Specialty trades like flooring contractors are often at the mercy of big commercial contractors, large tract home contractors, or custom homebuilders. With the downturn of the economy, many of these larger contractors have gone under, sometimes leaving the flooring contractor to fend for himself. So where do you find work in this environment? For many, the answer may lie in contracting with a municipality, or state or federal government.
Red Tape
While these types of jobs can be lucrative, often the process of obtaining and keeping the job (and getting paid) is more involved than working for a general contractor or homeowner. A contractor used to dealing with a homeowner on a handshake deal will struggle with doing government work. The simple reason for this is paperwork. Governments like paperwork. They insist upon it. You may be the best installer in the world, but if you cannot be bothered with paperwork, you will never get the job, let alone get paid.
If you are not completely averse to filling in paperwork, how do you go about getting the job? There are a number of methods. For instance, some jobs are specialty jobs, such as a courthouse in need of flooring repair or replacement. For that job, as a flooring contractor you can apply directly. Other renovation, restoration, or new construction projects will be put out to general contractors. For these, it helps to know general contractors out there who are bidding this kind of work.
Place Your Bids
Bidding? Yes. In most instances where the government is seeking to hire outside itself, it must put together a bid package listing the scope of work, job requirements and any special issues associated with the proposed project. This is done because governments work for the people and must make an effort to get the work done for the lowest reasonable price. These jobs are posted on the website of the government entity that is seeking the work. If you are Internet-savvy, you can find all sorts of jobs. If you are not, don't fret. You will just need to take a trip down to the government offices and ask around; you will substitute legwork for finger work.
Do all government jobs require bidding? No. For some jobs, typically smaller in scope and dollar amount, the government can award the contract to pre-qualified contractors. You can get on a list to be awarded such contracts. The process is much the same as bidding, but instead of bidding for a particular job, you are "bidding" to be put on the list, which involves demonstrating certain minimum bonding capacity, insurance capability, and other criteria.
Also, the contractor making the bid has to be qualified, and the bid itself must match the specifications for the job. Being qualified depends upon a number of factors, including possessing the right skills for the job, having the requisite license (where licensure is a requirement of the locality in which the job is being performed), having the required bonding capacity, and meeting any special conditions.
Bonds and Insurance
In order to bid government work, you will need to have or be able to obtain a bond in the amount required for the job. This bond is a "payment and performance" bond that (a) provides your subcontractors and material and equipment suppliers a source against which to make a claim in the event you don't pay them, and (b) protects the government in the event you fail to complete the job. Either can make a claim against the bond. Protection of your subcontractors is usually a requirement because the subcontractor cannot place a lien on government property in the event the subcontractor is not paid. (For more on liens, see "Lien Lingo" in the June/July 2011 issue.) This is due to a concept called "sovereign immunity," which basically means that the government's property is its own and nobody can take it away from the government for any reason (absent the government's consent).
You will also need to have insurance, and often more insurance than most contractors typically carry for private jobs. The insurance you will need includes, at a minimum, commercial general liability, automobile liability, and workers' compensation insurance. As part of the bidding process, or certainly at the time of award of the contract, you will need to get a statement from your insurance company or broker confirming you have the right coverage in the right amounts; and you will need to contact the insurance company or broker ahead of time to confirm that you can add the government entity to the policy for the job as an additional insured.
Other Requirements
What other things can a subcontractor do to increase the likelihood of getting a government job? First, governments are big on equality, and, as such, usually have programs for contracting businesses that have a majority of ownership held by minorities or women. If your business fits such a category, there are jobs set aside specifically for such businesses. How do you qualify? Generally you have to submit more paperwork and get on a special list. This paperwork primarily consists of demonstrating your minority- or woman-owned status.
Second, governments also have programs for small businesses. For example, under its "8A" program, the federal government has set aside certain contracts and gives priority on others to small businesses that are qualified through the Small Business Administration. Again, a web-savvy contractor will have more success with these programs, as most have online application processes.
After you get the job, you will need to keep good records. In order to get paid, you typically have to submit a payment application on a government-required form, a list of all the work performed during the period for which the payment is covered (which might include percentages of completion of portions of work, depending upon how the contract work is broken up), and releases from subcontractors and suppliers acknowledging payment from prior pay applications.
In short, being a good government contractor means working well with a pen or keyboard as much as working with your hands.
Business Brief
Q: I'm looking at having to reduce salaries for some of my employees. Can I do that?
A: It's the employer's prerogative to set pay rates for employees and to periodically awdjust them (up or down) unless otherwise defined or limited by an employment or union agreement. Circumstances that may justify a salary reduction may include:
- Reduction of hours or work schedule
- Reduction of responsibility or change in duties
- Change in work shift or working conditions causing loss of premium pay
- Reduced or minimal level of performance causing reduction of incentive or productivity-based pay.
Prior notice to the employee is recommended when reducing a salary. Likewise, when a pay reduction is necessary to reduce costs during difficult economic times, an employee may consider a job with a lower pay rate to be a better alternative to a layoff.
