Government Contracting: Look Before You Leap!
Entering the government contracting sector seems especially enticing during a recession. While contracting may be a good fit for your business, make sure you’re aware of the unique aspects of dealing with the government.
Government contracting is big business in the Commonwealth of Virginia. Federal procurement spending in Virginia across all agencies totaled $53.9 billion in 2008. Historically, some have considered federal government work to be a safe haven during uncertain economic times. While profit margins on government contracts are relatively low, Uncle Sam tends to be a reliable and potentially long-term customer. During the current recession, the lack of private sector work combined with “stimulus” spending under the American Recovery and Reinvestment Act of 2009 (ARRA) is causing some companies to consider government contracting. Many of these companies are small businesses. Contracting with the federal government imposes requirements on companies not commonly found in the commercial market. By and large, the government is spending taxpayer dollars. Understandably, the government requires much greater visibility into how dollars are spent than is typically required in the private sector.
Read entire article at VSCPA site for an overview of some of the unique aspects of government contract accounting and the challenges that commercial companies will encounter as they move into the government market.
Tom Marcinko and Bill Foote, CPA, are with Aronson & Company, a nationally ranked top-50 accounting and consulting firm. As a member of Aronson’s Government Contracts Services Group, Tom assists clients with both pre- and post-award contract administration, compliance and other regulatory requirements. Bill serves as an officer in the firm’s Forensic & Valuation Services Group, where he assists government contractors with valuation projects and contract disputes. He is also a member of the VSCPA Editorial Task Force. Contact Tom at tmarcinko@aronsoncompany.com and Bill at bfoote@aronsoncompany.com.
Top Contractors And Agencies For ARRA Contracts
We did a compilation of the Top Federal Contractors, the Top 100 Small Business Federal Contractors receiving federal contracts under ARRA (American Recovery and Reinvestment Act of 2009), and the Top Agencies awarding contracts under the new Act. The reports posted below are current based on data obtained from FPDS-NG as of 07/30/09:
- Top 100 Federal Contractors receiving ARRA contracts
- Top 100 Small Business Federal Contractors receiving ARRA contracts
- Top Agencies awarding contracts under ARRA
For further details and other new reports such as this one, go to www.fedmine.us or email amehan@fedmine.us.
Multiple Websites Now Track Stimulus Spending
If nothing else, the American Recovery and Reinvestment Act (ARRA) has certainly been a boon to website developers. The White House has now launched its own website, WhiteHouse.gov/recovery. Among other items, this website features an introductory video, a map showing the location of all stimulus projects, and a list of 10 Recover Act initiatives that will begin within the next 100 days. Other websites that track stimulus spending include:
- Recovery.gov which is maintained by the Recovery Accountability and Transparency Board which includes links to many state and federal agency recovery web pages to explain how they are spending ARRA funds
- Recovery.org which is maintained by ONVIA, a public company that tracks government spending
- StimulusWatch.org which is maintained by volunteers in some cases associated with George Mason University.
Stimulus Funds Impose New Requirements on Contractors
The American Recovery and Reinvestment Act of 2009 will be a boon for Government contractors. The Act appropriates $789 billion, much of which will be awarded to contractors. However, there are some strings attached. The Act includes a variety of requirements designed to increase the transparency, effectiveness, and fairness of the contracting related to the stimulus funds. These requirements, summarized below, are in addition to the normal procurement regulations. Even experienced government contractors should carefully review the terms and conditions of any solicitation that is funded with Stimulus dollars because what was acceptable before may not be now.
Information Collection- Contractors who receive stimulus funds will be required to submit quarterly reports describing the (1) total amount of recovery funds received, (2) total amount of recovery funds actually spent on the contract, (3) lists of projects funded by the recovery funds and number of jobs created, (4) information on any subcontracts awarded.
Fraud, Waste & Abuse- The Act establishes a Recovery Act Accountability and Transparency Board to oversee the stimulus spending with the objective of preventing fraud, waste and abuse. The Board has not yet implemented any requirements affecting contractors, but most experts expect to see reporting requirements at a minimum. Many believe that once the risk mitigation plans required by the Act are completed, the Board will impose more substantive requirements.
Contract Types – The Act requires the use of Fixed Price contract awarded using competitive procedures to the maximum extent practical. Contracts that are not fixed price or not competitively awarded must be listed on the Recovery.gov website. Also, presolicitation notices are now required for task or delivery orders. The Act also expands the Buy America Act requirements, requires prime contractors to report first tier subcontracts, and increases the Government’s access to contractor records.
Is your company pursuing stimulus-related contract opportunities?
Last Thursday we shared that FedBizOpps (FBO) added a special “Recovery” link to its home page that will take interested vendors directly to opportunities related to the American Recovery and Reinvestment Act (ARRA). As of today 398 stimulus projects are listed.
Is your company actively tracking and pursuing stimulus-related contract opportunities? Respond to our new poll question below Continue reading »
FEDBIZOPPS Adds Stimulus Opportunity Section
FEDBIZOPPS (FBO) has added a special link to its home page that will take interested vendors directly to opportunities related to the American Recovery and Reinvestment Act. Additionally, FBO now includes a special “Recovery” icon on these opportunities for easy identification. We highly recommending bookmarking this page so that you can keep up to date with the slew of opportunities that are being issued on nearly an hourly basis. Since February 24th, 301 stimulus projects have made their way to FBO and 131 of those were added THIS WEEK. Many of these projects are extremely time-sensitive, so keep your eyes open and don’t miss your big chance!
Stimulus Reporting Requirements Spawn Online Universe
The massive economic stimulus package has spawned its own online universe as agencies strive to track and report their stimulus spending. Beyond the White House’s Recovery.gov, many state and federal websites now have their own recovery web pages to explain how they are spending funds allocated by the American Recovery and Reinvestment Act (ARRA). These websites, linked to Recovery.gov, allow the public visibility into federal and state spending of the $787 billion under the economic stimulus law.
Right now, Recovery.gov provides links to 35 state websites and 25 federal agency websites monitoring their share of spending under the law. As of Feb. 17, governors had 45 days to claim the funds allocated to their state by certifying that they will spend the money appropriately on projects for jobs and economic growth. Currently, 26 states have posted their certifications on Recovery.gov. More states and agencies are expected to participate soon as this universe continues to expand.
M&A Report: Good news for government contractors…
In the March 2009 issue of The Global M&A and Private Equity Report, Factset research reported that the outlook for government services companies looks promising, with M&A activity and valuations holding up relative to other market sectors. The US M&A Report article referenced a recent report by Aronson Capital Partners (ACP).
Worries about the fate of defense spending have pushed down the value of the biggest companies in the sector by 28% over the past year, according to a report from middle-market M&A advisor Aronson Capital Partners. Yet firms that specialize in more general types of government services have only seen their value decline 1% over the same period. That divergence means that investors are still bullish on growth in government spending, says ACP Managing Partner Larry Davis. Aside from the new stimulus plan, an aging government workforce will require more outsourcing and modernization. To view the full US M&A Report article click here.
Aronson Capital Partners provides a full range of M&A and corporate finance advisory services to help clients achieve their growth and liquidity objectives. For more information Contact Larry Davis, 301.231.6225, ldavis@aronsoncapitalpartners.com.
Federal Stimulus Money to Benefit Maryland
The recently passed Stimulus package will significantly benefit businesses operating in Maryland. Maryland is expected to receive $3.75 billion in direct funds over the next three years. $904 million are dedicated to infrastructure projects such as highways, transit, housing, and drinking water. $1.3 billion are dedicated to medicaid and other health care projects. Over $100 million will be used for energy projects. Last but not least $1.5 billion are target for various Education projects.
The above figures represent only the direct funding, which is many cases will be spent at the local government level. Maryland will also benefit indirectly from Federal spending in Maryland on such projects as the expansion of the Bethesda Naval Medical Center and the National Institutes of Health.
GSA Gets $7 Billion in the American Recovery And Reinvestment Act Of 2009
The largest user of the GSA schedules program, GSA itself, is expected to receive over $7 Billion in funding under this act. GSA is responsible for implementing a number of programs addressed by President Obama, especially the “Greening” of public buildings.
GSA will be spending some of the $7 billion on: “Greening” of public buildings, IT security, IT system upgrades, engineering services, financial reporting systems and transition/change management.
The Obama administration is stressing the importance of getting the money into programs that will quickly stimulate the economy. GSA will surely be looking to some of it’s 16,000+ experts ( GSA Schedule contract holders) for implementation of many of these projects. Monitoring of FedBizOpps and e-Buy should be the top priority for business development staff.
State and local governments appear to be the biggest $ winners under the Act. GSA Schedule contractors holding the Information Technology (70) or Law Enforcement (84) GSA Schedule contracts have “cooperative purchasing” capabilities, allowing them to capitalize on this state/local spending. Identifying which states and local governments are likely to use GSA Schedule contracts to make purchases is the hardest part of the equation to solve.
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What We Are Writing
- 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)