Podcast Show Notes

Items in the News 

There were two general news related topics discussed at the beginning of the podcast.  

One involved Federal IT – upgrades, cloud computing, open source, AI. The discussion point centered on the idea “skate to where the puck will be” an old hockey maxim. In other words, attempt to identify indicators of future needs. The idea discussed was, are these articles indicating future information technology needs or potential shifts in technologies used to support federal operations. If these articles and others are signaling a shift, then companies in this area should conduct additional research to validate potential shifts and take appropriate steps to be ready.  

A second article also signaled potential changes. The article discussed an Army initiative to develop and ultimately field Autonomous Vehicles. This effort is still underway. However, it is likely that Autonomous Vehicles will require technical talent capable of maintaining the vehicle, software, robotics and communication systems. It is also likely that the Technical Data Packages (TDP) associated with such vehicle will in whole or in part contact Controlled Unclassified Information (CUI). Therefore, companies will need to ensure that they have complied with applicable cyber security requirements. Companies in the DIB should also maintain awareness of situations in which there may be  FOCI – Foreign Ownership Control or Influence concerns. FOCI concerns can arise from investments, acquisition and a company’s supply chain. 

Read the articles: 

https://breakingdefense.com/2025/02/army-picks-carnegie-forterra-for-autonomous-logistics-truck-prototyping

New Research: Feds See AI, Open Source, Cloud Driving Software Innovation – MeriTalk 

Review of Episode 2 

Budget issues – budget issues could affect autonomous vehicle programs. Also, budget issues – priorities could affect DoD budget as money may be redirected. The discussion also reviewed the impact of complex regulations especially for entry level companies and how customer needs drive procurement frequency and quantity of materials procured. Companies need to understand these factors to make informed decisions related to how to enter the Defense Marketplace.  

Creating a strategy is the focus of Episode 3. 

Episode 3  

Many companies take too broad of any approach when entering the Federal Marketplace and even when attempting to sell to DoD. 

They say, I want to sell to the government, or I want to sell to DoD. Other businesses will say, they can sell anything the government wants or needs. These approaches may yield contracts, but they are not the strongest approach. 

Contract award depends upon the contracting officer determining a business to be Responsible (see FAR Part 9). There are seven elements that are considered. If the contracting officer cannot determine that a business is Responsible, then by the FAR, a contract should not be awarded. An exception to this is if the contracting officer requests the SBA perform a Certificate of Competency (COC) review. The outcome of a COC can provide the necessary documentation needed by the contracting officer to make an award. 

Federal (DoD) awards are not just given away. Like commercial customers, Federal customers are more hesitant to award a contract to a recently formed company since there is little to no past performance history. Companies should have one to two years of past performance history. Their history should be consistent with the type of federal work they seek. Companies should capture their corporate history in a Capabilities Statement.  

A Capability Statement is a concise statement of the company’s history, capabilities, key achievements and other relevant information. Capability Statement should be provided during events, available at the companies website and included in the company’s SBA DSBS page. A major decision is will one Capability Statement suffice or are the prospect customers different enough so that tailored Capability Statements may be needed. 

Creating a Strategy 

Over a long period of time it is reasonable that the entirety of the federal government – the more than 2,000 buying offices –  will buy “everything.” However, as the time frame is shortened this buying activity will narrow. What is purchased will be further reduced based on the number of buying offices involved and the timeframe. Procurements are made to support the needs of the buying office’s customers. 

When attending a conference or trade show companies often provide information about their products/ services and capabilities; they provide a Capability Statement. Some make deliberate sales pitches and expect to transact business. If this approach leads to a contract, it’s the exception not the rule. 

As previously mentioned, the following are the four criteria necessary to create a contract – 

1. Bona fide need – “in writing” 

2. Budget  – appropriated funds must be available in the budget category 

3. Maximum Practical competition; exceptions exist 

4. Contracting Officer – to ensure the necessary process has been used, has the authority to contract 

*restrictions on the use of P-cards are less rigorous but P-card purchases also have rules. 

A typical piece of market insight is the NAICS code. A NAICS code is used to categorize the purpose of the procurement. Procurements for a broad array of items will normally only have one NAICS code assigned. That NAICS code will be representative of the line Item of largest value. While there is this association between NAICS codes and either the goods or services, the fundamental use of the NAICS code is to identify the Principal Purpose and size standard of the procurement. 

Unfortunately, while NAICS codes identify the Principal Purpose and size standard of the procurement this information is lacking from a sales or market research perspective. Viewing the description of various NAICS codes at https://www.census.gov/naics/ shows the breadth of the industry covered by a NAICS code. As an example, NAICS 236220 Commercial and Institutional Building Construction appears to very clearly identify the purpose of this NAICS code. Further review of the information reflects that this NAICS code corresponds to 101 different types of construction. 

The question is, when a DoD buying office provides a handout or briefing slide with its top 10 NAICS codes, what does that information mean? It implies one thing but may represent something entirely different. When NAICS 236220 is listed as one of the top 10 NAICS codes used, which of the 101 subtypes is the buying office referring to? If the procurement spend does not align with a company’s focus area, time and effort could be expended on a customer that is less likely to have opportunities which match the company’s skills and experience. There will be opportunities but will they represent opportunities that will have high or low probabilities of success? 

Ultimately, a company must determine does it make sense to move forward? Does the customer represent a good match? Are the majority of procurement funds being spent in an area where the company has either experience or past performance. If this opportunity is pursued, what is the probability of success? 

Success in the Defense Marketplace requires companies to be highly selective of the opportunities which are pursued. Responding to RFPs/RFQs requires time, resources and effort. All are precious and limited resources. Additionally, competition is keen which requires a company to develop and continually refine its Go/No-go criteria for identifying potential opportunities. 

Market research using freely available data can assist with such questions. Resources such as FPDS, USAspending and/or SAM Databank can provide additional information. These sites can help companies understand which Product Service Codes (PSC) have been assigned to past awards. PSCs provide additional information about the general nature of the work performed. In addition to the NAICS code, each solicitation also is assign a PSC. The PSC does not provide detailed information. However, it will indicate if the construction work involves a hospital or air traffic control facility.  Additionally, there is data on the type of Award/IDV type(s) used, number of offers received, timing of awards, competition and more.  

By identifying and selecting the proper information a company can create a set of filtering parameters which can be used to identify potential customers. A company can not just search for awards under a specific NAICS code, it can search on awards for a combination of NAICS, PSC, time of year, award type and even notices issued by specific buying offices. The goal is to identify characteristics that can identify the most promising customers which can help increase your ROI. 

Once these customers have been identified, further research can be conducted to better understand the customer and both current and future requirements. 

In evaluating prospective customers, companies should determine future potential opportunities. Prospective customers should be evaluated for not only the amount of potential future work but the value of awards. Realistically, given the time and effort requirements, there may be some opportunities that do not merit the investment and on the other hand there may be opportunities that are interesting but well exceed a companies capabilities, ability to manage and level of available financial resources. In other words, a company may be classified as responsible for one opportunity but un-responsible for another. Note, these are consideration do not only apply to small businesses they also apply to major firms.  

A part of a company’s process should be determining how many contracts are needed to meet its revenue goals. For companies that have not estimated the number of contracts required, here is one method. 

1. Establish a revenue goal – $150,000 

2. Estimate average contract – $5,000 

3. Divide the contracts into the revenue goal – $150,000/ $5,000 = 30 

4. Number of awards needed = 30 

5. 30 awards are needed if every submission is successful 

6. What if some responses are not successful 

7. Estimate Bid to Win ratio – say 10 :: 1; 10 responses required per win 

8. B :: W * Number of contracts — 10 * 30 = 300 solicitations 

9. 300 solicitations = about one per business day; does the customer base provide enough? 

10. Calculate effort to respond – 10 hours each 

11. Total effort = 300 * 10 = 3,000 hours bid and proposal effort 

12. Can the identified customers support this level of activity? 

This planning process sounds time consuming. Why is it important. 

Here is why. 

The Department of Defense has more than 1,200 contacting offices. Additionally, in 2024 DoD used 941 NAICS codes and 2,104 PSC codes – Product Service Codes to classify procurements. Not all PSC codes were used equally. 13 were each used over 100 times and 367 PSC codes were only used one time. 

There are many other considerations and companies need to identify those that are applicable to their efforts. 

There are many similarities between the federal marketplace and the commercial marketplace. 

Companies entering the federal market or Defense marketplace should tailor their SWOT analysis and business plan to reflect the unique requirements of these markets. 

1. CMMC update: CMMC is getting closer to full implementation. Late last year the Title 32 Rule which implements and authorizes CMMC as a program was published. Currently, the Title 48 Rule which addresses how CMMC will be implemented in contracts is in its last phase of the regulatory process.
Companies need to continue working toward full implementation but for now, need to have a SSP, conduct the DoD self-assessment, and upload their score to SPRS. Cybersecurity continues to be a critical need and attacks not only continue but grow in sophistication. Many of the requirements are well within the capabilities of the average company. Ignoring the issue is not a solution. The threats will continue and without the required cybersecurity your company will not be eligible for DoD awards and possibly Federal Awards.
To get started, call WPI at 414-270-3600.
DoD has released guidance covering both certification levels required and the timing of implementation.
See to review this memo:
https://dodprocurementtoolbox.com/uploads/DOPSR_Cleared_OSD_Memo_CMMC_Implementation_Policy_d26075de0f.pdf

2. Budget: Both Houses of Congress are working on their budget proposals. The goal is to have a budget prior to March 14th. As we move closer to that date and if there is no budget, it will be important to stay alert to any correspondence from your PCO or ACO.

3. FAR Update: The President’s Executive Orders have created a need to update contracts and contractual requirements. GSA has issued two Class Waivers. Based upon language used in relation to the issuing of these waivers, additional changes are likely to be forthcoming.

4. Contract Cancelling: Federal contracts can be terminated either due to Default or the Convenience of the Government. Termination for Default is associated with the performance of the contractor. In these circumstances, the contractor has not fulfilled its obligations and even though given chances to correct the deficiencies, the contractor will have been determine not to have performed.
On the other hand, Termination for the Convenience of the Government is just that; a termination of a contract based upon the government’s decision. Contractor performance is not a factor; the termination will not affect the contractor’s performance record.
However, it is possible that a contract may be wrongfully terminated. The following article provides information and references that apply. Companies should be aware of these differences. There may be circumstances when questions should be asked or an attorney contacted.
For more information see:
What to do if your Federal Contract was wrongfully terminated by the Government
https://www.jdsupra.com/legalnews/what-to-do-if-your-federal-contract-was-8424454/

5. Iron Dome – Missile Defense – Drones: These topics seem to be receiving considerable attention. Given the variety of requirements, technology assumed to be involved, and the number of systems required, there may be business opportunities for companies with various skillsets. The opportunities will likely range from material sourcing, manufacturing, deployment, testing, operations, servicing and repair.
Small Businesses may see opportunities both as subcontractors and/or suppliers. Some small businesses that are involved with critical technologies may see opportunities related to Research and Development.
Additionally, as technology evolves it is possible that newer generations of systems will replace older systems.

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DoD may be your perfect customer. While the path may appear obvious, there are a variety of “obstacles” that must be navigated. The following are some that should be considered.
1. Budget Uncertainty: Budget doesn’t equate to an automatic ability to spend. In order to spend money, a procurement needs the following:
1. Bona fide need
2. Authorized budget
3. Maximum practical competition
4. Contracting Officer
On the other hand, to receive an award a company must be determined to be Responsible, its prices fair and reasonable and all required Terms and Conditions must be satisfied or agreed to.

2. Government-Specific Terms: Federal (DoD) contract include FAR and Agency clauses. These are large in number, detailed in requirements and often require the business to determine when the requirements apply and what actions satisfy the clause requirements.
First time awardees typically will have a more difficult time “decoding” these clauses and what actions are required. Nevertheless, all awardees must review and comply with all contractual clauses. These typically range from Buy America Act, Labor laws to the relatively new cybersecurity requirements. More seasoned companies may have an easier time since they have previously dealt with the requirements. With each exposure they learned as they gained more experience.

3. Cost of Compliance: DoD contracts include many clauses. To comply, a company must review all applicable clauses and determine what actions if any must be taken. At a minimum, companies must expend time and effort to review the clauses, understand what is required and then determine what actions the company must take. While complying with some clauses such as Registering in SAM may be straightforward, other clauses such as the quickly upcoming CMMC requirements may require both time and hard costs. Still, other clauses such as Limitations of Subcontracting or Nonmanufacturer Rule require the company to understand when they apply, what actions are allowed, and how to comply.

4. Complex Contracting Processes: DoD does not have one standard method for conducting procurements. The characteristics of the procurement and other factors determine the procurement method to be used. Small requirements, termed micro-purchases, cost less than $10,000 can be purchased with a credit card and little to no competition. However, the purchase card holder must determine that the price is fair and reasonable. Other procurements might use a GSA Schedules contract or an Agency Indefinite Delivery Vehicle (IDV). Opportunities related to DLA’s DIBBS site generally are purchased via RFQs or Request for Quotations. Many other requirements are procured using the more formal Request for Proposal (RFP) process. There are pros and cons related to each of these forms of procurement. There are also different rules and requirements that companies need to know about and understand.

5. Security Requirements: DoD procurements may include sensitive information that require safeguarding. The most sensitive information is safeguarded under classified information programs. Other less critical information is known as Controlled Unclassified Information (CUI). This information must also be safeguarded. Companies handling CUI will require to implement DoD specified cybersecurity requirements. Later this year (2025) new requirements will fully implement the CMMC program which will require a company’s cybersecurity implementation to be reviewed and validated by an approved third party. Due to the detailed nature of these requirements, the number of requirements and compliance requirements companies must plan and budget for implementation of these requirements without which, once CMMC is implemented a company will not be eligible for contract award as either a prime or supply chain member.

6. Long Contracting Timelines: Small purchases (micro purchases) can be completed in a day. Most other procurements will require more time. Budgets are required, statements of work developed, and a synopsis of the opportunity posted to SAM.gov. Time must be allowed for responses and review of all qualifying submitted responses. Additional time may be required to review and make a selection. Still other procurements may require months or longer.

7. Contracting Workforce: The contracting workforce extends well beyond the Contracting Officer. The Contracting Officer is responsible for many aspects of a procurement but also acts as a “business consultant,” and ensures that FAR/DFAR requirements and other requirements are met. The Contractor Officer has a great deal of experience and knowledge but relies upon a broad team of other specialists that are involved as needed. During contract performance company personnel may interact with different members of the “contracting team.” Each member has their role. However, it is critical that the members of the awarded business’ team clearly understand that only one individual can direct/approved work. That individual is the PCO – the procurement contacting officer.

8. Partnerships and Integration: A micro purchase may be used to purchase a dozen bags of ice melt. On the other hand, an Aircraft Carrier will require a must more involved and complex process. A small business can tackle micro purchases on its own. A small business does not have the skills, experience, capacity, resources or financing to be able to construct an aircraft carrier. However, a small business can become a subcontractor or a supplier to the prime and be involved in the construction of an aircraft carrier. Such relationships are not automatic or easy to access. Small businesses must continually seek learn about these opportunities and network. Small businesses can also form Joint Ventures, Teaming agreements or potentially work to identify a Prime that may be interested in forming a Mentor Protégé Agreement. Again, these paths are not simple, guaranteed or easy to traverse. It takes, time, effort and opportunity to succeed.

9. Product-Mission Fit: “The government buys everything” is an often-used refrain. Over the course of time, this may be true. Companies should not automatically believe that a military unit or base will purchase what they have. Each organization has a defined budget and a list of needs that in most cases probably exceeds the budget. Decisions must be made and precious funds spent to ensure the mission capabilities of the unit are maintained. In many instances, the items be procured are specific such as a National Stock Numbered (NSN) item. The NSN defines the item, the quality, authorized manufactures, the specifications, material to be used and many other characteristics. While a NSN part may appear to be just like a commercial item, it is different and there is a stringent process used to qualify manufactures. On the other hand, there are procurements where the government specifies the performance required using a process known as performance-based contracting. Other procurements may include language that allows for substitutes as long as the item meets a form – fit and function requirement.

10. Intellectual Property Concerns: The contract will detail intellectual property requirements and companies should pay particular attention to these requirements. The FAR/DFAR provide guidance and requirements related to issues such as patents, data, copyrights. In general rights can vary and a company will need to refer to the appropriate clause(s) to understand their obligations and potential benefits. The SBIR/STTR program is a small business program for businesses involved in Research and Development. IP rights under this program are retained by the inventing company. Bottom line – review and understand your contract.

1. REAL ID Act
   • Deadline: Starting May 7, 2025, a REAL ID-compliant license or ID will be required for domestic flights and access to certain federal facilities.
   • Identification: REAL ID-compliant cards have a star in the upper right-hand corner.
   • Documentation: To obtain a REAL ID, you must provide documents showing your full legal name, date of birth, Social Security number, two proofs of address, and lawful status.
   • Alternatives: Passports or other acceptable forms of identification can be used if you don’t have a REAL ID.
   • URL: https://www.dhs.gov/real-id
   
2. VA Extends Deadline for Login Transition
   • New Deadline: March 4 for veterans and beneficiaries to switch to Login.gov and ID.me for accessing healthcare and benefits.
   • Current Credentials: DS Logon credentials will expire on September 30, after which ID.me must be used.
   
3. Department of Defense Class Deviation
   • Class Deviation: Refers to deviations from the Federal Acquisition Regulation (FAR) affecting multiple contract actions, often used to address unique or urgent situations.
   • Example: DoD issued a class deviation dropping project labor agreement requirements for certain military construction solicitations.
   • URL: https://www.meritalk.com/articles/va-extends-deadline-to-switch-to-login-gov-id-me/
   
4. Project Labor Agreements (PLAs)
   • Definition: Pre-hire collective bargaining agreements with labor unions setting terms for specific construction projects.
   • Key Points: Establish wage rates, benefits, prevent strikes, and apply to all contractors on the project.
   • URL: https://www.acq.osd.mil/dpap/policy/policyvault/USA000250-25-DPCAP.pdf
   
5. Executive Order on DEI Programs
   • Action: Contracting officers must cancel or amend solicitations and terminate contracts containing diversity, equity, inclusion, and accessibility (DEIA) requirements.
   • Deadline: Components must submit actions taken by February 21, 2025.
   • https://www.whitehouse.gov/presidential-actions/2025/01/ending-radical-and-wasteful-government-dei-programs-and-preferencing/
   
6. Potential Cuts in U.S. Military Spending
   • Announcement: President Donald Trump suggested cutting U.S. military spending by half, causing defense stocks to drop.
   • Implications: Potential significant changes to defense budgets and priorities.
   • https://www.msn.com/en-us/money/topstocks/trump-sends-shockwave-through-defense-stocks-says-military-spending-could-be-halved/ar-AA1z0lkK
   
7. OSHA Changes Under Trump Administration
   • Potential Changes: OSHA may face paused rulemaking, workforce reductions, and a shift toward deregulation.
   • Examples: Halting implementation of OSHA’s heat injury and illness standard, requiring agencies to repeal 10 regulations for every new one introduced.
   • Full article: https://www.constructiondive.com/news/osha-abolish-zero-chance-trump-labor-changes/739641/
   
8. Cybersecurity Maturity Model Certification (CMMC)
   • CMMC is not fully implemented at this time. Companies should not wait for full implementation to begin their compliance efforts. The requirements take time, efforts and there are likely to be some costs. Cost will depend upon a number of factors. Companies can help to manage costs by becoming more knowledgeable of the requirements. WPI offers free technical assistance to assist with understanding what is needed and how to start the process.
   • FAR 52.204-21: Outlines 15 basic safeguarding requirements for protecting contractor information systems, including access control, media sanitization, and protection from malicious code.
   • DFARS 252.204-7012, 252.204-7019 and 252.204-7020 detail additional requirements for handling Controlled Unclassified Information under a DoD contract.
   • Both FAR and DFARS clauses are available for not cost at: https://www.acquisition.gov/
   • Companies will need to perform a self-assessment see:
   https://www.acq.osd.mil/asda/dpc/cp/cyber/docs/safeguarding/NIST-SP-800-171-Assessment-Methodology-Version-1.2.1-6.24.2020.pdf
   • Scores need to be loaded into SPRS; see: https://www.sprs.csd.disa.mil/
   • WPI’s POC for Cyber Technical Assistance: Matt Frost
   
9. System for Award Management (SAM)
   • Policy: Contractors must be registered in SAM to comply with annual representations and certifications requirements.
   • Registrations must be reviewed and updated at least annually. Registrations must be accurate, complete and correct.
   • Increase visibility of vendor sources (including their geographical locations) for specific supplies and services; and it establish a common source of vendor data for the Government. FAR 4.1100
   • Contracting officers shall use the legal business name or “doing business as” name and physical address from the contractor’s SAM registration for the provided unique entity identifier to identify the contractor in section A
   • Contractors are responsible for their responses. Selecting an answer out of convenience or with the thought that one answer is better than the others could have severe and negative effects.
   • Exceptions: Certain contracts, such as those under the micro-purchase threshold or classified contracts, may be exempt.
   • SAM registration is required for other requirements:
   o Registration in WAWF – to be paid
   o JCP Registration – access Export Controlled Information
   o Register in PIEE – solicitation access, WAWF and JCP