DHS requires 'Hi, I'm a contractor' intro

Could the requirement undermine the teamwork
that's essential in a workforce?

Homeland Security Department officials want to draw a bright and shiny line between the two teams that work inside a federal department: the federal employees and the contractors.

Under DHS’ FirstSource II draft request for proposals, officials are telling contractor employees to announce in all interactions that they are not federal employees but are, instead, contractors.

For example, contractor employees must introduce themselves, in person and in voicemails, as employees of their companies. They cannot try to elide the difference by saying they work for DHS. And if they're employed by a subcontractor, they have to identify the company, not say they are employees of their prime contractor.

And federal Homeland Security Department officials—not to be confused with contractors—are suggestion that these announcements aren’t something for people to laugh about over lunch.

“Failure to adhere to this requirement may constitute grounds for termination for default of the base FirstSource II contract,” the draft states. Serious stuff.

The Defense Department has a similar rule. Contractors must announce, wherever they go, that they are contractor, not a federal employee. Officials instituted the rule in 2010.

The “Hi, I’m a contractor” rule may show who’s who in a conversation or meeting. But it won’t help in blending the workforce, some readers have said.

Contractors fear that the rule could undermine the teamwork that’s essential in that type of workforce.

“How do you maintain unity of community when segregation is forced?” a reader asked.

Read the Acquisitive Mind blog: FCW.com - DHS requires 'Hi, I'm a contractor' introduction

Surviving the Darwinian world of federal contracting

Federal programs aimed at aiding the growth of small businesses through federal contracting are not a good investment if they simply set up those firms to fail, some experts say.

The problem is that when small businesses become midsize businesses, they lose access to set-aside contracting programs and end up struggling to survive in the eat-or-be-eaten world of federal contracting. Some firms find a way to get by, but others end up selling out to bigger competitors.

That is not necessarily a good return on the federal government's investment. But help might be on the way.

Rep. Gerry Connolly (D-Va.), who has many IT contractors in his district, is pushing a pilot program to help ease newly graduated small businesses into full-and-open competitions against the biggest contractors.

In his plan, only the General Services Administration could award contracts through the set-aside program. As important, the midtier company could win a set-aside contract only if GSA officials believe a small business likely would not have received it. In addition, the midtier company must mentor a smaller company.

Connolly’s goal is to continue helping the once-small contractors that the government has invested in and nurtured through the years after they become midtier competitors.

He said he questioned the benefit to taxpayers if small companies are sent “into a Darwinian world where they are, on Day One, expected to compete with the big guys.”

Others have reached a similar conclusion — and have come up with their own solutions.

At a hearing Sept. 14, Rep. Nydia Velázquez (D-N.Y.), ranking member of the Small Business Committee, pointed out that GSA already has the Business Breakthrough program, which prepares small companies for the next level.

The program is available to a range of companies, and officials envision it being particularly useful to companies that are too large to qualify for small-business advantages but not large enough to successfully compete with the nation’s largest corporations. It's just want Connolly wants with his proposal.

GSA also has its mentor/protégé program. There are 81 active agreements between businesses of all sorts, from large companies to a variety of small-business types. The agreements can result in lasting business relationships and prepare the smaller firms to enter the bigger market.

Any of those programs might help, but only if federal agencies are willing to support them.

However, one industry executive said that for the most part, agencies aren’t looking beyond the small-business credit.

“No matter how well a small business does in support of an agency, it seems that once that business has outgrown the specific small-business program, the agency just turns to the next small business for support,” said Randy Slager, CEO of Catapult Technology, a mentor in GSA’s program.

Without a diversified set of customer agencies, a newly minted midtier company can quickly lose its customer base — a major factor in the high rate of failure among small businesses, he said.

Bill Jaffe, senior vice president and general manager of Tape, a service-disabled veteran-owned/woman-owned small engineering firm, said the 8-year-old company will cross the threshold into the full-and-open competition marketplace by December, and he’s going to face off for work against the Lockheed Martins and Northrop Grummans of the world.

“Companies do go through the process and survive,” Jaffe said, “but many of them do not survive.”

He is one of the leaders of a new industry group called Mid-Tier Advocacy that seeks to support such companies in a tightening market. But overall, it’s the company’s responsibility, Slager said. Businesses must plan and strategize well before the growth begins.

“I don’t think that this is a factor that is government-dependent,” Slager said. “It rests with the senior management of the small business.”

Another businessman has a different idea: Why make growth the main goal in the first place?

A reader calling himself Stay-Still-Stan recently commented on an “Acquisitive Mind” blog post by advising his peers to bask in the small-business perks. Most government contracting companies, including his own, strive to grow but are rarely happy when they do, he wrote.

His advice? “To be most profitable, government contractor: Find a niche, become the best, be a ‘disadvantaged’ company for special perks, stay not-for-profit and employee-owned, and keep company size under one of the government-defined limits to minimize the paperwork you need to do,” he wrote. “Do this, and everyone in the company will retire quite wealthy and happily.”

Read the rest of the story: FCW.com - A new push to rethink the small-biz contracting payoff

The ghost of small businesses past

In June, many agencies proudly tweeted that they had received an A from the Small Business Administration because they did such a good job of awarding contracts to small companies in fiscal 2010.

And although SBA shared their enthusiasm, many critics say the recognition is unfounded because the program is fundamentally flawed.

The government awarded nearly $98 billion in federal contracts to small businesses last year, or 22.7 percent of eligible contracting dollars, according to SBA. The goal was 23 percent. It was the second year in a row that the money going to small businesses went up, and it was the largest two-year increase in more than a decade.

“We’re obviously excited about the progress we’ve made,” said Joe Jordan, associate administrator of government contracting and business development at SBA, during a conference call June 23, the day before the score cards were released.

Ten of the 24 agencies that SBA evaluated received a higher grade in 2010 than they did in 2009, while 10 agencies’ grades stayed the same. SBA gave 13 As, five Bs, four Cs and two Ds. SBA received a B, as did the government as a whole.

However, many experts say the grades aren’t accurate because the businesses that are winning the contracts often aren’t small.

Agencies routinely get credit for awarding contracts to small businesses that have outgrown that status or been bought by large corporations. Therefore, in many cases, a small business is no longer doing the work.

So are the scores correct?

“I think the answer is no,” said Sen. Rob Portman (R-Ohio), ranking member of the Homeland Security and Governmental Affairs Committee’s Contracting Oversight Subcommittee.

Likewise, Sen. Claire McCaskill (D-Mo.), the subcommittee’s chairwoman, went so far as to call the 23 percent small-business goal “an empty achievement.”

She told Jordan during a recent hearing that “by taking the position you’re taking, you’re essentially saying to the public, ‘By the way, we’re saying 22.7, but don’t believe it.’”

However,Jordan said agencies are doing exactly what the program was designed to help them do: Award contracts to small businesses and watch the companies grow big.

Federal rules allow a company to maintain its small status for as long as five years before it must recertify its size. At that point, any small-business contracts it holds either maintain their classification or are reclassified based on the company’s new status.

That approach is an improvement, Jordan said. The policy used to be “once a small-business contract, always a small-business contract.” It didn’t matter who bought the company or how large it grew.

Nevertheless, some acquisition experts see the issue as Portman and McCaskill do. And they see the scoring as shady.

Sure, the program follows the rules and might be technically correct, said Jaime Gracia, president and CEO of Seville Government Consulting, a federal acquisition and program management consulting firm. But there’s plenty of room for tougher standards and clarity about a company’s size.

He said federal officials should require companies to certify their size every year to get a true picture of small-business contracting. That’s not happening now, which means “SBA is asleep at the switch,” Gracia said.

Guy Timberlake, co-founder and chief visionary officer at the American Small Business Coalition, said there should be changes in how agencies set aside contracts and how officials oversee them. And the government must enforce size standards so that small companies can reap the benefits.

He said a program that encourages subcontracting with small companies would help. When a small business that holds a set-aside contract grows too large, it should award a certain percentage of subcontracts to small firms for each upcoming option year of the contract. Agencies should make that expectation clear when they award the set-aside contracts and get a firm commitment from the companies.

Without such changes, “doing business as a true small business in the federal sector will continue to be — at least in part — an aggravating exercise,” Timberlake said.

Read the story: FCW.com - The ghost of small businesses past