Keith R. Scott Associates Introduction to the Federal Contract Market Presentation To

Keith R. Scott Associates

Introduction to theIntroduction to the

Federal Contract Federal Contract MarketMarket

Presentation To

Federation of Israeli Chambers of Commerce

August 20, 2014

Keith R. Scott Associates Proprietary

The Executive Branch of the Federal market consists of 15 departments, 70 independent agencies and government corporations, as well as numerous agencies of the Executive Office of the President

The Executive Branch supports both civilian and defense functions

The Executive Branch out-sources much of its work to the commercial and nonprofit sectors through contracts and grants

In Fiscal Year (FY) ’13, the Federal government spent over $461 billion on contracts: $308 billion for DoD, $153 billion for civilian agencies.

What is the Scope of the Federal What is the Scope of the Federal Market?Market?


Overall market size: Federal marketplace is a multi-billion dollar industryContract size: Federal contracts range from small

purchase orders up to billion-dollar contracts:• Micro Purchases are defined as any purchase of $2,500

(in some cases $3,000) and below and can be made without obtaining competitive quotations. Purchases in this category are open to small and large businesses and are usually purchased via a credit card or Government Procurement Card (GPC)

• Simplified Acquisition Procedures (SAP) apply to acquisitions between $2,500 and $150,000. The majority of these purchases are set aside for small businesses

• Purchases over $150,000 are considered large purchases that require a sealed bid process

Why Compete in the Federal Why Compete in the Federal Market?Market?


Contract length: Federal contracts are usually long-term, often 5 years in length

Preferences: Federal contracting rules require that agencies set aside a percentage of contracts for

small and disadvantaged businesses. Set-aside goals include:

• 23% for small businesses

• 5% for small disadvantaged businesses

• 5% for woman-owned businesses

• 3% for HUBZone small businesses

• 3% for service disabled veteran-owned small businesses

Why Compete in the Federal Why Compete in the Federal Market?Market?

((continuedcontinued))


What Does the Federal What Does the Federal Government Buy?Government Buy?

A wide variety of products and services classified in two main systems (http://www.naics.com/search/):

SIC Codes: The Standard Industrial Classification (SIC) codes are used by the Federal Government to identify and classify specific categories of business activity that represent a company’s primary line of business.

NAICS Codes: The North American Industry Classification System (NAICS) industry codes define establishments based on the activities in

which they are primarily engaged. The Small Business Administration (SBA) uses NAICS as

a basis for its size standards. Keith R. Scott Associates Proprietary

NAICS Codes That May Be of NAICS Codes That May Be of Interest Interest

NAICS Type of Business

31-33Manufacturing

51 Information (IT)54 Professional, Scientific & Technical Services56 Administrative, Support, and Waste

Management and Remediation Services61 Educational Services62 Health Care and Social Assistance


Is the work in your area of expertise? Are you offering services under the listed NAICS code?

Have you marketed the agency or department in which the opportunity resides?

Have you been tracking the opportunity or is there still sufficient time to track the opportunity and establish a capture management plan?

Is there a small business (SB) preference or an small disadvantaged business (SDB) preference for which you qualify?

Do you have the financial capacity to manage the opportunity?

Do you have the financial and staff capacity to bid the opportunity?

How To Assess Federal MarketHow To Assess Federal MarketOpportunitiesOpportunities


How To Assess Federal MarketHow To Assess Federal MarketOpportunities – More Questions to Opportunities – More Questions to

AskAsk

Does the work require personnel and/or facility clearances?

Is the work requirement in a locality where you have or can reasonably secure resources?

Can your firm ‘go-it-alone’ in supporting all work requirements, or do you need a partner to fill in gaps in your capability?

Should you be seeking to prime or to subcontract the opportunity?

Is there time to seek an appropriate partner(s)?

Have you bid anything similar? If so, what was the outcome of your prior similar bids?


Building relationships with project, contract and Small Business Program staff in target agencies

Building relationships with incumbents, large contractors and other potential teaming partners

Submitting capabilities statements well in advance of sources sought,pre-solicitation or other notices of forthcoming bids

Gathering intelligence about incumbents, agency forecasts, contract histories and client future needs

Defining pricing strategies that are effective and competitive in each individual agency market

Using Federal Supply Schedules as a marketing tool and contract vehicle

Marketing and Capture Marketing and Capture ManagementManagementApproachesApproaches


Types of Federal Types of Federal SolicitationsSolicitations

Request for Information (RFI)

Sources Sought

Invitation for Bid (IFB)

Request for Quote (RFQ)

Request for Proposal (RFP)


Analyzing Solicitation Analyzing Solicitation Requirements:Requirements:

What Does Your Firm Bring to the What Does Your Firm Bring to the Table?Table?

Technical expertise with scope of work (SOW) requirements

Recent past performance and current experience in your areas of expertise within: commercial, other government, academic and Federal marketplace

Size, NAICS and area(s) of set aside requirements

Focus on what matters to the program and to the contracting office (examples: in-place quality management plan, proven past performance, methodology for minimizing risk)


Understand Federal RFP SectionsUnderstand Federal RFP Sections

Section A – Information to Offerors or QuotersSection B – Supplies or Services and Price/Costs

Section C – Statement of Work (SOW)

Section D – Packages and Marking

Section E – Inspection and Acceptance

Section F – Deliveries or Performance

Section G – Contract Administrative Data

Section H – Special Contract Requirements

Section I – Contract Clauses/General Provisions

Section J – Attachments, ExhibitsSection K – Representations/Certifications and Statement of Offerors

Section L – Proposal Preparation Instructions and Other

Section M – Evaluation Criteria


Keys to Successful Keys to Successful Technical Proposal PreparationTechnical Proposal Preparation

Make bid/no-bid decision as early as possible – even before release of the solicitation

Download and review solicitation and revise bid/no bid decision based on final assessment of ability to support requirements

Prepare outline and schedule for proposal within 48 hours of reviewing solicitation

Assign proposal responsibilities within 72 hours of solicitation review

Update corporate “boiler plate” materials

Write to the solicitation evaluation criteria and instructionsKeith R. Scott Associates Proprietary

Pricing bids for the Federal Market must consider:• The type of contract• The competitiveness of your pricing elements

Main Types of Federal Contracts:• Fixed Price• Time and Materials/Labor Hour• Cost Plus Fixed Fee

Elements in Pricing Contracts (What Comprises Your multiplier):• Labor Rates• Frings• Overhead• General and Administrative (G&A• Fee (Profit)

Financial Background to Bidding Financial Background to Bidding Federal Contracts Federal Contracts


Fringe BenefitsFringe Benefits

Holiday labor cost

Other paid leave labor costs (such as jury duty, family leave)

Employer payroll taxes (FICA taxes, state unemployment taxes)

401(k) employer match or contribution

Health insurance and similar benefits


Examples of Overhead CostsExamples of Overhead Costs

Non-billable staff: such as Human Resources (HR), accounting, salesProportionate share of total facilities costs:• Business development efforts and to manage or

perform administrative functions

• Office supplies

• IT services

• Telephone

Overhead costs support the efforts of the direct labor workforce, not necessarily related to a specific contract


Examples of G&A CostsExamples of G&A Costs

Non-billable staff: such as HR, accounting, salesBusiness development efforts and to manage or

perform administrative functionsProfessional fees, such as legal, accounting, payroll processing feesTravel – perhaps in support of business development effortsBusiness insurance (general liability)State & local taxes (not federal taxes!)Conferences, business meetingsDues and subscriptions


The 2012 Grant Thornton Survey of the government contracting industry showed multipliers of 1.9 for offsite labor and 2.2 for onsite labor

Gross profit rates shown in that survey are between 1%–5% of revenue

Typical profit ranges bid:• Fixed price = 10%–15%• Time and Materials = 5%–8%• Cost Plus Fixed Fee = 3%–5%

Multiplier RatesMultiplier Rates


NextNext StepsSteps Prepare 12-month strategic plan for the Federal Sector and

incorporate into overall corporate strategic plan

Identify corporate lead and Federal BD management team to manage implementation of Federal Sector plan

Begin implementation of capture management approaches based on plan

Review progress at least monthly if not biweekly

Maintain strong lines of communication between :• Corporate lead and Federal BD management

team• BD team and potential clients • BD team and teaming partners• Corporate lead and current clients


SBIR Program: History and GoalsThe Small Business Innovation Research (SBIR) program is a U.S. Federal government program aimed at encouraging domestic small businesses to engage in research and development (R&D) activities and projects that have the potential for commercialization.

Currently, 11 Federal Agencies participate in the SBIR program.

The program’s main goals are to: (1) stimulate technological innovation; (2) meet Federal

R&D needs; and (3) increase private-sector commercialization of innovations derived from Federal R&D funding.


SBIR Program: Phases

Phase I: Establish the technical merit, feasibility, and commercial potential of the proposed research or R&D efforts. Phase I awards normally do not exceed $150,000 total costs for 6 months.

Phase II: Funding is based on the results achieved in Phase I and the scientific/technical merit and

commercial potential of the project proposed in Phase II. SBIR Phase II awards normally do not exceed $1,000,000 total costs for 2 years.

Phase III: Pursue commercialization objectives resulting from the Phase One and Two. The SBIR

program does not fund Phase III.


SBIR Program: How Do Israeli Companies Participate?

While a wholly-owned and operated Israeli company cannot participate in the SBIR program: it

could (1) set up a U.S. entity or (2) form a joint venture with an existing American company that will make it eligible to apply for an SBIR grant.

For example, an Israeli company could establish an American subsidiary, and the American

subsidiary could apply for an SBIR award as long as it is more than 50% directly owned and controlled by a U.S. citizen or permanent resident.

The SBIR program could also be a good option for an Israeli company whose owner is a U.S. citizen

residing in Israel.Keith R. Scott Associates Proprietary

Barbara J. Zakheim, PresidentOffice: 240-638-2757Mobile: 301-675-4652Email: [email protected]

Corporate Headquarters:8403 Colesville Road, Suite 1100Silver Spring, MD 20910Website: www.keithrscott.com


Keith R. Scott Associates Introduction to the Federal Contract Market Presentation To

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