The Pros and Cons of Contracting with the Government

The United States politics spent $ 835 billion in contractual services in 2018, making it the global ‘s largest employer for contract exercise. If you or your business can meet the politics ‘s requirements, you could end up with a healthy gross stream. But every caper has its pros and cons, and government contract is no unlike .
Whether you choose to become a government contractor could involve a mix of circumstance and personal predilection. There are some who swear by this type of work and others who would n’t touch a politics speculate if offered one. even, others have more politics shape than they can handle and long for something else .
While government contract can be an excellent way to start or sustain a business, it ‘s not without its downsides. As with any risk, you must evaluate all factors to determine if the advantage is worth the effort. here are some of the pros and cons of contracting with the government.

Pros of Being a Government Contractor

Good pay
If you ‘re thinking of working for Uncle Sam, it ‘s probably for the money. This is a valid reason, and the wage is surely good. In fact, you ‘ll earn more as a contractor than an employee, although there are trade-offs .
so, how much can you make ? That depends. According to the latest figures ( 2017 ), the average federal proletarian makes $ 90,794 per class. In comparison, the average federal contractor made $ 100,848 during the lapp period. Those rates will vary based on your character and representation. The downside, which we explain in a bit, is that contractors do n’t receive benefits .
Flexible work
Doing contract workplace gives you more wiggle room in your business activities and growth. possibly sitting in a booth eight hours a day is n’t your travel rapidly, although there is no guarantee that a contract position wo n’t require that you work on-site .
As a business owner, however, you have more flexibility over the character of sour you decide to take or reject. You can try a government contract and, if you do n’t like it, decide not to renew once the shrink is accomplished .
Easy to get
even though abridge work requires tortuous amounts of paperwork, these jobs are easier to get than a politics stead. One of the benefits of applying for condense function is that little businesses can take advantage of set-asides, which are contracts reserved for them entirely .
A booked allows a small occupation to compete against other similar businesses, rather of the big dogs. As a potential contractor, you ‘ll need to register with the SBA and qualify under at least one of these categories :
– Service-Disabled-Veteran Owned
– Women-Owned Small Business
– 8 ( a ) Business Development
– historically Under-Utilized Business Zone ( HUB )
A foot in the door
full-time government positions are notoriously difficult to land, but they are coveted ascribable to their pay, benefits, and stability. If getting a position with the federal politics is your goal, contracting can be one way to get your infantry in the door .
Working in a contract capacity, you will not only gain valuable feel but besides some excellent contacts. many condense employees are offered full-time bring, and it is easier to make this conversion than it would be for person to get a position with no relevant experience .
Stable employment
There might be a learn curve to landing your beginning politics compress but, once this is behind you, there is the opportunity for long-run relationships. Some contracts are for just one year, but many are for three years at a minimum. once that period is complete, you can broadly expect a renewal if you ‘ve done good work and fulfilled your end of the agreement .
Timely Payments
The fact that you are dealing with a politics entity normally means that you can be assured of requital. This greatly reduces the hazard of doing sour and then not getting paid .
Payments are typically made within 30 days, and even sooner for construction make. If you do n’t get paid within the terms of the contract, the government will besides pay you interest on the sum they owe .

Cons of Being a Government Contractor

Strict regulations
The union government has a short ton of rules and regulations. Every federal contractile organ is required to follow the Code of Federal Regulations and a variety of other labor standards. There are besides limits to what you can subcontract .
just the process of wish on a government shrink requires that you register with the System for Award Management ( SAM ) and the SBA. Plus, you ‘ll need to have a NAICS code and a DUNS code. After jumping through these hoops, you ‘re going to have to write up an RFQ and an RFP, and potentially respective of these depending on how many different contracts you want to bid on.

Steep competition
Assuming you go through the motions of applying for a politics sign, it would be a mistake to believe that you ‘re the only person will to do this knead. It ‘s no secret that the government has deep pockets, so the rival is cadaver for many contracts .
If you are a small business, you might find yourself competing with major companies and losing the shape ascribable to lack of know or resources. Finding a niche in this type of work can help you land more contracts related to your peculiarity .
No benefits
While your wage might be a spot higher than a government employee, you wo n’t get any benefits such as health insurance, paid time off, and retirement packages. This is a significant downside to doing contract function, but it ‘s besides the price of self-employment. If you ‘ve already decided to self-fund these items, you understand the tradeoff .
Dealing with government employees
Unless you have thick skin and can deal with fiddling to no work chumminess, you should forget about government condense work. As a general rule, government workers look down on contractors, with the belief that they make their jobs more difficult and are even trying to get them fired .
tied members of the public scene some government contractors as being overpay slackers that are taking advantage of outsize budgets. If you need constant affirmations, this is n’t the character for you .
Get ready for red tape
If you ‘re used to equitable doing what it takes to “ get ‘er done, ” you might want to look beyond government contracting for the ideal position. First, it can take time to get the award for the contract and get down sour .
There may besides be bureaucracy involved during the narrow. Decision-making about the progress of your study or fair the suffice to a simple doubt can be a slow process, which can be incredibly frustrating .
Job security
While we listed “ stable employment ” as a benefit to contracting with the government, there is another side to this coin. nothing is set in stone, so there is constantly the hypothesis that the shrink will end or not be renewed .
Since the government is a Sovereign entity, it has the exponent to unilaterally revise your contract, alter the precedence of work, deepen quantities, and tied outright terminate your contract for appliance. Budgets and priorities can change within government, and what you thought was a secure gig soon becomes a source of resentment .
Government shutdowns
While politics contractors can largely count on being paid, there are exceptions. When the government shuts down, contractors are broadly furloughed aboard even employees .
Those unconstipated government employees have always been provided with back give, but this has n’t been the case with contractors. Both in 2013 and again in 2018/2019, the government elected not to pay furlough government contractors .
Intrusive oversight
You might do a bang-up occupation for some government means, and placid find yourself under the microscope because – taxpayer dollars and bureaucracy. In fact, the government has the right to put surveillance at your adeptness, which is turn off enough for most professionals .
This is rare, though. What is more common, however, is the demand for an audit of your fiscal records, which can be inconvenient and dearly-won.

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Not Sure Where to Start?

As you can see, you have options when it comes to working with the federal Government. There may be some cash available, but is this the right opportunity for you and your business ?
If you still have questions about the fiscal benefits, and potential downsides, of politics abridge, we can help. We work close with a wide diverseness of politics contractors and are a GSA Schedule holder that specializes in government audits. Get in touch with us today .

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