The largest contracts — worth more than $550 million total — went to 21 companies to develop “big bet” technologies. Those companies are Aerial Applications, Analytical Space, Anduril Industries, Applied Minds, Elroy Air, Enview, Edgybees, Essentium, Falkonry, ICON Technology, Orbital Insight, Orbital Sidekick, Pison, Privoro, Shift.org, Swarm Technologies, Tectus Corp., Virtualitics, Wickr, Wafer and one company that the Air Force has not disclosed.
“For all these awardees, you’re on a four-year, fixed-price contract that we believe, if successful, will disrupt part of our mission in a way that will give a huge advantage for our future airmen,” said Will Roper, the Air Force’s acquisition executive.
The value of the contracts awarded by AFWERX may seem small compared to the multibillion awards for major defense programs. However, these awards go a long way in helping technology firms overcome the “valley of death” between technology development and production, when a lot of companies are vulnerable to failure, said Chris Brose, head of strategy for Anduril Industries, which specializes in developing artificial intelligence technologies.
“For a company like ours or companies of that size, It’s quite significant. It allows us to really kind of do more of the good work that we’re doing, to scale and grow and work with new partners, and it makes a huge difference,” Brose said.
Brose declined to detail the precise nature of Anduril’s contract with the Air Force, but said that the general objective is to prove that an unmanned aerial system can deliver a mass of swarming drones capable of performing complex missions. While a human would still be “in the loop” overseeing the network, certain tasks — such as steering the drones, moving their sensors and processing gathered data — would be automated.”
“Armed with new contracting authorities and a mandate to help the U.S. military stay head of peer competitors, the Pentagon’s Defense Innovation Unit is bringing new commercial partners into the fold and expanding its technological focus.“
“DIU was launched in 2015 by then-Secretary of Defense Ash Carter to bridge the gap between the military and the nation’s tech hubs. It is headquartered in Mountain View, California, in Silicon Valley, with additional outposts in Austin, Texas, Boston and the Pentagon.
“More and more of what the department needs going into the future is dual-use technology, which means it’s equally or more important in the commercial space as it is for the military. So we’ve got to leverage what’s going on with the tremendous innovation hubs that we have around the country and make sure those companies … are thinking about the Department of Defense,” DIU Director Michael Brown said during a panel at the Reagan National Defense Forum in Simi Valley, California.
The organization has three core mission sets: accelerate commercial technology to the warfighter; boost the military’s capability and capacity by taking on transformative projects that can be scaled across platforms and across the services; and grow the national security innovation base.
Its offices in Austin, Boston and Silicon Valley are focused primarily on commercial outreach, while the one in Washington, D.C., engages with military partners such as service acquisition executives.
“We start with the DoD customer with a DoD problem,” Mike Madsen, DIU’s director of strategic engagement, explained in an interview. “Then we put that out to the tech sector and get the imaginative minds in the tech sector to help solve our problems.”
Over the past year or so, DIU’s hand has been strengthened by a number of initiatives, he noted.
A crucial one was Undersecretary of Defense for Acquisition and Sustainment Ellen Lord’s decision to give the organization new contracting authorities, including the ability to directly enter into other transaction authority agreements that are intended to cut through bureaucratic red tape associated with the Pentagon’s traditional acquisition procedures.
“She delegated that authority so that we could award our own OTA contracts, which is a pretty big deal to continue moving fast,” Madsen said.
OTA mechanisms favor nontraditional suppliers, he noted, “whether it’s a couple of folks in a garage in Minnesota or whether it’s a Fortune 100 company in Silicon Valley that just have never done business before with the department.”
The Defense Innovation Unit has awarded about 150 contracts to 122 nontraditional vendors. Of those, 66 are first-time suppliers to the military, Madsen said.
In the past, high-tech companies in the commercial sector “evaluated the $740 billion defense market and said, ‘No thanks. I don’t want a slice of that. … It’s too complex, it’s too hard,’” he said. “What we’ve represented is a lowering of those barriers to entry, making it easier for those leading-edge technology companies to get their technology to the men and women in uniform.”
Madsen said DIU understands the commercial sector’s faster business cycles.
“We want to move at commercial speeds … and look like a commercial entity to those tech companies” that are wary of doing business with government agencies, he noted.
With other transaction authority agreements, DIU can transition from a prototype contract right into a production contract as long as the prototype contract was awarded under competitive circumstances.
The organization has stood up a defense engagement team and a commercial engagement team. The defense engagement team reaches out to the services, combatant commands and other agencies to learn about their needs.
“Then we put that problem [statement] out to the commercial sector and work with them for proposals and look to award a prototype contract as quickly as we can,” Madsen said. The goal is to award a contract within 60 to 90 days, and then move through the prototyping phase and field new capabilities within 24 months.
Once a successful prototype is developed, DIU’s defense engagement team looks for ways to scale it across the department. An example is a recent effort to use artificial intelligence for predictive maintenance.
An AI prototype developed by a company called C3.ai is capable of reducing unscheduled maintenance for the Air Force by about 30 percent, “which is pretty significant for our mission-capable rates for aircraft,” Madsen said.
“We took that successful prototype to the Army and said, ‘Hey, this works on aircraft, what do you think about trying to prototype on wheeled vehicles?’” Madsen explained.
“We worked a prototype for the Bradley fighting vehicle. Now we’re engaged with the Navy to apply the same concept to not only the aircraft in the Navy, but also shipbuilding.”
The commercial engagement team’s charter, meanwhile, is to pave the way for high-tech firms to enter the defense ecosystem and transition their products into a program of record.
It also reaches out to venture capitalists to gain greater visibility into the marketplace.
“They’re effectively the gateway to hundreds, if not thousands, of companies,” Tom Foldesi, DIU’s director of commercial engagement, told National Defense. “For any particular solicitation when we’re looking for specific technologies, they are … able to point us in the right direction.
“The VCs are always a really valuable source because oftentimes they have line of sight to companies that we might not even know about. They might be in stealth mode, they might not have announced their [funding] rounds. So we can gain a lot of insight into what might be going on in the market that might not be public.”
Being co-located in the tech hubs offers advantages. DIU also has its eye on other tech centers such as Seattle and Pittsburgh, Foldesi noted. The organization has received proposals from companies based in 44 states.
“We cast a very wide net across the country,” he said.
DIU is uniquely capable of reaching out to the commercial sector and venture capitalists on short notice, putting firms on contract and helping to scale solutions across the Defense Department, officials say.
“This is very important because most of the companies are [otherwise] pulled into a labyrinthine system within the Pentagon, and it’s really demotivating,” Foldesi said.
The often-cumbersome nature of the traditional defense acquisition system is one of the reasons why a lot of companies have opted not to do business with the U.S. military. But
DIU posts it solicitations directly on its website, with the aim of moving fast on all of its projects.
“There’s money on the table,” Foldesi said. “Someone will be awarded a contract within a few short weeks or months. And then there’s the opportunity to transition that prototype contract to a program of record.”
Over the past year, DIU has improved its decision-making process for taking on new projects, Madsen noted.
“We’ve really focused on building out that concept of transition much earlier in the process so we know what that transition from prototype to production to fielding that technology to the men and women in uniform really looks like before we’re even down the prototyping path,” he said.
The Defense Innovation Unit also helps companies navigate security and compliance issues.
“Part of the benefit of working with DIU is you have a trusted advisor and partner being able to help you manage through those … potential challenges, which can be quite significant for a company that isn’t used to doing business with the DoD,” Foldesi said.
Meanwhile, the U.S. military is trying to stay ahead of advanced adversaries such as China and Russia.
“In this great era of great competition, we think the tech race is the most important one,” Madsen said.
DIU’s top five technology focus areas are artificial intelligence/machine learning, autonomy, human systems, space and cybersecurity.
“Those are the areas that we see undergoing the greatest rate of change in the commercial sector. We think they also best represent the defense mission set,” Madsen said. “But we’re not just sitting back static on those.”
DIU is now broadening its aperture and eyeing other capabilities.
Foldesi and his team are talking to venture capitalists to get a better sense of the business sectors with emerging technology that might be of interest to the military.
“We’re looking at things like power and energy right now,” including lighter and longer-lasting batteries with faster recharge, Madsen said. Advanced materials, additive manufacturing, communications technology such as 5G, and virtual reality and augmented reality capabilities are other areas of interest.
Another new initiative being pursued by DIU is known as National Security Innovation Capital, or NSIC.
About 92 percent of U.S. venture capital funding currently goes toward software, resulting in an underinvestment in dual-use hardware. As a result, early-stage hardware development companies are in such need of capital that they might turn to foreign investors that will exert influence over their intellectual property, Madsen warned.
“The concern … from our perspective is once that happens, now that technology is probably unavailable to the department,” he said.
A key objective of NSIC is to pump money into critical hardware ventures so that they don’t have to look overseas for funding and endanger the supply chain.
DIU is also overseeing the National Security Innovation Network, or NSIN, which includes universities that aid the Defense Department. The network is growing and developing relationships with nontraditional partners in academia that are not typically involved in generating technology for the military, Madsen noted.
Pentagon efforts to engage with the commercial tech sector have not always gone smoothly. For example, in 2018 Google pulled out of Project Maven — an Air Force machine learning initiative focused on sifting through drone imagery — after employees protested the company’s involvement in aiding warfighting.
However, that case is not representative of the commercial tech sector writ large, DIU officials say.
“In fact, we see the opposite,” Foldesi said.
Madsen noted that a recent solicitation for AI technology generated responses from 50 companies. “To me, that indicates that folks definitely want to work with us.”
Foldesi said overcoming wariness of the Pentagon procurement process is the greater challenge.
“This is why our mission is so critical,” he said. “If we’re successfully able to demystify and de-risk doing business with the Pentagon, people will have perceived us having opened up arguably the single biggest [potential] customer” for some of these new technologies.
As DIU reduces some of the barriers to entry into the defense market, venture capitalists are taking notice, he said.
“You’re seeing a lot more of the top VC firms in the world start to put a little bit more money into defense[-related] startups,” he said. “This is just the start of a trend that we expect to accelerate as it becomes smoother and easier to field your technology within the Pentagon.”
The Defense Innovation Unit’s resources are growing. Its budget increased by about 60 percent between fiscal years 2019 and 2020, Madsen noted. Brown said the organization has started 60 projects and completed 30, delivering about a dozen new capabilities to the military using cutting edge commercial technology. Total contract values exceed $500 million so far.
Companies doing business through DIU have, in turn, been able to raise more venture capital, he noted.
“For every dollar we provide in a prototype contract, on average, $10 of equity capital is raised,” he said. “We just need more volume in this to get the flywheel effect going.”
Small Businesses typically have a learning experience growing into government contracting. Part of that process is undergoing reviews by the Defense Contract Audit Agency (DCAA). It takes knowledge of the requirements and strategic focus to set up the type of business processes required for accommodating government contract job cost accounting and fit those processes into the way your company does business.
DCAA or other agency representatives do not approve job cost accounting software packages. They approve contractor job cost accounting practices in compliance with Federal Cost Accounting Standards (CAS). If you are a small business, you are probably going to come under modified CAS Coverage that you can read about at the following link:
Perhaps you have already examined the above background, but I would encourage you to review it again in connection with planning for your business system. Perhaps you have discovered that CAS compliant job cost accounting effects your estimating structure, your long range planning for indirect rates, as well as your general ledger, overhead and G&A structure. You may have discovered as well that DCAA wants to see your government contracts accounted for in a separate cost center from your commercial work and that there are certain unallowable costs that cannot be charged directly or indirectly to government contracts.
Proposal audits are performed by DCAA on your cost proposal at the request of the Procurement Contracting Officer (PCO) and verify your direct and indirect rates against your long range plan, your labor category pricing, contingent hire agreements, vendor quotes, subcontractor proposals and all other data related to the cost volume of the proposal. Results go to the PCO. Arithmetic checks are made. No opinion is offered on the merit of the pricing, only that it has been documented in a long-range plan or a vendor or subcontractor quote and it is accurate.
PROGRESS BILLING AUDITS UNDER FIRM, FIXED PRICE CONTRACTS
This type of audit is on live data from your billing system. It is triggered by your submitting a progress payment under a firm, fixed price contract. Progress payments can be allowed in long-running firm, fixed price contracts that are front-end loaded with material and labor investment and have lengthy schedules for delivering the end product.
The DCAA Auditor will get the audit request from the contracting activity and will ask to examine the complete set of job cost records in your accounting system for incurred cost on the fixed price contract and tie those records out to the progress payment requested amount (usually 85-90% of the incurred cost to date – they hold some billed amount in retention). Records audited are at the time card and expense report level, as well as purchase orders, travel vouchers and any other transactions that are booked and billed in your accounting system to the fixed price contract. They will want to see the time cards and other documents and will trace them back through the system.
If you do not have a progress billing clause in your firm, fixed price contract, it is unlikely you will be audited. The contracting activity or the Defense Finance Accounting System (DFAS) will simply compare the final amount you bill to the firm, fixed price amount in your contract and pay if the item or service has been accepted and delivered. (Usually a sign-off by the PCO, Contracting Officer’s Technical Representative (COTR) or a DD Form 250 signed by a government inspector on product deliveries)
COST PLUS AND TIME AND MATERIAL CONTRACT AUDITS
Billing audits are performed by DCAA, again at the request of the contracting activity. The auditor will go into all actual cost records submitted with your billing. Cost plus and T&M billings must have all the billing detail behind them or they will not be paid. The detail must be at the transaction level and the audit is identical to the one discussed above for progress payments.
INCURRED COST AUDITS (OFTEN REFERRED TO AS “RATE AUDITS”
These audits are conducted when you are closing out contracts with the government and they have been billed at provisional rates, or the government needs to establish that you are billing accurately from a rate standpoint. If the contract is fixed price with progress payments, cost plus or Time and Material in nature and has been billed over a long period, particularly if it has crossed more than one government fiscal year, then a system-wide incurred cost audit will be necessary to verify the rates that were charged to the government and determine the difference between the provisional rate billed and the actual rate incurred (where applicable).
In addition it is periodically necessary for the government to establish that no unallowable costs have found their way into government contract billings.
The government allows provisional billing rates for the convenience of the contractor based on his long-range plan and mix of business. The government holds a retention amount on each billing and then at closeout determines with the contractor through an incurred cost audit the final amount due on the contract, releases the retention accordingly, and the contract can then be closed if all other obligations have been completed. At closeout the government pays the final bill.
A rate audit determines the compliance of the job cost system if it occurs while the contract is in process. If an incurred cost audit occurs on contract closeout actions, results will directly impact final contract billing approval and amounts.
JOB COST ACCOUNTING SOFTWARE TOOLS
My experience with job cost accounting software tools is that complete packages are pretty expensive. COTS accounting packages such as Quick Books do not provide job cost accounting. I have installed JAMIS, which is the ‘Cadillac’, DELTEK, which is the ‘Fairlane 500’, and SYMPAQ, which is the ‘Volkswagen’. They are all expensive, even for single user licenses. You can go to these and other product sites on the web and examine their capabilities:
All of the above suppliers are used to long sales cycles and competing against each other. They will do remote demos for you and bend over backwards to show you their products. You can learn much about government contract job cost accounting just by taking the time to go through a demo. For companies whose direct job cost records are growing fast, these tools offer the utility to manage data volume and efficiently handle requirements such as changes to existing records driven by rate changes, fiscal period closing or contract closeout.
GROWING YOUR JOB COST SYSTEM
Many small companies doing government work start out with a rudimentary direct job cost accounting software package such as Peach Tree or the add-on tool for Quick Books mentioned above and crutch it with manually maintained records on spreadsheets for indirect cost allocation, time keeping, expense reporting, purchasing and supplier commitments. There is nothing wrong with such an approach as long as you can supply job cost (individual contract) records complying with modified CAS Coverage and demonstrate such things as:
Time Cards and time keeping process by worker and labor category by contract or indirect cost pool
Expense Reports and expense report process by worker by contract or indirect cost pool
Purchase Orders with job cost accounting data traceable thru invoices to contacts or indirect cost pools after payment
Overhead Allocations in a Government-unique cost center to individual contracts at month end based on individual contract direct labor cost
G and A Allocations in a Government-unique cost center to individual contracts at month end based on individual contract total cost.
A semi-manual approach gets burdensome as the company grows and the number of accounting transactions at the direct and indirect cost level increase in volume.
If you do not have a good job cost software tool, I recommend you begin looking for one and plan strategically to implement it if significant progress billings and service contracting transactions, to include time and material and cost plus contracts, are in your future. Implementing a government compliant job cost system is a sensitive matter and must be planned. ‘
As companies grow and get involved in larger programs they come under full CAS Coverage that requires a disclosure statement and considerably more controls on the structure of the business system. You can read about full CAS coverage at the link contained in the introduction to this article.
If you have the investment budget available, you may wish to consider the job cost accounting system software suppliers I mentioned above and compete them against each other for a price. Installing one of these packages is critical from an accounting period standpoint. I recommend a new year starting point and running in parallel on your old system for at least a quarter.
Keep in mind that DCAA does not approve COTS job cost accounting system software. Buying the software will not make you “DCAA Compliant” or “CAS Compliant” You do that through careful process development, specific to your company, utilizing software as a tool to operate your own unique business processes. Your processes will include long range planning, pricing, job cost accounting, indirect cost allocation, time-keeping, expense reporting, purchasing and commitments and billing – all geared to accurate job cost records at the individual contract level.
To the extent that you cannot demonstrate the above features to DCAA when they audit your business you CAN demonstrate that you are aware of the necessity to set these things up, lay out your plan to do so, and specify a time frame within which DCAA can expect to see you complete your compliant government contract pricing and accounting structure.
I have found that DCAA auditors are reasonable people who understand small companies must grow into government business systems. Showing them your accounting structure and your business system plans will display knowledge they will appreciate and assure them you understand the requirements, even if you cannot demonstrate all the processes at the point in time that the government initially audits your company.
Chapters 45 and 51 through 53 of my Book, “Small Business Federal Government Contracting” provides further detail and examples on establishing CAS-Compliant small business planning, pricing and job cost accounting. The book is free as a download in the right margin of the below site in the “Box Net” cube.”
The table of contents below reflects free small business federal government contracting books and reference materials. You may download the book, SmallBusiness Federal Government Contracting and its supplement from the first, vertical “Box” in the left margin of http://www.smalltofeds.com. Blue topic titles are the basic book and red topics are contained in the Supplement.
Use the links beneath the table to access more recent articles since the publication of the book and the supplement.
You may also benefit from the free “Reference Materials” in the second, vertical “Box” in the left margin of the site. Contract agreements, incorporation instructions for all the US states, guidance on marketing and business planning are all included.
Other books by Ken available as free downloads in the “Box” include:
“A Veteran’s Photo/Poetry Journal of Recovery
From Post Traumatic Stress Disorder ”
“Odyssey of Armaments” My Journey Through the Defense Industrial Complex”
“This article is template to apply to your marketing operations for accommodating federal government contract proposal preparation. Proposals are special, sometimes exhausting projects, but a necessary part of doing business with government agencies.
Like many other aspects of business, the more proposals you prepare, the more you learn and the more can borrow from past practice for the next one. “
Your marketing efforts have resulted in locating a solicitation for supplies and services that is exactly suited to your business. The solicitation by the government may be a result of your self-marketing efforts or you may have located it at FEDBIZOPS, the gateway for all federal government business in excess of $25K. The fact that the government has now converted a project requirement into a formal solicitation means that the funding is available for a contract and the authorities within the government agency have authorized a source selection process.
BID/NO BID DECISION
Government contract proposal preparation is time consuming and can be costly. Meeting the agency Request for Proposal (RFP) requirements with a responsive proposal can be well worth the effort if a winning strategy can be formulated. When considering submitting a proposal to a given government solicitation, conduct a bid/no bid exercise. By going through that process you will begin formulating your win strategy or you will discover that you should not bid this job for lack of such a strategy. The elements of the process are discussed below in the form of questions to ask yourself against topics for key consideration. Affirmative or non-affirmative answers to the topical questions and ability to fill in the blanks below will drive your decision to bid or not bid a solicitation.
Do you know this customer? Yes __ No ___ Does this customer know you? Yes___No ___ Do you have any idea of the available funding for which the customer has obtained authorization? Yes___No ____ Specify the marketing contacts which have been made with the customer thus far: Date: Contact:
B. Supplies and Services:
Specify the supplies and services to be delivered in the prospective contract:
Line Item (s): Description:
Are the supplies and services in the RFP Statement of work a good match for what the company sells? Yes ___No ___ Is the RFP Statement of Work specific enough to identify risks? Yes____No ____ Is the RFP schedule specific enough to determine the delivery requirements? Yes____No____ Can the delivery schedule in the RFP be met? Yes ___No _____ Specify the delivery schedule for the prospective contract:
Line Item: Delivery Date:
C. Contract Type/Value/Start/End Date:
Does the proposed contract type (FFP, CP, T&M, etc) suit the nature of the work? Yes___ No ___ Specify the contract type for this program: _______________. Are there any unusual terms and conditions specified in the government RFP? Yes ____No___ Specify any unusual terms and conditions: ___________________________________________
What is the Rough Order of Magnitude (ROM) value of the prospective contract? $___________. What is the anticipated start date of the contract? ________. What is the anticipated end date of the contract? ________.
D. Company Strengths: Is this prospective contract for effort in which the company has strong skills? Yes____No ____ Specify the strengths the company will utilize in meeting the product specificaton or statement of work:
E. Company Weaknesses:
Are there any company weaknesses in meeting the product specification or statement of work? Yes ___No ___ Specify any weaknesses for which the company must compensate and manage associated risks:
F. Teaming Arrangements (If any):
Does your company plan to team with other companies in the performance of the prospective contract? Yes ___No ___ Identify the other team member companies:
Will your company be a prime or a subcontractor? Prime___Subcontractor ____ Have NDA’s and Teaming Agreements been executed? Yes____No ______
Is this a sole source set-aside procurement to your company? Yes____No____ If this is a competitive procurement, identify the prospective competition and their associated strengths/weaknesses:
H. Win Strategy:
Identify the proposal features and themes which will be utilized in the proposal as descriminators to win this program:
I. Proposal Budget:
Estimate the man hours and dollars for proposal labor, any travel expenses, shipping, packaging, samples and other expenses associated with preparing the proposal. The government does not reimburse the contractor for proposal preparation under the subsequent contract. Proposal expenses must be included in the cost center overhead or G&A and accounted for as marketing expense allocated across the cost center or the company.
Labor Hours __ Labor Dollars $______ Material _______ Travel _______ Reproduction _______ Samples (if any) _______ Packaging/Binding/Ship _______ TOTAL $_______
J. Bid/No Bid Decision:
If you can answer “YES” to at least 5 of the questions under paragraphs A through D above, it is likely you should bid this procurement. If the answers to 7 of the 10 “YES” or “NO” questions under paragraphs A through D above are “NO” it is unlikely you should bid this procurement unless the answer to G is “YES”. Even then, examine your answers and carefully review whether this business is suitable for your company. If the answer to E is “YES”, it is unlikely you will bid this procurement successfully unless the answer to G is “YES”. Even then, determine how you will overcome the weaknesses you have identified in your company associated with doing this work before you decide to bid it. Carefully compare the competitive analysis under Item G to the win statagy under H before you make your final decision.
BID _____ NO Bid _______
YOUR PROPOSAL You have decided to bid a prospective project. You have downloaded the RFP from the government agency and the clock has started on the proposal due date.
Visit the federal government on line certifications and representations web site and complete the standard information there, which can be utilized for all federal agency proposals. Certifications and representations are required for virtually every proposal submission. That web site is at:
The following information addresses the proposal process. It is from an independent consultant named Deborah L. Kluge, who is a specialist in proposal writing and consulting. The below is an extract from Deborah’s Web site.
If you are preparing a FAR Part 12 Commercial Proposal, certain elements of this material may not apply, but you are encouraged to utilize the information and the checklist to insure you have covered all the bases.
Read it once, then read it again. And again. Experienced bidders know that several readings of an RFP are necessary for a complete understanding of what is required. Learn what the lettered sections of an RFP are (e.g., Section B refers to your pricing, Section C is the scope-of-work, Section K contains Representations and Certifications, Section L provides instructions to the bidders, Section M specifies the bid evaluation criteria, etc.). The titles of the lettered sections are generally the same in every RFP. Be aware that information critical to your bid may be scattered among many different sections of an RFP. Put the RFP in a 3-ring binder for easy use as a reference document. You might also want to insert dividers in front of each important section for quick reference. Use small “Post-It”™ notes at the edge of a page to mark important pages or paragraphs. That way, you can find them quickly.
If you don’t understand some of the information in the RFP, you can submit written questions to the Contracting Officer. Some RFPs specify a date by which questions are due. Make sure you send in your questions before the due date or they may not be considered. Be aware that the Government’s response to all submitted questions are distributed to all bidders, usually through a written amendment to the RFP. Although you and your firm will not be identified as the “asker” of specific questions, the way in which you word your questions could provide important information to your competitors. Word your questions carefully to ensure that you don’t give away information on your strategy or pricing. If you call the Contracting Officer to obtain or clarify information in an RFP, be aware that verbal information given to you by the Government is not binding.
THE PROPOSAL OUTLINE
If you have downloaded an RFP from the Internet, you can use that file to begin constructing your proposal outline. If you do not have the RFP on disk, use a scanner to scan in important sections for use in preparing your outline. Some people prepare an annotated outline as well as a basic outline. An annotated outline can contain important points from the RFP, as well as your own information on what you are planning to say in each section. If you prepare an annotated outline, copy your file, save it under a different name, and delete the annotations. The result will be a basic outline which you can use for easier viewing and tracking of proposal sections and subsections. For each section and/or subsection of your outline, indicate the estimated number of pages that will be written, the person responsible for doing the writing, and the evaluation points. Put important instructions on the first page or at the top of your outline, so you don’t have to rummage through the RFP to find them. These instructions might include: proposal due date and time, number of copies, page limits, font size, page margins, packaging and delivery instructions.
THE PROPOSAL SCHEDULE
Make one and stick to it! Work backwards from the proposal due date. You might want to make a separate schedule for preparation of the cost/business proposal. Make sure you leave plenty of time for copying, binding, and delivering the proposal. Remember, the copier knows that an important document is being copied, so it will break, jam or smudge. Have a back-up plan that includes having extra paper and toner on hand and sending the proposal out to be copied. Distribute the schedule to all members of your proposal team.
Make sure you are familiar with the instructions in Section L of the RFP. Study the proposal evaluation criteria and the points allocated to each section/subsection of the technical proposal, as well as the points that are allocated to cost. This information will tell you what to emphasize and where to put your efforts with regard to proposal preparation. Hold an intial and regular follow-up meetings with your proposal team to discuss strategies, progress and problems. To the extent possible, your Technical Approach and strategy should provide answers to the following questions: who, what, when, where, how, and why. Depending upon the instructions in the RFP, your Management Section might contain a discussion on how you will manage the overall project, a discussion on how you will manage and oversee the work of your staff and subcontractors (if any), an organization chart of the project, and position descriptions of project staff. In your Personnel Section, you may be required to include narrative information on the experience and skills of the staff members you are proposing for the project and/or their resumes. In your Related Experience or Capabilities Section, you may need to demonstrate that you have performed similar or related work for this or other clients. Your proposal may have other sections such as an Executive Summary, a discussion of your Understanding of the Problem, Appendices, or other required information as specified in the RFP.
Don’t assume that the Government knows your organization’s capabilities, staff or the projects you have carried out. The Government is supposed to evaluate only the specific information contained in your proposal. That means it must be written down in accordance with RFP instructions. Use tables, charts and graphics to summarize information (“a picture says a thousand words”) or to break up your narrative. Check the entire proposal for the following: technical consistency; spelling; page numbering; section/subsection numbering or letting; consistency of appearance of headings, subheadings, font types and font sizes. Make sure you have filled in and signed all the forms in the RFP that you must return with your bid. Before and after copying your technical and cost proposals, check to see that each copy contains all pages and that they are in the proper order.
You have a technical strategy — you should also have a costing strategy! Don’t wait until the last minute to begin gathering cost information that you will need to prepare your cost estimate. Be aware of and understand the type of contract you are bidding: fixed-fee, cost-plus, cost-reimbursement, time and materials, etc. This will likely affect the way you price your proposal. Prepare a spreadsheet template or checklist of items to include in your cost estimate. Make sure your cost estimate is consistent with what you are proposing to do or provide. You may need to develop some specific assumptions for pricing purposes. If appropriate, you can include these assumptions in your cost/business proposal on a separate page or as footnotes to your estimate. In any event, always document your assumptions so that you can refer to them later and make changes if needed. Check and re-check your numbers and formulas. Review the hard copy of your estimate to help in spotting errors. Make sure that your cost estimate can be easily read. Don’t use a font that is too small. IF YOU WIN Celebrate! Uh oh — you now have to actually manage and implement your project.
IF YOU LOSE
You can call the Contracting Officer to arrange an in-person or telephone debriefing to find out the reasons for your loss. Try not to get too discouraged — no one can win all the time. Learn from your experience and apply that learning to your next bid.
PROPOSAL PITFALLS – Don’t Let These Happen to You!
Failure to follow the RFP instructions regarding organization of the proposal, inclusion of required information, page limits, volumes, etc. Failure to take evaluation criteria and allocated points into consideration when preparing your response. Failure to understand and to demonstrate an understanding of the problem (i.e., the reason why the agency is issuing the RFP). Failure to submit your proposal on the required date and time. Failure to include all of the information requested by the Agency. Failure to tailor your response to the specific RFP. Costs/Prices are unreasonable (too high or too low) or incomplete. Costs/prices do not provide any detail or breakdown information (if required) for line and sub-line items. Failure to include specifics of your proposed approach to the project. Proposal is unprofessional in appearance (e.g., typos, blank pages, unnumbered pages, smudges, no whitespace, sloppy-looking, etc.). This reflects poorly upon your company. Proposal is poorly written (e.g., information is not presented/organized in a logical manner, proposal is difficult to follow, poor grammar, etc.). Proposal merely repeats or paraphrases the RFP. Proposal does not explain how or by whom the project will be managed. Proposal does not contain RELEVANT information about your firm, its capabilities, and/or its management and staff. Proposal does not demonstrate that your firm/organization and personnel have the experience and capability to carry out the project.
Obtain complete copy of RFP Distribute RFP to appropriate staff. Review RFP for missing pages/sections. Prepare questions for submission to Contracting Officer. Receive and review responses to questions. Collect, distribute and review pertinent background documents.
Identify partners to participate in bid. Determine type of partnership arrangement. Prepare teaming or other type of appropriate agreements. Receive signed agreements from partners. Determine each partner’s level of effort for project. Number and type of long-term staff. Number and type of consultants.
3. TECHNICAL STRATEGY
Hold strategy meetings. Identify the partnership’s strengths and weaknesses. Identify competition and their strengths and weakness. Identify ways to differentiate partnership from competition. Develop strategic themes. Develop strategy for each component and overall.
4. TECHNICAL PROPOSAL
Prepare draft outline/revise as needed. Identify & select writers for each section. Determine page numbers for each section. Determine document format (font, major/minor headings, etc.). Provide writers with written formatting guidelines/instructions. Prepare/distribute list of nomenclature, abbreviations, acronyms. Identify and provide writers with relevant sections from past proposals. Prepare schedule/identify due dates for draft sections. Determine review, feedback and editing process for written sections. Ensure compatibility of software packages and versions. Ensure compatibility of document transmission via e-mail. Ensure sufficient quantities of appendix materials are available.
Prepare packet of materials for long-term candidates. Prepare personnel checklists/tracking list for candidate documents. Prepare commitment letter(s) for signature by candidates. Recruit long-term staff and consultants. Collect Resumes Sort Resumes by category/areas of expertise. Review Resumes Identify best candidates and alternates. Confirm candidates’ interest/availability. Obtain additional info from candidates for Resumes, if necessary. Obtain signed letters of commitment from candidates. Review personnel checklists for missing items. Determine format for re-written Resumes. Re-write Resumes. Prepare skills matrices.
6. PAST PERFORMANCE REFERENCES
Use RFP format if required. Update and/or prepare past performance information as needed. Review for accuracy and completeness.
Select cover design (map, picture, graphic, etc.). Identify info for cover (RFP #, date, submitted to/by, etc.). Prepare cover. Determine how proposal will be packaged. Purchase binder rings and covers, if needed. Purchase notebooks if needed. Purchase dividers/tabs if needed. Ensure sufficient quantities of all packaging items are available.
8. FINISHING TOUCHES
Spell check all sections. Gather appendix materials. Prepare Table of Contents. Prepare Transmittal Letter. Prepare Inside Cover Sheet for Technical Proposal. Prepare Section Tabs/Dividers for Technical Proposal.
Determine where and by whom proposal will be reproduced. Insert special pages, charts, etc., if required . Insert appendix materials. Check pages in each copy for legibility. Check each copy to ensure no pages are missing.
10. PROPOSAL DELIVERY/LOGISTICS Preparations for Delivery Obtain packaging materials (boxes, wrapping paper, tape). Purchase box handle (if needed for hand carrying). Prepare label for technical proposal. Prepare outside address label. Mark “original” on 1 copy of proposal. Prepare receipt (for hand carrying). Mailing Check courier service schedules (# days required for delivery). Wrap technical proposal and affix proposal label. Affix outside address label. Hand Carrying Identify person to carry proposal. Make airline and hotel reservations. Wrap technical proposal and affix “technical proposal” label. Affix outside address label. Affix handle, if required. Provide receipt to person who will hand-carry proposal. “
This article has offered guidance as a template to apply to your marketing operations for accommodating federal government contract proposal preparation. Proposals are special, sometimes exhausting projects, but a necessary part of doing business with government agencies. Like many other aspects of business, the more proposals you prepare, the more you learn and the more can borrow from past practice for the next one. As a final note please read the following carefully. Your proposal data may contain rate information, proprietary data or strategic technical solutions which you would not want to fall into the hands of a competitor. The government does not sign Proprietary Data Agreements (PDA’s). The government’s obligation to protect your information is covered in the following FAR clause and requires protective markings by you on the title page of your proposal and on each subsequent page.
FAR 15.509 Limited use of data.
(a) A proposal may include data that the offeror does not want disclosed for any purpose other than evaluation. If the offeror wishes to restrict the proposal, the title page must be marked with the following legend:
“The data in this proposal shall not be disclosed outside the Government and shall not be duplicated, used, or disclosed in whole or in part for any purpose other than to evaluate the proposal; provided, that if a contract is awarded to this offeror as a result of or in connection with the submission of these data, the Government shall have the right to duplicate, use, or disclose the data to the extent provided in the contract. This restriction does not limit the Government’s right to use information contained in the data if it is obtainable from another source without restriction.”
(b) The offeror shall also mark each restricted sheet with the following legend: “Use or disclosure of proposal data is subject to the restriction on the title page of this Proposal.”
(c) The coordinating office shall return to the offeror any unsolicited proposal marked with a legend different from that provided in 15.509(a). The return letter will state that the proposal cannot be considered because it is impracticable for the Government to comply with the legend and that the agency will consider the proposal if it is resubmitted with the proper legend. “
“Every client I have had in government contracting goes through a front- end-loaded learning process.
Below are the best tips I can offer to “Get Out Front” with effective marketing. It becomes easier as time goes on when clients get a reputation in the industry and some healthy contracts.
Teaming gives insights into the nature of the industry, but be aware that many firms end up teaming with companies on some jobs and competing against them on others; so proprietary data like rates and factors should be held close and protected.
Present qualifications openly, objectively and specific to agency needs. Determine what those needs are through market research, trade magazines, observing what they are buying on FEDBIZOPPS, as well as postings on their web site that are future-program oriented.
Subscribe to periodicals like “Washington Technology”, “National Defense Magazine”, NASA Tech Briefs and similar trade magazines. Observe agency trends and analysis that impact the market.
I have seen set aside programs marketed by small companies through acquainting agency management and technical personnel with capabilities they were not aware existed in the small business community or fulfillment of needs they in fact did not know they had.
Pay particular attention to FEDBIZOPPS “Sources Sought” or “Requests for draft RFP Comment” on programs that have yet to be formally solicited. Obtain an appointment to present capabilities to the decision makers (not the gate keepers). Be courteous to contracting officers but understand they are not the individuals who make source selections.
Understand that once the requirement is formally published on FEDBIZOPPS the gate closes on informal visits to the customer and the competition begins in the form of proposals by competitors. It is too late at that point to set the program aside for a sole source or a small business designation if it has not occurred by the publication stage.
Cultivate teaming relationships with other industry firms and look for early opportunities in agencies, not only to prime a program but to bring a team of qualified contractors in lesser roles to fulfill them or join a team being led by a more experienced firm
Understand the small business start up past performance challenge and work to meet it.
Attend small business outreach events by agencies and prime contractors. Stay attuned to who is attending and research their needs and requirements.
Make a point to be present at bidders’ conferences for existing solicitations that may not be bid but which may lend insight into the agency needs and prime contractor relationships in the future.
As a small business becomes known in the federal government contracting community, successful marketing of sole source or group-designated business becomes easier, but it is always a challenge due to the need for taking early action in windows of opportunity.
Find those windows and communicate capabilities to the decision makers and industry team members who can help you.”
ABOUT THE AUTHOR:
As a SCORE and Micro Mentor Volunteer Counselor, Ken Larson assists many small businesses with their planning and operations processes. He receives many inquiries from small companies wishing to enter or enhance their position in federal government contracting. Volunteer time, books, articles, and resources are 100% free, maintained exclusively for small business on the above subjects.
“The Defense Counterintelligence and Security Agency is going to be doing significantly less small business contracts after the National Background Investigations Bureau moves from the Office of Personnel Management to DOD.
DCSA — formerly the Defense Security Service — plans to shrink it’s small businesses goal from 65 percent to under 10 percent after the merger with NBIB “
“Elizabeth Mudd, small business program manager for the agency, said during an AFCEA NOVA event Aug. 6, “That doesn’t mean that all the opportunities that are out here that small businesses are doing aren’t going to be there. They’re all still going to be there; in fact, I think you will have even more subcontractor opportunities in that area than we have now.”
Mudd said the intent is to get more subcontractors to supplement the four primes that handle the background investigation services. NBIB is bringing over about $804 million in small business eligible dollars, compared to DCSA’s $73.4 million for fiscal 2019.
“It’s going to take an evolution of contracts to come up for recompete, to do more market research, to go more into what the exact process is” to increase the small business representation, she said.
DCSA will also field two additional training centers — one from the National Center for Credibility Assessment, which does polygraph training, and another from NBIB (previously under the Office of Personnel Management) as the merger completes. DCSA is scheduled to absorb NBIB and its functions by Oct. 1.
“What you’re going to see in the future is end-to-end vetting on the personnel side and on the facility clearance side. And what that offers is a ton of synergy,” Mudd said.”
Fiscal year 2020 is the start of DSCA fully taking over the background mission, Mudd said, while continuing its existing ones. Mudd also said that OPM will continue to provide DSCA with IT services following the merger.
NBIB’s contracting office is also merging with DCSA, meaning that existing contracts stay in place and contracting officers will keep their assignments. Mudd said “all the current employees are coming over to us so if you have a contract with NBIB right now, you’ll most likely be dealing with the same contracting folks you are today.”
Mudd said DCSA also issued its first two other transaction authorities for small businesses this year.
“I don’t know if it was fast,” she said with a laugh, “We’re kind of getting our feet wet with it…Mostly it’s been for the background investigation mission that we’re trying to innovate and see where we can go with it.”
“A small business set-aside designation can be a valuable tool if adequately documented, registered, certified and prudently used for bidding work that your enterprise is capable of performing successfully.
Carefully select your small business designations when preparing your business and marketing plans for federal government contracting. “
“Many questions have recently been received regarding federal government contracting small business set aside designations. This article will explain the designation types and suggest the best ways to establish and use them in your business planning.
There are 7 major small business set-aside designations in federal government contracting:
1. Small Business — Established by North American Industry Classification (NAICS) Code for all categories of government business (Please download the “SBA Small Business Size Standards” at the “Box Net” Cubicle on the right margin of this web site for further information). Every federal procurement has a NAICS Code assigned to it and is registered on the below web site if it exceeds $25k: FEDBIZOPPS
7. Historically Under-Utilized Business (HUB) Zone Located — Pertains to small businesses located in geographic areas with a historical record of low government contracting. This designation requires application at the following HUB Zone Site Web Site: Hub Zone Information and Application Site
QUALIFICATIONS, REGISTRATION, CERTIFICATIONS AND REPRESENTATIONS
To qualify as a small business for a given solicitation an enterprise must have registered at the System for Award Management Web Site under the applicable NAICS code for the procurement and meet the SBA eligibility size standards for that code.
A small business also certifying under the above must have individuals qualifying for the designations with at least 51% ownership interest and an operating role in the company. 60% is recommended to avoid the appearance of a front. Silent partners and investors without qualifying status or an operating role in the firm do not count toward the designation. It is suggested that ownership interest be specified by name on the articles of incorporation with the state and by % of ownership in an operating agreement or similar document.
To qualify as a HUB Zone Enterprise the business must be located in a HUB Zone and a qualifying percentage of the members (owners or employees) of the business must also live in the applicable HUB Zone.
Keep in mind that self-certifications are verified through records checks and site visits by contracting officers, DCMAO and Source Selection Boards for federal procurements before contract awards are made.”
“The Systems Engineering, Technology, and Innovation (SETI) contract uses “best value tradeoff” evaluation, where government decides whether the tech advantages of a solution warrant a higher price. ______________________________________________________________________________
“Twenty-three small businesses will engineer information technology innovations for the Defense Information Systems Agency, after winning spots on a maximum $7.5 billion contract.”
All 23 awardees will receive a $500 minimum guarantee during the base ordering period, with additional funds allocated by task order.
SETI runs five years with another five-year option, as the Department of Defense aims to deliver timely, agile engineering task orders to small and large businesses while reducing agency costs.
Winning small businesses were: Affinity Innovations LLC, Applied Systems Engineering Joint Venture LLC, A Square Group LLC, Business Computers Management Consulting Group LLC, Bluestone Logic LLC, Credence Management Solutions LLC, DHPC Technologies Inc., InCadence Strategic Solution Corp., INNOPLEX LLC., Innovation Evolution Technologies JV LLC, Innovative Government Solutions JV LLC, Integrated Systems Inc., Interactive Process Technology LLC, Mission Support LP, NetCentric Technologies Inc., Riverside Engineering LLC, Semper AASKI Alliance Inc., Superlative Technologies Inc., Synergy Business Innovation & Solutions Inc., TechSynap Corp., Tiber Creek Consulting Inc., ValidaTek Inc., and VOLANT Associates LLC.
Small businesses were part of a restricted pool, while a second, unrestricted pool received awards on June 14, 2018. Winning small businesses were selected from among 99 proposals.”
“The announcement comes as DoD’s concerns continue to grow about companies like Huawei and ZTE using their ubiquitous products to spy on the United States.
DoD expects to roll out the entire program sometime in July and already has about 50 companies in mind that are trusted enough to join the marketplace.
“The first step is to set up a website infrastructure to bring providers of trusted capital together with businesses looking for capital infusion,” Lord said. “I’m constrained legally from introducing one company to one venture capitalist; however, what we can do is segment the marketplace and then put in companies that need capital infusions that we think have critical technology for us. We can also vet critical providers of capital.”
Lord said DoD put out a request for proposals two weeks ago through an other transaction authority to find a provider for the website.
“A lot of these companies are small innovative companies that don’t have the resources, sophistication or contacts to reach sources of capital,” Lord said. “What we are trying to do is enable that, so they don’t have to go through a lot of time and expense with legal firms to find out who is out there. Likewise, we have some incredible patriots who have come to us and said ‘We are interested in putting our money somewhere that will make a difference in our national defense.’ There are two willing sides there and there is an unmet need that somebody like government can provide the ecosystem to make it work.”
Lord said DoD is still deciding how much money it will put into the program, but she noted TCM will satisfy a requirement made by the 2018 defense authorization act to help secure the defense supply chain.
TCM isn’t the only thing DoD is doing to address the industrial base and supply chain issue for developing technologies.
“We are tightly coupled with the intelligence community to find out what is out there,” Lord said. “We will continue not to buy from sources that are not trusted. A prime supplier to the Department of Defense has responsibility to understand their supply chain. The security of that supply chain, whether its two or three levels down or six or seven levels down, is the responsibility of the prime. That’s why we are developing standards that are very, very clear.”
That ties into DoD’s “deliver uncompromised” initiative, which hopes to bear capabilities without critical information or technology being lost, stolen, denied, degraded, given away or sold. The initiative establishes security as a primary metric for acquisition. That puts more responsibility on industry to beef up cybersecurity and be more cognizant of its supply chain.”