Looking for new markets?

Try Uncle Sam

By Louis H. Sanchez

Some may find this difficult to believe, but the Federal Government can be an excellent client for contractors. I can say this after many years of good experiences working for the Departments of Defense, Homeland Security, and other government agencies. Despite horror stories you may have heard about the feds being slow to make payments or how difficult it is to land contracts, the way Uncle Sam does business today makes him in many ways an ideal client.

For starters, the government does not require retainage! Even if you're working on your first government contract, there is no retainage when the work is completed satisfactorily. Instead, contractors post surety bonds. This way, you get all of your money after you've completed the job correctly.

What's more, with new electronic payment systems, in my experience, the government always makes payments within 30 days-sometimes as quickly as two days! How many other clients have that type of track record?

Though government agencies such as Defense and Homeland Security have some highly specialized, high-security projects, even those agencies provide opportunities for small contractors with more general experience. Homebuilders can land contracts for military housing. Office constructors can win contracts for office buildings on military bases. Contractors with experience building gas stations can qualify to build fueling stations on government properties. These are just a few examples.

Basic qualifications and bidding

In order to qualify for government contracts, you must have a viable business with a Dun & Bradstreet registration. You must also have proper insurance for contracting work. With those essentials, any contractor may register with a government agency's bidders list.

Over the past few years, the government has implemented a new policy in evaluating bids called "best value." This philosophy takes into account a contractor's track record as well as the price of the bid. For those who have not worked on government projects before, their work on private sector projects will be evaluated. Contractors are evaluated on past performance according to a formal set of standards, and are rated according to these criteria. "Best value" means that a contractor with a high performance rating may be awarded the contract even if the bid is somewhat higher than that of a contractor with a mediocre rating. There are five ratings of overall performance, ranging from "outstanding" to "unsatisfactory."

The evaluation process is consistent from project to project, and is comprehensive about all aspects of project execution and management. The government puts as much weight on project administration as on construction work itself. There are many evaluation criteria, but the following points encompass most of the key items:

• Quality of paperwork - Daily reporting has to be accurate and up-to-date.
• Cleanliness of the job site - The government is a stickler for this.
• Quality of workmanship and quality control
• Your ability to resolve problems with subcontractors and reduce delays
• Safety plan including hazard analysis - This is a critical element.
• Environmental compliance
• Documented compliance with wage laws and other labor standards

Practical advice

Let me offer a bit of advice on a few of these items. Your safety plan and implementation of that plan will undergo much scrutiny. Before each phase of a project, I meet with all subs and do a walk-through of the job site looking for any potential hazards. These could include power lines, culverts, poisonous vegetation, and even beehives. I make sure that everyone involved is aware of all hazards and that they have a plan to avoid them. Government officials also believe that a clean site is a safe site, and that a clean work environment reflects quality work. So, make sure that work areas are kept neat and as hazard-free as possible.

Another key issue is how you manage and solve problems. Maintaining a calm, business-like demeanor under even the most upsetting circumstances is critical. Don't be a hothead. When things go wrong, government officials are not obsessed with assigning blame. They just want problems to get solved as quickly as possible. Most are very reasonable. If there is a design flaw, they will likely pay you extra to fix it or to devise a work-around.

The government has very specific instructions for invoicing. You must have all pertinent information, and send in the correct form to the correct address and the correct contact. Always follow instructions to the letter. This makes it easier for you to get paid. And keep in mind that you get a higher rating when you are efficient and accurate in all phases of project administration, including paperwork.

Lastly, try to emulate your clients. If you look and talk the part, it makes working with government officials easier.

Louis H. Sanchez is President of The Artec Group Inc., a full-service federal and military contracting firm that also offers consulting services for businesses that want to do business in the federal arena. He can be reached at: lsanchez@theartecgroup.com.

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