Three Tax Issues of Importance to Government Contractors
DC Tax Penalties and Interest: Failure to pay District of Columbia franchise or income taxes on or before the due date of the return will result in a tax bill significantly higher than the taxes owed. Continue reading specifics of DC penalties and interest, and circumstances for abatement >>
Report of Foreign Bank and Financial Accounts: United States persons having an interest in or authority over any foreign bank accounts that meet or exceed aggregate of $10,000 at anytime during the calendar year must report that relationship each calendar year by filing TD F 90-22.1 with the Department of Treasury on or before June 30th of the succeeding year. This date can not be extended. Companies that possess foreign bank accounts that meet or exceed the $10,000 threshold at anytime during the calendar year will be required to file at least 2 form TD F 90-22.1′s for that year; one for the company and at least one for the person or persons with signature authority over the account. Continue reading more details on foreign reporting>>
Massachusetts Tax Amnesty: New Massachusetts law (signed into law on January 7, 2009) authorizes the state’s Commissioner of Revenue to establish a Tax Amnesty Program for two months (Tax Amnesty Period) in 2009 during which the state would waive all penalties (but not interest) on state tax liabilities for certain tax payers. The amnesty will expire no later than June 30, 2009. Click here for MA Amnesty tax payers eligibility details >>
For more information, contact Aronson tax experts:
Henry F. Chiwaya, Senior Tax Manager, (301) 222-8215, hchiwaya@aronsoncompany.com
Stimulus, Yes (track spending!). E-Verify stipulation, No.
With the updated $787 billion economic stimulus package approved on Feb 17th, www.recovery.gov went live allowing the public visibility into federal spending. One item dropped from the package: the stipulation that all contracts paid for with stimulus funding must use E-Verify to verify that their employees are legally authorized to work in the United States.
Proponents of E-Verify, including the Federation for American Immigration Reform, say the omission of the E-Verify provision is a disappointment, considering E-Verify to be a useful tool to protect jobs in the United States from going to illegal immigrants. From an employer standpoint, proponents point out employers who use E-Verify will not be guilty of knowingly hiring illegal aliens.
Critics, such as the Immigration Policy Center, have long criticized E-Verify because of the error rates and have warned of the danger of American workers losing or risking their jobs because of the shortcomings in E-Verify. The onus is on the contractor to disprove any findings of ineligibility. They also said E-Verify would slow the impact of the stimulus spending.
As posted in January on FedPoint!, May 21, 2009 remains the new postponed date of the FAR E-Verify rule which would require E-Verify for federal ID/IQ contracts and contracts worth more than $100,000.
Business Development Show Time – starting…Now!
by Mike Berger, Vice President, Advantage Consulting, Inc.
Wow… a new year, a new president, new people at every Federal agency (with a couple of exceptions), and, potentially, an entirely new slate of opportunities. So what to do?
Well, you can take ads in all the trade journals and hope someone reads them, or wait for the announcements in FedBizOpps and see about following up, or hire some new business development professionals and hope and pray they can fill your pipeline – OR – you might take a hard look at your strategic planning and business development processes and determine what’s needed to make them work better.
If that sounds like a plan, when are you going to start? Next quarter, this summer, “some day,” or how about RIGHT NOW. If there’s anything guaranteed in this world other than death and taxes, we can say for sure that the longer you wait to build an effective program the longer you are going to wait to see any significant results.
You didn’t think of that – OK, most people don’t – but now that you have, it’s time to assess. What are the corporate skills, capabilities, goals and strategies? What contacts do you have and which ones do you need to win? What have you been doing right and, equally important, what’s on the “don’t ever do that again” list? Is your staff involved (it is their company too you know), if not, why not, and how are you going to get them to participate?
Yeah, this is a tall order for any company but you can’t make money sitting on your butt. Need help? Call me. Mike Berger, 703-642-5153, cell 703-861-0726, or send me an email at mberger@acibiz.com. And, by the way, Happy New Year!
Priming for Success
With so many firms vying for attention to get government work, upfront knowledge of government agencies and large prime contractors time limitations goes a long way in shaping sustainable marketing efforts. Many talented firms with affordable solutions lose interest after seeing mixed results from initial marketing efforts, leaving the field disenchanted. Some shy away after sizing up the effort required to learn to market to the government, and some get discouraged from the long sales cycle.
But when your marketing efforts do result in government clients, you need to have a contracting vehicle for them to buy your products. Priming yourself with this understanding early helps leverage the value of timely relationships when you create them, helping sustain your success in the government. Primed companies don’t lose interest in selling to the government, because they benefit from reduced learning curves, shorter sales cycles, and increased efficiency, all positively affecting their bottom line and competitive strengths!
Eagerness to sell is not a human folly, but not understanding the government’s process of weighing the best possible choice of available solutions is definitely a killer. Consider the following statistics:
These hard numbers tell the story – over 50% of all contracts are awarded on IDV contracts. So get your GSA Schedule and have it handy when you need it! For more information concerning this analysis, email amehan@fedmine.us or visit www.fedmine.us for more information.
Maryland Utility Companies Set Contracting Goal
Prompted by Maryland’s Public Service Commission, the region’s public utility companies have established a goal of 25% of contracting dollars for woman, minority and disabled veteran-owned businesses. Executives from 10 Maryland utility companies signed the agreement on February 9, 2009. More companies are expected to sign the agreement in the near future. The goal is not mandatory nor has a time frame for compliance been established. Several of the utility companies have contracting programs in place but they lack of specific goal. There is a significant amount of money available for firms that contract with the public utilities. One example is PEPCO which spends about $800 million dollars a year on contracts.
GSA releases 2009 FTR mileage reimbursement rate
GSA’s Federal Travel Regulation (FTR) and DoD’s Joint Travel Regulations (JTR) decreased the standard mileage reimbursement rate for privately owned vehicles (POV) used for official travel to $0.55 cents per mile effective January 1, 2009.
By law, GSA is responsible for reviewing the privately owned vehicle (POV) mileage reimbursement rate on an annual basis. However, by law, GSA may not exceed the standard mileage reimbursement rate for POV’s established by the Internal Revenue Service (IRS) and for 2009 GSA’s mileage reimbursement rate is equal to the IRS’s rate. For complete information on FTR rates see the GSA Rate page; see the following DoD memorandum for additional JTR rate information.
3 New Executive Orders – Creates Upheaval for Government Contractors
On January 30, 2009, President Obama issued three executive orders that make significant changes in labor policy for government contractors. Sanctions includes include contract cancellation, termination or ineligibility period of up to 3 years. Contractors should begin reviewing their policies and procedures to see if they will be in compliance with the following orders:
1) Notification of Employee Rights Under Federal Labor Laws – Contractors and subcontractors must inform employees of their right to organize under the National Labor Relations Act as opposed to the current regulation which requires informing employees of their right to refuse to join a union. Employers must post notices, physically and electronically, in their plants and offices where employees are covered by the National Labor Relations Act.
2) Economy in Government Contracting- This order would make all company expenses to persuade employees to exercise or not exercise their right to organize and bargain collectively unallowable expenses. Costs incurred in maintaining satisfactory employee relations including costs of labor-management committees and employee publications are also unallowable.
3) Nondisplacement of Qualified Workers under Service Contracts - This order applies to follow-on service contracts for the same or similar services to be performed in the same location. In such circumstances, the order requires the successor contractor to offer the employees of the predecessor contractor who would otherwise be laid off, the right of first refusal for any job openings under the follow-on contract for which they are qualified. There shall be no employment openings under the contract until right of first refusal has been provided.
Information provided in part from Crowell & Moring Attorneys at Law February 2, 2009 newsletter. If you need help understanding allowable costs or developing a compliance program, contact Tom Williams of Aronson & Company at 301-222-8289 or twilliams@aronsoncompany.com for assistance.
Government Contractor Revenue & Support Staff Up, Margins Unchanged
According to a survey conducted by Grant Thorton LLP, 57% of Government contractors increased their revenue in Fiscal 07. Only 18% reported a decline. However, the growth was not evenly distributed. Revenue attributable to defense contracts increased while revenue attributable to civilian agency contracts actually decreased. Significantly, the increase in revenue did not result in an increased profit margin. 34% of contractors reported either no profit or a pretax profit of less than 5%. 39% of contractors reported profits between 6% and 10% of gross revenue. Only 27% reported profits of more than 10%. These margins are similar to those reported in the 2006 survey. The survey also noted an increase in management and support personnel that now account for approximately 16% of the average contractor’s staff.
New Services Available under GSA LANG Schedule 738 II
Federal customers demands are being met with the addition of two new Special Item Numbers (SINs) on the Language Services schedule (738 II). The Language Services Schedule 738 II facilitates access to commercial providers of linguists who can supply an array of Language Services, including Translation Services, Interpretation Services, Sign Language and Title III work, and Training Services. The new Language Services SINs, identified below, are intended to better identify the services offered under the schedule.
382 4 Comprehensive Linguistic Analytical Support Services (CLASS)
382 5 Services for the Visual and Hearing Impaired
In 2008, new SINS were also added to the LAW 84 Schedule and a SIN was renamed on the MOBIS 874 schedule. To learn more about these new service areas or for help in adding them your GSA Schedule contract, contact Pete O’Neill at poneill@aronsoncompany.com.
Federal Business Opportunities Hidden In Plain Sight – Part II
In Part I last week I discussed how your company can augment federal business development efforts responding to solicitations from FedBizOpps by pursuing teaming and subcontracting opportunities with established prime contractors. In this article we will learn to leverage successful subcontracting and teaming relationships to respond to opportunities. You may have heard the adage that federal agencies are looking for companies specializing in core areas, but many solicitations call for solutions that span across various competencies and multiple NAICS Codes.
These opportunities get embedded under “combined solicitations“, requiring bidders to partner with another company to create a complete solution. The key is to only bid on opportunities for which your team can provide a complete and responsive proposal. A quality proposal will not go unnoticed and even if your team is not selected, you will likely fall within the “competitive range” established by the agency for the bid. This designation qualifies you to request a debriefing with the contracting officer to uncover reasons why you weren’t selected.
Debriefings help you understand agency needs, identify decision makers, get valuable face time with potential customers, see how their organization is structured, and uncover immediate opportunities within the agency. Continue reading »
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- A Marriage of Inconvenience: GSA Schedule Contracts & The Contractor Code of Business Ethics & Conduct Clause
- Emerging Small Businesses: To Grow Your Business, You Must Plan For Growth
- Government Contracting: Look Before You Leap!
- GSA Schedules – Strategies for Success
- New Employee vs. Independent Contractor Considerations
- Pay on Display – Understanding the Executive Compensation and Subcontractor Data Reporting Requirements & Ramifications
- The GSA Schedule: Your Ticket to the Federal Market (May 2010)
- The New FAR Codes of Conduct and Compliance Program Provisions
- The Seven Deadly Sins (of contract compliance)