUNS #171898732), 3865 Wilson Boulevard, Suite 500, Arlington, VA 22203, with Core Team Members: Everware-CBDI North America, Inc., 2750 Prosperity Avenue, Suite 210, Fairfax, VA 22031; MindPoint Group, LLC, 8078 Edinburgh Drive, Springfield, VA 22153; Nester Consulting, 8400 Braddock Way, Suite 218, Columbia, MD 21046; and TechSoft Group, 260 Peachtree Street, Suite 2200, Atlanta, GA 30303.
Contract HSHQDC-13-D-E2019 was awarded to Federal Working Group, Inc. (DUNS #161745823), 508 Lincoln Avenue, Falls Church, VA 22046.
Contract HSHQDC-13-D-E2020 was awarded to KeyLogic Systems, Inc. (DUNS #054303180), 8825 Stanford Boulevard, Suite 210, Columbia, MD 21045, with Core Team Members: Enterprise Solutions Group, 12500 Fair Lakes Circle, Suite 200, Fairfax, VA 22033; and Lumark Technologies, Inc., 4904 Tydfil Court, Suite 100, Fairfax, VA 22033.
Contract HSHQDC-13-D-E2021 was awarded to LegalNet Works, Inc. (DUNS #965637424), 1100 N. Glebe Road, Suite 1050, Arlington, VA 22201, with Core Team Members: Alpha-Omega Change Engineering, Inc., 6 Manhattan Square, Suite 100, Hampton, VA 23666; HX5, 212 Eglin Parkway SE, Fort Walton Beach, FL 32548; and Zeichner Risk Analytics, 1100 N. Glebe Road, Suite 1010, Arlington, VA 22201.
Contract HSHQDC-13-D-E2022 was awarded to MBC EAGLE II Joint Venture (DUNS #964405448), 1421 Jefferson Davis Highway, Suite 600, Arlington, VA 22202, with Core Team Members: Chevo Consulting, LLC, 2275 Research Boulevard, Suite 100, Rockville, MD 20850; Credence Management Solutions, LLC, 700 12th Street NW, Suite 700, Washington, DC 20005; Enterprise Resource Performance, Inc., 116K Edwards Ferry Road NE, Leesburg, VA 20176; and iPower, LLC, 1317 Gatesmeadow Way, Reston, VA 20194.
Contract HSHQDC-13-D-E2023 was awarded to Quasars, Inc. (DUNS #969546621), 955 L'Enfant Plaza North SW, Suite 1201, Washington, DC 20024, with Core Team Members: Cirrus Technology, Inc., 4035 Chris Drive, Suite H, Huntsville, AL 35802; Data Systems & Technology, Inc., 4024 La Linda Way, Sierra Vista, AZ 85635; Galaxy Global Corporation, 2063 Winners Drive, Suite 202, Fairmont, WV 26554; and Trideum Corporation, 4946 Research Drive NW, Huntsville, AL 35805.
Contract HSHQDC-13-D-E2024 was awarded to SiloSmashers, Inc. (DUNS #175955335), 2677 Prosperity Avenue, Suite 100, Fairfax, VA 22031, with Core Team Members: Pro-Sphere Tek, 11447 Washington Plaza West, Reston, VA 20190; Oak Grove Technologies, LLC, 7200 Stonehenge Drive, Suite 310, Raleigh, NC 27613; Barquin International, 1707 L Street, NW, Suite 1030, Washington, DC 22036; and G2SF, Inc., 2804 Winter Oaks Way, Oak Hill, VA 20171.
Contract HSHQDC-13-D-E2025 was awarded to Strategic Enterprise Solutions, Inc. (DUNS #129148610), 11951 Freedom Drive, Suite 1300, Reston, VA 20190, with Core Team Members: Evolution Technologies, Inc., 2325 Dulles Corner Boulevard #500, Herndon, VA 20171; Hassett & Willis Associates, LLC, 1100 New York Avenue, NW, Suite 640E, Washington, DC 20005; Information Experts, Inc., 11425 Isaac Newton Square, Suite F1, Reston, VA 20190; and K2Share, LLC, 7607 Eastmark Drive, Suite 102, College Station, TX 77840.
Contract HSHQDC-13-D-E2026 was awarded to Technical and Management Resources, Inc. (DUNS #041316519), 10511 Braddock Road, Suite 1B, Fairfax, VA 22032, with Core Team Members: Exceptional Software Strategies, Inc., 849 International Drive, Suite 310, Linthicum, MD 21090; Loch Harbour Group, Inc., 6212 Lincolnia Road, Suite 401, Alexandria, VA 22312; and Sterling Heritage, 10779 Riverscape Run, Great Falls, VA 22066.
Contract HSHQDC-13-D-E2027 was awarded to Teracore, Inc. (DUNS #119514193), 2201 Cooperative Way, Suite 600, Herndon, VA 20171, with Core Team Members: Ambit Group, LLC, 1902 Campus Commons Drive, Suite 300, Reston, VA 20191; PG Public Services, LLC, 1069 W. Broad Street, #724, Falls Church, VA 22046; G&H International Services, Inc., 1100 New York Avenue, NW, Suite 250W, Washington, DC 20005; and eMentum, Inc., 6701 Democracy Boulevard, Suite 300, Bethesda, MD 20817.
Contract HSHQDC-13-D-E2028 was awarded to Total Systems Technologies Corporation (DUNS #112085472), 458 Greenbrier Drive, Saltville, VA 24370.
Contract HSHQDC-13-D-E2029 was awarded to Zenetex, LLC (DUNS #125368121), 950 Herndon Parkway, Suite 350, Herndon, VA 20170, with Core Team Members: Civitas Group, 1875 Eye Street, NW, Suite 400, Washington, DC 20006; K2 Consulting, 4330 East West Highway, Suite 320, Bethesda, MD 20814; Kilda Group, LLC, 1116 West Street, Suite A, Annapolis, MD 21401; and PMOLink Government Solutions, Inc., 2001 Lakeshore Drive, Mandeville, LA 70448.
(Originally released as a Set-Aside Alert EXTRA on May 22, 2013.)
by Alice Lipowicz, Editor, Set-Aside Alert
Federal contracting for women-owned small firms is getting a major push with a new campaign headed by the Small Business Administration along with two private-sector partners.
The new ChallengeHer initiative is one of the most ambitious promotions in recent years focused on boosting federal contracts for women, primarily through set-asides.
Set-asides under the SBA’s Women-Owned Small Business (WOSB) program are “a very significant tool” to increase contracting for women, Barbara Kasoff, president of Women Impacting Public Policy, one of the partners in ChallengeHer, along with American Express OPEN, told Set-Aside Alert.
The recently-approved law authorizing lifting the caps on federal set-aside awards to women-owned contractors also is expected to have a large positive impact, once the results are made final later this year, Kasoff said. (Update: SBA issued an interim final rule lifting the caps immediately on May 7). Previously, the caps were either $4 million or $6.5 million, depending on the industry.
The hope is that through free events sponsored by ChallengeHer to raise awareness and offer training and matchmaking opportunities, more female small business owners will add their names to the WOSB registry, now about 13,000 strong, and more federal procurement officers will create set-asides exclusively for WOSB companies.
ChallengeHer will “bring more women-owned firms into the federal government’s supply chain,’ Marie Johns, deputy administrator for the SBA, said at the kickoff event for ChallengeHer.
Since 2011, when the WOSB program debuted, there havs been about $150 million in set-aside contracts awarded under the program, Emily Murphy, senior counsel to the House Small Business Committee, said at the kickoff event.
In addition to registering women in the WOSB program and urging federal agencies to set aside more contracts for WOSB firms, the campaign’s other primary aim is to help reach the SBA’s 5% goal for federal contracts going to women-owned firms.
In the fiscal 2011 year, 4% was attained, according to the SBA’s latest-available official figures.
The single percentage point difference represents about $5 billion in additional contracts.
Overall, the SBA reported $16.8 billion in contracts to women-owned small firms in fiscal 2011, the latest official figure available.
That broad category includes the relatively tiny amount of set-asides currently made through WOSB. It also includes contracts made through full and open competition and through other types of federal set-asides, such as those for small businesses, small disadvantaged businesses, veteran-owned or HUBZone firms. Women who own small federal contracting companies often can qualify in one or more of those categories as well.
However, the WOSB program is the only federal set-aside targeted specifically to women-owned firms. It consists of 83 industry categories, including many types of construction and manufacturing, which women-owned firms are underrepresented.
While women are competing effectively for many federal contracts even without a set-aside, having a set-aside targeted exclusively to women allows them to compete only against other women and increases their chance of success, Kenneth Dodds, director of the SBA’s Office of Government Contracting, told Set-Aside Alert.
Achieving gains through WOSB hinges on convincing federal contracting officers to utilize the WOSB set-asides, which could be challenging, he added. “It is going to take education, and getting the word out,” Dodds said.
“We need collaboration from government buyers,” agreed Benjamin Stone, director of small business and start-up development for American Express OPEN.
Women-owned small business contracting has grown in recent years, according to the White House’s Small Business Dashboard.
In fiscal 2000, $4.3 billion in contracts was awarded to female vendors. By fiscal 2008, that amount had risen to $14.3 billion.
During the same period, total federal contracting more than doubled, from $206 billion to an all-time peak of $541 billion. The total has slipped each year since then, to $517 billion in fiscal 2012.
Awards to women-owned small firms measured $15.7 billion in fiscal 2009, hit their highest point at $17 billion in fiscal 2010, and dipped to $16.6 billion in fiscal 2011 and $16.2 billion in fiscal 2012, the dashboard indicated. Details were not immediately available as to why the dashboard data for fiscal 2011 is slightly different from the SBA’s official data.
The first ChallengeHer event is on May 23 – the U.S. Energy Department Opportunity Forum in Washington, DC. Additional events are scheduled on June 12 in Phoenix, AZ; June 17 in Seattle, WA; and July 16 in Denver, CO.
(Originally published on May 3, 2013 in Set-Aside Alert)
WOSB caps lifted
The Small Business Administration published an interim rule to lift the existing caps on federal contract awards for the Women-Owned Small Business program. The new interim rule is effective immediately, according to the Federal Register Notice.
The provision is expected to benefit women-owned small federal contractors. It was approved by Congress and the White House in the National Defense Authorization Act of 2013 (NDAA) signed by the president in January.
(Originally released as a Set-Aside Alert EXTRA on May 8, 2013.)
HUBZone counties: Gain some, lose some
There are more changes happening to HUBZones as a result of new unemployment data.
The SBA announced late yesterday that HUBZone eligibility has been modified for 74 counties as a result of the 2012 annual unemployment data released by the Bureau of Labor Statistics.
A total of 39 counties are newly qualified as HUBZones, enabling local companies to be certified for the program. A total of 35 counties, previously qualified as HUBZones based on their unemployment rates, are no longer qualified.
(Originally released as a Set-Aside Alert EXTRA on May 8, 2013.)
By Alice Lipowicz
Editor, Set-Aside Alert
President Obama's proposed budget for the Small Business Administration in fiscal 2014 includes a boost for small federal contractors and a mix of new programs and reductions for small businesses overall.
The president wants to add personnel specifically aimed at increasing federal contracting for small firms. There also is new money for training veteran entrepreneurs and owners of mid-sized companies and for spurring innovation.
On the other hand, support for university-based small business general training programs and training for small disadvantaged firms would be cut.
To help small businesses win federal contracts, the president is seeking $4 million to pay for the hiring of 32 new procurement center representatives at the SBA.
The representatives would be "strategically embedded across the federal government to increase the small business share of federal procurement awards," according to a White House fiscal 2014 budget document. The personnel would help reserve procurements for competition among small business firms and provide small business sources to federal buying agents, the document said.
"This is a big deal," Joe Jordan, administrator of the Office of Federal Procurement Policy, said in announcing the $4 million initiative at a recent industry conference.
"The president wanted to ensure that we had more resources to facilitate collaboration. I was really happy about this," Jordan said at the event.
The SBA's procurement center representatives are located at area offices and major federal buying activity centers around the country. They help the buying offices to identify qualified small businesses eligible for awards and to initiate set-asides.
Some specialists have cited a need for more staff support at the SBA to facilitate set-asides for 8(a) certified companies and other small vendors.
The SBA also is proposing a $40 million new MBA-like intensive leadership program to help mid-sized entrepreneurs grow their workforces, SBA Administrator Karen Mills said at a recent hearing of the House Small Business Committee.
Asked why the SBA was seeking new funds at a time of budget austerity, Mills said the program would fill a gap by addressing medium-sized small businesses.
The agency also wants to add $7 million for the new Boots to Business program to train veterans to be entrepreneurs and $5 million for the new Growth Accelerator venture capital program. There would be a $1.7 million boost for Regional Innovation Clusters.
At the same time, the SBA is offering to cut $8 million from its budget for Small Business Development Centers in fiscal 2014.
The centers work with universities to train small businesses. There are 63 centers with 900 outreach locations.
The SBA spent $115 million on the small business development centers in fiscal 2012, and its budget is $113 million in fiscal 2013.
The 2014 budget request would reduce funding to $105 million.
The SBA also is looking to save $3.3 million by terminating the PRIME technical assistance program for micro-entrepreneurs; to trim $2 million from 7(j) technical assistance for small disadvantaged firms; and to cut $671,000 from Women's Business Centers.
Overall, the SBA would be funded at $810 million in the president's budget request, which is a decrease of $109 million from the fiscal 2012 enacted level. Most of the reduction is due to lower subsidy costs for the 7(a) Business Loan Guarantee Program, the White House indicated.
The budget also includes $159 million to support $1.1 billion in small business disaster loans.
Panelists at the recent House small business committee hearing were mostly critical of SBA's plans. Rep. Sam Graves, R-MO, chairman of the panel, was dismissive of the SBA's request for allocations for new programs.
The agency "has the audacity to request nearly $57 million in new funding for entrepreneurial development programs not authorized in the Small Business Act," he said in a statement.
(Originally published in the April 19, 2013 issue of Set-Aside Alert.)
By Alice Lipowicz
Editor, Set-Aside Alert
The federal government's flagship 8(a) contracting program for small, disadvantaged businesses is shrinking.
The number of firms participating in the Small Business Administration's 8(a) program has been steadily falling over the past six years - a decline that shows no signs of reversal, according to figures provided by the SBA to Set-Aside Alert.
From a high of 9,667 companies with 8(a) certifications in fiscal 2006, the number dropped to 9,423 in fiscal 2007, rose slightly to 9,462 in fiscal 2008, and then fell to 8,827 in fiscal 2009, 8,444 in fiscal 2010 and 7,814 in fiscal 2011, the SBA figures indicate.
Overall, the program experienced a net loss of 1,853 firms during the six-year period, a drop of 19%.
The pattern of slow decline appears to be continuing. An unofficial check of SBA databases on Feb. 12 showed only 7,696 8(a) certified firms.
The 8(a) program is the SBA's premier business development program for small and disadvantaged firms. Originally established in 1958, and expanded and amended during the Civil Rights era, it offers unique benefits to eligible small vendors, including access to sole source federal contracts and set-asides.
Companies must show social or economic disadvantage to be eligible. The 8(a) certifications last for nine years.
The SBA's Darryl Hairston, associate administrator for the 8(a) business development office, has acknowledged that the 8(a) program is losing more members than it is gaining, resulting in a net loss over time.
"There are several factors to be considered in the rate of increase or decrease in the number of 8(a) Business Development program participants," Hairston told Set-Aside Alert in an emailed statement.
"Over the past three years, there have been a significant number of firms that have completed their nine-year terms and have voluntarily withdrawn from program participation," Hairston said.
"While we continue to see strong interest in the 8(a) program from across the country (averaging approximately 45 new applications per week), the number of applicants eligible for program participation has not kept pace with the number of program exits," Hairston added.
The SBA currently is engaging in "an aggressive outreach effort" to attract more applicants to the 8(a) program, he added.
While the number of 8(a) firms declined, the dollar amount and share of federal contracts going to small disadvantaged firms increased during the six-year period. That category includes 8(a) firms, among others.
Federal contracts with small disadvantaged firms rose from $23 billion, or 6.8% of the total, in fiscal 2006, to $32 billion, or 7.7% of the total, in fiscal 2011, according to the SBA.
Specialists familiar with the 8(a) program suggested several factors that may be contributing to the loss in participation, including changes in eligibility requirements and limited SBA support staff.
The SBA tightened up 8(a) eligibility requirements in 2011 to combat fraud. Specialists say it often costs about $3,500 to $10,000 in assistance to become 8(a) certified, and the process could take up to a year.
"They have really upped the scrutiny," said Richard Hernandez, principal at E-MBE.net consulting firm in Chicago. "The applications hardly ever come back clean. You always have to resubmit."
"They have changed the rules and made it a lot harder," Robert Ramos, president of The Gabriel Group consulting firm in Corpus Christi, TX, told Set-Aside Alert. "The SBA is being much more selective about who comes into the program."
At the same time, less assistance is available. In fiscal 2012, the SBA enacted a $10 million cut in support staff to its business development centers.
"The SBA has cut the resources down quite a bit," Ramos said. "They also have cut down on travel quite a bit."
"Support is not what it used to be," Hernandez agreed.
Overall, while there are still new companies eager to join 8(a), many get frustrated by the hurdles along the way, said Roger LaPlante, senior partner with Government Certification Specialists in Leesburg, VA.
"In our experience, SBA is challenging 100% of the new applications," LaPlante told Set-Aside Alert.
"This administration has focused on integrity, but that translates to being more stringent," LaPlante said.
(Originally published in March 8, 2013 issue of Set-Aside Alert.)
By Alice Lipowicz
Editor, Set-Aside Alert
Federal agency purchases from small companies owned by service-disabled veterans have risen dramatically and appear to have reached the government's 3% goal for the first time in fiscal 2012, according to the latest figures released on the White House's Small Business Dashboard.
Procurements from service-disabled veteran-owned (SDVO) small businesses accounted for 3.04% of total federal procurements in fiscal 2012, the dashboard reported on Feb. 17.
The dashboard is part of the White House's Data.gov initiative. It allows users access to continuously updated data from the Federal Procurement Data System.
The value of SDVO purchases rose to $12.2 billion in fiscal 2012, the dashboard indicated, up from the Small Business Administration's official figure of $11.2 billion in fiscal 2011.
The dashboard also shows increased buys from small firms overall. However, HUBZone purchases have dropped.
The dashboard figures for fiscal 2012 still may change as more data is entered, and final official numbers for fiscal 2012 goal achievement will be released by the SBA this summer, John Shoraka, associate administrator for government contracting and business development, wrote in a statement to Set-Aside Alert.
Specialists have indicated that changes at this point are likely to be small.
SBA annual goaling reports show a strong upward trend in buys from SDVO firms-rising from .87% of total buys in fiscal 2006, to 1.01% in fiscal 2007, to 1.49% in fiscal 2008, to 1.98% in fiscal 2009 to 2.5% in fiscal 2010 and to 2.65% in fiscal 2011.
If the dashboard figure of 3.04% becomes official, it would continue the trend, and it would be the first time the federal government met its 3% goal for service-disabled firms for at least eight years.
In other news from the dashboard, the government appears to be edging closer to meeting the overall 23% goal for small business overall.
The dashboard on Feb. 17 showed the government made 22.24% of its acquisitions from small businesses in fiscal 2012, up from 21.67% in fiscal 2011 (SBA Procurement Scorecard).
About $90 billion in purchases from small firms in fiscal 2012 had been reported as of Feb. 17.
On the other hand, HUBZone (Historically Underutilized Business Zone) buys are shrinking, according to the latest dashboard figures.
Purchases from HUBZone firms fell to 2.02% in fiscal 2012, the dashboard showed, from 2.35% in fiscal 2011 in the SBA Procurement Scorecard.
The HUBZONE Contractors National Council said in a recent report that a major reason for the spending decline is the large decrease in the number of HUBZone-certified small businesses. Most of that reduction occurred through remapping of HUBZone areas under 2010 Census data in late 2011.
In addition, many council member companies have reported decreases in the number of HUBZone set-aside opportunities in the last year, the council said in its report.
Federal agencies that spent less than 1% on HUBZone contracts in fiscal 2012 included the Commerce, Education, Energy, Health and Human Services, Housing and Urban Development and Labor departments, as well as the Agency for International Development and NASA.
More information: Small Business Dashboard http://smallbusiness.data.gov/ and click on "FY 2012" in the upper right corner.
(Originally published in the February 22, 2013 issue of Set-Aside Alert.)
Angst about GSA mega-contract for professional services
By Alice Lipowicz
Editor, Set-Aside Alert
The Obama Administration's push for strategic bulk buying is about to expand to cover billions of dollars in professional services contracts with the goal of better management to reduce costs and improve efficiency.
But vendors have become increasingly agitated by the plans because they fear complex technical and management support services may be oversimplified in the process, possibly driving down performance as well as prices.
The General Services Administration is preparing to release a draft Request for Proposals within a month or so for its massive OASIS (One Acquisition Solution for Integrated Services) government-wide multiple-award contract, which it estimates could be worth up to $60 billion over 10 years. OASIS is expected to have two tracks: unrestricted and small-business only.
Executives from the GSA and from several vendor groups recently held a two-hour discussion on a number of critical questions about OASIS and how it will be structured. Participants from the Professional Services Council, TechAmerica, ACT-IAC and the Coalition for Government Procurement asked what the GSA is expected to gain from OASIS, how it will handle pricing and pricing data, and how OASIS fits within broader strategic sourcing plans.
The goal of OASIS is to better manage the purchase of engineering, IT, management consulting and other services under a single broad contract, which currently is not possible, said Jeff Koses, director of GSA's office of acquisition operations. Agencies generally create new contracts for each service they need. Under OASIS, there would be a single centralized contract all agencies can use. Presumably it would have standard prices or price ranges for various labor categories of professional services.
The government needs OASIS to reduce "repetitive" contracts, Koses said.
Currently, some vendors have up to 200 professional services contracts with the federal government, while some federal agencies have 20 or more services contracts with the same company, Koses said.
Meanwhile, prices for the same apparent service vary by 200% to 400%, he added, and the government appears to get no leverage from buying in bulk.
"It costs a lot to manage all that, so how do we reduce that?" Koses asked. "There is enormous savings potential."
In OASIS, the GSA intends to collect data on pricing to allow for comparisons of prices for essentially the same level of professional service, he said.
But how do you determine the right price? Jim Ghiloni, GSA director of business operations, suggested honing in on a common vocabulary and definitions for specific labor categories, obtaining pricing data for each category and plotting it on a graph. The pricing data for a particular service likely would resemble a Bell Curve, he said, with most prices falling in the middle and outliers at each end of the curve.
Making the pricing data widely available to contracting officers would enable smarter buying decisions, Ghiloni said. Vendors with prices at the high end "would have to justify their rates," Ghiloni said.
However, vendors at the meeting raised objections to OASIS and suggested it was too broad and oversimplified and potentially would have negative unintended consequences.
Trey Hodgins, senior vice president at TechAmerica, said it was hard to conceptualize the standardization of the most complex procurements of services. "Strategic sourcing works for paper clips," he said.
Roger Waldron, president of the procurement coalition, said standardized labor rates for services are contradictory to the government's push for excellence in performance-based contracts. In those deals, the government strives to link contractor pay to getting the best results.
"This undermines the whole point of doing performance-based contracting," Waldron said. Without flexibility on pricing to account for superior skills, those skills may become less available to the government, he added.
Stan Soloway, president of the services council, suggested that GSA may be inadvertently raising the costs of contracting by seeking large amounts of new data. "Those costs should be articulated and reported," he said. "Data is not a free good."
Despite the concerns, Joe Jordan, administrator of the Office of Federal Procurement Policy, said contractors have to be prepared for strategic buying.
"Mandatory is what we're moving toward," Jordan said. "There will be winners and losers, and not all who want to sell to the government can sell to the government."
Jordan hopes to apply strategic sourcing to about $150 billion in annual contracts.
(Originally released as a Set-Aside Alert EXTRA on February 15, 2013.)
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