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When will deserving small security providers be awarded 20% of govt. security contracts?
DEAR EDITOR,
Sometime ago the government had announced via the print and electronic media that small contractors would be awarded 20% percent of government contracts. This has not yet materialized in the security industry.
The number one complaint of small contractors is the time it has been taking to secure government security contracts; a company that has been in business for say two years and has limited funding remaining is not going to be looking to spend another two years establishing a relationship with the government.
The amount of money that small contractors have in the bank is closely tied to the amount of money they have been able to raise from other legal sources, and not investors. The amount of money in the bank, along with their “burn rate” determines their “runway”.
Capital infusions are the only way a small contractor without revenue can continue to survive. The Small Business Bureau would approve a grant of $300,000 to small businesses that have been prequalified. Undoubtedly that sum is infinitesimal to run a company, and the commercial banks would refuse to approve millions of dollars in loans to a small company when that company is not fully operational and therefore not bringing in an income. The government must find a way to convince small contractors that they have a realistic chance of winning a contract within a relatively short period of time.
Most small businesses in the security industry are interested in contracting with the government, but numerous obstacles deterred them, some of which include the length of time to award security contracts, an unlevel playing field (bidders both small and large are instructed via the Evaluation Criteria of the Bid Document to submit evidence of establish financial capacity or credit arrangement or bank statement representing 30% of bid price; the bid document would also state that the contract “will be awarded to the bidder whose bid is determined to be substantially responsive (must obtain all ‘Passes’} and who has offered the lowest price”) and a sense that newcomers have little chance to win contracts over incumbents who were enjoying the good life under the previous administration, and from all appearances, will continue to do so under this administration which would work to the small contractors detriment.
Can a small business offer a bid sum that is as low as possible while still covering costs and generating a reasonable profit? To arrive at one’s hourly rate, one would have to factor in: base wage, overtime, uniform costs, transportation costs, training costs, vacation allowance, meals, management fee and margin or bottom line. The older and more established security companies are in a position to offer a bid that is as low as possible unlike a small business.
A widespread belief among small businesses is that only established players with the right connections and infrastructure have a chance of winning government contracts. From my understanding and experience, winning a government contract particularly in the security industry tends to mean a company is best at winning government contracts, not the best qualified for the job.
By the time government finally makes a decision to award 20% of security contracts to small, deserving security contractors, many could cease to exist.
Regards
Julius Williams
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