MCB Accounting Blog

Accelerate your company's federal government contracting success.  It is a new day in federal contracting, time to refresh your strategies and tactics through advanced level classes at the Government Contracting Institute. Leaders in the government contracting market provide instruction affecting every aspect of federal contracts: marketing, business development, legal, accounting, proposals, and other topics that will help your company fast-track market penetration.

There are two upcoming classes:

Federal Contracting Gap Analysis

This session is geared to existing and new businesses who want to sell more products or services to federal government agencies locally or nationwide. This is a $500+ billion market with the world's Fortune one customer. The course is a practical, concise gap analysis of the business relating to federal contracting requirements. Participants will compare their business related to the required registrations, the basics of contracting law, rules, and key players involved in contracting. Participants will also learn the types of contracts, their uses, and how the Federal Acquisition Regulations (FAR) control how contracts are written, advertised, competed, and awarded.

Date: February 21, 2013
Time: 8:30am to 4:00pm
Location: bwtech@UMBC Research and Technology Park, Baltimore, MD
Instructors: Jon W. van Horne, Matthew Roberson, and Gloria Larkin

Federal Market Identification Strategies and Tactics

This session is focused on the specifically detailed business of government contracting process, identifying your target market, leaning the strategies involved in being a prime contractor, a subcontractor, or a teaming partner, the mentor-protégé programs, evaluation of opportunities including Requests for Information, Requests for Quotes, Requests for Bids, Sole Source Contracts, the bid/no bid decision making process, purchase thresholds, simplified acquisitions, and related legal issues.

Date: February 28, 2013
Time: 8:30am to 4:00pm 
Location: bwtech@UMBC Research and Technology Park, Baltimore, MD
Instructors: Keir Bancroft, Tim O'Connor, Tamara Jack, A. Larry Staudmeister, and Gloria Larkin

For more information about the other courses offered, the instructors, or to register, visit www.governmentcontractinginstitute.com. If you have any questions or concerns contact the Government Contracting Institute at 443-543-5067 or email governmentcontractinginstitute@targetgov.com.

MCB has been serving government contractors for over 60 years with their business, tax, accounting, and compliance needs. Contact an MCB Adviser for your tax and accounting needs at 703.218.3600 or at information@mcb-cpa.com.

The federal government has once again fallen short of its small business contracting goal--meaning small firms are losing out on billions of dollars. According to data released last week by the Small Business Administration (SBA), federal agencies awarded a total of $91.5 billion to small companies in fiscal 2011, down 7 percent from $97.9 billion in fiscal 2010. The contracts given to small firms in 2011 amounted to 21.7 percent of all government contracts available--down from 22.7 percent in fiscal 2010. This amount is even further short of Congress' annual goal of 23 percent. (Missing out on this 1.3 percent of contracts in fiscal 2011 meant small businesses were deprived of $3.8 billion.)

The government also failed to meet its procurement goals for women-owned small businesses (the goal was 5 percent; the government hit 4 percent) and service-disabled veteran-owned businesses (the goal was 3 percent; 2.7 percent were awarded), plus businesses located in low-income areas known as HUBZones. That goal was 3 percent, but just 2.4 percent of government contracts went to those areas in fiscal 2011--below the 2.8 percent of the year before.

John Shoraka, the SBA's associate administrator for government contracting, blamed some of the shortfall on Congress' failure to approve agency spending bills on time, which meant procurement officers struggled to plan. He noted that improvement is needed, however, and that the numbers highlight agencies that need to focus on improvement.

Some agencies did much better by small businesses than others. The Department of Energy, the second-largest government buyer, received an F from the SBA, meaning it fell at least 30 percent short of its procurement goal. The Department of Health and Human Services, the third-largest government buyer, earned an A for awarding 24 percent of its contracting dollars to small businesses. The General Services Administration (GSA) and the Treasury Department were the only agencies to receive A-pluses, although the GSA awarded 2.3 percent instead of 3 percent of awards to service-disabled veteran-owned small businesses, while Treasury awarded 2.6 percent instead of 3 percent of awards to HUBZone firms.

Currently, there are no penalties for agencies that do not meet their small business contracting goals. However, bills recently introduced in both the House and Senate would either eliminate bonuses for department heads or reduce budgets for agencies that miss their goals.

In addition, a bill introduced in May by Rep. Sam Graves, R-Mo., who chairs the House Small Business Committee, would raise the government's goal to 25 percent. That extra 2 percent could mean up to $11 billion in new small business contracts.

Click here to view the complete OpenForum.com article.

Closely held businesses are the backbone of MCB's success.   We understand the pressures you face today.  We work together with our clients as accounting, business, and tax advisers to navigate the current economic difficulties.  Contact an MCB adviser for your tax and accounting needs at info@mcb-cpa.com or 703.218.3600 to start building a relationship with a CPA firm who strives to earn your RESPECT and CONFIDENCE as a TRUSTED business adviser.

The federal government has once again fallen short of its small business contracting goal--meaning small firms are losing out on billions of dollars. According to data released last week by the Small Business Administration (SBA), federal agencies awarded a total of $91.5 billion to small companies in fiscal 2011, down 7 percent from $97.9 billion in fiscal 2010. The contracts given to small firms in 2011 amounted to 21.7 percent of all government contracts available--down from 22.7 percent in fiscal 2010. This amount is even further short of Congress' annual goal of 23 percent. (Missing out on this 1.3 percent of contracts in fiscal 2011 meant small businesses were deprived of $3.8 billion.)

The government also failed to meet its procurement goals for women-owned small businesses (the goal was 5 percent; the government hit 4 percent) and service-disabled veteran-owned businesses (the goal was 3 percent; 2.7 percent were awarded), plus businesses located in low-income areas known as HUBZones. That goal was 3 percent, but just 2.4 percent of government contracts went to those areas in fiscal 2011--below the 2.8 percent of the year before.

John Shoraka, the SBA's associate administrator for government contracting, blamed some of the shortfall on Congress' failure to approve agency spending bills on time, which meant procurement officers struggled to plan. He noted that improvement is needed, however, and that the numbers highlight agencies that need to focus on improvement.

Some agencies did much better by small businesses than others. The Department of Energy, the second-largest government buyer, received an F from the SBA, meaning it fell at least 30 percent short of its procurement goal. The Department of Health and Human Services, the third-largest government buyer, earned an A for awarding 24 percent of its contracting dollars to small businesses. The General Services Administration (GSA) and the Treasury Department were the only agencies to receive A-pluses, although the GSA awarded 2.3 percent instead of 3 percent of awards to service-disabled veteran-owned small businesses, while Treasury awarded 2.6 percent instead of 3 percent of awards to HUBZone firms.

Currently, there are no penalties for agencies that do not meet their small business contracting goals. However, bills recently introduced in both the House and Senate would either eliminate bonuses for department heads or reduce budgets for agencies that miss their goals.

In addition, a bill introduced in May by Rep. Sam Graves, R-Mo., who chairs the House Small Business Committee, would raise the government's goal to 25 percent. That extra 2 percent could mean up to $11 billion in new small business contracts.

Click here to view the complete OpenForum.com article.

Closely held businesses are the backbone of MCB's success.   We understand the pressures you face today.  We work together with our clients as accounting, business, and tax advisers to navigate the current economic difficulties.  Contact an MCB adviser for your tax and accounting needs at info@mcb-cpa.com or 703.218.3600 to start building a relationship with a CPA firm who strives to earn your RESPECT and CONFIDENCE as a TRUSTED business adviser.

The IRS has warned employers that they only have until June 19 to qualify for an expanded tax credit of up to $9,600 for hiring veterans. Employers that hired unemployed veterans in late 2011 and early 2012 were given an extended period to request the required certification for claiming the expanded Work Opportunity Tax Credit (WOTC).  The expanded period ends Tuesday, June 19. Employers must file Form 8850, Pre-Screening Notice and Certification Request for the Work Opportunity Credit, with their state workforce agencies by that date in order to receive the credit.

The credit applies to eligible veterans hired on or after November 22, 2011 and before May 22, 2012. The credit can be as high as $9,600 per veteran for for-profit employers or up to $6,240 for tax-exempt organizations.  The amount of the credit depends on factors such as the length of the veteran%u219s unemployment before hiring, the hours the veteran works and the amount of first-year wages paid. Employers who hire veterans with service-related disabilities may be eligible for the maximum credit.

Click here for the complete AccountingToday.com article.  More details about the expanded WOTC and the applicable forms are available from the IRS website.

Contact an MCB Tax Adviser at 703.218.3600 and start building a relationship with a CPA firm who strives to earn your RESPECT and CONFIDENCE as a TRUSTED business adviser.

Despite recent articles in the Washington Post that have offered a rather bleak view of the future of the technology and professional services markets in the Washington, DC, area, the picture is not as bad as it may be being painted.   Post columnist Steve Pearlstein has hypothesized that coming budget reductions will significantly affect the market and the regional economy.  He also has posited that the region's traditional government "technology" community, which is built for and around the government, isn't where the most innovative technology is being developed. This, according to Pearlstein, will make it difficult to maintain the region's technology base without government spending.

Stan Soloway, president and CEO of the Professional Services Council , feels that although Pearlstein's concerns are legitimate, the reality is somewhat different. Despite the looming budget cuts, the government will spend hundreds of billions of dollars on goods and services. There will be individual company winners and losers, but the services and technology industrial base in the region will remain strong and vibrant.

In addition, some areas are less likely to be cut as deeply as others.  Cybersecurity and information protection spending is unlikely to decline and could increase. The new defense strategy's reliance on intelligence and analytics will command large portions of available budgets.

Many civilian agencies, even those facing fiscal problems, will have similar opportunities to benefit from spending in the professional services and technology industries. These include the National Institutes of Health and the Department of Homeland Security.

According to Soloway, there is "too much 'we vs. they' thinking with regard to the inevitable fiscal challenges. Some are arguing to cut contractors and others argue we should slash the federal workforce."  However, as Soloway notes,  both areas will be affected, and a more collaborative process that focuses on mission need, human capital and resources will be mutually beneficial.

Click here for the complete Washington Business Journal article.

MCB has been serving government contractors for over 60 years with their business, tax, accounting and compliance needs. Contact an MCB Tax Adviser for your tax and accounting needs at 703 218.3600 or at info@mcb-cpa.com.

According to General Martin Dempsey, chairman of the Joint Chiefs of Staff, for a trimmed-back Pentagon, resources have become an independent variable.  He meant that, as part of the solution to the nation's fiscal crisis, the Department of Defense must choose its spending priorities carefully and control its costs more precisely.

At the same time, the civilian portion of the government is not exactly doing well either, and it is likely to be even more constrained for 2013.  Sellers in the federal market should not be surprised that their customers are thinking about costs first.  Federal spending on IT, R&D and construction are all flat or down in 2012 relative to 2011.

IT budgets for 2012 are roughly $80 billion.  Although they were not reduced substantially from 2011, the government's emphases are changing.  Agencies want to rebalance spending, with less going to operations and maintenance and more going to solutions for improved mission delivery.

Budgets are down for construction.  The General Services Agency will not start new projects this year.  Although military construction is strong, the actual amount to be spent, $117 billion, is down from the request for $182 billion.  At Housing and Urban Development, grant and contract spending will be cut in half. Construction-related spending for IT, audiovisual and furniture will be down as well.

Policy initiatives from both the Government Accountability Office and the Office of Management and Budget will affect how agencies spend. Efforts will be made to shift risk to the supply chain. For example, the 2012 Defense Authorization Bill requires contractors to track, and take fiscal responsibility for, counterfeit parts that might turn up in equipment.  It leaves in place caps on contractor executive salaries that can be charged back to agencies and extends them to everyone working on a project.

Agencies are also cracking down on poor quality. For example, the Missile Defense Agency recently put out a solicitation for development of ground-based missile development and sustainment that includes a Contractor Accountability for Quality clause that lets the agency cut or totally withhold performance fees for bad parts or failure by a contractor to use best practices.

The Federal Acquisition Regulation Council has written into regulation greater use of firm-fixed-price contracts, which put more risk on the contractor than cost reimbursable and time and materials contracts. It is also supporting a provision in the Duncan Hunter National Defense Authorization Bill of 2009 that requires written determination and justification that use of a chosen interagency contract is the best procurement approach.  It also validated an earlier Office of Management and Budget directive against specifying brand names in solicitations to maintain vendor neutrality.

Click here to view the complete Washington Business Journal article.

MCB has been serving government contractors for over 60 years with their business, tax, accounting and compliance needs. Contact an MCB Tax Adviser for your tax and accounting needs at 703.218.3600 or at info@mcb-cpa.com.

Defense Secretary Leon Panetta has provided contractors with more specifics about the $487 billion in defense cuts announced recently. Specific cuts include the retirement of aging sea and air vehicles and reductions in contract services.

For its fiscal 2013 base budget, the Department of Defense will request $525 billion, which is $6 billion less than fiscal 2012. The goal is to increase the budget to $567 billion by 2017, $55 billion less than previously planned.

Besides a drawdown in forces, Panetta discussed reducing, streamlining and standardizing the air fleet, including the retirement of the C-5A and C-130 military transport aircraft.  Both of these are manufactured by Bethesda-based Lockheed Martin Corp.  It has been reported that Lockheed might offer these aircraft to either allies or commercial freighter companies to keep them in production.

The Navy will retire lower priority cruisers that have not been upgraded with ballistic missile defense capability or that require significant maintenance as well as combat logistics and fleet support ships. DOD will modernize a class of submarines to carry more cruise missiles and to include an undersea conventional prompt strike options.

Its overall strategy, however, includes reducing overhead, eliminating waste and improving business processes. These steps are expected to realize $60 billion in savings.

In addition, the department will focus on aggressive and competitive contracting practices, as well as a reduction in contract services. This will translate to fewer business opportunities and slimmer margins for the contracting industry.

Click here for the complete Washington Business Journal article.

MCB has been serving government contractors for over 60 years with their business, tax, accounting and compliance needs. Contact an MCB Tax Adviser for your tax and accounting needs at 703 218.3600 or at info@mcb-cpa.com.

In December 2011, the SBA unveiled a new $1 billion program to invest in young companies.  The new program, the Early Stage Innovation Fund, is part of the Obama administration's Startup America campaign and is likely to begin in spring 2012.

The new program is similar to existing programs in that it would allow venture funds licensed by the Small Business Administration (SBA), known as small business investment companies (SBICs), to borrow money from the agency to augment the capital they have raised from private investors. A successful fund that borrows money generates higher returns for investors when it sells those stakes since the lenders don't share in the profits.  Companies seeking financing would not contact the SBA directly, but instead--as with any venture financing--would approach the SBIC, which would judge prospects on the strength of their business plan and management.

The new Innovation Fund would fill a gap in the SBA's offerings by channeling funds into growth companies normally overlooked by venture capital funds.  The SBA has not had a way to nurture fast-growing startups since 2004 when an earlier program was eliminated. The earlier program, which essentially allowed SBICs to sell equity stakes in their portfolio companies to the agency, collapsed in the wake of the tech bubble. The program's complex terms helped ensure its failure. In addition, the government saw little of the profits on successful investments.

The new fund is more straightforward and is in fact a variation on a more successful SBA program, in which the SBICs loan the money they have borrowed from the SBA to their portfolio companies. Investment companies have rarely been able to reach the youngest startups because these businesses often lack the cash flow required to make quarterly interest payments. The SBA has tweaked the rules for this program to make it easier for venture funds to use debt to buy equity. In addition, at least half of the investments venture funds participating in this program make must be in companies without positive cash flow from operations.

Currently, nearly three-quarters of venture financing goes to companies in just three states: California, Massachusetts and New York.  The new fund is designed to have a significant impact on seed investment activity in the other 47 states.

The SBA has taken steps to minimize taxpayer risk in the new fund. Leverage is limited to the amount of private capital a fund has raised, up to $50 million. A fund must also raise $20 million privately.

Click here to view the complete New York Times article.

MCB has over 40 years of experience serving Private Equity and Venture Capitalists with accounting, tax, audit, due diligence and consulting services. Contact Matt Dwyer at 703.218.3600 to start building a relationship with a CPA firm who strives to earn your RESPECT and CONFIDENCE as a TRUSTED business adviser.