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

Keith R. Scott Associates Introduction to the Federal Contract Market Presentation To Federation of Israeli Chambers of Commerce August 20, 2014.

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

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  1. Keith R. Scott Associates Introduction to the Federal Contract Market Presentation To Federation of Israeli Chambers of Commerce August 20, 2014 Keith R. Scott Associates Proprietary

  2. 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 Market? Keith R. Scott Associates Proprietary

  3. Why Compete in the Federal Market? Overall market size: Federal marketplace is a multi- billion dollar industry Contract 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 Keith R. Scott Associates Proprietary

  4. Why Compete in the Federal Market? (continued) 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 Keith R. Scott Associates Proprietary

  5. What Does the Federal 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

  6. NAICS Codes That May Be of Interest NAICS Type of Business 31-33 Manufacturing 51 Information (IT) 54 Professional, Scientific & Technical Services 56 Administrative, Support, and Waste Management and Remediation Services 61 Educational Services 62 Health Care and Social Assistance Keith R. Scott Associates Proprietary

  7. How To Assess Federal Market Opportunities 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? Keith R. Scott Associates Proprietary

  8. How To Assess Federal MarketOpportunities – More Questions to Ask • 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? Keith R. Scott Associates Proprietary

  9. Marketing and Capture Management Approaches 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 Keith R. Scott Associates Proprietary

  10. Types of Federal Solicitations • Request for Information (RFI) • Sources Sought • Invitation for Bid (IFB) • Request for Quote (RFQ) • Request for Proposal (RFP) Keith R. Scott Associates Proprietary

  11. Analyzing Solicitation Requirements:What Does Your Firm Bring to the 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) Keith R. Scott Associates Proprietary

  12. Understand Federal RFP Sections • Section A – Information to Offerors or Quoters • Section 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, Exhibits • Section K – Representations/Certifications and Statement of Offerors • Section L – Proposal Preparation Instructions and Other • Section M – Evaluation Criteria Keith R. Scott Associates Proprietary

  13. Keys to Successful Technical 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 instructions Keith R. Scott Associates Proprietary

  14. 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 Federal Contracts Keith R. Scott Associates Proprietary

  15. Fringe 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 Keith R. Scott Associates Proprietary

  16. Examples of Overhead Costs • Non-billable staff: such as Human Resources (HR), accounting, sales • Proportionate 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 Keith R. Scott Associates Proprietary

  17. Examples of G&A Costs • Non-billable staff: such as HR, accounting, sales • Business development efforts and to manage or perform administrative functions • Professional fees, such as legal, accounting, payroll processing fees • Travel – perhaps in support of business development efforts • Business insurance (general liability) • State & local taxes (not federal taxes!) • Conferences, business meetings • Dues and subscriptions Keith R. Scott Associates Proprietary

  18. 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 Rates Keith R. Scott Associates Proprietary

  19. NextSteps • 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 Keith R. Scott Associates Proprietary

  20. SBIR Program: History and Goals • The 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. Keith R. Scott Associates Proprietary

  21. 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. Keith R. Scott Associates Proprietary

  22. 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

  23. Barbara J. Zakheim, President Office: 240-638-2757 Mobile: 301-675-4652 Email: bzakheim@keithrscott.com Corporate Headquarters: 8403 Colesville Road, Suite 1100 Silver Spring, MD 20910 Website:www.keithrscott.com Keith R. Scott Associates Proprietary

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