TOPIC: CSMI’s Professional Service Agreement (PSA) and Confidentiality Agreement

• Am I bound to CSMI throughout the life of my 8(a) status?
• Does this agreement violate any provisions with the SBA and jeopardize my 8(a) status?
• How does CSMI help me get bonding, banking, and financing over what I could do on my own?
• CSMI has mandatory PM services on each job. Why is it mandatory, how does it help my business, and how is the cost determined?
• By signing this agreement, am I bound to perform any work directed to me by CSMI?
• Why does CSMI require me to provide confidential business and personal information, and what do they do with it?
• Why does CSMI require me to sign a confidentiality agreement?

TOPIC: CSMI Fees and Payment

• CSMI charges a Marketing Fee, a General Management Fee, and Back Office Services Fee. Can I opt out of any and all fees?
• If I obtain the work on my own, without CSMI involvement, do I have to pay the CSMI fee?
• How are the fees paid to CSMI determined, and do they change based on contract value?

TOPIC: Marketing

• What differentiates CSMI from other firms offering marketing services to 8(a) companies?
• Does a CSMI develop a specific market plan for my company, or do they just market the companies as a portfolio?
• How does CSMI market my company and win business for my company?
• Will CSMI market me as prime or a sub to the federal market and commercial space?
• How do I know that CSMI’s marketing efforts are ethical and legal?

TOPIC: Estimating

• When estimating a job, am I required to share my direct costs and profit margin numbers with CSMI? If so, how can I be assured that CSMI won’t use my information to bid shop?
• How does the estimating process work, how is my company involved, and who has the final estimate approval?
• How do I know that CSMI does not engage in bid shopping?

TOPIC: Contract Award

• In whose name is the contract awarded in? And who is payment made to?

TOPIC: Project Execution

• How does CSMI insure that projects are completed successfully?

TOPIC: Government Procurement

• I have never done government contracting, what is unique about it?
• What are certified payrolls, and when do I have to fill them out? Can CSMI help?
• What types of payment terms does the government offer?

TOPIC: General Issues

• What information does CSMI provide to me on a regular basis?
• If I am not 8(a) certified, can CSMI assist with this process?

TOPIC: CSMI’s Professional Service Agreement (PSA) and Confidentiality Agreement

No. The term of the contract is listed under Section 1 of the PSA.  Also, Section 1contains a clause that allows you to get out of the contract for any reason with written notice within a specified number of days.

No.  Our agreement does not violate your SBA status in any way.  There are four major reasons this is true:

1) We have no ownership in your company.
2) We are simply a subcontractor to your firm.  In the same way you sub out portions of the on-site work, in this case, you are getting assistance with the contract administration.
3) We have no control over your company or its decisions. You can deny any work we bring to you.
4) We do not control your money in any way.  Contracts we find for your firm are in your company’s name, not ours. Also, we don’t get paid until you receive money from the owner.

CSMI has deep relationships with M&T Bank, Hess Egan, and Main Street America Group to name just a few.  These large, established companies are experts at assessing risk.  Due to their knowledge of our firm, and the people who run it, they have a very high level of confidence in their investments.

This does not guarantee that we can do better for you than you might find on your own, but there is a very high likelihood this is the case.  If you can find a better deal or arrangement in the marketplace, you are under no obligation to accept the terms we bring to you.

Our Project Management Leasing Services are mandatory because CSMI needs to maintain quality assurance on projects we are involved with.  We spend considerable time and energy obtaining procurements from various agencies, contracting officers, and large GCs.  During this process we make it clear that jobs done by our network companies are completed in a high-quality fashion, on-time, and on-budget.  If one of our network companies were to not fulfill this standard, our reputation within the entire agency would be affected.  Since CSMI has a great deal of risk associated with this, we ensure performance by providing a PM on each project. We strongly advise and prefer that your company have a PM assigned to the project. CSMI's personnel are simply supplementary. All other supervisory positions (e.g. superintendents, foreman, etc) are provided exclusively by your firm and are on your payroll.

In addition, this involvement by CSMI is a great assistance to your company.  Through our involvement you are able to tap into a tremendous amount of knowledge, experience, and resources on all facets of the construction process.  We take this role very seriously and only supply your firm with the highest quality Project Managers.

The fee for Project Management is determined before the project begins during the estimating stage.  When the price is being assembled, CSMI makes a commitment as to how many hours are required for us to maintain our high quality standards.  If we exceed the PM time in the estimate, you are not charged for this additional time. 

The time/cost of this are included in the general conditions of the estimate and are a direct cost to the project.  While we still invoice your company for the service, in essence it is being paid for by the owner.  For example, if we estimate a project will require 100 hours at $100/hour (fully allocated) then you will know before hand that a $10,000 fee will be charged to you (no matter how much time it takes us to actually manage the project).  This is the exact same as when you price your own PM.

No.  If we bring you a project that you feel doesn’t make sense for your firm for any reason you can simply pass on the project.  In this instance you will not be charged a fee for our efforts.

There are several reasons why this information is important:

• We unofficially certify your company when it is in the CSMI network.  This allows us to market effectively since we can claim with a high degree of assurance that you are worthy of doing business with the government. More times than not, contracting officers have had one or more bad experiences with an 8(a) company and are leery of taking a risk that harms the government.  By understanding your background we protect our reputation and make a well-founded claim to the contracting officer.
• When working directly with the government, you need to provide a surety bond and insurance.  This process is time consuming and cannot be accomplished overnight.  By proving this information DIRECTLY to those companies, the process can begin prior to the contract award.  We want to avoid being denied a project because of paperwork issues that could have been avoided with proper planning.

Information provided to our corporate partners (M&T Bank and Hess Egan) is protected as confidential.  In fact, in the case of credit reports CSMI neither sees nor handles the information directly.  In these instances we are simply notified in general terms whether or not your firm is in a position financially to do business with us and the government.

This agreement is for your protection.  CSMI requests that you share confidential information with us so that we can help with the bonding, banking, and insurance processes.  We want you to know that we will treat the information in a certain way and not share it with anyone who is not authorized to view it.

The agreement also has a non-complete clause that protects both companies from taking employees from the other.

In short, the agreement allows each company to trust the other as we develop our working relationship.

TOPIC: CSMI Fees and Payment

The marketing fee (previously called a contract fee) and general management fee are not optional and must be paid for on every project.  The Back Office Service Fee is optional and can be removed on a project by project basis.  However, if we assist with any of the services associated with the BOS CSMI will charge your firm for the full amount.  The only reason to opt out of the BOS is if you intend to do all the contract administration associated with the project.

If you obtain work on your own, and CSMI has nothing to do with the project, then no fees are due to CSMI. 

If you win a contract award on your own, but want our assistance, then we charge the appropriate fees.  In all cases whereby you obtain the work, the marketing fee will be waived, or a credit applied for this amount.  The general management fee will still be invoiced along with the BOS fee (should you choose to use it) and the Project Management Leasing Fee.

CSMI fees are based as a percentage of the total contract value.  Subsequently, they vary from contract to contract.

TOPIC: Marketing

CSMI is unlike other marketing companies for several reasons:

• - We do more than simply market your firm.  We assist your company in all facets of the work from procurement through final completion.
• - CSMI has an internal network of companies that work together to benefit all of its partners.
• - Because all of CSMI companies are minority based, we are able to market both commercially and to the government very effectively.
• - We do not charge any up-front fees or request a retainer.  Our fees are based entirely on results.

Once our PSA and confidentiality agreement are signed and our online intake form is completed we develop a one page marketing summary tailored specifically for your firm.  This takes into consideration your capabilities, size, largest project to date, past performance, previous agencies you have worked for, references, and government procurement forecasts.

Concurrent to marketing your company individually, we market you as a CSMI network partner that can meet the needs of the government/owner. We have found that this dual approach is very effective at continuing to create brand awareness, even if your firm is not chosen on a specific project.

CSMI leverages well-established relationships with key contacts in the procurement area based on proven and successful past performance.  In addition to the numerous contacts the owners of the firm have, we employ marketing personnel which bring their entire contact list to bear to help our partner companies.

CSMI markets each partner company as a prime to the federal government.  This is our preferred method of procurement. 

However, in an effort to maximize the opportunities for our partners, we also spend considerable time looking for subcontracting work.  These subcontracting opportunities can occur both within our network, and outside of it.  For example, there are countless general contractors in the area looking for minority participation on their projects. In these instances, we are able to leverage the minority status of our partners to obtain the either sole source contracts, or significantly limit the competition for jobs we are trying to secure.  Furthermore, once the skills of our partner companies are determined, there will be several opportunities to subcontract for work that is unrelated to your disadvantage status.

CSMI makes all assurances that we are a bone fide agency as defined in subpart 3.401 of the FAR.  Furthermore, the owners of the company and its employees are all upstanding citizens in the community and do not in any way, involve themselves in activities which either break the law or put our reputations at risk.

In short, we do not engage in any marketing methods that involve illegal payments to contracting officers.  All of our relationships are based on legal marketing techniques and/or relationships developed over a number of years on past projects.

TOPIC: Estimating

Yes. As a network company we require that you provide us with information on your direct costs.  This information is essential so that we can be very clear on our negotiation position.  This also allows us to factor in the general conditions and CSMI’s Project Management Leasing Fee without any harm to our partners.

This information is used solely for negotiation and is NOT bid shopped!

CSMI will provide you with an estimating spreadsheet that we will need you to fill out.  This insures that all necessary items are included, and allows us to understand your overhead and markup percentages.

If you are a general contractor on a project, CSMI will work with your company to generate a comprehensive estimate using TimberlineTM.

If you are a subcontractor, we will rely on your firm to generate a price based on your company’s direct cost.  Once this is developed we will ensure that all the necessary general conditions are applied and that CSMI’s Project Management Leasing Fee is built-in.

In ALL instances, you have the final say on estimates and must approve them before they are submitted on your behalf.

This is not in CSMI’s best interest, and is against our corporate policy.

TOPIC: Contract Award

ALL Contracts are in your company’s name.  CSMI simply facilitates the procurement process and does not appear on the contracts.

TOPIC: Project Execution

CSMI has a great deal at stake on each and every project.  Thus we become very involved with the project management of each and every project (the cost of which is our Project Management Leasing Fee included in the General Conditions section of the estimate).

Our Project Managers bring with them countless years of experience and expertise.  We assist with the contract administration (e.g. RFIs, Submittals, Change Orders, etc.) and work to make sure all parties are on schedule.  If the project has run into a problem, we are with our partners at every turn to minimize the issues and return the project to an efficient completion path.

TOPIC: Government Procurement

From a construction end, there is theoretically no difference between commercial and government work.  However, there is a major difference in the contract administration portion.  The paperwork tends to be more voluminous, documentation is essential, steps cannot be skipped, and the payment cycle is slightly different.

The good news is that CSMI can help you with the additional paperwork, and that the government always pays (assuming you meet the contractual requirements).  With government work you do not have to be concerned that the entity will run out of money (though they will always be on a tight budget).

The unfortunate news is that with governmental work you typically need to start work BEFORE receiving payment.  The government does not give deposits.  If this creates a cash flow problem for your organization, CSMI can help.  Through our partnership with M&T Bank we can typically help with raising debt capital or obtaining a line of credit (or getting an existing one increased).

When doing government work, employees have to be paid according to the Davis Bacon wage rates.  These are rates set by the Dept of Labor and are based on negotiations and local costs.  In almost all cases these rates are much higher than are paid on commercial jobs.  However, the rates are simply minimums (not maximums), and you are certainly allowed to pay your best skilled workers more than the Davis Bacon rate.

A listing of these rates will be listed in your contract, but in case you need to reference them you can do so online at http://www.gpo.gov/davisbacon/index.html.

Certified Payrolls are “certified time sheets” that show the government that you are in fact paying your employees the minimums listed in the contract.  These forms can be complicated and require a great deal of attention. To see the official DOL form click on the following link http://www.dol.gov/esa/forms/whd/wh347.pdf  (this form can be printed out and used for submission to the government).

 CSMI can certainly help on this, but we will require a great deal of payroll information (and our BOS Fee will necessarily apply).

In almost all cases the government pays within 30 day of an approved requisition (invoice).  The key work here is “approved”.  Depending on the complexity of the job the approval process can take several days or more. 

If the project is of longer duration than several weeks, a schedule of values (SOV) will need to be developed and an agreed invoice date established.  It is essential that you send invoices on that date or your payment will be delayed.  Typically the first invoice date is 30 days after work begins (or material is delivered to the site)

In certain instances, it is possible for 8(a) companies to get payment within 15 days after approved invoice.  Before signing your contract with the government make sure you contact us so we can help make sure you qualify for early payments.

TOPIC: General Issues

Much of the information you receive depends on whether or not you participate in CSMI’s Back Office Services.  In this instance you will receive considerably more information than should you opt out of these services.
Even if you opt out, you will receive, at a minimum:

• - Market Plan for your company, with occasional updates
• - Copies of all project correspondence
• - If work is in progress, you will receive quarterly progress reports

Absolutely.  We do not perfom this work in house, but rather outsource it to two companies who we have worked extensively with.  Based on our relationships and the volume we send them we are often able to negotiate significant discounts – that we pass onto you.  To be eligible for the discounts, we must contact them on your behalf as a CSMI network partner.

If you have any other questions please don’t hesitate to contact us directly:

450 W. Broad Street
Suite 203
Falls Church, VA 22046

Phone: (703) 533-0111
Email: corporate@capitolstructures.com
Web: www.capitolstructures.com