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Never, ever get a government contract unless you don't need to get paid from for at least 9 months. I have had friends burned bad.
One friend had the gov't agency issuing a 1099 stating he was paid, but never cutting the check. Getting that corrected was comical.
DKS
One friend had the gov't agency issuing a 1099 stating he was paid, but never cutting the check. Getting that corrected was comical.
DKS
Consultants were created to venture into troubled waters. The $180 Billion market is too good to pass up. My company is now working on two government contracts - both at $90/hr plus all expenses - and I will soon add a third. I invoice every 30 days and get paid within 15 days of invoicing. All these are multi-year contracts. My consultants are paid $100K and the company clears $66K from each consultant per year - a total of about $500K income for 3 people. This is just to day that if you want to go hunting in this very lucrative and stable market, you have to learn the rules and hunt with skill.
The article pointed out that IF you know to negotiate for a "rapid payment schedule" AND "partial invoicing", thne you can avoid some of the worst payment delays and still participate in this market.
The article also pointed out that for small businesses and lone consultants, being a Prime may not be wise but you can still get in on the government contracting by being a sub to a Prime. YOu get the benefits of being on a government contract without a lot of the risks.
Don't avoid this market out of fear - just enter it cautiously and with your eyes open.
If you want more articles on gvoernment contracting, contact me or TechRepublic.
See my web site at www.mtccouncil.com.
The article pointed out that IF you know to negotiate for a "rapid payment schedule" AND "partial invoicing", thne you can avoid some of the worst payment delays and still participate in this market.
The article also pointed out that for small businesses and lone consultants, being a Prime may not be wise but you can still get in on the government contracting by being a sub to a Prime. YOu get the benefits of being on a government contract without a lot of the risks.
Don't avoid this market out of fear - just enter it cautiously and with your eyes open.
If you want more articles on gvoernment contracting, contact me or TechRepublic.
See my web site at www.mtccouncil.com.
Anytime the government institutes a new regulation that applies to a large market sector, you can bet that there are golden contracting and consulting opportunities there. HIPAA is a good example. HIPAA is a new regulation that mandates every medical service - hospitals, clinics, insurance companies, etc. - must use new electronic forms and must comply with certain patient data security requirements. The industry involved is in the 100's of Billions of $$$. Many of these medical institutions are electing to use the opportunity to reorganize and to optimize their systems and processes, however, most medical professionals are not adapt at process analysis or IT systems analysis and design. A one-person consulting service can provide thebusiness process analysis, systems analysis, IT systems upgrade, project management or other related services to a large hospital or medical complex. Since the government has mandated that this must happen, you know that every medical facility around you is a possible contracting candidate. What a fantastic opportunity.
Another mandated regulation that will affect a very large market is the OMB A-76 and Fair Act changes that have recently been proposed but not yet mandated. In the very near future, these new regulations will require every government agency to study their operations for potential candidates for outsourcing of services. This is a recurrring requirement that will create a new market in the 100's of millions of $$ per year.
There are other such opportunities - just keep your eyes open.
Tom Watkins
Management Technology Consulting, Inc.
www.mtccouncil.com
Another mandated regulation that will affect a very large market is the OMB A-76 and Fair Act changes that have recently been proposed but not yet mandated. In the very near future, these new regulations will require every government agency to study their operations for potential candidates for outsourcing of services. This is a recurrring requirement that will create a new market in the 100's of millions of $$ per year.
There are other such opportunities - just keep your eyes open.
Tom Watkins
Management Technology Consulting, Inc.
www.mtccouncil.com
Sorry the neophyte got the lesson, but sounds like he didn't know much about business in general. Why would he expect to get paid $9K for providing such a service as using someone elses money to buy something for them? Even so, establish a relationship with a vendor, a line of credit, utilize the delay between purchase and billing, etc to mitigate the long delay before gov't invoicing and payment. Get 10 of those deals in a pipeline one after another. $90k/year doesn't sound bad. I wouldn't expect to make such a profit without assuming some risk and performing some effort.
Two other things to know about being a prime to a Government contract: First, Uncle can cancel the contract at any time (?at the convenience of the Government?) and you will recover only the costs incurred to date and those associated with shuttingdown the contract. This can happen to the best of efforts, no matter how enthusiastic the Government team may be about the product or how well you are doing. Contracts can get cancelled because the programs above them suddenly lose funding due to internal agency budget battles or even Congressional action. Contractor beware.
The second point is--even with continuing Government funding--to be cautious about growing the business past ten employees. In my experience, small primes running a successful contract where the U.S. was the only customer would make the mistake of growing their business in anticipation of more work. Somewhere past ten employees the owner would expand to a second building and bring in additional management. That's when everything would start to go to hell. If Uncle needs to surge the effort, consider subcontracting the additional work out to a bigger outfit or even the competition. Try to stay small and stick to your knitting until you can expand your products and customer base to include clients more reliable than the Government.
The second point is--even with continuing Government funding--to be cautious about growing the business past ten employees. In my experience, small primes running a successful contract where the U.S. was the only customer would make the mistake of growing their business in anticipation of more work. Somewhere past ten employees the owner would expand to a second building and bring in additional management. That's when everything would start to go to hell. If Uncle needs to surge the effort, consider subcontracting the additional work out to a bigger outfit or even the competition. Try to stay small and stick to your knitting until you can expand your products and customer base to include clients more reliable than the Government.
Great article. Wonderfully written. Simple, informative and readable
As a follow on comment to my text earlier, thought it would be easier if I included the FAR here:
32.908 Contract clauses.
(a) Insert the clause at 52.232-26, Prompt Payment for Fixed-Price Architect-Engineer Contracts, in solicitations and contracts that contain the clause at 52.232-10, Payments Under Fixed-Price Architect-Engineer Contracts.
(1) As authorized in 32.904(c)(2), the contracting officer may modify the date in paragraph (a)(4)(i) of the clause to specify a period longer than 7 days for constructive acceptance or constructive approval, if required to afford the Government a practicable opportunity to inspect and test the supplies furnished or evaluate the services performed.
(2) As provided in 32.903, agency policies and procedures may authorize amendment of paragraphs (a)(1)(i) and (ii) of the clause to insert a period shorter than 30 days (but not less than 7 days) for making contract invoice payments.
if you follow the blue links on FAR 39.903, it will take you here:
5 CFR 1315.5 - Accelerated payment methods:
(a) A single invoice under $2,500. Payments may be made as soon as the contract, proper invoice , receipt and acceptance documents are matched except where statutory authority prescribes otherwise and except where otherwise contractually stipulated (e.g., governmentwide commercial purchase card.) Vendors shall be entitled to interest penalties if invoice payments are made after the payment due date.
(b) Small business (as defined in FAR 19.001 (48 CFR 19.001)). Agencies may pay a small business as quickly as possible, when all proper documentation, including acceptance, is received in the payment office and before the payment due date. Such payments are not subject to payment restrictions stated elsewhere in this part. Vendors shall be entitled to interest penalties if invoice payments are made after the payment due date.
(c) Emergency payments. Payments related to emergencies and disasters (as defined in the Robert T. Stafford Disaster Relief Act and Emergency Assistance, Pub. L. 93288, as amended (42 U.S.C. 5 121 et seq.); payments related to the release or threatened release of hazardous substances (as defined in the Comprehensive Environmental Response Compensation and Liability Act of 1980, Pub. L. 96510, 42 U.S.C. 9606); and payments made under a military contingency (as defined in 10 U.S.C. 101(a)(13)) may be made as soon as the contract, proper invoice, receipt and acceptance documents or any other agreement are matched. Vendors shall be entitled to interest penalties if invoice payments are made after the payment due date.
(d) Interim payments under cost-reimbursement contracts for services.
For interim payments under cost-reimbursement service contracts, agency heads may make payments earlier than seven days prior to the payment due date in accordance with agency regulations or policies.
[64 FR 52586, Sept. 29, 1999, as amended at 65 FR 78405, Dec. 15, 2000]
Being both Prime and Sub under varying circumstances over the last 15 years, I'd much prefer to be the prime. As a sub, you more often have to struggle with getting paid on time - Commercial entities will most often try to delay your payments, rather than work with the rules above.
Information is power over any situation. The regs are there to protect both you and the taxpayer-paid gov project. Dig in - you'll grow your business!!
32.908 Contract clauses.
(a) Insert the clause at 52.232-26, Prompt Payment for Fixed-Price Architect-Engineer Contracts, in solicitations and contracts that contain the clause at 52.232-10, Payments Under Fixed-Price Architect-Engineer Contracts.
(1) As authorized in 32.904(c)(2), the contracting officer may modify the date in paragraph (a)(4)(i) of the clause to specify a period longer than 7 days for constructive acceptance or constructive approval, if required to afford the Government a practicable opportunity to inspect and test the supplies furnished or evaluate the services performed.
(2) As provided in 32.903, agency policies and procedures may authorize amendment of paragraphs (a)(1)(i) and (ii) of the clause to insert a period shorter than 30 days (but not less than 7 days) for making contract invoice payments.
if you follow the blue links on FAR 39.903, it will take you here:
5 CFR 1315.5 - Accelerated payment methods:
(a) A single invoice under $2,500. Payments may be made as soon as the contract, proper invoice , receipt and acceptance documents are matched except where statutory authority prescribes otherwise and except where otherwise contractually stipulated (e.g., governmentwide commercial purchase card.) Vendors shall be entitled to interest penalties if invoice payments are made after the payment due date.
(b) Small business (as defined in FAR 19.001 (48 CFR 19.001)). Agencies may pay a small business as quickly as possible, when all proper documentation, including acceptance, is received in the payment office and before the payment due date. Such payments are not subject to payment restrictions stated elsewhere in this part. Vendors shall be entitled to interest penalties if invoice payments are made after the payment due date.
(c) Emergency payments. Payments related to emergencies and disasters (as defined in the Robert T. Stafford Disaster Relief Act and Emergency Assistance, Pub. L. 93288, as amended (42 U.S.C. 5 121 et seq.); payments related to the release or threatened release of hazardous substances (as defined in the Comprehensive Environmental Response Compensation and Liability Act of 1980, Pub. L. 96510, 42 U.S.C. 9606); and payments made under a military contingency (as defined in 10 U.S.C. 101(a)(13)) may be made as soon as the contract, proper invoice, receipt and acceptance documents or any other agreement are matched. Vendors shall be entitled to interest penalties if invoice payments are made after the payment due date.
(d) Interim payments under cost-reimbursement contracts for services.
For interim payments under cost-reimbursement service contracts, agency heads may make payments earlier than seven days prior to the payment due date in accordance with agency regulations or policies.
[64 FR 52586, Sept. 29, 1999, as amended at 65 FR 78405, Dec. 15, 2000]
Being both Prime and Sub under varying circumstances over the last 15 years, I'd much prefer to be the prime. As a sub, you more often have to struggle with getting paid on time - Commercial entities will most often try to delay your payments, rather than work with the rules above.
Information is power over any situation. The regs are there to protect both you and the taxpayer-paid gov project. Dig in - you'll grow your business!!
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