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Ode to the NAICS Code

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A fundamental building block of your company’s government contracting existence. The NAICS codes define you, quite literally, by associating your offerings with a certain segment of the universe of products and services sold in North America.    Then why are they so difficult to get right?

First, let’s define the problem.

According to the U.S. Census Bureau, NAICS, or “North American Industrial Classification System”, is the standard used by Federal statistical agencies in classifying business establishments for the purpose of collecting, analyzing, and publishing statistical data related to the U.S. business economy. NAICS was developed under the auspices of the Office of Management and Budget (OMB), and adopted in 1997 to replace the Standard Industrial Classification (SIC) system. It was developed jointly by the U.S. Economic Classification Policy Committee (ECPC)Statistics Canada, and Mexico’s Instituto Nacional de Estadistica y Geografia  to allow for a high level of comparability in business statistics among the North American countries.

As of February 2016, there are 1045 active NAICS codes.  536 of them refer to services (from banking to industrial launderers to fur-bearing animal production), 509 refer to wholesalers and manufacturers (from music stores to dental labs to fasteners/buttons/needles).

And there must be one out there that perfectly describes you, and if you find it, everything is smooth sailing…

Not so fast.

Federal contractors need to look at NAICS Codes, much like they need to look at everything else they’re doing in pursuit of business: from their customer’s viewpoint.

So here are some best practices for figuring out what your NAICS codes should be.

Step I: Easy Stuff

  1. The Obvious ones. Go to naics.com, type in a keyword or two for what you do, and a couple will pop up. There might be even several that are close enough or fall within the range of your products and services. Write them all down. You don’t have to pick a “primary” one yet.
  1. Follow the Leader. What NAICS are your teaming partners and competitors using? Look at their websites, business cards, capabilities statements – the numbers aren’t a secret code. They’re a common denominator for associating similar products/services. If your direct competitors are using them, you might want to.
  1. Procurement History. I happen to love award analysis and historical data – it’s the best prediction of future behavior in government entities, because they tend to follow similar processes when doing the same work.  So if you look at usaspending.gov and www.fpds.gov and even www.fbo.gov, you’ll find that the NAICS codes associated with most of the work they’re going to be procuring are NAICS codes they’ll use again and again.  Much of the time, the NAICS codes will be the same as you found in steps 1 and 2.  So why bother?

 

Step II: Secret Squirrel  Methodology [The logic behind seemingly illogical coding]

When you searched procurement history, you probably came across NAICS Codes that did not make sense. I have found “frozen foods” purchases coded as IT services. I recently even ran across a Piano purchase that was coded as an armored vehicle (Contract # VA24416F6918 if you want to see for yourself).  There are 2 things you need to think about: why does that happen, and what do you need to do about it.

First, Why, oh why, do NAICS codes used by my customers make no sense to me?

  1. Government is buying something to Meet Their Mission. Like I said earlier, put yourself in your customer’s shoes – they are not buying landscaping or cloud software because they want that particular product. They’re buying it because it is part of their mission – and the agencies’ budgets are allocated into big buckets to be spent on missions. It’s much easier to budget, track, award, and maintain contracts in those same buckets, therefore the NAICS Code will often reflect the customer’s end goal, not the

    means they are using to meet it.  If you are building a data center to support a mission to Mars, it might be coded as a data center – but it’s a lot easier for your customer to track the expenditures and justify to Congress an expense that is aligned with a mission vs. just a purchase for the back office.

  2. Mistakes Were Made. Government entities have procurement cycles, when something expires, they buy it again.  If the NAICS Code powers change the code and you missed it, you might be buying something under an expired code without realizing it.  Or maybe you transposed a digit and typed 12 where you meant to type 21. And now you have a whole new NAICS code and that’s how pianos get turned into tanks.
  3. “Small” Business affinity. NAICS Codes aren’t uniform, they have many different standards for determining whether an entity is small. While they vary across individual codes, the two major delineations are:
    1. For services, the standard is the average of the last 3 years annual revenues
    2. For products / manufacturers / wholesalers, it’s the number of employees

Let’s say there’s a $20 million dollar business that has been doing great work and when the contract comes up for recompete, the government customer wants the company to be included in the competition – have a chance to win the work.  Would the government ever put that procurement, if it’s a small business set-aside, under a NAICS code where the small business threshold is $6M? No, because that would preclude them from competing altogether.

So what do you do? Stay calm and do research.  When you are searching for opportunities and past awards, use a variety of search cirteria – keywords, agencies, vendors, not just NAICS, because if that’s the only criteria – it will be both too broad, and at the same time, too limiting as you are likely to miss good opportunities.

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Navy signs MOU with GSA

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GSA and Department of the Navy recently signed a memorandum of understanding for extended use of the OASIS (One Acquisition Solution For Integrated Services) contract for complex professional services requirements. Its focus includes, but is not limited to; Military Engineering, Aircraft R&D, and Space and Missiles R&D. Using the OASIS contract offers the NAVY a streamlined acquisition tool to meet its requirements while reducing costly duplicate contracts. Additional information: OASIS@GSA.GOV.

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Procurement Instrument Identifiers (PIID) structure changes

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Source: Defense Logistics Agency

In order to standardize procurement transactions across the Federal Government, the Federal Acquisition Regulation (FAR) Subpart 4.16, Unique Procurement Instrument Identifiers (PIID) has been amended to implement a uniform award identification system referred to as the Procurement Instrument Identification (PIID).

For DLA, the new PIID structure will continue to require use of Activity Address Codes (AACs) as the unique identifier for contracting offices, the current fiscal year, instrument type and a four-character serial number.   Existing contract, purchase order, and delivery order numbers will not change.

Beginning October 1, 2016:

  • Manual purchase order numbers will change from “M” to “P” in the 9th position.  Automated purchase orders will continue to use a “V” in the 9th position.

Beginning October 2017:

  • Task/Delivery Order numbers will be issued with a unique 13-character delivery order number as described above, containing “F” or “M” in the 9th position; the current four-character supplementary call number identifier will no longer be utilized.
  • A “M” in the ninth position of the PIID will identify purchase orders and task or delivery orders issued by the enterprise FedMall system.
  • All modifications, including modifications to calls and task/delivery orders, will utilize a 6-character format, added to the 13-character PIID being modified.

More information about the October 2017 changes will be provided as we move closer to the implementation date.

Please monitor the DLA Internet Bid Board System (DIBBS) and/or the Supplier Information Resource Center (SIRC) for updates.  Additional information will be provided as we move closer to the implementation dates.

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Before You Start… (and how to make the best use of your PTAP)

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Virginia PTAP (and our nationwide colleagues) are happy to welcome you to government contracting. We will do our best to help you succeed at selling to state, local, and federal agencies.

Some businesses, however, aren’t ready for government contracting, and your meeting with a PTAP counselor, or your attendance at a class can be frustrating, overwhelming, and (let’s be honest), disappointing.

So let’s get this secret out of the bag: PTAP is not intended to help you start a business. That’s outside our mission, that’s something our grant funder (Department of Defense) specifically frowns upon, and that’s the kind of assistance we recommend you seek from our resource partners, such as the Small Business Development Centers, Women’s Business Centers, Veterans Business Outreach Centers, and SCORE.

In fact, before you meet with a PTAP counselor or attend even our introductory “Basic Training” class, we recommend that your company obtains:

Legal Requirements (for any business)

  1. State entity registration if your business is anything other than a sole proprietorship (LLC, Corp, LLP….)
  2. Federal Tax ID Number (TIN / EIN) from the IRS
  3. Business license from your state / locality (in Virginia, it’s called a BPOL)
  4. Business Plan

PTAP Counselors won’t usually ask to look at your documentation, unless they’re helping you submit a certification that requires above-mentioned paperwork.  However, in order to start registering as a vendor to any government entity, businesses must meet certain basic requirements.  If you are sure that you are going to pursue government work, get these out of the way.  And as far as the Business Plan – again, while we don’t require written proof that you created one for your business, we do want to ascertain that you are serious, that you have considered the pros and cons and financials and business structure and have a plan.  We will absolutely help you refine it, give you a reality check, and assist with a proof of concept; but if you’re not serious about your business, there really isn’t much we can do to overcome that.

Government Contracting Specific Pre-Requisites

  1. Identify your NAICS and PSC Codes (Federal)
  2. Identify your NIGP Codes (State / local)
  3. Obtain a DUNS Number
  4. Register in SAM = obtain a CAGE Code.

This is a bit more of a chicken-and-egg category.  Yes, we can help you figure out all of these codes and numbers and what you should select.  However, the best advice at the outset is that you try to identify the codes that apply to your business. Attempt to get a DUNS number. See if you can register in SAM.  If you get those steps out of the way without a snag, then your meeting with your counselor can cover more in-depth, “next step” material.  And if you do have questions or run into technical difficulties, that’s absolutely an area where a counselor’s perspective will be invaluable.  (Hint: make sure the physical address for your Tax ID, DUNS, and SAM is *identical* down to the letter and abbreviation).

You and your counselor should review your registrations during your session, and we will have some insight into additional / related / adjacent codes to consider.  You’ll hear tips and tricks in classes.  We’ll explain the purpose and utilization of all of these by your target customers. And we’ll give you next steps, like competitive and customer analysis, DSBS profile creation (and much more!) — built on the foundation of the basics you have completed.  There’s a lot more to government contracting, so the sooner we get these “pre-requisites” out of the way, the sooner we can do some real work.

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No, you can’t just “Apply” to the Mentor Protege Program

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The long-anticipated, much applauded, expanded SBA All Small Mentor Protege Program is here.

So what?  What does it mean to your small business?   How do you take advantage of it?

Well, let’s talk about the mechanics.

Mentor Protégé Program (MPP) is an agreement between typically a large business (mentor) and a smaller business (protégé) whereby the mentor provides:

  • Management and Technical Assistance
  • Financial Assistance
  • Contracting Assistance
  • Trade Education
  • Business Development Assistance
  • General and/or Administrative Assistance

(source: SBA)

to the protégé, essentially investing resources into the company’s growth and infrastructure.  It’s not a direct government-to-small-biz program: there’s no application that small businesses fill out to ‘get in’ – but there is a checklist.  It’s an agreement between two businesses that is regulated and approved by either the SBA (for civilian agencies) or the DOD. (note, the DOD Mentor Protege Program was NOT affected by the new SBA rule – they have their own).

The reason large businesses are incentivized to become mentors is:

  1. Civilian agencies – ‘credit’ program: agencies will give “credit” to mentors when considering for awards.  This can also help mitigate gaps in subcontracting requirements for them. mentors can get credit depending on agreement, if their protégé wins work independently as well (because the implication is that the mentor’s help was instrumental in getting the company ready)
  2. DOD – reimbursement agreements. DOD does credit agreements, but some DOD agencies will give dollars directly to the mentor to invest in the protégé.  The financial benefit is obvious to both – the mentor isn’t spending internal resources helping the protégé, but rather the DOD’s money.

Epilogue: how can we help?  Virginia PTAP’s affiliated organization, the George Mason Mentor Protege Program (Mason MPP) helps mentors execute and manage the agreements. Mason MPP starts with a needs assessment of the proposed team (Note: they not do “matchmaking” or finding a mentor for a business), then they’ll craft an agreement that will pass the government agency’s muster (all MPP agreements have to be approved by a federal agency).  Then Mason MPP will help the mentor deliver the technical assistance on the mentor’s behalf.

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Do Your Homework!

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Tell me if you’ve heard this one before – from contracting officers, OSDBUs, SBLOs, your well-meaning networking acquaintances and teaming partners and Chamber of Commerce #govcon speakers…And you have no idea what they are talking about.

What homework? How much do I have to do? where do I start? What’s the point? Are you just letting me down easy to wiggle out of a conversation? (Well, I can’t answer that last one – but I can certainly help guide you in the homework-doing department).

What the industry experts mean by ‘homework’ is to be prepared for a conversation with a potential customer – whether it’s a government agency, a large prime, or a similarly small business who you want as a partner.  Prepared to not just to recite to them how great you are, but to speak to your value proposition. What can you do for them?

Well, what can you do for them?

If you are even thinking about responding with something along the lines of “well, I can sell them my…” – STOP.

Federal agencies, and the food chain of contractors that you want to be a part of aren’t just buying products and services, no matter how shiny and cool. They aren’t “giving out” contracts, there are no magic words that would enable a government agency to suddenly bypass decades of processes and volumes of rules just to do you a favor.[1]

So how do you figure out what your customer wants to hear?

  1. Get to know your customer

How do you even know where to start, who would be a good customer for you? You may know from experience, which puts you a step ahead. But if it’s just a hunch – test that hypothesis through solid research before venturing out – you’ll save a lot of frustration and parking dollars.

  • What have they bought before? From whom? Where? How much did they spend? What kind competition do they usually have for your products/services? What NAICS do they use to buy your gadget?  Tools like USASpending and Schedule Sales Query are a good start. If you’re in IT, familiarize yourself with the IT Dashboard.
  • What are they on the market for currently? Opportunities in FBO, Procurement Forecasts.
  • Want more? Look at GAO reports, Inspector General’s office findings. What are your customers posting on Twitter? Are the decision makers speaking at conferences on topics of interest?
  • If you’re meeting with primes, find out in advance what they do. Their websites are a great start.
  1. Present yourself

Elevator Pitch, Business Card, Capabilities Statement, and a website. Know them, have them, invest in them. You want to present yourself as an established business that isn’t risky in any way. You want to appear polished and professional, memorable and knowledgeable.  If you are even thinking about sending an email to a government customer from a yahoo or gmail account, don’t do it. Get a company website with an email @your own domain. There are tools out there that make it really easy to put together a presentable website even for non-IT folks, for not a lot of money. Wix, SquareSpace are so easy, even I can do it.

They’ll be much more likely to invest time and answer questions from someone they see potential in.  They’ll be much more likely to send a complete newbie to their local PTAP office for the basic skills.

  1. Engage and ask the right questions

Forget asking your customer “what do you do.” If you haven’t figured it out, you’re wasting your time and theirs.   Now, if you are meeting a company you haven’t heard of at a networking event, that’s a fine question.  At a planned appointment, when you’ve had a chance to pull up their website at the least, it’s a taboo question.  If you’ve done the reading, you know what they do, you know what they buy, you know who they buy it from and how much they spend annually.   The questions you ask should showcase your knowledge of their environment and challenges, a subtle indication that you know exactly how to fix things – and a desire to understand their ideal state.

There are a number of opportunities to meet your customers – yes, at their office. Also at industry days, conferences, in LinkedIn groups, in local AFCEA, NCMA chapters, industry-specific organizations, and even on social media. Where are they going to learn? Where are they going to share information?  Don’t forget that your customers are people too – and can be found at dog parks and PTA meetings and home improvement stores. I’m not advocating stalking, but there’s a lot you can learn in a casual, no pressure, non-sales interaction that can enlighten your business development / teaming / proposal strategy.

This is plenty of homework to get started. If you need help, we’re here to help you work on your pitch, review your capabilities statement, assist with market research.

 

[1] Yes, there are instances where companies get work faster than the usual contracting timeline. That is the stuff of legends in our field. Usually, such miracles are the result of a lot of hard groundwork and persistence.

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BUCHANAN & EDWARDS to be GOLD Sponsor of the Department of State / Virginia PTAP Government Contracting Conference

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May 23, 2016 – For Immediate Release: BUCHANAN & EDWARDS, INC. to be Gold Sponsor of the US Department of State / Virginia PTAP Government Contracting Conference

Fairfax, Virginia: The U.S. Department of State is partnering with the Virginia Procurement Technical Assistance Program (PTAP) at George Mason University (GMU) to host the inaugural, 1st Annual Small Business Overseas Government Contracting Conference.  The goal of the conference is to enable small businesses to help the U.S. Department of State meet its overseas missions.

“We appreciate Buchanan & Edwards, Inc. (BE) for giving back to the small business community by supporting the mission of the U.S. Department of State and Virginia PTAP.  As a successful State Department small business contractor and PTAP client, BE’s participation in the event is a wonderful example of the mutually beneficial, collaborative environment between industry and government.” Said Virginia PTAP Director, Anna Urman.

BE’s State Department work dates back to the founding of the company: “From our beginning supporting one Department of State Bureau in 1998, BE’s customer base has growth to 26 Bureaus, including all regional bureaus. Within the U.S., we provided system architecture design and modernization for the Bureau of Human Resources’ Foreign Service Bidding Application (FSBid) to improve system functionality and enhance the overall user experience. For the Bureau of Information Resource Management (IRM) Systems Integration Office (SIO), we support the world’s largest Government SharePoint implementation.  We have developed automated scripts that enable us to create a new SharePoint server farm within hours. Globally, we developed a solution for the U.S. Embassy in Pretoria, South Africa that streamlines the invoice approval process, improves management visibility and reporting, and minimizes the risk of lost invoices and late payments.  Our leading edge solutions include implementations that have been deployed on-premises as well as to the cloud.  These solutions were for R/PPR and ECA.  For R/PPR, we were trailblazers in regards to deploying secure solutions to the cloud as policies regarding cloud were and continue to be crafted by the Department. We also provide SharePoint support for the US Consulate in Frankfurt, Germany. Through our support of other DoS programs, such as the Human Resources Knowledge Center, we touch the daily work of DoS employees around the world.”

The inaugural conference is currently SOLD OUT at over 300 participants, including small businesses, large primes, and several government agencies that operate in the international space, including USIAD, Department of State, and the Department of Commerce.

For more information about the event, please visit http://vaptap.ecenterdirect.com/events/1661.

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SAHOURI Insurance & Financial GOLD Sponsor of State Dept / PTAP Government Contracting Conference

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May 23, 2016 – For Immediate Release: SAHOURI INSURANCE &FINANCIAL to be Gold Sponsor of the US Department of State / Virginia PTAP Government Contracting Conference

Fairfax, Virginia: The U.S. Department of State is partnering with the Virginia Procurement Technical Assistance Program (PTAP) at George Mason University (GMU) to host the inaugural, 1st Annual Small Business Overseas Government Contracting Conference.  The goal of the conference is to enable small businesses to help the U.S. Department of State meet its overseas missions.

“Thank you Sahouri for supporting the mission of the U.S. State Department and Virginia PTAP by signing on as Gold Sponsor. We appreciate your commitment to the small business community; your contribution will enable us to share much needed resources and information with the government contracting community.” Said Virginia PTAP Director, Anna Urman.

Since 1970, SAHOURI INSURANCE has been dedicated to helping government contractors and overseas operations succeed with cost-effective insurance, risk management, and employee benefit solutions. SAHOURI created BASE, an exclusive Defense Base Act Insurance program designed to provide the cost effective coverage that overseas government contractors need.

The inaugural conference is currently SOLD OUT at over 300 participants, including small businesses, large primes, and several government agencies that operate in the international space, including USIAD, Department of State, and the Department of Commerce.

For more information about the event, please visit http://vaptap.ecenterdirect.com/events/1661.

 

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Virginia PTAP Announces RTI International as Gold Sponsor of Veterans International Small Business Conference

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November 6, 2015

Fairfax, Virginia: The United States Agency for International Development (USAID) is partnering with the Virginia Procurement Technical Assistance Program (PTAP) at George Mason University (GMU) this year to host the 2nd Annual Veterans International Small Business Opportunities Conference (VISBOC).  The VISBOC conference is specifically designed to benefit Veteran owned small businesses.  This conference will take place on November 10, 2015 in Arlington, VA.

“We are proud to announce that RTI International is partnering with us to be a Gold Sponsor for the VISBOC Conference. We appreciate their commitment to supporting veteran-owned small businesses,” said Virginia PTAP Director, Anna Urman.

RTI International is one of the world’s leading research institutes, dedicated to improving the human condition by turning knowledge into practice. RTI’s supplier diversity initiative fosters economic growth and is designed to engage the suppliers that provide the needed expertise and best value solutions. RTI engages and empowers staff members to embrace and expand utilization of veteran owned-, service disabled veteran owned-small businesses. “The viability of small business concerns is an integral element of domestic and international economic development, and we hope to expand our utilization of Veteran Owned-, Service Disabled Veteran Owned-Small Businesses,” said Hudson Oliveira, Director – Supplier Intelligence and Monitoring, RTI International.

This year, VISBOC will draw over 200 participants, including small businesses, large primes, and several government agencies that operate in the international space, including USAID, Department of State, Overseas Private Investment Corporation, and the Millennium Challenge Corporation.

To register for the conference, please visit http://vaptap.ecenterdirect.com/ConferenceDetail.action?ID=1464

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Virginia PTAP Announces Tetra Tech as Gold Sponsor of Veterans International Small Business Conference

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November 3, 2015

Fairfax, Virginia: The United States Agency for International Development (USAID) is partnering with the Virginia Procurement Technical Assistance Program (PTAP) at George Mason University (GMU) this year to host the 2nd Annual Veterans International Small Business Opportunities Conference (VISBOC).  The VISBOC conference is specifically designed to benefit Veteran owned small businesses.  This conference will take place on November 10, 2015 in Arlington, VA.

We are proud to announce that Tetra Tech signed on as Gold Sponsor for the VISBOC Conference. We appreciate their commitment to supporting veteran-owned small businesses,” said Virginia PTAP Director, Anna Urman.

Tetra Tech has been a leading provider of consulting, technical assistance, engineering, program management, staff support, and capacity-building services to the U.S. government since its founding in 1966. They operate in more than 100 countries and territories, with approximately 13,000 employees, over 300 offices worldwide (including several in the National Capital Area), and an annual revenue of over $2.5 billion.  Tetra Tech has a strong record of supporting USAID’s mission in steady-state, austere, contingency, post conflict, and high threat environments for nearly 40 years.  For more information on their international development assistance, please visit http://www.tetratech.com/en/international-development, and this link will provide information on becoming a partner or vendor http://www.tetratech.com/en/suppliers-and-partners.

Tetra Tech also has a strong history of assisting small business and veteran-owned small businesses. As Jan Auman, President of Tetra Tech’s International Services Division, notes, “We are proud of our relationships with small business and veteran-owned small businesses.  Over the past five years, we have subcontracted roughly $1.25 billion to small businesses, with more than 10 percent going to veteran-owned and service-disabled veteran-owned small businesses. We are also increasingly subcontracting to many of the same small businesses who are more frequently serving as a prime contractor. Sponsoring events like VISBOC is another way we are able to help give back to veterans, support the growth of small business, and support USAID’s efforts to facilitate the development of more veteran-owned small business implementing partners.”

This year, VISBOC will draw over 200 participants, including small businesses, large primes, and several government agencies that operate in the international space, including USAID, Department of State, Overseas Private Investment Corporation, and the Millennium Challenge Corporation.

To register for the conference, please visit http://vaptap.ecenterdirect.com/ConferenceDetail.action?ID=1464

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