Friday, May 30, 2008

Here's a primer for contractors to get on the BRAC bandwagon

Baltimore Business Journal - by Hillel Glazer

Much of the focus on the Department of Defense's Base Realignment and Closure (BRAC) action has been around the large number of jobs it will bring to the region, as though jobs are one-dimensional.

As people hold jobs, they're doing work. A lot of that work includes managing projects. Projects that involve technology. And, every job -- regardless of what it is -- requires technical support and services.

This spells opportunity for the region's technology firms to get into the federal contracting space to work on projects or provide technical products and services. Companies already in the federal space will see the chance to move up to be major subcontractors or even prime contractors, while others may be just getting into the arena for the first time. In either case, the maze of federal contracting rules and regulations can be daunting and fraught with risk -- if you don't know how to navigate them.

As opposed to civil servants, contractors get their paychecks from a commercial or other organization that has a contractual (or grant-based) relationship with the government to do work.

The "prime" contractor has the contractual relationship and employees of the prime contractor get paid by them. Then, most of the remaining work and money flows down to non-prime contractors called subcontractors. Subcontractors can have subcontractors and so on.

Many of the uncounted jobs created by BRAC will be through the contracts the government will need to award to keep itself operating and to carry out the missions of the various offices. Many of those contracts will be for technology products and services. Understanding the basic workings of federal contracting will be key to taking advantage of these opportunities.

Government contracts work in accordance with the Federal Acquisition Regulations (FAR) legislated by Congress, and most of them -- especially for garden-variety technology -- follow the General Services Administration schedules.

The GSA schedule is an enormous tome detailing how much the government will pay for stuff. Frequently, all contracted work is based on values found in GSA schedules. Starting with the prime contractor and down to every other contractor on the effort, the GSA schedule spells out how much any contractor can charge.

It's no secret that to make a profit companies must have their expenses below what they charge for their work, and since there's seldom much margin left, GSA rates are very often well below open-market rates. Companies doing business with the feds rely on high volume and economies of scale to ensure remaining in the black. So, the first bit of advice for hopping onto the BRAC bandwagon is to ensure that your services and products can sustain a GSA-type approach. Visit GSA's site at www.gsa.gov for a sense of their rates.

If you believe you can still make money -- obviously, many businesses do -- the next step is to get yourselves registered onto a schedule, usually channeled into contract "vehicles". This process, like so many other dealings with the feds, is just a formula that once you follow the first time, you can re-employ again and again.

That first step, though, can be a steep one.

Hillel Glazer is the CEO of Entinex Inc. in Baltimore and can be reached at agilecmmi@gmail.com.