Last week I had the opportunity to meet David Hahn the new chairman of the NDIA Small Business Division. David presented his briefing on the plans for the Small Business Division for the coming year. There was also a lively discussion from other small business owners in the meeting as there are definitely some issues that small business owners have in the area of Government Contracting.
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For many seasoned government contractors dealing with the Department of Defense, the Wide Area Workflow (WAWF) system is already a familiar tool. It may not be a well liked tool, opinions vary on this system, but many contractors are already using this tool. The system is continually being refined so that it can do more things and, at the risk of sounding facetious, easier to use. There were revisions to the system in 2013 (March 2013, version 5.4.0 & July 2013, version 5.4.1) and again this year (January 2014, version 5.5). A lot of the changes in the last year are minor in nature but some are worth noting:
As the Federal Government's budget crisis continues to unfold, many people are starting to believe that there will be a "war on profits". The government has always wanted a good deal from government contractors and that includes defining a certain limit on the amount of "fee" or profit that they are willing to pay. This is especially true on cost reimbursable type contracts. Of course, many government contractors are looking for excuses on why they are loosing some business from their biggest customer. While the government is trying to reduce waste and trim budgets, they claim that they are not trying to force contractors to take unreasonably low profits or no profits. The Pentagon has assured contractors that they are not trying to eliminate profits or restrict them. They are trying to eliminate cases where any contractor may be taking advantage of the government. This becomes a delicate line to walk. Many times in the past the lower than normal profits on government contracts could be rationalized as a cost of doing business in exchange for a large customer that always paid their bills and always paid on time (as long as you followed the procedure). You didn't have to worry about a "bad debt expense" with this customer. But there were a small percentage of firms that took advantage of the government. This abuse caused headaches for all government contractors as more rules and regulations are constantly added to help prevent the abuse of "the system".
President Obama has sent his preliminary budget request for FY2014 to Congress as of Wednesday this week. In his release, President Obama stated that the budget would emphasize job creation, emphasize education, health care and emphasize energy independence. He replaced certain Sequestration cuts with more targeted cuts that should result in an additional $1.8 trillion cut (he stated this was a compromise offered to Speaker Boehner) that he indicated is more balanced than the sequestration cuts.
Sequestration is now a reality. OK, a 5 to 10% cut across the board and no big deal, right? Who hasn't had to deal with a 10% cut in business and managed to make the adjustment? If that was all that was asked, I don't think there would be this much complaining. The real issue is the compounding of several events. It started in 2010 when the Defense Department announced they would trim $100 Billion from their budget over the next 5 years. Then came the Budget Control Act in 2011 that required the Defense budget be cut by $487 Billion over the next 10 years. Add to that the recent pressure to reduce the budget for 2013 and 7-10% Sequestration cuts across the board. Not to mention the continuing resolution, which is still looming, that threatens to reduce the 2013 proposed budget further. I just saw today where congress is considering a plan to reduce the effects of sequestration by replacing it with a "more responsible" spending cut plan that could soften the blow in the DOD.