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It’s a paradoxical situation. Federal contractors, especially small businesses, must apply for assistance under the CARES Act stimulus bill, at a time when demand for their services is higher than ever. For a few tips on navigating through it all, the Federal Drive with Tom Temin spoke federal sales and marketing consultant Larry Allen.
Tom Temin: And Larry, what are you seeing? Are small businesses in the contracting field necessarily having to apply for CARES? And if they are, should they?
Larry Allen: Tom, I think the fundamental question about whether or not a small business has to apply for CARES funding is do you need the money? This is intended to be money for your payroll, that’s part of the Payroll Protection Act, and it’s for your employees. So if you are a sole practitioner, or your workforce is comprised of 1099s or part-time people, the CARE[S] Act funding is not for you. It’s for companies that have full-time employees, and who actually need the money. Now, these loans are technically forgivable by the Small Business Administration. But as you referenced in the introduction, there’s an opportunity cost. If you are seeing an uptick in demand from your federal customer for your regular business, and business is thriving, well, that’s what you should be spending your time and resources on right now. I’ve seen a few of our clients apply for Payroll Protection Act funds, and that’s entirely fine. That’s why it’s there. It’s intended to be there for your small business if you need it. But when you do that, remember that this is a process between you and your bank. And your bank is the one that has the process as ordained by the Small Business Administration. And that is the relationship that you need to rely upon to execute that action.
Tom Temin: But if you have contracts say that are held up because of the current situation, but those will be resumed at some point when the government gets down to normal, I guess, you should probably think of it as a loan. Because if the revenue will eventually be realized from the contract, then you’ll be able to pay back that loan, in theory.
Larry Allen: That’s correct, Tom. You can pay that loan back if you need to. But if you need the funding right now, you can get it and it may end up being that you get everything forgiven in that loan. If you’re a contractor that is not able to work on an existing contract, though, there are some protections either in place or protections that are coming for you, depending on the type of government contract you have. So if you’re working for the Department of Defense on a cost-plus contract, you have some protections right now on getting paid, even if you can’t show up for work onsite because that site is closed or even if you’ve got something like a childcare issue that prevents you from going onto that worksite. There is direction from the Department of Defence and in fact, this was another part of the CARES Act section 3610 that talks about ensuring that contractors get paid and continue to be in a ready status to support the Department of Defense for critical missions, or really anything else. So there are some other protections that you can look at. If you’re a small business in particular, that is finding your federal government business disrupted.
Tom Temin: Got it, we’re speaking with Larry Allen. He’s a federal business and marketing consultant with BTO and concomitantly you’re offering advice these days on how to stand out if you feel like you can help the government and it’s more than just saying, “Hey, we’re here to help.”
Larry Allen: That’s exactly right, Tom. There are lots of contractors right now that are trying to get the attention of people in government, whether it’s a pharmaceutical supplier or medical equipment supplier or even an IT provider looking to ensure secure telework solutions. You have to make sure that your business stands out, you have to emphasize to your customer that you’re one click away from being available to help. It’s not that you’re here to help, it’s that you’re helping and you can help more than what the government is currently taking advantage of from your company. So it’s doubling down making sure that your sales reps 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’s a new offering in your business, a new way to buy from you? Whether it’s a other transaction authority or small business set aside, something that’s easy for a federal buyer to reach your company. Whatever it is, you try to make your business stand out. And Tom, I think one of the things that really helps if you can show it is experience you already have in serving government in a time of need, whether it’s the federal government, which of course would be ideal, or even state and local government experience, because many companies have experience in disaster relief and recovery. And we’re kind of almost in that same type of mode right now, particularly as government acquisition is concerned. So any experience that you have as a contractor can help give that federal buyer some reassurance that you’re a low risk supplier who really understands what’s going on in their world.
Tom Temin: And there’s also some flexibility implied with recent White House guidance with respect to how agencies can spend money under a given program. Which might mitigate in favor of contractors who are flexible enough maybe to alter their offerings to face the need that the government has at this moment?
Larry Allen: Well, there are all kinds of flexibilities that had been put in if, on one hand, there are accelerated progress payments. So if you’re working on a long-term project, there is guidance on how to get paid more, earlier, which really can help with your cash flow, whether you’re a small business or a large business. GSA, for example, has opened up its disaster relief and recovery capability for its multiple award schedule program, which means that state local governments can buy directly from any schedule so long as you the contractor have opted in. We’ve particularly seen this to become an issue with the Department of Veterans Affairs contracts, Tom, where it’s not just pharmaceuticals, but it’s all manner of medical supplies and even some medical equipment. The bottom line is that there are some new flexibilities on how you can use those contracts, new flexibilities for you as a contractor on who you can sell to through those contracts. And also ways to facilitate your getting paid, whether it’s a long term contract or a contract that you have, where you’re typically required to be on a client’s site, but you can’t do that right now. So if you’re a contractor, and you’re not familiar with these options, I recommend that you become very familiar with them. I also recommend, Tom, that contractors not assume that their government buyers are familiar with all of these flexibilities and new ways of doing business. Your contracting officer is busy running around trying to meet a million different missions at once, whether it’s health care IT, overseas deployments, whatever it is. You the contractor want to make sure that you’ve got the proper documentation to point out to the contracting officer here, we can do it this way. And now here’s how that happens.