While some industries grapple with slowdowns, many government contractors have geared up during the pandemic. From vital military and intelligence tasks to supporting Federal Emergency Management Agency’s coordination of the national response to COVID-19 — the work of contractors is vital.
Here in Las Vegas, our economy benefits from a strong military presence, with Nellis Air Force Base, Creech Air Force Base and the Nevada Test and Training Range providing billions of dollars in impact, annually. In addition to offering direct employment to thousands of our city’s civilian workers, these entities also provide ongoing work for many contractors in the Vegas Valley.
Contracts from federal and state governments remain in force, and work continues as government partners are working to help them succeed, what lies ahead for contractors remains uncertain as the health crisis challenges continue.
CHALLENGES FOR GOVERNMENT CONTRACTORS
Because much of the work is “essential” to government, few contractors have seen stop-work orders. Yet contractors’ worries are similar to other industries: how stay-at-home orders impact their ability to do the work they’re contracted to do.
Government agencies, recognizing the need for essential work to continue, have taken extraordinary steps to guide contractors on policies and procedures. The government activated contingency plans to help people work virtually wherever possible. While this helps existing contractors, many new contracts are delayed 30 or 60 days because of health concerns and competing priorities. This can cause cash flow challenges for companies that need to keep employees in place and ready to go while awaiting new contracts to take effect.
First-time government contractors may also face challenges. A ventilator manufacturer might be asked for five times its normal production, but may not have the capital and personnel necessary to ramp up, while also navigating federal contracting requirements. Many companies want to help; however, there may be obstacles for those without federal contracting experience.
KEY INTERNAL AND EXTERNAL CONSIDERATIONS
In this rapidly changing environment, contractors should be in direct communication with
contracting officers. Many — including the Army small business office, the Defense Intelligence Agency, the Special Operations Command — post daily updates.
Companies should consider their workers’ health and welfare, including physical and emotional well-being. They also should assess how long they can sustain a virtual-work environment and its impact on company performance as well as the associated costs. While payments to contractors are predetermined, contracting officers may be able to modify payments due to unforeseen COVID-19 related expenses.
Some contractors are facing supply chain difficulties without any recourse. Looking ahead, those depending on a single supplier should identify backups.
PROACTIVE STEPS FOR GOVERNMENT CONTRACTORS
Now, is the time for contractors to discuss contingencies about cash flows, installation changes, access to facilities and the CARES Act.
Contractors have supported military operations in Afghanistan and Iraq and have navigated earthquakes and hurricanes, sequestration and government shutdowns. Mission success often depends on adapting to unforeseen obstacles. Government contractors are successful because of their experience. Coupled with the counsel of their partners, they will thrive through this crisis,too.
Anna Cavalieri is a market executive for business banking at Bank of America.