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Government Accounts Require Attention To Detail
Government accounts — whether at a local, county, state or federal level — are steady, lucrative work for building service contractors. However, servicing these types of customers can require specific hiring, training and purchasing practices as well as certifications, to even participate in the bid process. Pursuing government clients takes significant commitment to adhering to detailed specifications and investment in personnel and operations systems, but it can pay off for BSCs.
“In an economic climate that is up and down, you can count on government work to be a staple. Government work, unlike commercial, is steady,” says Mitch Lustig, president of PMM Companies, Rockville, Md.
PMM Companies contracts with the U.S. Marshals and the Defense Information Services Agency, as well as with property managers overseeing facilities rented to government agencies. It also subcontracts with companies holding government contracts. All of these accounts kept revenues steady during the recession as the commercial market swayed up and down.
“The constancy of revenue over a specified period of time, be it one year or three years, is a tremendous advantage to government and municipal accounts,” says David A. Herrera, president of Culver City, Calif.-based CAM Services, which provides maintenance, construction and janitorial services for general municipalities and the California Department of Motor Vehicles.
But while it sounds like a revenue utopia, both Herrera and Lustig caution BSCs hoping to enter the government space to proceed with caution. Government work may present opportunities BSCs don’t currently have and a steady source of income, but there’s no easy entry into the business.
“Government work is a great space if you’re committed to it, but you can’t be half in. You have to be an expert at it,” says Lustig.
Lustig notes there are different kinds of government procurement opportunities, including eBuy, an open bidding system that allows any company to bid on any job, and Discriminators, which detail exactly the type of company that might bid on the job. These opportunities might only allow a minority-owned or Veteran-owned operation to compete for the work. However, Herrera says, a firm not meeting this criteria might still get the business if it works with companies that do meet the criteria, for example, subcontracting janitorial services to a minority-owned company.
Qualifying for a schedule is a meticulous process, Lustig adds, noting the government requires BSCs to document exact pricing, training, equipment and employee information and demonstrate past performance with those things in place. Everything down to the smallest detail must be correct.
“The government auditors in charge of putting schedules together are very meticulous, so it requires an extreme amount of accounting,” Lustig says.
It also takes time. A government account doesn’t land on the books overnight. It took PMM Companies six months to secure schedules in janitorial and facilities and maintenance. While BSCs can pay companies to prepare the documentation the government requires, Lustig says PMM Companies appointed a full-time staff member to head the effort.
A BSC’s work isn’t done once a schedule is in place, warns Lustig.
Appoint an employee to handle government sales, he says. PMM Companies and CAM Services employ separate sales representatives to pursue government contracts.
Companies often integrate government and commercial sales, which Lustig maintains is a mistake. Government RFPs contain a multitude of regulations and articles specific to these accounts.
“The government process is extremely detailed. It requires a different skill set than the commercial side,” he says. “When companies don’t have someone dedicated to these sales, people become overwhelmed when they look at RFPs that might be 300-400 pages long. And if you don’t answer every question, you’re disqualified.”
Next, gather all the data needed so it’s handy for every bid. Companies in the governmental space must have detailed quality and safety programs, exacting procurement plans, thorough staff information, training records, and more. While gathering this data can take considerable time, once it’s in place it can be re-used for future bids.
Proposals need to be as precise and detailed as possible, and more attention needs to be paid to these bids than most others in commercial accounts.
“You have to go word by word and answer every single question they ask,” Lustig says. “The commercial market does not require this level of detail. A lot of people jump in thinking it will be like the commercial market and it’s more than they can handle. When the government puts out an RFP, everything has to line up identical to what they wanted. There is no deviation.”
Lustig says once the data is in place and an expert is on board to make the sales, a BSC will have a leg up on the competition.
“There might be 100 operations that can bid on the job, but only 10 that actually submit proposals,” he says. “The other 90 think it’s too hard or they don’t have time or they don’t think they have a chance. So if you’re proficient at it, you can win this business.”
The government needs exact details in terms of employees, certification, equipment selection and chemical choice.
Companies often must submit resumes for the managers who will oversee the job if they get it. For example, the RFP might ask for a project manager with 10 years of experience serving military bases. The BSC must demonstrate it has a person with that experience available.
“You have to look for these people, either internally or externally, even if you don’t have the business, because the government wants to know what type of people you will put in place to run the job at different levels,” Lustig says.
Governmental janitorial contracts also typically require green cleaning and the certifications that go along with that. In fact, Lustig says, many government contracts now require GS-42 certification, Green Seal’s green cleaning standard for service providers. The standard outlines specific criteria that covers planning, products, supplies, equipment, procedures, training, communications and labeling.
Equipment needs vary from RFP to RFP but BSCs can expect to invest in new equipment for government contracts. Generally the government requires HEPA vacuums with four-stage filtration, low-dust emission buffers and other specific tools, so bidding companies need to be prepared to list available equipment or document to acquire the equipment in the RFP.
Training requirements may be more arduous than those required by the commercial sector, states Lustig. Government RFPs often require BSCs to offer and document sexual harassment and safety training, in addition to initial and on-the-job training.
“Your proposal must outline how you’re going to provide all of this training to employees as well as how you will document it,” Lustig says.
BSCs should be selective and only accept government contracts that truly fit their operation, according to Lustig and Herrera.
There are some red flags, they say, that keep them away. For example, if the building manager is not the person initiating the bidding process, CAM Services often won’t bid on the job. The reason? They’ve found those situations often lead to the lowest bid being accepted as opposed to the lowest qualified bid.
“We stay away from those situations and look for those where bidders must go through an interview process to demonstrate their qualifications,” Herrera says.
If the job requires purchasing a lot of expensive equipment, they also may stay away. They don’t want to buy this equipment for a government job and still be paying for it when the contract ends. BSCs need to carefully consider these investments and whether or not the job is worth the expense, Herrera says.
“If a BSC isn’t properly capitalized it can lead to problems,” he says. “You have to carry receivables for an extended period of time. There may be capital equipment expenditures you didn’t count on. You really have to exercise good long-term planning to cover all your costs and make a profit.”
It pays to be choosy, but it’s still worth the effort to enter the governmental contract world. Besides the stability that a diversified business model, that is a mix of commercial and government contracts, brings, there is also positive recognition that comes the BSCs way.
“It helps you develop good relations within the community,” says Herrera. “Often we have a property in the private sector that is within that municipality. It helps us in terms of scale as well as puts forth a good company image.”
Ronnie Garrett is a freelance writer based in Fort Atkinson, Wis.
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