Helping businesses find, win and perform on government contracts • maineapex.com

PM’s Corner

A monthly feature from the Maine APEX Director, Bryan Wallace

Do Tariffs Impact Your Federal Contract? Will They?

In case you haven’t been following the national news recently, on February 1, President Trump issued Executive Order No. 14193 titled “Imposing Duties to Address the Flow of Illicit Drugs Across Our Northern Border”. This order announced tariffs that will impact a wide range of imported goods from Canada, similar to tariffs with Mexico and China. On February 10, President Trump signed an order imposing a 25% tariff on aluminum and steel imports as well. Over the last month or so Maine APEX has received several questions from Maine businesses asking what options they have in addressing these tariffs and the increased costs they will incur while performing on their federal contract.

I am summarizing an article from Dentons and you can find the full article here.

If the federal contract is a fixed-price contract, a business can reference Federal Acquisition Regulation (FAR) 52.229-3 which requires a contract price to be increased “by the amount of any after-imposed Federal tax” so long as the contractor warrants that the newly imposed tax was not included in the contract price. In addition, businesses should review their fixed-price contracts for an economic price adjustment clause. For example, FAR 52.216-4, requires a contracting officer to negotiate a price adjustment after receiving notice requesting an adjustment in price from labor and/or material (subject to certain limitations). 

If the federal contract is a flexibly priced contract a business may be able to rely on the allowability rules in FAR 31.201-2. Moreover, while there is no cost principle that specifically addresses tariffs, businesses might be able to FAR 31.205-41 which discusses taxes.

If a business is considering an upcoming contract, or if recovery for increased costs is not an option for an existing federal contract, they may want to seek one of the several FAR and DFARs allowing for the exemption of tariffs through duty-free entry for materials used in federal contracts.

Lastly, keep in mind that while the tariffs for Canada and Mexico have been temporarily paused, Maine businesses with federal contracts should use this pause to review their contracts now and evaluate the impact. Please reach out to Maine APEX if we can be of any assistance.

Podcasts for Today's Government Contractors

Dana Delano, Procurement Counselor serving Aroostook County

I’m not going to lie, it has taken me a while to acknowledge, understand, and appreciate the relatively new medium called podcasts. Why are my mid-twenties to early thirties adult children talking about different podcasts they were listening to? Little did I know, I was missing out on a fun and educational new medium. As an information junkie trying to keep up with government contracting topics and changes, it is hard to find the time to read magazines, newsletters, and white papers that inundate the marketplace. I happened to stumble upon a vendor’s podcast series that covered our industry of government contracting and after just one episode…I was hooked. Reading is one thing, but listening to professionals in the field discussing the many different topics AND giving real life examples and stories is another. What a new and exciting way to stay abreast of this ever-changing field and learn topics relevant to your business interests. Plus, you can enjoy this medium during your driving time or over coffee on a Saturday morning.

The December 2024 Issue of Contract Management, a leading industry magazine, featured a list of leading podcasts for contract managers and companies interested in government contracting. Below are a few of those podcasts that you should consider if you are looking for a fun new medium to stay current on today’s topics and changes in this arena. As I mentioned in my last newsletter article, a new administration brings with it changes, directions, and priorities in government contracting that are important for you to understand.

• GovCon Giants: Focus: government contracting success stories. Topics: Interviews with successful contractors, tips on winning contracts, business growth strategies, and insight into SBA programs.
• GovConBiz: Focus: Networking for government contractors. Topics: Business development, teaming agreements, subcontracting, and federal business networking strategies.
• The Contracting Experience: Focus: Insights, interviews, and practical advice tailored to both seasoned contracting professionals and newcomers alike. Topics: Contracting basics to advance strategies for managing and executing government projects.
• Gov Close: Focus: Breaking into federal contracting. Topics: Tips for small businesses entering federal markets, contract acquisition, networking with federal agencies, and proposal writing.

A podcast has a unique value, which is essentially what sets it apart from other mediums. They can focus on a specific niche market, like government contracting, and provide a distinct perspective, engaging storytelling style, in-depth expertise on ‘our’ topic, and a unique format that caters directly to YOUR needs as a government contractor.  Give it a try; you just might like it, or even ‘love it’ as I have learned to. If you have any questions, do not hesitate to contact your Procurement Counselor, it is what we do.

Small Businesses' Journey to Achieve CMMC Certification

Christopher Paradis, Procurement Counselor Serving Franklin, Oxford, and Androscoggin Counties

With the Code of Federal Regulations (CFR) December 16, 2024 posting officially adopting the Department of Defense’s (DOD) Cybersecurity Maturity Model Certification (CMMC), companies need to ramp up their efforts to meet the compliance requirements.

The CMMC framework, developed by the U.S. Department of Defense (DoD), aims to protect sensitive information within the Defense Industrial Base (DIB) from cybersecurity threats. This certification is crucial for businesses seeking to secure defense/federal contracts and maintain a competitive edge in the government marketplace.

To start their CMMC compliance journey, small businesses should be focusing on several key actions.

First, they needed to determine what types of federal contract information (FCI, CUI, and CUI+CDI) they are currently managing or maybe managing in the future.

Second, companies should be conducting top to bottom assessments of their current cybersecurity practices to identify gaps and areas for improvement. This involves mapping existing controls to CMMC requirements and developing formal or informal System Security Plans (SSPs), as required by the model, coupled with plans of action and milestones to address deficiencies.

Third, companies should familiarize themselves with the current CMMC implementation milestone deadlines, particularly the requirement to conduct and report Level 1 and 2 self-assessments to the DOD’s Supplier Performance Risk System (SPRS), which is currently scheduled for third quarter of 2025.

Many companies should consider engaging qualified cybersecurity experts (3CPAO Certified) for pre-assessment consultations to streamline and expedite their compliance efforts. More importantly, this can help them avoid potential pitfalls caused by a lack of in-depth understanding of the CMMC standards.

With industry cost implementation estimates ranging from $6-12K for Level 1 and $35-100K for Level 2; financial challenges will be a significant concern for small businesses pursuing CMMC certification. Many are exploring external funding resources such as government grants and other no cost resources like DOD’s Project Spectrum to try and offset costs associated with upgrading their cybersecurity infrastructure to meet the CMMC standards/controls.

In light of the undertaking involved, most businesses are employing a phased implementation approach to plan, address, and effectively manage time constraints in an effort to minimize disruptions to their core business operations. Using this approach of breaking down the compliance process into manageable steps should result in better and efficient allocation of resources required to achieve continuous progress towards achieving CMMC Certification.

Overall, the push for CMMC compliance and certification is driving small businesses to enhance their cybersecurity posture, not only to meet regulatory requirements but also to safeguard their operations against evolving and increasing external threats. As businesses navigate the complexities of the certification process, they will be positioning themselves for future growth and sustainability in an increasingly security-conscious commercial and government marketplace.