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| TEAMING AGREEMENTS: ENFORCEABLE WHEN DRAFTED CORRECTLY |
Companies recognize that one of the keys to being successful in winning government contracts is finding the right teaming partner. On large government procurements involving multiple tasks, indefinite quantities, or goals for subcontracting with various types of small or disadvantaged businesses, it is common for government contractors to join together to form a team consisting of a prime contractor and one or more subcontractors to compete for the a contract award. Teaming agreements are arrangements between potential prime contractors and subcontractors under a specific government contract or acquisition program to work together towards achieving a winning proposal. A teaming agreement is not a subcontract. Rather, the teaming agreement typically contains a provision that if the parties successfully win a government contract, they are to enter into a subcontract. The government ordinarily encourages teaming agreements (provided they do not run afoul of the antitrust laws) because they offer “the best combination of performance, cost, and delivery for the system or product being acquired”. FAR Sec. 9.602(a) (2)...
| GSA OFFICIALS INDICATE CONCERN WITH ADVANTAGE! LISTINGS |
The Coalition for Government Procurement meeting with officials of GSA's Federal Acquisition Service this week heard concerns with the robustness of product and pricing information on GSA Advantage!, GSA's on-line catalog and ordering system. All schedule contractors are required to post their products, or a list of their services, on Advantage! and keep such information updated through the life of the contract. While GSA acknowledged that some of problem stems from over-burdened contracting officers delaying action on Advantage! updates provided by contractors, they are concerned that contractors also do not always act promptly to update Advantage! listings after contract modifications or extensions. GSA officials point out that Advantage! is used much more often for price comparisons than purchases and, if information is not accurate, the schedules and stock programs suffer from the perception that prices are too high and products offered are not the latest technology.
GSA Contractors should check to ensure that their Advantage! listings are up to date at the start of each month.
This article was taken from The Coalition for Government Procurement’s Friday Flash newsletter for March 3, 2006. The Coalition is a non-profit association of companies that sell commercial services and products to the federal government primarily through multiple award schedule (MAS) contracts and GWACs. The Coalition’s mission is to protect the interest of its members by providing valuable information on issues affecting the government market and by constantly advocating common sense in government procurement policy. For more information go to their website at http://www.thecgp.org/. If you are interested in becoming a member contact Adrian Tucker at atucker@thecgp.org.
| GSA CONTRACT COMPLIANCE WITH THE TRADE AGREEMENTS ACT |
The Trade Agreements Act places limits on the ability of GSA schedule holders to supply products made in some foreign countries. The GSA contractor must certify that they will supply products made or “substantially transformed” either in the United States or in a country with which the United States has a free trade agreement.
"Substantial transformation" is a U.S. Customs Service term that refers to a manufacturing process that results in a new and different article of commerce, having a new name, character and use. Many products and or services are just not competitively available under these limitations.
As hardware and software production migrates to Taiwan, China, Malaysia, Thailand and etc. compliance with the Trade Agreement Act requirements may be become more difficult. The increasing number of GSA Office of Inspector General audits has already found in non-compliance at companies primarily selling commercial products such as Corporate Express, Office Max, Office Depot, Staples and Caddo Design.
Now is the time for direct sellers and MAS resellers to review their procedures and controls for ensuring compliance with the Trade Agreement Act requirements.
Those who would like to participate in research on the unintended impact of this Act should contact the Coalition for Government procurement at www.thecgp.org or 202-331-0975.
| ACCOUNT PLANNING: THE CUSTOMER ACQUISITION METHODOLOGY |
This is the second in a series of articles from Jerry Sparger, Global Business Solutions (www.gbsonline.net). The first article, More Selling, Less Overhead, appeared in the January issue of the GCNewsletter and can be accessed on our website at www.GaffeyCPA.com.
To refresh the reader, the Customer Acquisition Methodology allows companies pursuing government business to use delivery resources such as program managers to pursue and win business. Smart contractors are using everyone that interacts with customers to sell. Companies must do this in a controlled manner to get the maximum benefit of all the face time that they have with customers. Team selling in the federal marketplace results in more sales with less overhead.
| VIRGINIA CONTRACTORS ONLY – AN UPDATE! |
Last month we published an article provided to us by the Greater Reston Chamber of Commerce Government Contracting Alliance & Interest Group regarding the “true object test”. The Fairfax Chamber of Commerce through their Advocacy Update newsletter has provided an update.
Under the true object test the Virginia Department of Taxation imposes the state sales and use tax on goods that companies buy to fulfill Federal contracts that the tax department determines are “service’ contracts. The tax is imposed even if the products are not used by the company in rendering those services and are delivered directly to the government.
Current language contained in the Governor’s budget would repeal this practice effective July 1, 2006. You are urged to contact your legislators and tell them to support budget item 268, which directs the Tax Department to cease application of the True Object Test and place Virginia’s government contractors on an equal playing field with their competitors in other states.
For more information visit the website of the Coalition to Keep Contractors Competitive at www.govcontaxfairness.org or contact Jason Flanary at jflanary@fccc.org .
The Future of Share-In-Savings Contracting
On July 2, 2004 a proposed rule was issued in the Federal Register (Volume 69, Number 127, Proposed Rules, Pages 40515-40517) establishing the standards for the use of share-in-savings contracts.
Share-In-Savings contracts are a type of performance-based contract that requires contractors to make significant up-front investments while allowing them to receive compensation based on the savings realized by the government during contract performance.
On January 30, 2006, the Federal Register (Volume 71, Number 19, Proposed Rules, Pages 4854) withdrew this proposed rule casting doubt on the future of this contracting vehicle. Major hurdles in the implementation of contracting concept included difficulty in determining the baseline for calculating the savings generated and concern over the cost of obtaining funding to cover potential cancellation or termination liability before savings were realized.
| COMPIANCE WITH THE BERRY AMENDMENT |
A Department of Defense working group is developing an approach to the contractual and practical aspects of a long-term Berry Amendment compliance policy.
The Berry Amendment prohibits the use of appropriated funds to purchase certain items, including specialty metals, unless they are certified as U.S.-produced. Most specialty metals are procured at the subcontract level, often many tiers removed from the prime contract. It is difficult and sometimes impossible to trace the source of specialty metals in end items and components. The result is that items containing a specialty metal that can't be confirmed as compliant with Berry Amendment requirements are not acceptable to the government.
The current practice is a partial payment withholding and conditional acceptance at the time of delivery and an eventual negotiated price reduction. DoD has said it can't continue that practice indefinitely and is threatening to discontinue its use. We will keep you informed as the resolution develops.
| COST ACCOUNTING STANDARDS |
On January 26, 2006 the Cost Accounting Standards Board, Office of Federal Procurement Policy issued a Staff Discussion Paper (SDP) regarding CAS 416, Accounting for Insurance Costs, addressing the use of the term “catastrophic.
The purpose of this SDP is to consider whether the word “catastrophic” should be replace with a term such as “significant” or “very large” in 48 CFR 9904.416-50(b)(1) to more closely align the Standard with what was originally intended and to eliminate confusion between the Standard and FAR 31.205-19, Insurance and indemnification.
CAS 416 presently allows a contractor to reinsure the losses of a segment at the home office if they are catastrophic losses. FAR 31.205-19 makes catastrophic losses unallowable.
The full text of this SDP can be found in the Federal Register, January 26, 2006 (Volume 71, Number 17), Proposed Rules, Page 4335-4337. Comments must be in writing and received by March 27, 2006 to www.casb2@omb.eop.gov or via fax to 202-395-3254.
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