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January 16, 2015

What Government Contractors Should Know About the Fair Pay and Safe Workplaces Executive Order

Government contractors understand that companies seeking work with the government need to meet certain standards. But some contractors are still trying to understand the impact of a new set of standards put into place by Presidential executive order.

The President signed an order last year intended to raise the standards for companies allowed to bid for government contracts by barring companies that violate labor laws from government contracts. The “Fair Pay and Safe Workplaces” executive order says government agencies soliciting bids must also ask contractors to disclose violations of any of 14 different labor laws in the last three years, reports the Washington Business Journal.

Before awarding a bid, a contracting officer must find out if any corrective actions were taken, and then determine whether the company’s record qualifies it for consideration of the bid. Agencies must also determine whether contractors comply with the executive order.

Some groups represent the contracting community are taking issue with the rules, raising questions about whether they’ll do what the White House expects them to do. The Professional Services Council and 18 other trade and professional groups sent a letter in November to Labor Secretary Thomas Perez and White House Domestic Policy Council Director Cecilia Munoz explaining that government agencies already have mechanisms to deal with labor law violations. They also say that additional rules are not needed and could make the contracting process unnecessarily complicated.

“The order would complicate and confuse that process by imposing new data collection, reviews, inter-agency consultations and procedures on top of the balanced and battle-tested enforcement regimens already in place,” PSC President and CEO Stan Soloway said in a statement released after submitting the letter. “Most of all, the order is so vague, sweeping and lacking in any objective criteria that it will be fundamentally unexecutable.”

According to the letter, the contracting groups believe that in targeting a small number of companies, the executive order is actually having a broader impact on the larger contracting community. Even if companies seeking contracting work with the government have no labor law violations, potential bidders should be aware of how the new rules affect the contracting community. To learn more, contact us.

January 9, 2015

Understanding Federal Cloud Opportunities for Government Contractors

If you’re angling for federal opportunities for government contractors in the cloud, the outlook is promising. While the Office of Management and Budget has said federal agencies are expected to spend $2.9 billion on cloud solutions in fiscal 2015, IDC Government Insights forecasts that cloud spending will reach as high as $3.4 billion in fiscal 2015. In fact, the research firm projects an increase in cloud spending through 2018.

What is driving the spending increase? Agencies are migrating their systems to the cloud, where the software can beaccessed from anywhere in a Software as a Service (SaaS) model. IDC says that SaaS has outpaced spending on Infrastructure as a Service (IaaS). By IDC’s calculations, the government’s fiscal 2014 SaaS spending totaled $1.3 billion, compared to just $986 million spend on IaaS. But even though cloud spending is forecast to increase, not all cloud services are alike. Here is where the government is making cloud investments.

  • Private cloud – The private cloud includes services that need to meet certain security standards in order to protect the information handled. IDC notes that the Social Security Administration is the leading agency for the private cloud. IDC projects that private cloud spending will reach $5.9 billion by fiscal 2018.
  • Public Cloud – These services include the hosting and storage of data considered public information. IDC is forecasting that public cloud spending will top $3 billion by fiscal 2017.
  • Community Cloud – The community cloud encompasses shared infrastructure among agencies that have common computing needs. IDC expects community cloud spending to reach $868.9 million by fiscal 2018.
  • Hybrid cloud – The hybrid cloud is the combination of various cloud services and applications to meet a specific need. Spending on hybrid solutions reached $135.1 million in fiscal 2014 but IDC projects it will fall to $118.8 million by fiscal 2018. While the firm believes that hybrid clouds have their place, it notes that it is not its own spending category.

Federal private cloud spending looks to be the most promising area for government contractors looking to land government cloud work. IDC says that work will be driven by the security needs of government. To learn more about how to land government cloud contracts, contact us.

January 2, 2015

How Government Contractors Can Win Bids Without Being the Lowest Bidder

Some businesses aiming to land work as government contractors assume the key to landing a government contract is submitting the lowest possible bid. But being the lowest bidder won’t necessarily get you the job. In fact, government agencies in some cases specifically won’t select the lowest bid.

In a post published by Washington Technology, Bob Lohfeld makes a case for what he calls “price reasonableness.” The idea is that the rather than selecting among low bids, the government instead takes a different approach to evaluating bidders in order to avoid choosing a bid that’s too high. It does this by comparing a bid against other bidders, or by comparing a bid against an independent government cost estimate (IGCE).

Lohfeld says that the government rarely tosses out a bid that’s unreasonably high because it can stand as an example that a bidder did not provide the best value. Some government contractors underestimate their costs for a bid. But Lohfeld notes that Federal Acquisition Regulations (FAR) require that the government assess a bidder’s proposed costs to determine whether or not those costs are realistic expenses for the services proposed. There’s a risk here of a bidder being too low for the work that’s required. If that’s the case, Lohfeld notes that the bid price can be adjusted higher and the technical score of the bidder can be lowered – a reflection of the bidder’s insufficient understanding of the work that’s needed for the project up for bid.

While bidders can look for ways to push their bids lower in an effort to win the bid, there are also ways that government agencies can keep those bids from going unrealistically low. The government can accomplish this by explicitly detailing its project and labor requirements in the request for proposal. For example, the government can require that bidders provide an analysis of its labor rates with sufficiently detailed information to justify them. If the government’s RFP does not adequately describe these requirements, there’s really no limit to how low prices can go.

As a prospective government contractor, the RFP is your guide. It’s best that businesses seeking to bid on government contracts carefully read RFPs in order to clearly understand how the government will evaluate bids. To learn more about how to evaluate and approach government contracts contact us.

December 26, 2014

Small Businesses Can Learn How to Compete Against Big Government Contractors

If you’re an entrepreneur running a small business, you might think you’re out of your league going up against big government contractors. You’re not. Landing a government contract can be hard, but there are plenty of opportunities for small businesses if you know where to look. Consider, for example, that federal law requires that 23 percent of all federal prime contract dollars be awarded to small businesses.

The first thing to understand is that landing a government contract is not like landing work with another business. The government has certain requirements that all bidders of any size must fulfill. The House Committee on Small Business points out that small business set-aside contracts will limit the amount a business can subcontract, the products that can beprovided, and how much that business can interact with other firms. Small businesses can find more details about the rules governing small business contractors by reviewing the Federal Acquisition Regulations.

Small business seeking federal contract work must register with government through the U.S. Small Business Administration’s System for Award Management, or SAM. This database allows government agencies to search for businesses based on a variety of criteria. The SBA notes that another database, the Dynamic Small Business Search database, or DSBS, offers an opportunity for a small business to fill out its small business profile, offering another system for government agencies to use to identify a small business contractor.

The House Small Business Committee recommends that small businesses keep their applications short and simple but also complete, explaining that “most problems within the application process stem from omission of necessary information which will result in automatic rejection of any bid.”

As a small business, learning how to work with the federal government on government contracts can be complex. For help or to learn more, contact us.

December 19, 2014

Working capital finance: Definition and sources

Running a small business is an activity that requires a combination of skills that not everybody possesses. For example, youmust be able to market your idea and/or look for new customers, while making sure that your financial liabilities don’t go out of control. This is especially true if the business is still in its early stage. As a small business owner, you probably know the value of money. Indeed, you need financing to keep your operating cycle running, but it’s not the easiest resource to secure, especially from banks. This article defines working capital finance and identifies some of its sources.

What is work capital finance?

Work capital finance is the amount of money that you need each cycle to run your operations. This amount is calculated by subtracting current liabilities from current assets. Without this capital, you wouldn’t be able to manufacture your products or deliver your services to customers.

How do you secure this financing?

For small businesses, factoring companies are the major providers of work capital finance. To get this financing, small businesses sell a portion of their account receivables at a discount in return for instant cash. As you might know, account receivables are the outstanding invoices that customers must pay to a business within a pre-determined time period usually ranging from 30 to 90 days. But since the selling business can’t afford to wait until its customers settle their invoices, it’ll have to find the money it needs elsewhere, which is where factoring companies become relevant.

What is the cost of work capital financing?

When a small business finds a factoring company willing to buy its receivables, both parties start to negotiate on the discount rate. Usually, factoring firms assess the risk associated with the small business by analyzing its financial ratios such as the account receivables turnover ratio. This metric reveals how fast customers generally settle their outstanding invoice. The higher the ratio, the lower the discount rate.

Factoring is the most popular source of work capital financing, and by far the most preferred among small businesses because of its relatively easy accessibility in comparison to commercial loans.

Please contact us now if you have more questions.

December 12, 2014

Cyber Security and Infrastructure Targets – Part 2 – Critical Systems

The first part of this report covered the increased national investment in cyber security and explored fundamental vulnerabilities in critical infrastructure systems. This section gives insight into how control and command systems are infiltrated and highlights the dangerous capabilities of identified cyber threats.

How systems are penetrated – Trojans and Botnets

Specialized computer viruses, called Trojans, are usually the first line of attack. These viruses have the capability to open up communications channels with remote operations centers. Once communications are established, the remote server can then deploy additional malicious software. This follow-up software is often designed to target specific types of systems, both economic and industrial. These programs frequently include stealth routines, high levels of encryption, data compression. and reactive evasion tools. These features allow sophisticated software to camouflage their activities. Other programs are less subtle in their techniques, but often manage to infect remote systems.

A network of compromised systems is called a bot net, and represents the most dangerous threat vector. Bot net commands may originate from a single web host or may distribute information across a number of machines using peer-to-peer sharing techniques. Systems which are not connected to the internet can be penetrated by using social engineering techniques to physically place software, including communications access, onto an isolated network.

The Trojan can then proceed to deploy tools such as: platforms for denial of service attacks, command hijack tools, and injection tools designed to subtly alter program parameters. Observational tools such as real-time keyloggers, file system cataloging and upload tools, and audio and visual recorders have also been encountered. The possibilities are nearly limitless. Once a hacker takes control of a system and acquires full privileges, the hacker is capable of any task the system operator would be able to accomplish.

Impact potentials

Unfortunately, the potential for a hostile force to hijack the control systems of an airplane, hydro-electric dam, vehicle traffic control system, or nuclear facility, have obvious and severe implications.

Energy sector bot nets:

Signatures of several bot nets have been identified as active and present within the energy sector. The following are among the most entrenched within existing installations.

Black Energy

This botnet almost exclusively targets systems in the energy sector and has been identified as being present in several NATO countries. The Department of Homeland Security has issued an unknown number of reports to potential targets. The vulnerability has been found in software issued by private vendor companies to manage internal systems. There are several variants of Black Energy and recently a number of additional countries have reported infections, according to SecureList.

Dragonfly

This bot net initially targeted defense and aviation companies, both in the US and Europe. Recently the network appears to have shifted its focus towards energy industry targets. Dragonfly uses remote access tools, such as Backdoor.Oldrea and Trojan.Karagany. Infection vectors include spam e-mail campaigns, exploiting compromised industry websites and using browser weaknesses identified by malicious java script fingerprinting techniques. Attacks appear to be initiated from Eastern Europe, according to a white paper issued by the private research firm, Symantec.

Regin

Recently announced by Symantec, Regin.backdoor is a virus with numerous capabilities. While not yet found in the US or China, this botnet is considered a tier one threat. The botnet has infiltrated telecommunications, energy sector targets and corporate control systems in several countries. While it appears to be currently employed as an intelligence gathering tool, modules designed to take over systems directly have been identified. The originating actor is currently unknown. Like many viruses of this nature, Regin which was launched as early as 2006, remained unidentified for several years.

Other alerts

The industrial control systems cyber emergency team, ICS-Sert, administers alerts and reports on a wide range of vulnerabilities and threats to control systems.

Stay ahead of the competition

Recognition of competitive opportunities in the government sector can result in significant market advantages. To learn how our expertise can increase existing opportunities, and assist your organization in identifying new opportunities, contact us at Financial Engineering Counselors.

December 5, 2014

Cyber Security and Infrastructure Targets – Part 1 – Vulnerability Assessment

The prioritization level of cyber warfare technologies, within the government, can be established by comparing aspects of their budget requests. For fiscal year 2015, the Department of Defense  sought $7.5 billion in funding for the Missile Defense Agency, which represents a key aspect of global strategic dominance. By comparison, they requested $5.1 billion for funding of cyber operations designed to “enable both offensive and defensive capabilities across the full range of cyber contingencies”. The numbers make it clear, in terms of strategic importance, the DOD has placed cyber defense on par with ICBM delivery systems.

The DOD is not alone in requesting funds in the cyber arena. The Department of Homeland Security, according to the agencies budget-in-brief (see PDF page 20), requested $1.25 billion dollars  for safeguarding and securing cyberspace.

These budget requests show a growing recognition of the importance of the global internet in national security terms.

High priority programs

Revelations regarding the extent of electronic intelligence gathering capabilities over the internet reached high levels of national awareness. While it is no longer a secret that DHS has invested heavily in espionage activities, the DOD has a wider range of priorities. These include: cyber security research, cyber ops technology development, and an initiative to consolidate DOD networks under a coordinated cyber command. Development of an integrated cloud based platform for sharing of resources, standardized between military branches, also received significant focus in the Pentagon’s cyber operations FY2015 request.

Hardening key infrastructure

Hardening critical infrastructure was designated as a primary area of interest. Specifically the Defense Budget Priority Choices report indicated a necessity to defend networks, degrade adversary cyber capabilities and support national infrastructure including “federal and critical communications systems” in conjunction with the DHS.

How severe is the threat?

Defense One ran a story with the alarming title of “Major Cyber Attack Will Cause Significant Loss of Life By 2025, Experts Predict“. The report takes the position that, while it was impossible to know when a life threatening cyber security breach would occur, an incident of this nature is an inevitability. Defense one posited that hostile foreign nations, terrorist organizations, and even independent actors could potentially launch a devastating attack that could result in mass casualties. Economic targets were also listed as likely targets.

The reality of the situation

The nation’s infrastructure defenses are incredibly porous. Interconnected networks including telecommunications, energy sector, transportation and essential commercial sectors are extremely vulnerable. The trend towards heightened integration of transit systems, including driverless cars and drones, indicates that as time passes, increased potentials for mass havoc will rise. Systems are highly susceptible to infiltration and compromise by outside actors. What is extremely alarming is that, not only are these types of attacks theoretically possible, many of these systems are already compromised.

The presence of malicious tools, capable of taking over SCADA (Supervisory Control and Data Acquisition) based systems have been identified, throughout the world. Positive threat identifications have been found, not only within the United States, but also in Europe, Russia, China, India, Saudi Arabia and a host of other countries, both friendly and hostile to US interests. These tools, in many cases, are capable of not only observing systems, but actually taking over the command and control functions of their targets.

A deeper look

It is clear that cyber security is a high priority throughout the government. Follow our blog for “Cyber Security and Infrastructure Targets – Part 2 – Critical Systems”, where we take a deeper look at how systems are penetrated. Our report includes an overview of specific active threats which have successfully infiltrated critical infrastructure, including the Dragonfly, Regin and Black Energy bot networks.

Stay on top

At Financial Engineering Counselors, our expertise can help your organization access the financial resources to protect and grow your company. Contact us to learn how our experience, reputation and affiliations, can help your enterprise stay on top of the game.

November 28, 2014

Contractors Face $161B in Federal Opportunities With Government in Fiscal 2015

Federal contractors looking to take on new business opportunities with government agencies in the 2015 federal fiscal year are looking at the highest contract value opportunity in the past five fiscal years, according to a new report from enterprise software and IT firm Deltek. The federal opportunities for contractors seeking to work with the government in the 2015 fiscal year represents 220.3 billion in total contract value, Deltek says.

Most of those dollars will be available in information technology, which represents a $161.5 billion contracting opportunity. That total makes up 73 percent of the top 20 total contract value, Deltek says. Compared to last year, professional services made up most of the contract opportunities. The increase in the value of IT contracts is due to follow-on contract programs in IT that are expected in the 2015 federal fiscal years. Deltek says that follow-on opportunities account for 99 percent of the value in the top 20 contract opportunities.

In most years, defense contract opportunities outdistance civilian opportunities by a large margin. But Deltek expects that the top 20 opportunities will be split evenly between defense and civilian, in terms of both dollar value and the number of opportunities.

Federal Times notes that the projected total value of defense contracts fell by nearly $7.5 billion compared to the previous year’s list. Meanwhile, the value of civilian contracts more than doubled. The largest contract to make the list is a civilian one: Alliant II Unrestricted. This contract is a government-wide acquisition contract that the General Service Administration will use to bring in complicated IT software solutions. Deltek is estimated the Alliant II Unrestricted contract will have a $50 billion ceiling; Alliant II Small Business will have an estimated $15 billion ceiling.

The GSA contract is as large as the next two contracts put together. The Army’s Responsive Strategic Sourcing for Services, or RS3, is $30 billion; the Defense Department’s Defense Health information Technology Services Generation I IDIQ, or DHITS GEN, is an estimated $20 billion.

Defense and IT aren’t the only opportunities for government contractors. Additional contract opportunities making Deltek’s list include professional services, operations and maintenance, architecture, engineering, and construction. To learn more, contact us.

November 21, 2014

Understanding Convergence & Relationships Leads Contractors to Government Sales

Government contractors might be chomping at the bit to offer their products and services to government agencies. Knowing the potential purchasing needs the government has could put contractors a step ahead when the purse strings open. There is a convergence in services, meaning that contractor offerings are coming together as a package of products and services bundled together. Understanding convergence, and having relationships with government agencies, could facilitate government sales and bring new opportunities for selling to the government.

Many private sector entities have shifted operations into the cloud, where software can be accessed securely online from anywhere. These so-called software-as-a-service, or SaaS, offerings allow customers to save on the costs of maintaining and operating servers. The SaaS model offers customers a great deal of flexibility and a variety of services can be offered in this fashion, leading to the term XaaS, where “X” can stand in for anything.

A recent study by the Professional Services Council and Market Connections found that 64 percent of government contractors see SaaS as a business opportunity. But just 21 percent of government agencies have plans to implement SaaS solutions. Unfortunately for government contractors, the public sector moves more slowly than the private sector. Much more slowly. As a result, contractors can spend time and money developing solutions that government agencies may not buy.

It’s not always possible to make the wheels of government move quickly but there are steps that contractors can do to get them turning. In a blog post, Market Connections suggests that educating potential customers about the solutions is a good way to spark business development. Another way to nudge government agencies into a purchase decision is by conducting a market opportunity assessment, which determines the growth potential of a particular product or service. Such studies can help a contractor and a client understand whether the services offered are adequate and whether any changes or additions need to be made. The bottom line for contractors is that securing government contractors comes down to basic customer service – understanding a government agency’s wants and needs and being prepared to fill those needs. For more information, contact us.

November 14, 2014

Mobile Apps, How They Are Shaping Our Government

It seems like there’s an app for everything these days. Track your caloric intake. Find your favorite coffee house. Deposit a check. Find an alternative route to avoid traffic. Analysts at Flurry estimate that mobile phone users spend two hours and 19 minutes per day using apps. Gartner, IT spending forecasters, estimates mobile app downloads will reach an annual revenue of $77 billion this year. The private sector isn’t the only one partaking of this boom, however. The federal government and numerous states and municipalities are utilizing apps to collect data, provide information and improve customer service. In fact, in 2012 President Obama asked government agencies to create at least two apps to better serve the public. They listened. Here are four of our favorites.

  • US Census Bureau: Labeled America’s Economy for Phone, this apps says it gives users a “pulse on the U.S. Economy straight from your phone.” The apps provides users with access to 19 real-time key economic indicators from the U.S. Census Bureau, Bureau of Labor Statistics and Bureau of Economic Analysis including trends regarding employment, construction, international trade, manufacturing and retail sales.
  • Department of Defense: This government department has 12 different apps that cover simple news and updates, offer access to financial aid resources, provide a portable stress management tool in an app called “Breathe2Relax, and the “mTBI” app, aimed at helping physicians identify patients with Traumatic Brain Injury (TBI) and develop a management plan. Additionally, the Department of Veterans Affairs has an app called “PTSD Coach,” offering sufferers with support, resources and a self-assessment tool.
  • Department of Energy: Three apps are available to make “going green” easier. Apps help vehicle operators locate alternative fueling stations, compare the most fuel efficient vehicles, calculate gas mileage, and access the latest science and research.
  • Small Business Administration: The SBA app helps users find advisers, SCORE representatives, Women’s Business Centers and Small Business Development Centers nationwide. Additionally, users can calculate start-up costs and receive the latest small business news.

From apps that help track and arrest child predators to apps that help Department of Children and Families representatives in the field find Head Start programs for their clients, mobile apps are shaping our government. You can review a complete list of available government apps at www.usa.gov/mobileapps.

Financial Engineering Counselors prides itself on being a resource for government contractors, commercial companies, banks, other financial institutions and professionals. Let our expertise work for you. Contact us for a consultation.

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