News That Impacts Your Career
GOVERNMENT CONTRACTS INDUSTRY HIGHLIGHTS
Grant Thornton LLP has released its 15th Annual Government Contractor Survey. The survey presents business information from small, medium, and large businesses. The majority of the firms responding to the survey are companies providing services to the Federal Government. The following items are taken from the survey’s Executive Summary:
- On average, survey participants report that approximately 91% of total revenue comes from government contracts, which is practically identical to last year’s survey. However, the percentage of revenue from the Department of Defense decreased slightly from last year, possibly as a result of less contractor activity in Iraq.
- 50% of survey participants experienced revenue increases from federal business during the past year while 20% suffered decreases. These findings once again demonstrate that federal spending on an overall basis rarely declines from one year to the next.
- Only 4% of surveyed companies anticipate significant revenue increases from the stimulus package. Another 33% anticipate modest revenue increases while 63% do not anticipate any measurable benefit.
- At 14.6%, management and support headcount as a percentage of total headcount is somewhat lower than the 16% reported in last year’s survey, but is consistent with the average from the last three surveys.
- Profits before interest and taxes continue to be modest in the government contracting industry. 45% of surveyed companies had either no profit or profit rates between 1-5% of revenue in this year’s survey compared to 37% last year.
- Labor multipliers inclusive of fee have decreased compared to last year’s survey. The multiplier for company site direct labor fell from 2.4 to 2.1 and for customer site labor from 2.0 to 1.8.
- 26% of surveyed companies do not account for all hours worked and as a result are at risk for under-billing time and material contracts. This is an improvement from last year when 35% of respondents did not report total time worked.
- Cost reimbursable contracts continue to be the largest source of revenue for surveyed companies comprising 46% of total revenue.
- Survey participants report a 30% award rate from proposals for non-sole source business. The win rate jumps to 60% when the company establishes a special business unit such as a joint venture or a limited liability corporation to bid the work.
- 56% of surveyed companies consider their procedures for identifying out-of-scope work to be either not effective or only somewhat effective. 78% of respondents report the government requests they perform out-of-scope work without issuing contract modifications.
- 24% of surveyed companies have contracts which require EVMS. Of these, 45% report they rarely if ever receive meaningful feedback from the government regarding information in the EVMS reports.
- Executive compensation remains the cost element most frequently challenged by DCAA. DCAA’s methods for questioning these costs tend to be weak and can be challenged from several perspectives.
- The government has recently expanded requirements for compliance systems which are applicable to most government contractors. Compliance with these regulations is mandatory and failure to comply can result in prosecution, suspension and debarment.
- DCAA operations have been severely criticized in two recent GAO reports and as a result there have been major changes in DCAA management and audit procedures. These changes are likely to increase the risks facing government contractors.
FY 2011 FEDERAL BUDGET CALLS FOR LARGER AND IMPROVED ACQUISITION WORKFORCE
The federal budget for fiscal year 2011, released on February 1, allocates $158 million for an initiative to improve the capacity and capabilities of the civilian agency acquisition workforce, building on a similar initiative at the Defense Department.
The funds will allow agencies to increase the size of their acquisition workforce by 5 percent and proposes investments in training, certification management and technology for the contracting staff, according to the budget.
Some of the money will come from the new $24.9 million Acquisition Workforce Initiatives Fund. Managed by the General Services Administration, the fund will spend $7.9 million for salaries and training; $6 million for human resources support; $3 million for acquisition workforce data management; $6 million to create and maintain a contractor inventory database; and $2 million to study current and future acquisition workforce needs.
The remaining $133 million to boost the size of the acquisition workforce is included in the budget requests of individual agencies, according to an OMB official.
“We have…north of $500 billion in federal contracts,” OMB Director Peter R. Orszag said. “Over the past eight or nine years, those contracts have doubled in size. The acquisition workforce has stayed constant. It’s not too hard to figure out that oversight of those contracts has not kept pace with what it should be.”
The White House also has proposed a boost in the acquisition staff for the Defense Department, which represents 70 percent of all government contract spending.
Continuing a policy announced last year by Defense Secretary Robert Gates, the budget calls for the department to increase the number of acquisition personnel by 20,000 during the next five years, from 127,000 in 2010 to 147,000 by 2015. This includes roughly 10,000 positions currently held by contractors that will be converted to civil service positions.
A budget provision would require agencies to create an annual inventory of all contractors providing services for the government. By the end of 2010, agencies would be required to submit to OMB a list that includes a description and cost for the services; the contractor’s name and place of performance; and whether the contract was awarded competitively. The administration instructs agencies to look for services that are inherently governmental or for poorly performing contracts.
The budget continues a government-wide moratorium on A-76 competition for federal work. The budget also recommends that the Pentagon reduce its use of time-and-material and labor-hour contracts by 17 percent and increase the number of contract obligations that are competitively awarded by 1 percent.
QDR CALLS FOR IMPROVING DEFENSE ACQUISITION WORKFORCE
The Defense Department’s Quadrennial Defense Review (QDR) issued on February 2 states that a pressing challenge facing DOD is acquisition — how goods and services are acquired and taxpayers’ money is managed.
Over several decades and across multiple administrations, four major problems that hamper the Pentagon’s ability to acquire critical systems and capabilities have developed. These problems are:
- The requirements for new systems too often are set at the far limit of current technological boundaries.
- The acquisition workforce has been allowed to atrophy, exacerbating a decline in the critical skills necessary for effective oversight.
- The current system of defining requirements and developing capabilities too often encourages reliance on overly optimistic cost estimates.
- Effective and efficient delivery of logistical support to the men and women in the field is an enduring priority and an area where continued improvements must be made.
DOD is taking or planning a number of actions to address these problems, including:
- Increasing the number of acquisition personnel by 20,000 positions by 2015, and enhancing training and retention programs to bolster the capability and size of the acquisition workforce.
- Strengthening the front end of the acquisition process by ensuring all major programs are subjected to an early and clear definition of approved requirements based on a rigorous assessment of alternatives; conducting a comprehensive design review, including independent reviews, to certify that the technologies involved are sufficiently mature before any program can progress to the costly final phase; and using competitive prototypes when doing so is cost-effective and in the interest of national security objectives.
- Strengthening cost analysis capabilities by increasing reliance on independent analyses, to ensure decisions on acquisition and logistics programs are based on the most realistic cost estimates possible; expanding the department’s independent cost assessment capabilities and modernizing the cost and price analysis training DOD personnel receive; improving contractor data reporting of actual costs, early systems engineering and development planning, earned value management, and pricing information; and improving the transparency of cost estimates, establishing a more rigorous quality assurance program, and reporting annually to Congress on the department’s cost-estimating activities.
Beyond ensuring that acquisition efforts begin on the right track, DOD also must continue to strengthen the execution phase of weapons development programs by:
- Employing fixed-price development contracts more frequently when appropriate.
- Constraining the tendency to add requirements to programs by employing the Configuration Steering Boards previously endorsed by Congress.
- Demonstrating critical technologies and proving concepts by creating competitive prototypes prior to initiating engineering and manufacturing development.
- Certifying technology maturity through independent reviews and technology readiness assessments.
- Developing more accurate technical baselines by applying disciplined systems engineering throughout the life cycle.
- Conducting realistic integrated testing to identify system problems as early as possible.
- Better aligning profitability with performance by linking contract fee structures with contractor performance, rigorously examining service-based contracts to ensure fees are properly earned, eliminating the use of sole-source contracts whenever possible, and ensuring that multiyear contracts are limited to instances in which real substantial savings are accrued to the taxpayer.
- Achieving effective life-cycle cost management by employing readiness-based sustainment strategies, facilitated by stable and robust government-industry partnerships.
The QDR also calls for institutionalizing a rapid acquisition capability to quickly respond to urgent needs. The report may be found at www.defense.gov/qdr.
PMI RESEARCH AND EDUCATION CONFERENCE
The Project Management Institute’s (PMI) Research and Education Conference 2010 program is scheduled for July 11-14 in Washington, D.C. The program is designed to provide a holistic and motivating experience to educators, researchers, senior practitioners and students. It includes traditional paper presentations, symposia and poster sessions organized into two tracks: research and education. The program also provides an opportunity to network with peers from all over the world.
The PMI Bookstore set up at the conference will enable you to browse through the most recent project management and allied disciplines research book titles from leading publishers and, if you wish, to purchase them at the event. Plenary speakers featured at the conference will sign copies of their most recent books at the PMI Bookstore. See www.pmi.org for information.
ESIDE SUPPLY MANAGEMENT — A PUBLICATION FROM ISM
eSide Supply Management is a bimonthly ISM member benefit that targets up-and-coming supply management professionals (generally entry-level to mid-level employees, as well as students). This publication, delivered by e-mail, offers information readers can use frequently throughout the year. Every edition of eSide aims to impart practical, service-oriented, supply-management-specific content in an interactive, immediate and reader-friendly format.
AGU Update
COURSE ASSIGNMENTS
Several times a week students call in stating that the assigned chapter number is different than the Study Guide lesson number. This is not unusual since the number sequence of Lessons in a course may not match the assigned study materials. When starting a new Lesson, read the first page of each Lesson carefully. The “Lesson Assignment” on that page will take you to the exact chapter(s) in the text, or supplementary readings in the Study Guide, or on CD or on the internet. For further information see page 16 of the Student Handbook. The Handbook is sent to each student in their acceptance package. The Handbook can also be found on the AGU website at www.agu.edu. Please click on “Student Center/Register” and then on “Student Handbook (PDF).”
COURSE FINAL EXAMS/PROJECTS
Every AGU course has either a final examination or project. After completing all the Course Lessons, students must request the final examination from Student Services. The final examination will not automatically be sent to a student and is not available on the Coursewebs online system. Final exams cannot be sent to students until all other coursework has been submitted and graded. For further information see page 21 of the Student Handbook.
STUDENT IDENTIFICATION CARDS
These cards were sent to all current AGU students during January 2010. New students receive them after they enroll in their first course. The AGU Student Identification Card should be able to be used with any organization that offers student discounts.
FOCUS ON THE FACULTY
 Most AGU students would agree that Course 657, Management Accounting and Control, is the most challenging course in all AGU’s degree programs. Gene Murabito, an AGU faculty member since 2000, is the instructor of this course, Gene understands that students are uneasy about this course and works with them every step of the way. He is also the instructor for Course 661, Financial Management, and Course 695, Management Information Systems.
Having worked in the aerospace industry for 25 plus years as a director of contracts and program cost accounting, in 1998 he started his own accounting practice, Business Systems Support. They specialize in small to medium-sized service and light manufacturing businesses and offer a full range of accounting services from set up bookkeeping, including accounts receivable, accounts payable, account reconciliations, financial statement preparation, payroll, and tax preparation budget and projects. As certified advisors for QuickBooks they provide training, set-up, adjustments and ongoing technical and accounting support. His first hand experience enables him to relate theory to practice.
After serving the city of Glendora, California on the Planning Commission for seven years he was elected to the Glendora City Council in April of 2009.
Gene received his undergraduate degree in Organization Management and his graduate degree in accounting from the University of LaVerne. He and his lovely wife Maura have two daughters. |
ACTIVITY REMINDERS WILL BE SENT TO CURRENT STUDENTS
While AGU’s self-paced delivery approach does give the student the freedom to work at their convenience it also puts the responsibility for keeping current squarely on their shoulders. AGU realizes that students are juggling family, work, and school responsibilities while still trying to carve out a little time for themselves. Sometimes weeks may go by before a student realizes they’re getting behind and that five month deadline is looming.
This month AGU is instituting a reminder email message that will transmit automatically to students who have not submitted a lesson for over 30 days. The message will go out as necessary until the five month deadline.
If you have signed up for more than one course, are not using your VA benefits and have not submitted a new start date for your second course (or additional courses) on the student enrollment agreement, please contact Student Services (studentservices@patten.edu) to correct the start date for your second course. This will prevent you from receiving the inactivity notice for the second course. The start date must be no later than five months from the start date of your first course.
If you have any questions please contact Rachel at 877-351-9060 ext 1005, or by email at: studentservices@patten.edu.
Advance Your Career With AGU
AGU COURSE 603 EQUIVALENT TO DAU’S CON 216
AGU’s Course 603 “Government Contract Law” has received
equivalency to
the Defense Acquisition University course CON 216 “Legal Considerations
in Contracting”. AGU students completing Course 603 can now
receive
credit from DAU for their course CON 216.
AGU COURSE 601 EQUIVALENT TO THREE DAU COURSES
American Graduate University has achieved equivalency for
its Course 601, “Federal Government Contracting,” for several Defense Acquisition University courses. The DAU courses are CON 110, “Mission Support Planning,” CON 111, “Mission Planning Execution,” and CON 112, “Mission Performance Assessment.”
AGU students completing the 30 module distance education course will receive
credit for the three DAU courses. AGU Course 601 includes coverage on:
- Contract Procedures
- Laws and Regulations Governing Procurement
- Government Contract Law
- Methods of Procurement
- Types of Contracts
- Developing the Requirement
- Developing the Solicitation
- Statements of Objectives/ Statements of Work
- Source Selection Procedures
- Government Marketing/Business Development
- Proposal Preparation
- Pricing
- Estimating
|
- Profit and Fee
- Cost or Pricing Data
- Price and Cost Analysis
- Cost Principles and Cost Accounting
Standards
- Negotiation Techniques
- Contract Terms and Conditions
- Contract Financing
- Contract Management and Administration
- Contract Changes
and Modifications
- Remedies, Disputes and Claims
- Terminations for Default
- Terminations for Convenience
|
In addition, AGU faculty and staff will be working on developing several new distance courses to apply for equivalency to other DAU courses.
AGU
Home |
Contact Us | Privacy
Policies | Subscribe
|
