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Government Contracting News: February Edition Two

Written on February 25, 2020

The President’s Budget Request Cuts Some Areas and Increases Critical R&D

The Fiscal Year (FY) 2021 budget request from the White House was released last week showing an increase in the Trump Administration’s emphasis on non-defense research and development projects, including artificial intelligence and quantum information science. The administration has requested significant increases in this spending for FY21 and proposed a doubling of the amount of spending in those areas by FY22. This proposed budget increase aligns with two executive orders President Trump signed in February 2019, making AI and quantum R&D a top priority for research agencies citing national defense. This new budget request also includes more than $850 million of funding to the National Science Foundation and interdisciplinary research institutes, close to a 70 percent increase from the FY20 budget request, a $125 million investment from the Energy Department in AI research, a $54 million increase from the FY20 budget request. A $50 million investment from the National Institutes of Health (NIH) for the use of AI, and other new technologies in researching chronic diseases is also included. Certain domestic programs, such as funding for the EPA, would be cut to pay for some of the additional research. The final verdict on the President’s budget request ultimately is in the hands of Congress. They are quite likely to make changes in several areas. It is unclear whether they will alter the specific requests for research funding. This is potentially good news for contractors and possible AI-related work. See the story here.

What Do You Mean I’m A Government Contractor?!

Some companies don’t think of themselves as government contractors, even when they sell to the government.  It is not uncommon for one part of a large company to hold a government contract without other parts knowing it. If your firm does business with a company that sells your solutions or products to a federal agency, you could be considered a contractor. Similarly, your company is a contractor if it holds a contract, even if the fulfillment of that deal is primarily done by a business partner (the advisability of that situation is a subject for a different article). While these may seem obvious, it’s apparently an issue in need of clarification. If you’re not sure whether your company is listed as a prime or subcontractor, it’s time to do a little research and ask questions. The Federal Procurement Data System (FPDS) can be used to search on whether your company is listed as a prime contractor and, if so, what the contract number is, and the agencies to which you sell through it. Asking business partners that sell to the government directly how they describe your business relationship to the government can also be enlightening. Some may say that you are a supplier, a status that, if the government agrees, generally exposes your firm to lower risk. If your partner says, “You’re absolutely a subcontractor since I need your small business size to help me make my goals,” you’re in another arena. It’s time to get up to speed on the rules and regulations your firm must follow as a subcontractor. These rules vary depending on the type of contract your partner holds. It is ultimately how the government views your company that can determine whether you’re a supplier, prime or subcontractor. The time to understand this is now, before any problems develop.

With Q3 Around the Corner, Three Things Contractors Should Focus on Now

Federal business is conducted throughout the year, and the pace is about to shift gears. Prospective buyers are increasingly focusing on how they will buy what they need, not what. Here are three things contractors should focus on to maximize federal business opportunities:

  • Get Those Informational Meetings in Now: The third quarter of the federal fiscal year starts in April. The pace of acquisitions will pick up from that point forward. While many federal agencies want to hear about new solutions, potential customers will have progressively less time to meet with new companies. Aim to have your first meet and greets finished by the end of May.
  • Be Prepared to Answer the “How” Question: We’ve written about this before, but not everyone has gotten the word. Contractors must be prepared to tell a customer how they can buy from them, not just what solutions they are selling. Never assume your federal customer knows how to get your solution easily. A recent client meeting proved this point. The customer was interested in the solution and was amazed to hear how easy it was to get started with the company. The company knew more about available acquisition methods than the customer. Be prepared to recommend one or two potential acquisition methods as part of all business development activities.
  • Check Your Compliance Status: This sounds about as much fun as going to the dentist. Just like routine dental care, having good contract compliance is a must, especially this year. Is your company preparing to meet new DOD cyber standards (see article below)? Can it meet restrictions on the sale, or even use, of prohibited IT and telecommunications equipment? Is your company complying with its GSA Price Reductions Clause? You need to be able to focus on closing business over the last two quarters of the fiscal year. No one wants to trip on the last 10 meters of the 100-meter dash. Checking your compliance now helps ensure that you can finish the race strong this fall.

What the New Cybersecurity Maturity Model Certification Standard Means for Your Business

The Department of Defense (DOD) released the first version of its Cybersecurity Maturity Model Certification (CMMC) standard on January 31st. While the DOD stated that the new standard won’t be a mandatory requirement on all contracts until 2026, the agency simultaneously said that approximately ten contracts will include the standard this year, with ten more having the standard included as part of Requests for Information the department will issue. Contractors can expect to see individual DOD buyers increasingly require offerors to show certification ahead of the 2026 deadline. The National Institutes of Health Information Technology Acquisition and Assessment Center (NITAAC) also said that CMMC will be a part of its CIO-SP IV contract (see article below). DOD Undersecretary for Acquisition and Sustainment Ellen Lord stated that the standard faces a “complicated rollout,” an indication that there will be confusion among DOD and industry over when the standard will be required to be a part of specific acquisitions and which of the five certification levels contractors and subcontractors will have to meet for each acquisition. The CMMC is a combination of processes, practices, and capabilities that all companies doing business with DOD, regardless of prime or subcontract status, will have to meet, depending on the level of compliance contained in each RFP or RFQ. Contractors will have to have their compliance validated by a DOD-authorized third party. DOD contractors need to act now to start the certification process. Even those that do business solely with civilian agencies should take notice as similar standards for those agencies are already on the drawing board. See the article here for more.

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