Digest: The Cost of Doing Business (Keeps Going Up)

Cost of Doing BusinessSmall business government contracting has been controversial of late with organizations challenging the SBA’s methods for determining small biz awards. Still, most agree that more small contractors are getting work. The question is, can they afford all this good fortune?

 1) Small Contractors Are Spending More to Snag Contracts

Most of the items for our first news issue of 2017 is going to focus on contracting. First up — a survey conducted by the American Express OPEN for Government Contracting initiative indicates that it is costing small companies a lot more to compete for federal awards.

Cost of Doing Business 2The federal government spends roughly $90 billion on contracts awarded to small companies. That’s a sizeable chunk of change, so it’s certainly not surprising that competition is growing.

But, as GovExec reports, results from the American Express survey indicates that small companies:

“… spent $148,124 in time and money to bid for federal work. That’s a 72 percent increase over the past six years, and a 15 percent increase since 2013.”

And, as far as competition:

Small business contractors report that there are now fewer bidding opportunities and increased competition,” the survey revealed. “Nonetheless, over the past three years, nearly half of prime contract bids were successful, and two-thirds of subcontracting participation likewise yielded some contracting activity.”

Of companies generating $50 million or more in revenue, 37 percent responded they are spending more time pursuing government work.

Here are some other interesting findings:

  • Minority contractors in fiscal 2015 invested $152,969 seeking contracts, six percent more than the $144,676 investment made by Caucasian-owned companies.
  • Women-owned contractors continue to spend less time and money seeking federal contracts, the survey found. Women-owned firms reported investing $107,774 on average in 2015, only 58 percent of the amount invested by men-owned firms ($170,621).
  • Over the past three years, nearly half of prime contract bids were successful, and two-thirds of subcontracting participation yielded some contracting activity.
  • Still, 62 percent of active contractors agreed with the statement that “It’s getting harder to win contracts because there are more bidders for each opportunity,” up from 52 percent in the 2013 survey. Also, 60 percent agreed that “It’s getting harder to win contracts because there are fewer bidding opportunities due to contract bundling,” up from 47 percent agreement three years ago.

It will be interesting to see how long small companies can maintain interest if these cost trends persist.

2) The Procurement Black Box of the New Administration

Trying to guess what is going to happen after January 20th is becoming Washington’s latest obsession. Contractors, lobbyists and government employees (to name a few) all want to know what to expect.

Reading Tea Leaves 2We don’t know any more than anyone else. But, we do try to track trends, and we never toss out our tea leaves:

  • Defense Stocks – The big boom initially expected for the defense industry following the stunning election results isn’t panning out so far. Defense stocks soared the day after the election. Since then, however, only a few of the largest defense companies’ shares have outperformed the market.

Defense One charted recent results:

after-trumps-election-defense-stocks-follow-market-growth

  • Here’s what we heard through the grapevine
  1. Cyber Command will be putting together a 10-person procurement team to handle the $75 million Congress allocated to the agency. CYBERCOM is currently looking for a command acquisition executive to develop the team and oversee the program. [Federal News Radio]
  2. In the past three months, the State Department has ok’d 21 foreign weapons sales worth an estimated total of $45.2 billion dollars. To put that in perspective, U.S. defense companies sold only $33.6 billion for all of FY 2016. Many of the sales were for high-dollar jet fighter orders. [Defense News]
  3. Small construction companies interested in Air Force contracts will get a chance to pitch directly to the 88th Air Base Wing Civil Engineering, Air Force Life Cycle Management Center (AFLCMC) Operational Contracting, the Air Force Installation Contracting Activity (AFICA), and the Army Corps of Engineers. Companies with NAICS codes 236 (building construction) and 237 (heavy and civil engineering construction) are sought. Space is limited to 70, and registration ends March 17, 2017. [Bloomberg]
  4. The GSA is asking industry for insights on how it can apply software-as-a-shared-service to its administrative operations. The agency is specifically looking for what software enhancements and capabilities providers will be able to offer over the next 24 to 36 months toward administrative shared services, in addition to industry plans for FedRAMP authorization and proposed partnership plans to set up an interoperable system. Details are available here. [Federal Times]

Beyond that, we gots nuthin’.

Other Contracting News
  1. If a company brings a lawyer, cut the discussion short.” Wrong.
  2. Companies never actually improve their work as a result of a debriefing, and it always leads to protests.” Actually, contractors do much better after they understand why the decisions are made.
  3. There’s no way for an agency to prepare for debriefings.” While no one can predict everything, COs often know the main questions that will be asked.
  4. Debriefings are only valuable to the losers.” Successful vendors can also be helped by understanding the decision-making process more thoroughly.

3) Contractors Can Be a Huge Security Risk for Industry

One stereotype of federal agencies is they never really know how many active contractors and contracts they have at any given time. So, how can they assess the security risk caused by all those “quasi-employees” being led into the back door?

Calling the Kettle BlackHowever … Contractors and other private firms often have the same problem.

The Privacy Rights Clearinghouse offers some examples:

The problem, Quartz reports, is:

[M]any temporary workers, such as IT workers, are given administrative logins to company systems. Others may not have unique logins to systems, which means it’s difficult to track what programs they’ve accessed or if they’ve leaked sensitive data. And, in the eyes of a customer, anyone working on location for a company works for the company.”

And, it’s not just employees working under a corporate contract. Temporary and part-time employees can also fly under the radar to subvert the security regular, full-time employees encounter daily.

Headcount is fuzzy,” says Lisa Disselkamp, who specializes in workforce management as a managing director at Deloitte. “This never used to be the case. In a traditional company, it was easy to determine–it was how many people on payroll. Now with the Uber workforce, the Uberization of the workforce, we’re hiring and contracting, but nobody knows what the actual headcount is or what it should be.”

There’s no question that security is a major concern for government agencies. But, contractors should also develop systems to monitor the activities of their own temp and contracted workers to make sure they aren’t giving the keys to the kingdom to people selling the kingdom’s data on the dark web.

Other Cybersecurity News
  • Curtis Dukes, the NSA official who headed up its cyber-defendersIs leaving to become the Center for Internet Security’s Executive Vice President. Dukes was head of IAD since 2013. In that post, he was responsible for defending U.S. national security networks — IT systems that handle classified information or are otherwise crucial to the U.S. military or intelligence agencies. [FedScoop]
  • It should come as no real shock thatThe Russian hackers linked to the DNC breach are also suspected of targeting Ukrainian soldiers. Malware used in the DNC data theft was also used as part of combat operations in Eastern Ukraine in 2014, which enabled the Russian troops to better target Ukrainian artillery positions. [Defense One]

Technology News

International News

 

And, finally …

If it’s January, it’s time for the Consumer Electronics Show (CES), which displays and debuts to most cutting edge electronic innovations we will soon see on the shelves and websites of our favorite retailers.

As always, Mashable is right on top of the action, including:

Helia

Toyota

LG-55

But, hey, why read when you can watch:

And, most of it will be available just about the time your wallet recovers from Christmas …

Posted under: Acquisition, Air Force, Contract News, Cybersecurity, SBA, Security, Small Business Contracting, TechTalk

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