The Only Way to Deal With Government Insourcing

© DOC RABE Media - Fotolia.com

© DOC RABE Media – Fotolia.com

A couple of months ago I wrote about how small business federal contractors could use the results of the SBA’s 2014 Small Business Scorecard to target federal agencies looking to increase their set-aside numbers.

“I wish it were that easy,” was the response from one of my readers. They went on to describe what is unfortunately a common contracting experience. Their federal government agency customer had decided to insource some of the work the contractor’s company had been providing.

So what can you do when the government threatens to – or does – insource your best people?

Well, here’s what we did at TAPE back in the day, because it happened to us when we won our first big contract. We showed up at the kick-off meeting and the government contracting officer’s representative (COR) said they were going to insource 25% of the contract before we’d even start.

We did what we could – talked to the agency’s small business person, the SBA, and the contracting officer. However, the reality is that there really was no recourse.

What you have to do in this type of situation is plan for success. Anticipate the possibility that your employees are potentially going to become government employees someday.

If you’ve treated your employees well, then these folks are likely to be friends. Figure out how you’re going to take advantage of that friendship, in terms of new contacts, access to “nearest neighbors” (related departments or agencies that could potentially hire you), and increased awareness of your business’s good reputation.

In our case, while our agency customer was talking about 10 or more positions, they wound up insourcing five. What saved those five positions? The agency hadn’t considered the overhead it would cost to move all those positions in house. As well, it had crossed over into another budget year they didn’t get their required budget.

So five employees stayed our employees. And because we had treated them so well, each of the five who became government employees proved to be a valuable resource for us in the future.

So that’s my advice. Instead of fighting government insourcing, work with it. There’s really nothing much more that you can really do. Believe me, your customer will recognize the difference between resistance and supportive activity, and they will remember that the next time a job comes up.


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