international government contracting workshop: contracting ... · 5 | basis of estimate...
TRANSCRIPT
International Government Contracting Workshop:
Contracting / Business Development – Mistakes Not to
MakeMarch 2017
2 | www.gdit.com
Agenda
Marketing, Proposal focus
Price-to-Win Questions
Basis of Estimate
International workforce considerations
Risk register
Cash flow considerations
Contract close-out
Lessons-learned
3 | www.gdit.com
International Business Lifecycle
Marketing Proposal Execution Closure
• General marketing, other pursuit activity
in-country.
• Assessment of Export, counterintell., and
competitive risk
• Cross-functional expertise identified,
consulted.
• Legal entity and con ops research.
• SOFA / cooperative agreements.
• Work visa, taxes
• Sponsorship and other third party vendor
quals.
• Specific opportunity identified.
• Preparation of proposal, BOE /
pricing.
• Legal entity setup, green-fielding or
changes to existing entities.
• SOFA / cooperative agreement
implementation.
• Start SOFA, work visa, etc.
• Final quals for candidate (CRC,
Medical, SPOT, etc. ).
• Contract performance and /
or sale delivery.
• Local entity operational.
• Knowledge workers -employees in-
country temporarily or long-term. Local
nationals under local company contract.
• Relocation, travel, work visa, SOFA, etc.
• Expatriate management and administration.
• Contract concluded.
• Final delivery of product.
• Termination of assignments,
repatriation of employees.
• Final invoices.
• Close tax issues.
• Close reserves.
• Contract close.
• Finalize contract expense records.
• Legal entity disposition.
CONTRACT LIFECYCLE
4 | www.gdit.com
Price-to-Win – International Considerations What are our options for workforce performance
Can we perform without receiving entity/PE?
If not, can we afford / should we invest to greenfield?
What are the workforce options meeting customer addressable budget
Resourcing
• Expatriates/deployments (travel, relo., allowances, incentives, accompanied, taxes, etc.)
• Local nationals or third country nationals
• Rates: Direct or ODC for contract (e.g., Local labor law, relo, HOLA, COLA, danger
premium, travel?)
• Rates: Indirect or wrap rate items (e.g., local labor law, relo,?)
• Compensation: range penetration, levers for cross-border workers, policies
Black-Hat review: what is our competition estimate for workforce and pricing
Resourcing options, legal entity and operations locally?
Rates
Compensation
Localize non-labor costs?
What are the risks and our company approach to those
Assume, note in risk tool/register
Project or Financial reserve?
5 | www.gdit.com
Basis of Estimate – International Considerations
Cost build-up
Labor, Material, Indirect
Wrap or pool rate(s)
Vendor/SubK quotes to your estimates estimates
Clear SOW – RFQ and terms to your teaming partners, potential vendors
Materials and ODCs
Subcontractor Labor & Travel
Pricing Assumptions
Identify the sources of data along with the estimating methods used
Discuss the rationale behind the estimating methods applied to the basis of
estimates
Price risk issues?
Evacuation/medical issues
Labor law
Fx – payment terms, direct or indirect costs in foreign currency
Guarantees, bid or performance bond
PE
6 | www.gdit.com
Generic Risk Register
Risk Probability
(75%, 50%,
25%)
$
Risk
Weighted $ Mitigation Plan – If Appropriate
SOFA contract denial or delays Pre-proposal Q&A, FOIA, RFP
analysis, Package prep pre-award
SOFA employee / subK denial or delays Candidate pre-screening includes OR
analysis, template resume, forms
Business traveler vs. worker visa status
(and delays)
Pre-proposal country research, out-
source LN, TCN to host country , Gray
passport, etc.
Local labor laws (costs not bid,
productive hours impact) or
subcontractor labor issues
Harmonize in sponsorship agent
countries, non-USG contracting
countries
Evacuation, Medical, NEO, etc. Back-stop through WC, DBA, Gap
employee medical insurance plan or
international medical plan mandatory
election by employee
Permanent Establishment Secondment / inter-company
contracting
Value-Added Tax USG as importer of record, price to
customer, exception as Foreign
company or SOFA
Miscellaneous unbillable costs
7 | www.gdit.com
International Workforce ConsiderationsScope of
Work
Country Information Contracting Parties Exceptions and Terms Workforce
Information
Knowledge
workers
• Location of work
• Commercial site
• Embassy /
consulate
• U.S. / Joint
installation
• Foreign
government
• End user and contracting
relationships - Contract parties:
• USG,
• Foreign Gov’t,
• Comm’l
• Party relationships and delivery:
• Prime,
• subs,
• inter-company
• Beneficiary in host
• SOFA/cooperative agreement
vs. business visitor or worker
• SOFA / host end user
sponsorship
• Work authorization
• Tax: corporate,
individual
• Social programs:
Totalization,
Totalization with host
requirements, or host
• Sending company
• Home payrolling
entity
• Prime, subK
• ICs
Negotiation
, sale
Anticipated time and scope:
•Business visitor in time and
scope?
•Residency issues
•Work – visa, permit based
on activities
International offset requirements • Receiving Company
• None
• PE
• Inter-company
• Third party
Export and
import
• Citizenship(s)
• Home
• Host
• TCN
Manufactur
ing
• Workforce status; history
in host
• Immigration/visa
• Residency
• Tax
• Family
• Supra-national
zone
• Incumbents
• Job information: title, job
description
• Compensation, policy
8 | www.gdit.com
International Workforce Considerations - 2Scope of
Work
Country Information Contracting Parties Exceptions and Terms Workforce
Information
Knowledge
workers
• Location of work
• Commercial site
• Embassy /
consulate
• U.S. / Joint
installation
• Foreign
government
• End user and contracting
relationships - Contract parties:
• USG,
• Foreign Gov’t,
• Comm’l
• Party relationships and delivery:
• Prime,
• subs,
• inter-company
• Beneficiary in host
• SOFA/cooperative agreement
vs. business visitor or worker
• SOFA / host end user
sponsorship
• Work authorization
• Tax: corporate,
individual
• Social programs:
Totalization,
Totalization with host
requirements, or host
• Sending company
• Home payrolling
entity
• Prime, subK
• ICs
Negotiation
, sale
Anticipated time and scope:
•Business visitor in time and
scope?
•Residency issues
•Work – visa, permit based
on activities
International offset requirements • Receiving Company
• None
• PE
• Inter-company
• Third party
Export and
import
• Citizenship(s)
• Home
• Host
• TCN
Manufactur
ing
• Workforce status; history
in host
• Immigration/visa
• Residency
• Tax
• Family
• Supra-national
zone
• Incumbents
• Job information: title, job
description
• Compensation, policy
9 | www.gdit.com
International Export ConsiderationsScope of
Work
Country Information Contracting Parties Terms
Knowledge
workers
• Location of work
• Commercial site
• Embassy / consulate
• U.S. / Joint installation
• Foreign government
• End user and contracting relationships -
Contract parties:
• USG,
• Foreign Gov’t,
• Comm’l
• Party relationships and delivery:
• Prime,
• subs,
• inter-company
• Beneficiary in host
• Shipper of Record
• Technical information, translation of
content, etc.
• Export classification of material
• Defense service or equipment
• Commercial items
• SOFA/cooperative agreement vs.
business visitor or worker
• SOFA / host end user
sponsorship
• Work authorization
• Tax: corporate, individual
• Social programs: Totalization,
Totalization with host
requirements, or host
Negotiation,
sale
Anticipated time and scope:
•Business visitor in time and scope?
•Residency issues
•Work – visa, permit based on
activities
Licensing, etc.
Export and
import
Manufacturing
10 | www.gdit.com
Generic: Cash Flow Considerations
11 | www.gdit.com
-1
-0.2
0.34 0.35 0.36 0.36
-1.02
-3
-1 -1.2-0.86
-0.51-0.15
0.21
-0.81
-2.79-$4.0
-$2.0
$0.0
$2.0
$4.0
$6.0
$8.0
$10.0
$12.0
2017 2018 2019 2020 2021 2022 2023 2024
Net Cash ($Ms) Cum Net Cash ($Ms) Receipts ($Ms) Disbursements ($Ms)
Green-fielding: Cash Flow Curve
12 | www.gdit.com
Contract / Host Work Close Considerations
Trailing tax program costs: post revenue, bill with reserve
SOFA
Notification to authority, forms/process for deregistration
Repatriation/end of assignment travel
Non-SOFA work
Host notice and/or information/consultation periods
Sponsorship agent and other vendors
Terminal indemnity / end of service gratuity
Notice periods
Clearing any deposits: WPS, housing, vehicles
Compensation: retain allowance information and incentive
records
Allowances and incentives: source data, dates, methodology
Policies
Centralized or decentralized records
Reconcile, close Project / Financial reserve
13 | www.gdit.com
Lessons-Learned
SOFA is not automatic
Processes vary by country, contract, position, company, location specific: not “portable”
LOA, Travel Orders vs. SOFA vs. SOFA dependent vs. “Ordinarily Resident”
FAR/DFAR Local Labor Law clause, regional deviations from FAR/DFAR (e.g., ASG
Kuwait, CENTCOM AOR work)
SOFA and individual logistics support
Home indirect rate pools vs. host harmonization costs
Involve export control early and often
Employment law: harmonize when?
Legal entities need “form and substance”
Leasing company (secondments, transfers to PE-blocker)
Payroll, HR programs needed (local remittance, labor laws, social security)
Security: cage-code coverage of U.S. legal entities and the FOCI issue
In the absence of explicit tax exclusion under the host country SOFA, worry about:
Work visa obligation day 1, and resulting implications (e.g., personal tax?)
PE/entity and tax obligations
BOE and Risk considerations
Customer budget, your workforce options, and realism
Vendor, 3rd party quotes, and terms
Fx, export, security / FOCI, etc.
14 | www.gdit.com
Questions
15 | www.gdit.com