Five key factors for evaluating infrastructure opportunities against requirements
With the Infrastructure Investment and Jobs Act signed into law, authorizing a total of nearly $550 billion in new federal funding for infrastructure projects in addition to the renewal of existing programs that were set to expire as early as September, 2022, there is a ton of opportunity for manufacturing, construction, and clean energy companies to obtain government awards (see Overview of the Infrastructure Investment and Jobs Act below).
This means contracts and funding will be awarded to companies and projects with a major focus in the areas of construction and clean energy.
For those who are interested in jumping directly into the deep end and leveraging their commercial qualifications to capture opportunities in the public sector, we urge you to consider five key factors that will help you to evaluate the opportunities in light of the requirements, risks, and benefits they offer.
1. Barriers to entry: Actually winning the federal award probably sounds like the biggest barrier to entry. In actuality, the real barrier to entry is ensuring your company has the proper people, processes, and technologies in place for your company to successfully perform on government awards. If you don’t have the right people with the requisite knowledge about the Federal Acquisition Regulation or Uniform Guidance, you could inadvertently trigger a noncompliance, such as charging unallowable costs to the government that could result in fines and penalties. Ensuring you have the proper processes and technology in place is discussed in greater detail in the next key factor.
2. System requirements: One of the most challenging areas of compliance lies in requirements for capability of business systems such as accounting, estimating, and purchasing systems. The government expects systems to be capable of complying with applicable regulations that often have compliance and reporting requirements that are not common in the commercial marketplace. Establishing systems adequate enough for government contracts or grants can require company investment but not necessarily in the way many companies think. For example, it’s a common misconception that in order to do government work, you have to implement purpose-built applications.
While implementing technology-based solutions can help facilitate compliance, ultimately the type, complexity, and volume of government awards should heavily influence how organizations approach the investments they make in technology related to the systems that need to be developed and/or enhanced.
3. Strategy to capture opportunities: Any effort to enter the federal public sector without a strategy to identify and pursue opportunities will likely fail quickly. A benefit of working with the U.S. government is that all the information about opportunities, administration priorities, and near and intermediate term spending plans is public information. Use them to identify where you have offerings that are consistent with the needs of the government.
The System for Award Management (“SAM.gov”) will be your primary resource for information about government opportunities in the form of Requests for Proposals (“RFPs”) or Requests for Quotations (“RFQs”). As an example, for a manufacturing company, one approach is to understand the government’s required specifications for an item your company manufactures and then assess if your product meets these specifications. If it does not, consider what will be needed to meet the government’s requirements and determine if you are willing to make the investment. Some examples of changes that may be needed might be a requirement to source some of the inputs from the American or Trade Agreement Act authorized sources or to maximize the utilization of small business subcontractors in delivering the contract. The costs of some of these changes may be able to be covered by the contract itself. When the government is ready to buy the product, you may be able to take advantage of your own commercial sales history to leverage a market price approach, rather than a cost-based approach, for the offering.
4. Ways to obtain a competitive advantage: Many federal contracting opportunities involve set-asides for veteran-owned, women-owned, and other types of businesses, including small business set-asides. Consider enabling your company to participate in these set-asides either directly with the government as an SBA certified small business or as a large business subcontracting to a small business prime. It is important to verify your SBA status and many businesses that do not consider themselves to be small businesses may actually qualify. In order to confirm if you qualify, you will need to identify your North American Industrial Classification System code (“NAICS code”) by going to the Small Business Administration’s website and looking for the small business criteria for your particular NAICS code. There are both headcount and revenue measures that indicate how your company measures up that will allow you to determine if you qualify as a small business. If you are under the limit within the stated time parameters (revenue look back can be around three years, and headcount look back can now be two years), be sure to self-certify as a small business in the SAM.gov website.
Consider other opportunities to participate in set-asides, including expanding ownership to those who will assist the firm in participating in minority, women-owned, veteran-owned, or other set-asides. It is important to make sure that your small business status is correctly represented because failure to adequately disclose your status can result in noncompliance up to, and including, loss of the contract or enforcement actions under the False Claims Act. This may sound scary, however, the SBA size requirements are available to guide you.
5. Performance of the contract: Once you have won government work, it is important to successfully perform your contract. The quality of your performance will impact your ability to win future work. The government will keep formal note of whether or not you met delivery or timing requirements. Make sure to communicate frequently with your U.S. government contracting officer and their representatives so that you can get regular feedback, fix issues before they become problems, and ultimately achieve high ratings for the products and/or services you have delivered.
While these five key factors will help you evaluate the requirements, risks, and benefits as well as help start you off on the right foot, balancing the cost of compliance with the many rules that come with federal contracts and grants can be a challenge. Having the right specialists on call is important to help ensure success. Having helped a wide array of clients navigate the federal marketplace, CohnReznick’s professionals have the necessary experience to help assist your company.
- $110 billion for roads, bridges, and other major projects
- $73 billion to update the nation’s electricity grid
- $66 billion for passenger and freight rail
- $65 billion for broadband internet
- $55 billion for water infrastructure
- $15 billion for removing lead pipes
- $50 billion for climate resiliency projects
- $39 billion for public transit
- $25 billion for airports
- $21 billion for environment remediation priects
- $17 billion for ports and waterways
- $11 billion for transportation safety projects
- $7.5 billion for low emissions buses and ferries
- $7.5 billion to construct EV charging stations
Rich Meene, Principal, Government Contracting
Chase Clark, Manager, Government Contracting