When we started Quimba Software we were viewing government contracting the same as commercial contract work. That, coupled with the fact that we both had prior experience as employees of other government contracting firms, made us feel comfortable going in. It didn't take long for us to discover just how incorrect that understanding was. Our biggest problem, it turned out, was the fact that the government throws a whole lot of people, processes, regulation, and bureaucracy at you but there is really no single document that ties them all together. For example, soon after you win an award you learn about DCAA. You are likely not to discover DCMA unless you get assigned a proactive representative within DCMA (quite rare), miss a deadline, something goes wrong, or the contract closes or is terminated.
Complaining about the complications or the complexities won't add any value to your life and, frankly, is a waste of your time as an entrepreneur. As our tax accountant likes to say: "If you want to change policy, run for office." Otherwise our job, as entrepreneurs is to accept the policies, though not without consideration and at times questioning, figure out how to manage our business in a way that meets both the government and our goals. That, in and of itself is quite a challenge. The first thing we need to learn to succeed with a new system is all the moving parts. In this article I enumerate typical agents of the government and tell you a little bit about their role in the contracting process.
Customer or Agency: Your goods or services will be requisitioned by one of the many government agencies, referred to as the "customer", "end user", or the "agency" in the industry.
RFP: The customer develops the technical specifications for the necessary product or service. Depending on the total projected cost to the government, as well as considerations such as clearance requirements, the specifications will go through an internal process of examination, pre-announcements, and revisions. At some point a Request for Proposal (RFP) will be issued. Except as amended, this document is the final word on what the government will be buying. It spells out everything you need to know to offer a bid and/or a proposal.
Bid or Proposal: Contractor's formal offer in response to a solicitation.
Contracting Officer (CO): Government can only be obligated to a contract by someone whose title typically includes the words "Contracting Officer". No other person within the government is authorized to purchase goods or services, solicit for proposals, accept deliverables, or pay for them. There are several types of COs. Understanding the differences in their roles and when they are involved in the process is essential to your success. Keep in mind that the CO is working for the government and is tasked with maximizing the value government extracts from the contract while minimizing what the government pays. Make no mistake about their absolute commitment to do this job as effectively as they can and you should only be surprised at their tactics if they overstep certain boundaries, set by FAR, which will discuss in the future.
PCO: A Procurement or Procuring Contracting Officer (PCO) is someone that is mentioned in the solicitation. If you have won a government contract, you already have dealt with a PCO. In order to do such a broadly job, contracting officers"outsource parts of their responsibilities to authorized representatives. The PCO's has several key functions during the procurement process. The role you, as the winner, should be concerned about after being notified of your selection, is that the PCO will attempt to haggle your price down by any means possible. Typically they first ask for a pre-award survey. If you want to know more about pre-award survey's, you can read our blog, linked at the bottom of this note BUT please don't just click through. If all this is new to you, your are not ready for the blog posts. A key mistake entrepreneurs new to government contracting make is that they think the government's purpose is to create jobs via contracting. Well, of course that is part of it but that is NOT all of it. The PCO still has to report, through the chain of command in his organization, to Congress and in all that reporting they need justify why they selected your company to build a product at the agreed upon price. So, basically, it is a business negotiation.
ACO: An Administrative Contracting Officer works for the DCMA and other than sharing the DoD organization, might not have any other connection to the customer. This is really important to understand: The ACO does not know what problem you are solving and does not care. The ACO does not know what the government is buying and does not care. All the ACO cares about is to match what your deliverables are, precisely as detailed in the contract, with what you deliver to the agency and when. The ACO looks at the agency employees (COTR) to "accept" the deliverables. We learned the hard way that being nice and doing a small changed here or there as the customer asked will only get you (and the person who asked) into trouble. If the customer, or you, want to deviate from the LETTER (not the spirit) of the contract then you need to talk to the contracting officer overseeing the contract and ask for a formal Modification or "Mod".
The ACO also plays FOUR critical financial roles that you should be quire aware of. I only mention this here but we'll delve into this in detail in the future. First is that if you miss a deadline, the ACO can fine you for it. Sometimes the fine is specified in the contract and sometimes they'll demand a "consideration" (read: money) if the delay is not caused by the government. Second, the ACO can withhold part of your fee (profit) on your contract. We'll eventually discuss why this makes sense and what is reasonable. The third key item to note is that the ACO will most likely hold payment on your last invoice until the contract is audited and closed. That will be at least two years after you have delivered everything and reported the contract "completed". So you should make sure your accountant understands this. Finally, you should also keep in mind that the final audit is probably going to find *something* you overcharged for. This is one of those horror stories in the business that some people sail through and others end up in the Bermuda Triangle. Our experience indicates that DCAA *will* find something and that the ACO *will* uphold DCAA's decision. This means that you should expect to, frankly, be held up for a couple of points on your rates at the end of the contract. We'll cover all this is more detail in the future but, for now, just beware that you'll have some bumps at the end of the contract.
DCAA: Within the DoD, the PCO authorizes the Defense Contract Audit Agency (DCAA) for functions relating to accounting as well as reviewing some corporate policy material. DCAA is one of the two agencies that Congress funds to provide oversight for government contractors.
DCMA: The other is the Defense Contract Management Agency (DCMA). Once a contract is signed, the PCO will transfer the responsibility and authority of day-to-day contract management to DCMA and an Administrative Contracting Officer will be taking the represent the government side from then until the contract is closed. You may be assigned multiple ACOs. DCMA has a frustratingly annoying habit of not notifying contractors, at least small business contractors, of changes to their DCMA team. However, a reasonably accurate list of your team is usually obtainable from their web site.
COTR: Contracting Officer's Technical Representative is a person inside the agency, the customer, who you are likely working with. You also hear labels such as Program Manager, Program Director, and Principal Investigator referring to people with COTR authority. The COTR who can officially accept your work may not work on your project, or with you directly but rely on other colleagues to make that determination.
PI or PD: Principal Investigator or Project Director or Program Director is the person inside your organization that has ultimate technical responsibility to deliver project specifications. In larger companies, technical and financial management responsibilities are typically separated and assigned to different individuals. In most small companies, both functions are performed by the Principal Investigator who is usually a senior or founding member of the team and properly empowered by the company's Board of Directors to make purchasing, staffing, and compensation decisions.
CCR: Contractors Central Registry: A directory of all government contractors. All contractors are required to register in the CCR.
DFAS: To get paid you will have to submit a bill to the Defense Finance and Accounting Services agency or DFAS. This getting paid process is not as simple as sending an invoice to another company. You will, more than likely, not be allowed to submit an invoice directly to the agency. You would submit a voucher - a request for an invoice - to the DCAA. The DCAA will review your voucher and if approved, will convert it to an invoice and send it to DFAS. Once DFAS has the invoice, you will typically be paid within 30 days. DFAS does not issue checks and, for all relevant intents and purposes, makes payments only via ACH and uses only to the information in your CCR Registration. So it does not matter what you put on your invoice as payment directive. Only the information in the CCR is used by DFAS to remit. It shouldn't then be a surprise that a lot of payment issues revolve around wrong or mistyped ACH information in the CCR.
FAR: Federal Acquisition Regulations. Umbrella laws governing government contracting industry. References US Code. Each person in the Government Contracting World has a specific role, authority, and responsibility as prescribed by FAR and, just like any other industry, there are people who are better at their jobs than others. Unfortunately, you can't choose who is assigned to your contract. Occasionally it becomes necessary to work with the agency to change either the terms of a contract, or circumstances surrounding it, like changing the ACO or the auditor. In future articles I will explore how small business entrepreneurs can maximize using Federal Acquisition Regulations (FAR) to optimize management and delivery of their contracts.
About the Author
Bob Dourandish is a co-founder at Quimba Software, a software technology research and development company in the San Francisco Bay Area. Quimba has won contracts and grants from a wide range of prestigious national laboratories such as the Air Force Research Laboratories (AFRL), Department of Homeland Security's Science and Technology (DHS S&T), National Science Foundation (NSF), US Department of Transportation (DOT), and Defense Advanced Research Projects Agency (DARPA). Bob has served as Principal Investigator (PI) for many of the projects awarded to Quimba, as well as Sr. Investigator on Awards of Department of Energy (DoE) and Nuclear Regulatory Commission (NRC) in the past. He is published extensively in peer-reviewed national and international journals.
The company's blog http://quimbasoftware.wordpress.com/ is devoted to entirely to help small businesses succeed in government contracting by focusing on the underbelly of the industry through honest sharing of our own experiences.
