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NACM-GBG Welcomes Repeal of 3% Withholding Tax

Did you know?

Multiple Award Construction Contracts are being procured with specific size standards to allow for diversity/competition. Including:

  • Small business set-asides,
  • 8(a) competitive set-asides, and
  • HubZone set-asides
This is why you lost your contract bid. According to the Department of Defense, the main reasons why contractors lose proposals are:
» Failure to understand your customer and their requirements
» Failure to address each aspect of the RFP (Request for Proposal)
» Poorly written proposal
» Non-persuasive proposal
» Ineffective proposal reviews
» Failure to apply best practices, proven principles and techniques
» Making points that are not verifiable or quantifiable

After five years of opposition, NACM-GBG welcomed President Barack Obama’s signature on November 21 of H.R. 674, a bill that finally repeals the 3% withholding tax on local, state and federal government contracts.

Had the bill not been signed into law, contractors would’ve been forced to sacrifice 3% of their profit from government projects in order for the Internal Revenue Service (IRS) to ensure these companies’ compliance with tax obligations. While NACM believes that all businesses should pay what they owe in taxes, the devastating effects that the 3% withholding requirement would’ve had on contractor cash flow would've negated any positive developments in tax compliance. Luckily, Congress and the Obama administration finally recognized this, and summoned the political will to repeal this harmful tax.

It is a great feeling to know that all of our hard work on repealing this bill was not in vain and that the system still works when we come together. Strength in Numbers.

View a copy of NACM’s official press release on this long-fought-for repeal here.

DCAA and FAR: Accounting Compliance and the Government Contractor

Accounting systems must be approved during the pre-award survey. This survey is required once a contractor bids on their first federal government contract, especially if the contract is cost-based. The most important component to the compliance is the approval of the company’s policies and procedures, including day-to-day practices. The internal components, such as software, are included in the review, but many offsets in a company’s software with regards to missing features can be manually corrected. The government agency may postpone an award until the company can update its accounting system. It is not unheard of for the review of the accounting system to be done long after the first award.

As outlined in the Defense Contract Audit Agency’s (DCAA) "Information for Contractors" publication dated January 2004, the purpose of this review is to "determine the adequacy and suitability of the contractor's accounting system and practices for accumulating costs under the type of government contract to be awarded." (Publication DCAAP 7641.90, Chapter 2, Section 2-301). For more information on this document, visit the DCAA website.

Also available here is the Defense Contract Audit Manual (DCAM), another important document, which includes information on the conduct of a pre-award survey. Both publications contain important information on the government’s expectations with respect to contractor accounting system functionality and compliance.

Federal Acquisition Regulation of the Month

FAR 9.601 definitions of a "team arrangement":

A "contractor team arrangement," as used in this subpart, means an arrangement in which—
(1) Two or more companies form a partnership or joint venture to act as a potential prime contractor; or
(2) A potential prime contractor agrees with one or more other companies to have them act as its subcontractors under a specified Government contract or acquisition program.

FAR 9.603 : Policy
The government will recognize the integrity and validity of contractor team arrangements, provided the arrangements are identified and company relationships are fully disclosed in an offer or, for arrangements entered into after submission of an offer, before the arrangement becomes effective.

Women-Owned Business Information

Common acronyms: EDWOSB

Economically-Disadvantaged Women-Owned Small Business
North American Industry Classification System
Online Representations and Certifications Application

Small Business Administration
Women-Owned Small Business

Classification requirements:

  • A woman must hold highest officer position and have the managerial experience of the extent and complexity to run the business
  • The woman owner must devote herself full time to the business during normal working hours
  • The woman owner must be a United States citizen

NAICS has codes for woman-owned small businesses (WOSBs) underrepresented in the construction industry enabling a contracting officer to set aside contracts for EDWOSBs. However, WOSBs cannot bid on contracts set aside for EDWOSBs

WOSB/EDWOSB Certifications
SBA does not certify as it does for 8(a) or HUBZone programs, but 8(a) participants 51% owned and controlled by women are also considered WOSBs and EDWOSBs. For all others, self-certification by the owner is required at least annually through ORCA and the documents sent to the WOSB Document Depository.

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