On November 15, 2006, the SBA issued its final rule addressing the time at which size is determined for the purposes of long-term federal contracts. Previously, one’s status as a small business was determined at the time of award and retained this status throughout the life of the contract. Contracts impacted by these regulations include Government-Wide Acquisition Contracts (GWACs), the General Service Administration’s Multiple Award Schedules Contracts (MASs) and other multi-agency contracts (MACs). The primary reason for SBA’s change was that some of these type contracts were for up to 20 years in length and companies receiving such awards continued to receive task orders and follow-on contracts even though they were no longer a small business. The new regulations, which require recertification after 5 years or upon sale of the company/contract, go into effect on June 30, 2007. They apply to solicitations and contracts issued after the effective date as well as contracts and solicitations in existence at the time of the effective date.

The anticipated goals of the SBA were to increase the contracting opportunities available for small businesses as well as improving the reporting of small business prime contracting activities by the various agencies of the Government. It is the current goal that 23% of all prime contract awards are issued to small businesses. Over past years, Federal agencies had increasingly relied upon multiple award task order contracts to procure various goods and services. In addition, the agencies were taking small business reporting credit towards their small business goals for task orders being awarded to companies that were no longer small. These regulations were written to ensure this does not occur.

Finally, when an acquisition, merger or novation by a large company has taken place of a contractor holding these type contracts, under the previous regulations, the large company would be able to continue performance through the duration of the contract. The agency continued to take small business reporting credit even though the contracts were being performed by some of the nation’s largest contractors. Under the new regulations, if an acquisition takes place, a re- certification will be required.

These new regulations will have far-reaching effects on the contracting community, some of which were not contemplated by SBA. Reductions of companies valuations and marketability (see article below), significant increases in the number of size protests, and contracting officers being left trying to find new contractors to perform work effort are all resultant issues expected to occur.

Companies who are currently performing under these long-term contracts may experience a potentially significant decline in the value of their company as well as decreased interest impacting their marketability. For a text of the entire article, click here.www.fedstrat.com/article

With the new regulations taking effect on June 30 of this year, there are distinct strategies that a company can implement to reduce the impact on valuation and marketability.

Continue pursuit of long-term contracts. These long-term contracts can still provide the company with much needed past performance, develop capabilities that could translate to full and open awards, pay for infrastructure costs to provide a foundation for growth, and earn a good return on the work effort. Even though these contracts may not transfer upon sale or the company may grow out of the size status, these benefits far outweigh the decision to not pursue such work.

Develop value through other avenues. A small to mid-sized company can create value through other avenues. These include:

• Niche development (of either product or services), it's better to have significant depth in a few areas than to try and be all things to all customers.
• Create strong relationships with fewer agencies. Buyers are currently paying premiums to companies with strong relationships in the Intelligence Agencies (NSA, CIA, NGA, DIA), Homeland Security, and high- level relationships with DOD.
• Increase the numbers of secured personnel within your workforce.
• Have a high success rate in winning re-bid contracts.
• Improve your success rates in bid & proposal opportunities.

Consistent with our goal of providing value-added consulting services to the government contracting industry, we have entered into strategic alliances with several specialized software companies providing solutions for the government contracting industry. We are pleased to announce the following partnerships:

Unanet-Unanet provides web-based professional services automation software that helps contractors manage people and projects for improved profitability, project performance and compliance with government regulations. More than just an automated timekeeping and expense reporting system, Unanet provides real-time access to project metrics and proactive resource planning tools. Its automated timekeeping product is one of the most widely-recognized and utilized system of its type. Federal Strategies Group provides implementation services for the Unanet products and offers our clients a discount on their products.

Deltek Systems-Deltek is the leading provider of enterprise management software for the government contracting industry and project-focused organizations. Its GCS Premier product is the most trusted and proven accounting and project management software solution designed for small to mid-sized government contractors. Federal Strategies Group provides needs analysis, process development, and implementation services for the GCS Premier product. In addition, we also offer our clients a discount on various Deltek products.

SIRA-SIRA is a rapidly emerging organization providing products that help project-based organizations optimize fiscal management and profitability. Its product eProMT (pronounced e-prompt) is a web-based Business Performance Management software solution that assists managers in developing budgets, reviewing costs, analyzing performance and making timely financial decisions. eProMT integrates with Deltek’s Costpoint and GCS Premier accounting systems.

For more information on any of these products, contact Don Acker at dacker@fedstrat.com

Due to the strong demand for our services we are looking to add several new hires to our rapidly growing team.

Sr. Manager - CFO, Outsourcing Group

• Former CFO of a government contractor that is either currently consulting or looking to become a consultant.
• Strong financial and accounting systems expertise, Deltek GCS and/or Costpoint preferred.
• Experience with mergers & acquisitions preferred.
• Experience with DCAA and other government audits.
• Ability to provide strategic advisory services.

• Former Controller of a government contractor.
• Ability to work simultaneously with multiple outsourced engagements.
• Strong financial and accounting systems expertise, Deltek GCS and/or Costpoint preferred.
• Strong background with incurred cost submissions, indirect rate development, DCAA audits.
• Must be very personable.

• Must have experience in government contracting either as a consultant, forensics expert, or an auditor seeking to perform forensics work.
• Working knowledge of the FAR.
• Ability to work on multiple assignments and meet strict deadlines.