Coronavirus Recommendations for Government Contractors

This article focuses on the coronavirus that the World Health Organization (WHO) has officially named "Coronavirus Disease 19" (COVID-19).

The Center for Disease Control (CDC) estimates that one in five (1:5) business professionals in the United States will stop working if the spread continues.

Virus is Ethnic, Market, and Industry Agnostic

There are already hundreds of articles and blogs on what government contractors should do to insulate themselves during this outbreak. However, I want to move beyond the Federal Acquisition Regulation (FAR) and Defense regulations (DFAR). So let's start with:

The government is a microcosm of society.

If it's impacting corporate America, it's impacting the government. So it's important, as a government contractor, not to look at this in a vacuum. Don't simply think like a government contractor. Think like a business professional.

Next 30 to 60 Days - A Balancing Act

Professional sports teams have cancelled their seasons. Large corporations, such as Nestle, L'Oreal, Apple, and many others have curbed travel and started telecommuting. The same is taking place, at different levels, across the federal government and Department of Defense.

My team and I support more than 600 companies and our recommendations are grounded in business strategy (and common sense). One of two things are going to happen in the next two months: Either the United States will successfully impact and minimize the spread of COVID-19; or we'll see similar impacts to society as we've seen in China, Italy, and other nations.

We've seen that panic is a strong motivator. Look, I know that municipal, state, and federal governments are making decisions based on 'facts' in order to curb the spread. But we also know that 'panic' is one of the criteria being used in their decision making. Let me provide a simple scenario that is playing-out across the United States right now. What is the one common metric for school districts that are still holding classes today? Why have all the schools closed-down for a month in San Diego? Why have schools or school districts closed-down in more than eighteen different states as of the date of this article?

One of the answers is that EVERY single one of these schools or districts had at least one person in the community test positive for COVID-19. It's not rocket-science. In my community of more than 395,000 people, we do not have a positive test yet. However, we're getting updates from the school district every day or two. I personally believe it's just a matter of time. As soon as one parent of one child in one school tests positive, the schools will shut down.

Just as the government is a microcosm of society, our school districts are a microcosm and they are just as powerful an indicator for what will happen in government contracting. As the overall society restricts travel and congregation, so will the government.

Government employees have kids just the like the rest of us. Even if one of your government contracts remains in full effect and they haven't closed the military installation or federal office, this brings me to my second point.

School closures are an indicator of pending impact to your government contracts.

Don't just track the impact to your current government clients. Maintain awareness on the school districts in the cities or on the military installations where you hold these contracts. In the military, this is called situational awareness.

Note. Before I could even click "publish" on this article, my wife walked in a with an email from the school district. All schools in our city are closed until April 3rd. In fact, I can hear my kids screaming with joy. I'm just staring at the wall wondering how we're going to keep them busy.

What To Expect on the Government Side

In late February, the Department of Defense banned all leave and liberty travel to CENCOM. Mark Esper, the Secretary of Defense (SECDEF), has been holding daily working group meetings to address the concerns of the disease. Schools, child care centers, gyms, churches, and army facilities have been shuttered across Italy and other parts of Europe; and military units in Germany are already preparing for shut-down or minimal manpower.

Mission Essential Personnel

Every office in every federal agency and military command has already identified their mission essential personnel or are in the process of identifying them. These are the individuals that are considered the bare minimum to either accept the risk of travelling to the office or will be fully operational from home. Even in times of war or extreme danger on the home-front, the government can not afford to stop operating.

As mission essential personnel are activated, we'll see an immediate impact to the acquisition process; the ability to reach government decision makers and contracting specialists; and an even greater impact to the supply chain. A few thoughts on these:

Slower Acquisition Cycle

You can be fairly certain that larger indefinite delivery contract (IDC) (most of us refer to as IDIQs, MACs, or MATOCs) that the government told you would release in mid-April, will most likely move to the right if the government moves to mission essential personnel only.

Contracting offices that have dozens of contracting professionals may send home many of the acquisition folks. It depends on the city, travel time to the office, number of people who have tested positive in the community, and the extent to which social distancing is possible within the office. Some government offices will remain fully manned. Other's will be essential personnel only.

But what good is a fully staffed contracting office if the government employees and service members, who are the program side... in other buildings, cities, or states, are on not going to their offices? A fully operational contracting division with all end-users at home will likely have to slow their processes. And the reverse of this is true as well.

Government contracting won't stop. We can't afford for that to happen. But it takes more than just the contracting professionals. It takes requirements. It takes program managers. The government acquisition process does not operate in a vacuum.

That brings me to my third point:

Effective immediately, government contractors need to not only realign their revenue expectations for 2020, but modify and shift their operational and business development strategies.

Now is not the time to "wait and see what happens." This has nothing to do with government sales. It has everything to do with general business strategy.

Get ahead of your competition. Start shifting your strategies now. Many companies are panicking, hunkered-down, or acting like a deer in the headlights. Most business professionals are planning for what to do with their kids when they get sent home. Just like you're preparing for what happens when the school closes, you need this same level of effort for planning what to do with your company.

Update. One example of the acquisition (procurement) cycle slowing down comes from the Missile Defense Agency (MDA). I recently received an email from MDA about an opportunity that is currently in proposal phase. MDA said they've extended the proposal response almost a month to the right. Why? Because the source selection team doesn't have an "isolated environment" in which to perform source selection.

Payment Interruptions

In business, we say that "cash flow is king." There are several great articles already published that discuss the FAR and DFAR. Two of the articles are from the Federal News Network and Koprince Law. I won't replicate what they've said but if you have active government contracts, you need to at least be familiar with:

• FAR 52.249-14 – Excusable Delays
• FAR 52.249-8(c) – Fixed Price Contracts
• FAR 52.212-4(f) â€“ Commercial Items Contracts and Force Majeure
•  DFARS 252.237-7023 – Continuation of Essential Contractor Services

In general, all the articles I've read are focused on payment interruptions due to contractors not being able to perform their work. Obviously, if your contract is Time and Material (T&M) and the work location is shut down, you can't invoice if your team can't get onsite and do the work.

But there's another payment interruption that I recommend you take into account. Whether you sell product or service, consider this scenario: You invoice but only mission essential personnel are at the office. One of the awesome benefits of selling to the government is that the government pays fast. Now, your government client may say, "Josh! Don't worry about payments. Even with decreased staffing, we'll get your payments out." They are all going to say that. However, even if non-essential personnel are working from home, common sense would tell us that it is highly possible that invoices may not get paid as fast as they are today.

And that brings us to my fourth point:

Government Contractors should add two additional weeks to their account receivable timeline.

If your company operates on tight margins with little operational reserves, I recommend you consider the impacts of not being paid on time. Remember the last time the government shut-down? Many government contractors sent their employees home to use their vacation time or were furloughed. Is your company capable of sustaining several weeks of delay in getting paid?

And that brings us to my fifth point:

If you don't have cash reserves, you should be talking to your financial institution, right now, about line of credit or short-term loans.

For smaller companies, the SBA is providing disaster assistance loans, up to $2 million, for companies impacted by COVID-19. I believe those loans are at 3.75%. For me, even if the SBA loan has less interest, I'd be more focused on how long it takes to get the loan versus the interest rate. Both are important but don't simply jump at SBA's disaster assistance loan if it takes twice as long as working with your local financial institution.

Government Supply Chain and Prioritization

Many government contractors will tell you, "War is awesome for business!" Whether you like it or not, war and military conflict are a boom for government contractors. The COVID-19 situation is similar but with one major difference. If you sell products that are not mission essential and / or not related to the virus, the government will likely re-prioritize and either slow down or cease buying what you sell until the situation stabilizes.

I performed a fairly non-scientific poll over the weekend with several dozen of our clients and Federal Access members that sell products. The feedback was fairly common sense. If the company sold medical supplies OR supported the Department of Veterans Affairs, their business isn't just doing well, they're getting orders faster than they've seen in the last two years.

Veterans Affairs is making sure that their supply chain is “full.” VA Secretary Robert Wilkie said at a hearing in front of the House Veterans Affairs Committee, "We don't need any extra money now," but added "the situation could change rapidly if the virus begins to impact veterans."

Bottom line, if your company sells product, you should either be planning for what to do when the government temporarily stops buying your products; or ramping up your sales efforts to take advantage of products considered critical by the government.

Waiving the Buy America Act (BAA)

Whoaaaa. Before some of you get excited, this has not happened yet. My gut tells me this is likely if we don't slow the spread of the virus and we experience what happened in China and Europe. Our healthcare system may require more than what our supply chain can support. I'm not saying this will happen. I'm just looking at my crystal ball and that brings up my sixth point:

Run the propensity, AGAIN, (who buys what you sell, how much, and how often) for all agencies and military commands.

Use SAM, FPDS, and USASpending.gov. Know exactly who buys what you sell. Capture their contact information so it's readily available. Call them to let them know you're there to support them.

Will the President waive the Buy America Act (BAA)? This President? I strongly doubt it. But it's very possible depending on the spread of the virus. Be prepared.

Recommendations for Government Contractors

What We've Already Discussed:

• The government is a microcosm of society.
• School closures are an indicator of pending impacts to your government contracts.
• Effective immediately, government contractors need to not only realign their revenue expectations for 2020, but modify and shift their operational and business development strategies.
• Government Contractors should add two additional weeks to their account receivables (AR) timeline.
• If you don't have cash reserves, you should be talking to your financial institution or the SBA, right now, about line of credit or short-term loans.
• Run the propensity, again, (who buys what you sell, how much, and how often) for all agencies and military commands.

Recommendation #1 - Take Stock of Your Current Contracts

This includes both prime and subcontracting. You need to talk to your clients in each geographical region. This is not an email. You need to call them. One of your questions is "Have you initiated the process for identifying who is mission essential personnel?"

Ask them what social distancing measures are currently in place and what they are currently discussing for the future.

Ask each of your clients if they can work from home and still access all the necessary government systems to do their jobs? The answers to this question will help you identify the impacts to your current contracts and help you adjust your financial and operational strategies.

Don't just ask the contracting officer! You also need to talk with the program folks. These are different offices with different requirements and activities. You need to talk to both sides.

Recommendation #2 - Set Google Alerts for Each Contract Location

You know that as soon as someone in that city tests positive for the virus that panic and shutdowns will ensue. If you don't use Google Alerts, it's free and very simple. I helped one of our clients set-up alerts on seven cities in five states. It took five minutes.

What do you do with this information? In itself, the data isn't crazy helpful. But it alerts you to the fact that more serious impacts are likely coming. This is just a simple means of tracking indicators.

Recommendation #3 - Document Everything

Many of the law firms that specialize in government contracting have already touched on this. Briefly, that call you had last Thursday with the contracting officer at 3:27pm about your contract? You're not going to remember the date, time, or exact specifics of that conversation in late June when when you're attempting to get compensated due to delays and other issues.

What happens when the government terminates a contract for convenience? I'll leave the legal jargon to the lawyers, but government contractors are authorized to recoup costs involved in preparing for operating the contract before it was terminated. It's always distressing to see a contractor respond with, "Hey! We've spent $25,000 ramping up for this contract and... I don't have any documentation or notes... but we need that $25,000 reimbursed."

Oftentimes the government says, "Um... no."

My point is this (what every lawyer will tell you), the more data and documentation you have, the easier it is to get money when there are interruptions in service. This applies in the situation of COVID-19 as well.

Recommendation #4 - Update Your Accounting Procedures

Many readers will shiver and experienced a dry-heave as soon as they read "Update your accounting procedures." Let's keep this simple. I don't care if your accounting is DCAA compliant. I don't care if your books look like the cookie order form for my daughter's Girl Scout Troop.

Just add a line-item or category in your accounting system for any costs involved with start-up, shut-down, or general impact due to the pandemic.

Just combine Step #4 with Step #3 and you will have protected yourself and you'll know that if you need to request compensation, that you have the documentation and that you can easily look at the books and identify the financial impacts.

Recommendation #5 - Mitigating Your Costs? Well... Yes and No

Everyone is talking about "hunkering down," protecting their cash flow, and riding this out. Okay, time out. Yes, this applies to a good number of companies, but it doesn't apply to all.

If you have little liquidity, little to no cash-flow, and no cash reserves, then yes, you have little choice but to hunker down.

BUT, if your company has successfully banked some funds, now is the time to put your business development strategy on steroids. Consider the stock-market. When is the best time to buy? When the market has tanked. The same applies to business development activities. Everyone else is hunkered down.

No right answer here but I've seen entirely too many articles talking about cutting and mitigating costs. Every company is different. Don't immediately jump to cutting costs. That's a tactical response; not necessarily a strategic one.

Recommendation #6 - Target & Engage Medical Organizations

It's not just the VA, it's also the Center for Disease Control (CDC), the Defense Health Agency (DHA), Health and Human Services (HHS), and other like agencies. The VA is one federal agency that will be buying a lot during the pandemic.

Over the last six months, quite a few clients have said of the VA, "We know they have money. We've seen the appropriations. But the actual buyers can't find the money or aren't being given the money.

This aligns with what Mr. Robert Wilkie said to a House Veterans Affairs Committee, "We don't need any additional money at this time." In other words, they have money and our clients are seeing the floodgates open.

So, if you already sell to the VA, you should be positioning and keeping your name in front of all the buyers. If you don't currently sell to the VA (or any of the other health agencies), you may want to introduce yourself.

Recommendation #7 - Alert Your Customers and Prospects on Alternative Products, Services, or Solutions

Let's assume you sell products in the healthcare industry. If the supply chain can't keep-up with the demand, does the government know about the three or four similar products that you sell, that could be used instead?

Have you sent a list of your core products to all your buyers? Unless you're Cardinal Health, the government likely has no idea of all the products you could provide to them.

This applies to both products and services that could lend support to the COVID-19 pandemic. Send alerts to all your current contracting officers and also those you don't currently support, with a list of the products or services they have access to.

For products, how many do you have immediate access to? How many can you access in 48 hours? In 96 hours? What are your shipping and delivery times. Don't just tell them what you can supply, help them understand the timelines.

And here's a great recommendation. Map all your products to the products they currently use today. Make it easy for the government to buy your products. You may have a product and other than one product specification, your product is pretty much identical with the same functionality.

From a tactics and strategy perspective, we always talk about collecting intelligence as part of your business development strategy. This is one of those situations where you should be pushing intelligence to government buyers.

Recommendation #8 - Collaborative Team Tools

How about that? For the last twenty years we've been using collaborative technology and it's been getting better and stronger every year. Facebook is collaborative. LinkedIn is collaborative. Using your cell phone is collaborative. Email is collaborative.

In this case, we're talking about tools like WebEx, GoToMeeting, Microsoft Meetings, Skype and the like.

First, you don't need to pay for a system. WebEx and other companies won't like that but there are enough free tools that you really don't have to pay for it. My company uses Skype internally and Microsoft Teams with our clients. It comes with our Microsoft Office Suite. It's awesome.

Second, if everyone is still working from the office, send everyone home tomorrow and test the collaborative tool you plan to use. Test NOW. Don’t wait to figure out which works best for your company. That can take weeks. Start testing to validate and verify that everyone in the company can access the collaborative meeting space and also has a fast internet connection at their home. If you have employees without a fast internet connection, spend $30 extra, per employee, each month, and have your employees upgrade their connections. Do it NOW, before the cable company stops all service calls.

Finally, these tools provide accountability. You know who’s online and they know you can see them and reach out to them.

Recommendation #9 - Corporate Recommendations for Working at Home

If you just send your folks home with "see you online...," you're going to learn a hard lesson. Just because you have all the computers, networks, and tools you need to work from home doesn't mean you'll be productive.

For all the business owners whose teams are already working remotely and those planning for it, you can't simply send your folks home and hope for the best.

In general, very few people can successfully and consistently work from home if they've never worked from home in the past. It's not easy! It's not as simple as setting up your laptop on the kitchen table.

You don't need to over-complicate this, but you should strongly consider a one-page corporate memo that provides recommendations to your employees on tactics and concepts to make it easier to work.

For example, I have two offices. One is a home office and the other is downtown. However, when I don't have client meetings in my local region, I work out of the home office. I had a mentor once teach me the information below so now is a great time to share it.

It is not as simple as working from home. Every company is different. Think rationally. Some percentage of a company's employees will be watching TV, reading a book, taking the dog for a walk, or sunning on the back porch. So how do you get your employees into the mental frame of mind to properly and successfully work from home?

There are two parts to your one-page corporate memo. The first is social and location. The second is a collaborative team tool that also provides accountability.

• Get up every morning at the same time. Just because you don't have to drive or take the metro to work - doesn't mean you get to sleep later. That screws with your internal clock. Set your alarm for the same time every day just as if you're going to the office.
• You may be working from home, but you're still going to work. That means you need to shower every day just like you did before.
• It is a proven fact that you act how you look. We've all heard this quote. If you look professional, you'll act professional. That means to keep your sanity, you need to get up at the same time, take a shower like you always do, and get dressed for work. You will NEVER catch me in sweatpants and a t-shirt. I wear slacks, button down shirt, and a jacket. However you dress at work today is how you should dress if you're working from home. So much of this is mental!
• Once you've 'entered' your office, the second floor, the bedrooms, the TV room, and all other rooms are off-limits. Most business professionals don't have a formal office at home. You may work from the kitchen table and that becomes your office. When I go to work every morning at 8:30am, I'm only allowed in the office, the bathroom, and wherever the coffee maker is located. At lunch time, the office is closed and I'm allowed in the kitchen. And then you know that until 5pm, you are not allowed to roam the house. Help your employees get in the right frame of mind.
• Get out! Take a walk! When your employees are at the office, do you have any idea how often many of them leave the building, sit outside on a bench, or simply walk around to get a breather? It's no different when you're working from home. Remind your team to take a 20 minute break in the morning and one in the afternoon. Go outside and take a walk around the neighborhood. It's very easy to forget to do this when you work from home. Put this into your one page memo to the employees. Trust me, you would rather they take twenty (or fifteen) minute breaks around the neighborhood versus turning-on a two and a half hour movie in the living room.
• Put a sign on your front-door that says, "No visitors or soliciting until 5pm." If you're home... they're home. A simple, "Hey, you're home too, let's talk about that," easily turns into a 45 minute conversation. Mitigate this from happening so you can stay focused.

Recommendation #9 - Your Tactics and Strategies

For some companies, the coronavirus has yet to impact their operations. For other companies, the impact has already been swift and severe, both positive and negative. You'll find this quote in every book I've written:

The difference between a job and an occupation is life-long-learning.

Small and large companies alike are going to need to change how they operate in the government market. It's actually market agnostic. You'll need the same tactics and strategies for commercial and residential sales as well.

You may not be able to access military installations. Industry days for various government opportunities will be moved to phone conferences. Federal agency buildings you often visit may be closed. I've already had more than half-a-dozen government conferences cancelled or postponed.

Many business owners and business developers rely on local, regional and national conferences to meet teaming partners and collect intelligence from government buyers and decision makers.

Well now what? Industry days are cancelled or moved to phone. You can't get onto military installations and federal agencies are closing their offices. Those two key conferences you were planning to attend this spring have already been cancelled. So how are you going to maintain the competitiveness of your pipeline and collect market intelligence? Oh, and the folks you need to be selling to are not at the office and the employees that are considered mission essential personnel have no clue who you are.

You're going to see a TON of webinars. I'm not exaggerating. I'm predicting a ten-fold increase in the number of emails you will receive... and many of them if not most of them will provide some level of value.

This is not similar to a government shutdown. The money is still flowing. Agencies and military commands are still operational. But how they do business is going to change drastically during a pandemic.

Do you have the right tactics and strategies to help you shift how you manage your contracts and how your sale team performs business development in this type of environment?

Remember, the difference between a job and an occupation is life-long-learning.

Stay safe,

Joshua Frank

#coronavirus #covid19 #rsmfederal

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Award-winning business coach, professional speaker, and #1 bestselling author, Mr. Frank is a nationally recognized authority on government sales and business acceleration. With 30 years in the government market, he speaks nationally on bridging government sales strategy with business strategy. Managing Partner at RSM Federal, Mr. Frank is author of the #1 bestseller An Insider's Guide To Winning Government Contracts and the #1 bestseller Game Changers for Government Contractors. Mr. Frank serves as Chairman of the Board for the Midwest Veterans Advocacy Foundation (VAF). Mr. Frank also supports the SBA's Emerging Leaders Program and is a judge for Arch Grants providing startup funding for entrepreneurs. RSM Federal works with small and large businesses to accelerate revenue in the federal market with clients and members winning more than $2.6 billion in government contracts and more than $30 billion in Indefinite Delivery Contracts (IDC).

Josh holds a degree in English, an MA is Management of Information Systems, and an MBA from the Walker School of Business.