Government Contracts: Cleaning for Uncle Sam
In 2003, President Bush declared that more federal government facilities would be shifting from standard in-house operations to outsourced services. This opened the door for many private companies, including building service contractors, to bid on government contracts.
However, that doesn’t mean the door to government facilities is wide open. Many government facilities still use in-house cleaning operations and some of the accounts that do become outsourced already have a specific type of contractor in mind. Since many traditional BSCs don’t qualify, most steer clear of the government marketplace, says Ian Greig, CEO, Daniels Associates, Phoenix.
But there are opportunities, especially for smaller or minority-owned cleaning companies. Even though breaking into the government market can be tough, those BSCs who do make it in have found it rewarding.
The U.S. General Services Administration (GSA) manages more than 8,000 owned or leased government properties — 46 percent of government office space. Services on these properties may be provided by small businesses, large businesses and organizations in the Javits-Wagner-O’-Day (JWOD) program, a division of NISH that provides employment opportunities for people with severe disabilities, says Mary Alice Johnson, spokesperson, GSA Public Affairs, Washington D.C.
Under the JWOD Act, NISH has the opportunity to provide service on a new building or new business at an existing GSA property, says Johnson. GSA worked with NISH to establish the November 2002 Strategic Alliance that allows GSA to take into account meeting its small business goals. NISH handles nearly 300 of GSA’s accounts, but some BSCs see this as an unfair advantage. Controversy still lingers from BSCs who say that NISH steals business away from incumbent contractors and wipes out small businesses.
Greig, however, disagrees.
“It’s wonderful that a program like NISH gets government accounts. They run a marvelous program,” says Greig. “It helps ensure that jobs get done correctly. [Facility managers] don’t have to worry that another contractor will come in and take over the account for less money and then perform poorly.”
Also, NISH does not accept all accounts that GSA offers. JWOD will only accept the account when all option years on the incumbent BSC contract have been exercised, if a non-profit agency employing people with disabilities is capable of facilitating the account, and the account passes an economic impact study, says Curt Salter, assistant vice president for service operations for NISH. If an incumbent contractor will lose significant revenue over a three-year period if it loses the account, NISH will turn down the contract. If JWOD passes on the contract, it will be left for BSCs to pursue via traditional contacting avenues with the GSA, adds Salter.
Accounts that aren’t handled by NISH need to meet socio-economic goals; these business opportunities are set aside for small businesses or companies that are owned by members of minority groups, veterans or women. Contractors who meet these qualifications can bid for these contracts, says Johnson.
For the BSCs who do qualify for these accounts, it can be a great opportunity to establish a foothold in the contract cleaning industry, says Kurt Zachhuber, managing director, FVG Services, Bedford, N.H.
Pros and cons
The government market may be difficult to maneuver, but it makes up a significant portion of the overall available space to be cleaned, says Bill Griffin, president, Cleaning Consultant Services, Inc., Seattle. And those opportunities can’t be ignored.
In the private sector, many small businesses are unable to compete with larger companies or national chains. But government accounts can service as a niche market for these small or minority-group owned BSCs. In addition to accounts being set aside or given to preferred types of businesses, some accounts may feature price breaks for minority groups, says Griffin.
But as in any market segment, not all government contracts are going to run smoothly.
“Regardless if it’s a government contract or not, it comes down to … how well people communicate what’s expected,” says Zachhuber.
With government accounts, Zachhuber has found that expectations are not always expressed clearly. At times, the head of finance will initiate the bidding process rather than the facility manager. When this happens, the head of finance looks for the lowest price and cuts down the specifications dramatically without keeping the facility managers expectations in mind. The BSC then gets caught between what he is paid to do and what he is expected to do.
Also, government building managers usually aren’t emotionally involved with the building or organization, says Zachhuber. In the commercial market, facility managers typically are proud of the company they work for and work hard to uphold the brand identity, he says. With less emotion can come less interest in better cleaning methods.
“Pride in the building makes the cleaning job easier because the building is better maintained all the way around,” he adds.
Greig identifies other problems for contractors in the government market. Most BSCs must buy their own equipment for government contracts and it can take upwards of three years to pay it off. But the problem is that the contracts aren’t as long. By the time the equipment is paid off, the contract is up, says Greig. And since lower bids typically win the accounts, it can be easy for a contractor to be replaced, even if the competitor’s service isn’t as effective, he adds.
But like any contract, BSCs should be selective and only accept accounts that will fit their needs, advises Zachhuber. Not all contracts are going to work out.
Many do, however. And the benefits are there. Payments for government contracts are consistent — a worry most BSCs have in the private sector. Also, since bid prices are published, BSCs can get feedback on how their pricing compares to competitors, says Zachhuber.
Although the government market isn’t the easiest door to open, it still is smart for BSCs to diversify their accounts, says Zachhuber.
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