Help clients get government contracts: quick, who is the biggest customer in the world?

EXECUTIVE SUMMARY

* The U.S. government is the biggest buyer in the world. CPAs can help clients build business by learning the federal procurement process and advising on how to compete successfully for a share of government business.

* Companies first must obtain a data universal number (DUNS) from D&B, know the appropriate government product and service codes and have all required licenses.

* The federal government requires vendors to prequalify. The Central Contractor Registration Handbook (www.ccr.gov/handbook.asp) is an excellent reference guide for the process and provides all the necessary links.

* The Central Contractor Registration Web site (www.ccr.gov) is a gateway for doing business with the federal government. Registering with it shows that businesses are prepared and provides them with visibility.

* Registration information must be accurate and it must be updated at least annually to be eligible for special programs and set-asides.

* The federal government has embraced paperless/e-commerce technology in a big way. It highly encourages companies to provide all solicitations, proposals, bids, quotes, awards, invoicing and payments electronically. A client who does not currently have this capability is a candidate for an additional service.

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It's the U.S. government, of course. CPAs in public practice who take the time to understand the federal procurement process can help clients tap into this enormous buyer of goods and services.

Helping clients compete successfully for a share of government business adds value to your firm's services, facilitates cross-selling and increases revenue. Learning procurement protocol and developing relationships to better navigate this highly regulated marketplace can benefit your employer, too. This article provides an overview of the federal procurement system and suggests strategies for acquiring the expertise you need to steer interested parties through the registration process.

QUALIFICATION REQUIREMENTS

Like any large entity, the federal government requires vendors to prequalify An excellent reference guide for this process is the Central Contractor Registration Handbook, which is available at www.ccr.gov/handbook.asp. The book explains the process in detail and provides all the necessary links that support registration, including authoritative federal acquisition regulation (FAR) information. Each branch of the military has a version of FAR. For an example, the Air Force's FAR is at http://farsite.hill.af.mil/. It is easier to register if you first do some research on government requirements.

There are several preconditions to registration: obtaining a data universal number (DUNS), knowing the client's product and service codes, and having the requisite business and other required licenses. Clients can obtain a DUNS free from D&B (www.dnb.com/ccr/register. html). This nine-character number uniquely identifies your client's business.

Next determine your client's industrial classification code under the North American Industry Classification System (NAICS); it will identify your client's products within the federal procurement database. It is essential to be familiar with NAICS so that you properly classify goods and services within the database of federal contractors. Refer to this Web site for information and guidance about the process: www.census.gov/epcd/www/naics.html.

Qualifying as a small business or other preferential seller brings significant advantages. Each federal agency has individual targets for small business purchases--and these often are allocated regionally. To take maximum advantage of these targets, your clients will need to meet the program eligibility criteria for small business in the appropriate NAICS classification for the goods or services solicited. It is possible to register in multiple industry classifications and independently meet the small business criteria in one or more of them.

REGISTERING CLIENTS

Now you're ready to register with the Central Contractor Registration Web site (www.cer.gov), the gateway for doing business with the federal government. Registration gives companies visibility and shows their readiness to do business. You'll be required to enter descriptive information about your client, including ownership, a point of contact, banking information, tax ID and summary financial information for the past three years, if available, and whether it is eligible for small business programs or other special programs. All information provided is subject to verification and is made available to federal agencies and their contracting personnel.

It's especially important to properly identify and register smaller businesses that may be eligible for special programs and set-asides--that is, special contracting award targets. Small business designation criteria vary by industry classification. In some industries classification depends on the number of employees; in others it depends on the average revenue over the past three years.

The Commerce Department annually reviews and changes thresholds for small business status. Qualifying as a small business entity can bring significant advantages. Clients also can register multiple business lines, some of which might meet the small business criteria. A registrant's classification is determined automatically based on information provided with CCR registration. Registration information must be updated at least annually--and it must be accurate. Small business or other preferential contractor status is subject to challenge by competitors, and errors can result in denial of contract awards.

It is worthwhile for your small business clients to contact the local Small Business Administration (SBA) office as well. It plays an important advocacy role for small businesses and puts valuable resources at their disposal. The Procurement Technical Assistance Center (PTAC) also is a good stop to identify opportunities for smaller businesses. This quasi-government organization is very knowledgeable about government procurement systems at both the federal and state levels. These offices vary regionally--some states have many while others have none. The SBA Web site (www.sba.gov) lists SBA and PTAC offices.

Note that the federal government has embraced technology in a big way. It highly encourages vendors to submit all solicitations, proposals, bids, quotes, awards, invoicing and payments electronically If your client does not currently have this capability, this is another service opportunity you can offer.

Once registered, your client is ready to find out who is buying what. We'll discuss several ways to locate business opportunities after we review the solicitation and awards process. Most solicitations for more than $25,000 are posted on the Federal Business Opportunities (www.fbo.gov) Web site.

REACH OUT

Get your client out into the field to meet contracting officers and possibly give "capabilities briefings." The PTAC also can help you identify local contracting offices and key staff. It is a good idea to contact them directly to introduce your client(s) and discuss opportunities. Every federal agency whose contracting office makes annual awards in excess of $100 million has a designated full-time small business specialist whose job it is to fulfill purchase "targets" for that agency. Agencies that spend less than $100 million annually will not have a dedicated staff member but will have someone designated to fulfill targets. Following up with those agencies is important to keep your client from falling through the cracks.

The next step is to submit a proposal to provide the goods or services. You must work through several important considerations with your clients. First, the federal government has moved away from "lowest price" criteria to "best value." You must impress upon your clients how important it is to study the solicitation and identify the criteria (for example, past performance, experience or price) being used to rate proposals.

Each solicitation will identify the NAICS classification based on the type of goods or services requested. It is possible to challenge the NAICS classification of a particular solicitation, but you must do this prior to a contract's award. Often, selection of the NAICS classification is done by the soliciting agency's local contracting officer. That individual may buy goods and services across the entire spectrum, and errors are possible. Challenges must be timely and must follow specific rules outlined in the appropriate FAR.

The requesting agency's contracting officer will review the proposals received in response to each solicitation and make a formal award. If your client is chosen, it is important to perform satisfactorily to receive future business. The government maintains a blacklist of companies and individuals on the CCR Web site that contracting officers are required to search before making an award.

As mentioned, the federal government has implemented a paperless contracting process that requires electronic invoicing and payments. Invoicing requirements are specified on the Wide Area Work Flow (WAWF) information page (www.dod.mil/dfas/contractorpay/electroniccommerce/wideareaworkflow.html). Payments will be delayed if documentation is incomplete or late. Payments will go to the bank account identified in CCR registration, though this can be changed easily.

A SMALL ADVANTAGE

One strategy for success in seeking federal contract awards is to play the "small business card." Significant benefits are available for clients who qualify as small businesses or as minority, veteran or disabled businesses. All federal agencies are allocated targets to encourage them to award contracts to small or preferred businesses. The allocations are established every Oct. 1, the first day of the federal fiscal year, and your clients can request the information from local contracting offices.

Your small business clients also can take advantage of PTAC resources that help them promote and network in federal and state procurement systems. Those offices are staffed by knowledgeable people who can identify needs and assist businesses in proposing solicitations. They meet regularly with federal and state contracting officers in their region and can help businesses become more visible and connect with the right people.

Not all federal purchases occur through the traditional solicitation/award channel. Purchases of less than $2,500 are exempt from the contracting registration requirements discussed above, and federal agencies may make them directly by using a government purchase card (GPC). Clients' best way to attract such small purchases is through normal business channels such as Yellow Pages advertisements and direct-marketing efforts.

Many prime contractors--those firms that are awarded very large projects or systems-development contracts--have targets as well as financial incentives they try to fulfill through subcontracting. These represent significant business opportunities. You can identify prime contractors working in your region through the Directorate for Information Operations and Reports (http://siadapp.dior.whs.mil/). Reports are available by region and identify all large-dollar contracts and contractors.

Another useful source is the military's long-range acquisition estimates, which forecast anticipated procurements for military installations for the current fiscal year and beyond (www.selltoairforce.org/ opportunitierg/rae.asp). These are helpful in identifying upcoming solicitations and making the necessary preparations to compete successfully.

An equally good strategy is to ask the contracting offices in your area what purchases they've made over the past year(s) to identify those products that have been most in demand. A CPA firm could collect and maintain a database of purchases in its region and provide analysis to help clients obtain contracts.

Despite the e-commerce focus of government contracting, adding a personal touch is a key strategy Meeting regularly with local contracting officers can pay large dividends. Since they buy a wide range of goods and services, it is difficult for them to keep track of all the local vendors, especially the smaller ones. Regular meetings with them provide useful information about past and planned future acquisitions, preparing you to offer even better service to your clients.

Even though your clients may find it overwhelming to navigate through the procurement process to win federal government contracts, with your help and knowledge your clients can make the dream a reality.

Big Opportunities

Of the more than $314 billion in federal contracts awarded in FY2005, about 25 percent (nearly $80 billion) went to small businesses.

Source: Small Business Goaling Report, Federal Procurement Data System, www.sba.gov/GC/goals/SmallBusinessGoalingReport_2005.pdf

General Services Administration (GSA) contracts

GSA contracts can be a great source of business for CPA clients or employers. Direct purchases using federal government purchase cards (GPC) do not follow the standard procurement process, and buyers have incentives to locate and use GSA contract holders. In becoming a GSA contract holder, a business must commit to provide goods or services at a specified rate for a fixed period of time and to link to the GSA Web site. Sales are generated largely through direct-marketing channels such as Yellow Pages listings, Internet searches, trade fairs and advertisements.

Practical Tips

* Make sure clients obtain a data universal number (DUNS).

* Impress upon your clients how important it is to study a solicitation and identify its criteria.

* Determine the client's industrial classification code under the North American Industry Classification System (NAICS).

* Find and talk to the designated fulltime small business specialist whose job it is to fulfill purchase "targets" for specific federal agencies.

* Meet regularly with local contracting officers to learn about past and future acquisitions; bring clients with you.

* Clients can register multiple business lines, some of which might meet the small business criteria, a category with special advantages.

8(a)-Designated Small Businesses

Qualifying minority and/or economically disadvantaged businesses get a special break in the form of the Small Business Administration's 8(a) designation. The SBA confers 8(a) status after documenting and verifying a small business's need.

Some minority-owned businesses qualify automatically (for example, Alaskan- and American Indian-owned businesses). Other minorities must demonstrate both economic and political disadvantage. Qualification has significant economic benefits. These entities can request and receive noncompetitive awards of as much as $3 million from federal agencies. It is desirable but not required that 8(a) entities participate directly in providing the goods or services that are the subject of the contract; in fact, forming joint ventures is common with established businesses.

AICPA RESOURCES

Practice Aid

CPA Marketing Tool Kit offers tools to help members promote their practices and services, www.aicpa.org/Professional+Resources/Public+Accounting+ Firm+Resources/CPA+Marketing+Toolkit/.

CPE 

* Successful Selling Strategies for CPA Firms (DVD/Manual (79-min. video), # 181190XUJA; Manual for DVD, # 351191XUJA).

Publication

* Management of an Accounting Practice Handbook (loose-leaf version, # 090407JA); e-MAP (online version, # MAP-XXJA).

For more information or to make a purchase, go to www.cpa2biz.com or call the Institute at 888-777-7077.

H. Charles Sparks, CPA, Ph.D., is an associate professor of accounting, and Henry Wichmann, CPA, is a professor of accounting at the University of Alaska, Fairbanks. Their e-mail addresses are [e-mail] and [e-mail], respectively.