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It is a paradoxical situation. Federal contractors, especially small businesses, must apply for help under the CARES Act stimulus bill, at a time when demand for their services is higher than ever. For some tips on navigating through it all, the Federal Drive with Tom Temim spoke to Federal Sales and Marketing Consultant Larry Allen.
Tom Temin: And Larry, what do you see? Do small outsourcing companies necessarily have to apply to CARES? And if they are, should they?
Larry Allen: Tom, I think the basic question of whether or not a small business should apply for CARES funding is, do you need the money? This is meant to be money for your payroll, it’s part of payroll protection law, and it’s for your employees. So if you are an individual practitioner or if your workforce is 1099 people or part-time people, CARE[S] Deed financing is not for you. It’s for businesses that have full-time employees and really need the money. Now, these loans are technically forgivable by the Small Business Administration. But as you mentioned in the introduction, there is an opportunity cost. If you are seeing an increase in demand from your federal customer for your regular business and your business is thriving, well, this is what you should be devoting your time and resources to right now. I’ve seen a few of our clients apply for payroll protection legislation, and that’s absolutely correct. That’s why he’s here. It’s meant to be there for your small business if you need it. But when you do this, remember that this is a process between you and your bank. And your bank is the one that has the process ordered by the Small Business Administration. And it is on this relationship that you must rely to perform this action.
Tom Temin: But if you have contracts that are on hold due to the current situation, but those will resume at some point when the government returns to normal, I guess you should probably consider it a loan. Because if the contract income ends up being realized, then in theory you can repay that loan.
Larry Allen: That’s right, Tom. You can repay this loan if you need it. But if you need the financing right now, you can get it and you might get everything that is set aside in this loan. If you are a contractor who is unable to work on an existing contract, certain protections are in place or protections are provided for you, depending on the type of government contract you have. So if you are working for the Department of Defense on a cost-plus contract, you currently have certain protections to get paid, even if you cannot report for work on-site because that site is closed or even if you have something like a child care issue that keeps you from going to this job site. There is a Department of Defense branch and in fact that was another part of section 3610 of the CARES Act which talks about ensuring that contractors are paid and continue to be ready to support the Department of Defense. Defense for critical missions, or really nothing else. There are therefore other protections that you can consult. If you are a small business in particular, your federal government operations are disrupted.
Tom Temin: Got it, we’re talking with Larry Allen. He’s a federal business and marketing consultant to BTO and at the same time you’re offering advice these days on how to stand out if you feel you can help the government and that’s more than just saying : “Hey, we’re here to help you.”
Larry Allen: That’s exactly it, Tom. There are currently many subcontractors out there trying to get the attention of officials, whether they are a pharmaceutical supplier or a medical equipment supplier or even an IT supplier looking to guarantee secure teleworking solutions. You need to make sure your business stands out, you need to emphasize to your customer that you are just a click away from being available to help. It’s not that you are there to help, it’s that you are helping and you can help more than what the government is currently benefiting from your business. So you have to double the stake by making sure that your salespeople are in charge, their customers and are in regular contact with them, trying to tell them something that they don’t already know. Maybe there is a new offer in your business, a new way to buy from you? Whether it’s another transaction authority or a small business on hold, it’s easy for a federal buyer to reach your business. Either way, you are trying to make your business stand out. And Tom, I think one of the things that really helps if you can show that is the experience you already have serving the government in times of need, be it the federal government, which of course would be. ideal, or even state and local government experience, as many companies have experience in relief and disaster recovery. And we’re sort of pretty much in the same kind of fad right now, especially when it comes to government acquisitions. So any experience you have as a contractor can help reassure that federal buyer that you are a low risk supplier who really understands what’s going on in their world.
Tom Temin: And there is also some flexibility implied with recent White House guidelines regarding how agencies can spend money on a given program. What could ease in favor of contractors who are flexible enough to perhaps modify their offerings to meet the needs of the government at this time?
Larry Allen: Well, there are all kinds of flexibilities that have been put in place if, on the one hand, there are accelerated progress payments. So if you are working on a long term project, there are tips on how to get paid sooner which can really help you with your cash flow whether you are a small or a large business. The GSA, for example, has opened up its disaster relief and recovery capacity for its multi-award schedule program, meaning local state governments can buy directly from any schedule as long as that you, the entrepreneur, have chosen. become a problem with the contracts of the Department of Veterans Affairs, Tom, where it is not just pharmaceuticals, but all kinds of medical supplies and even some medical equipment. The bottom line is that there are new flexibilities on how you can use these contracts, new flexibilities for you as a contractor that you can sell to through these contracts. And also ways to make your payment easier, whether it’s a long-term contract or one you have, where you usually have to be at a customer’s site, but you can’t. do for now. So if you are an entrepreneur and you are unfamiliar with these options, I recommend that you familiarize yourself with them. I also recommend, Tom, that entrepreneurs don’t assume that their government buyers know about all of these flexibilities and new ways of doing business. Your contracting officer is busy running around trying to complete a million different assignments at once, whether it’s healthcare IT, overseas deployments, etc. You, the contractor, want to make sure you have the proper documentation to report to the contracting officer here, we can do it that way. And now here’s how it goes.
Tom Temin: Larry Allen is currently Federal Sales and Marketing Consultant at BDO. As always, thank you very much.
Larry Allen: Tom, thank you and I wish your listeners good sales.
Tom Temin: We will post this interview on www.federalnewsnetwork.com/FederalDrive. Listen to Federal Drive at your own pace. Subscribe on Apple Podcasts or Podcastone.