If you’ve been watching the news at all lately, you have probably noticed the trend towards discussing the finer points of the stimulus package. The Obama Administration has successfully pushed their plan through both the Senate and the House in order to pump more money in the declining US economy. Among the issues many federal employees are fearing is that with the passage of this package their jobs will be outsourced, as the Bush administration did in 2003.
President Obama has stated numerous times that he will not outsource federal jobs. The stimulus package, for instance, is pumping money into repairing government buildings and facilities, actions that are traditionally contracted out and not completed by federal employees anyway. With that in mind, now is a great time to be a government contractor! However, on the flip side, it is also a difficult time to be one. As stated in The Washington Post by Joe Davidson, “The stimulus package will generate more business for government contractors at a time when government contracting is coming under greater scrutiny.” This scrutiny, which all contractors must face, is due to the past ten years of abuse that was allowed during the last administration. It is inevitable, but is much worse for companies that have already encountered difficulties within the field.
But how will the Obama administration fix and prevent the abusive tactics that many contractors have implemented? On Tuesday, February 24, 2009, President Obama discussed how lawmakers will be implementing different procurement processes for government contracting. The specifics have not been stated yet, but there is talk of cutting back significantly on overpaying individuals and on greater monitoring of award decisions and amounts.
There is a bright side to this scrutiny, though. For instance, bigger names have a harder time winning contracts, especially the smaller ones. Small businesses will be favored throughout the bidding process even more. However, and I cannot stress this enough, it is critical that contractors are aware of their market and product prices. In many cases, the federal employee goes into the negotiations with a set price range that he is allowed to purchase within that we the contractors are unaware of. One must ensure their price is competitive; if your price is above what the government is asking, they’ll automatically disqualify you and move on to the other bids. If it is too high, you may not even be eligible to compete on future contracts!
Recently, Senator Carl Levin (D-Mich) proposed a bill that would require defense contracts to be reexamined if they are over the original cost estimate by 25% or more. Many large contracts can be recalculated as needs change and over time, but the government wants to crack down on excessive increases. The Department of Defense awards contracts based mostly on weaponry and technology; if the government is taking a stand against overspending on DoD contracts, then ones awarded in other departments are undoubtedly soon to be significantly be cut back as well.
The government generally decides the price range based on what they feel the material and labor costs should be. Usually, the federal employee assigned to the contract has appropriate estimates. The government wants contracts to be done easily and cost-efficiently, however, they understand that there needs to be a profit or small businesses won’t work with the government any more.
While the Obama administration is cracking down on the problems typically associated with federal contracting, there is nothing stating they will stop hiring contractors. In fact, time and again they have explicitly stated they want to hire MORE small businesses. If anything, the process might involve more paper work or red tape, but for the most part, contacting will continue. So long as the small business contractor follows the bid guidelines and offers competitive prices, there will be no shortage of contracts for the small business owner!