Contractors wonder which of two procurement systems applies to them

When it comes to blue collar wages, a different standard seems to apply to federal agencies and to contractors. Two standards appear to apply when it comes to Trade Agreement Act Compliance. What’s going on? For on view, the Federal Drive with Tom Temin spoke with federal sales and marketing consultant Larry Allen.

Interview Transcript: 

Tom Temin You are pointing to a Gao report and some other activities of the government which show that sometimes they don’t follow the rules agencies when paying things directly, that they expect contractors to follow. Tell us more.

Larry Allen A time that’s right. I think the bottom line is contractors need to always remember exactly where it is they stand when they’re doing government business, and that places at the bottom of the ladder. Even if you’ve got people working side by side in a government agency. The only real difference being the type of bad contractors need to understand that a different set of rules apply to them. That’s come out quite clearly recently. As you alluded to, the Government Accountability Office came out with a report recently saying 75% of federal agencies pay their hourly wage workers incorrectly, while some agencies pay more than the prevailing wage, a number of the pay less. And that was kind of the end of the GAO report. By contrast, if a contractor had been found to not be paying prevailing wage rates either under the Services Contract Act or in construction via Davis-bacon, they would have been really taken to the compliance woodshed. And that’s just a very much a double standard. Contractors need to be aware of that issue, and contractors can spend a lot of money, hundreds of thousands of dollars for larger companies every year, ensuring that they stay in compliance with labor and wage rate requirements. It’s a whole thriving legal practice in and around the Beltway, too. Then the second part of it was the trade agreements that we read recently about the General Services Administration CIO getting taken to the congressional woodshed for his agency’s failure to do all the due diligence it should have done around the Trade Agreements Act. By and while getting taken to the congressional woodshed is never pleasant. It pales in comparison to the sometimes years long, 7 or 8 figure defenses that contractors have to put up when they are accused of Trade agreements act wrongdoing. That’s the second issue, and I’m just using these two issues to highlight the fact that contractors, again, they need to understand where they are. They can be scapegoated. They can have fingers pointed at them, even when things may not entirely be their fault, it’s easier to blame the contractor. So, you just have to be smart about how you’re approaching government business. Understand that there’s sometimes can be two standards. As I often told my teenage children, life isn’t fair.

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Tom Temin That’s right.

Larry Allen I think you just have to remember that you.

Tom Temin Can’t win by saying to the government, well, you only paid those people less than the federal minimum wage or less than the Missouri or Michigan or whatever. It is minimum wage. But that’s not going to help you in federal government.

Larry Allen So a little bit like the parents of the teenagers in this case, Tom, it’s definitely do as I say, not as I do.

Tom Temin Right. In the Trade Agreement Act. By the way, the GSA incident that you mentioned concerns the acquisition of Chinese made conference room cameras, where presumably China has the potential to listen in on what’s going on in federal conference rooms because of that little cute camera sitting in the middle of the table.

Larry Allen If the Chinese are having trouble staying up at night, I recommend that they listen in on a lot of GSA conference calls.

Tom Temin We’re speaking with Larry Allen. He’s president of Allen Federal Business Partners. And let’s talk about the appropriations bills that are now law. And we are into the second half, almost of the of the federal fiscal year. And there’s actually appropriations for 2024. The numbers are good for contractors.

Larry Allen Tom. They are good for contractors, particularly if you’re selling to the Department of Defense or the Department of Homeland Security. Both of those agencies received funding increases over what the president had originally requested in his FY 24 budget request, particularly in the Department of Defense. You’re going to see things for all kinds of weapons programs, for research to maintain the U.S. technological edge across the board. In DHS, a lot of that funding is going to go to the southern border. And while a lot of it’s going to go to higher personnel, it’s also going to go to technology that the personnel can use in the conduct of their mission. So those are two good opportunities. And really what we’re talking about here is, you know, essentially by the time each individual office gets its numbers, spending number, we’re talking about five months left in the procurement. Cycle for this year. So just to modify a phrase, it’s very much, ladies and gentlemen, start your engines.

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Tom Temin Yeah that’s right, because it takes a few weeks for the moneys to get deposited in the accounts.

Larry Allen What happens now is the Office of Management and Budget takes all the appropriated money. They pass it out to a certain degree for each agency. Give that back to the finance people in each agency, and then the agency further subdivides it to get into individual spending accounts. It’s a process that usually takes 4 to 6 weeks, depending on the agency.

Tom Temin Yeah. So that puts us into or puts federal contractors and buyers into what, May before they can actually.

Larry Allen That’s right. So, if you were planning on taking that spring vacation, think again. Bloomberg government recently reported that the sustained delay in implementing appropriations resulted in a 40% decline in government business. That’s a lot of business that’s going to have to be made up between now and September 30th.

Tom Temin What’s your best advice for contractors? I mean, they’ve got to somehow get the government to focus on spending and focus on letting these contracts, because the money is not multi-year money. So, it’s either spend it or lose it for a lot of these dollars in the in the 5 or 4 and a half months, it’ll remain when the government can actually do something.

Larry Allen Indeed. So, Tom, and I think one of the main things that contractors can do now is make sure you’re ready with a fast and reliable acquisition method that you can recommend to your government buyer. While some government agencies do have preferred acquisition methods, others are going to be looking for ways to get money obligated. That’s the key word. Get that money obligated by midnight, September 30th. And if you’re a contractor and you’ve got a couple of good fast options, whether it’s one of the many government wide acquisition contracts like GSA is a line three, or whether it’s, socioeconomic status like AA sole source, whatever it is that you’ve got that you can recommend as a fast and efficient way to get that agency to commit the money, you’re going to be that much of a better partner.

Tom Temin It also points to the fact of the need for being on the right contract vehicles for task orders because that’s the most efficient route from the government standpoint. And so, it really underscores the importance that you got to be able to have vehicles.

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Larry Allen Well, right. And Bloomberg government recently came out with a report on that as well, talking about the use of best-in-class contracts. And while a lot of these are in the information technology world, Tom, there are also plenty of big spending that happens in the professional service, logistics, transportation worlds as well. So, agencies, more and more particularly civilian agencies are looking to these best in class, short name big contracts to do acquisitions. And what you find is that successful government contractors have 2 or 3, sometimes more, of these vehicles that make it easier for agencies to do business with them. And while there could be some grumbling among contractors about which type of contract gets a best-in-class designation, the fact is that agencies often view that as a symbol, that it’s a gold star type of program, that you can use, that nobody’s going to second guess you about.

Tom Temin All right. So, some work to do, basically.

Larry Allen Lots of work to do in a very short period of time to do it in.

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