When To Push Back: Judo & The Art Of Managing Government Contracts (Podcast Transcript)

                        [01:09] Richard C. Howard: Hey, guys. Richard here with Richard C. Howard and associates and the government Sales Momentum Podcast. So today we're going to talk about something a little bit different. I would say most of our podcasts are focused on how you can obtain new government contracts and the many strategies and techniques that we use to help our clients get on contract with different agencies. And I'll tell you, most companies actually do focus in that area, right? So whether it's responding to RFPs influencing requirements, maybe it's the spirit process. There are a lot of different ways to go on contract with the government. But what we find is that much more important than focusing on obtaining new contracts with the government is really managing your current contract with the US government. And that's where we see a ton of companies really struggle because they don't understand the process, right? So it was said by a colleague of mine who's a former contracting officer, that the United States government is a 500-pound gorilla in the room and a lot of companies are afraid to push back when the government pushes a little bit or insists upon something.

                         Now, you certainly have to understand what's in your contract. You have to understand the different clauses in there that refer to the Federal Acquisition Regulation. But when the government pushes, we refer to it. It's almost like contract judo, right? There is some pushing back that you can do and you should do in order to properly manage your contract. So what I want to talk about today is not necessarily meeting what your contract is asking for because I assume you're a good company, you have put in a solid proposal and you're the best at what you do and you're going to deliver whatever product or service is in that contract. But what I want to talk about is as you're managing that contract over the years, how can you really set that up? So it works best not only for you, but for the government. So if the government is not paying you enough, or if your margins for profit are too little, you're not going to be able to deliver your best product or service, and the government is not going to receive what they really are looking for. So it's really important to understand where you can push back and maybe where you shouldn't.

                        One thing that I wanted to talk about is wages. And when you're looking at wages, if you're providing services to the government, I've talked to a lot of companies that felt that they were locked into the wages that were in their contracts, even for contracts that were decades old. And at a minimum, your wages should be increasing with the Department of Labor's annual increase in labor rates. Right? So we have inflation every year. So at a minimum, without asking for anything else, you can go to the Department of labor website and check out what those labor rates look like. And it may not match up perfectly, but you should be asking for those increases every year if it's not already worked into your contract. So that's one thing that you can look at. Another thing, especially now in today, because I'm recording this in August of 2021. So we've been in a covert environment for over a year and a half. Another thing you can do is pull the Covet card. Look, if you put a contract if you've had a contract with the government and it was under agreement before COVID happened, COVID drives a lot of costs that you might not have had before, and it's perfectly acceptable to go back to the government and say, look, we're in a pandemic situation. We've been in one here for a year and a half, or whatever it's been. And this is driving costs that we did not anticipate when we first went into this contract. That's another area where you can enter into a negotiation with the government to really try to make sure you're getting paid for the actual costs that are involved in executing that contract.

                         Now, there is in some contracts, a lot of gray area. I've seen some contracts be so gray as far as not being specific about the project or product that they're actually purchasing. Right. So when you have a gray area like that, we were talking with the company the other day about requirements for cyber security. If those aren't very detailed, you could be on the hook to do a lot more work than you maybe initially thought you were, when you signed up with that contract with the government. So you want to make sure that when the government's asking you for things, especially after you're on contract, you want to make sure it's within scope of your contracts. This is where it really makes sense to have someone if it's not if you don't have a contract expert on your team, a government contract expert, to have someone reviewing all of the different cleanse and fire clauses and specifications of your contract. So when the government says, hey, I want these requirements added, or hey, we think even though the contract was gray and it wasn't very specific, this is really what we're asking for.

                        There are a few ways you can push back with that and you have to be careful. Right? So there's an art form to this, but the first is, hey, government agency, this is out of scope. This is not within the scope of the contract. And if something is out of scope, you need to push back and ask them to submit an RFP to you so you can put a proposal together on what they're actually asking you to do. Now that's if you got to make sure that what they're asking you for is not included in the contract you signed up for. But I'm really speaking to those contracts that have that gray area where you're on contract, but all of the details are not there and all the specifics are not there. You can absolutely push back with out of scope. And anytime they ask you to do something that's not in the contract, my response would be, yes, we can do that here's what it's going to cost. Now, we can certainly talk to you about the art form of that because there are risks, of course, whenever you push back to the government, right. The biggest risk is, well, you could just not have a contract with the government anymore, right. So you want to be careful that you are delivering what is absolutely required in your contract, but also pushing back where it's appropriate when the government is asking you for something else. Those are really the two big things that I wanted to cover in today's podcast is going over labor rates and just those gray areas where the government is now asking you to do something that wasn't really dialed into the contract and where it's appropriate for you to say. Hey. That’s out of scope, or pricing it out and saying. Hey. That's going to be in addition to what we're on contract for already. So I hope that helps.

                        [07:56] Richard C. Howard: Again, feel free to reach out. We have some excellent former contracting officers that will review your contracts of all sizes with the government to show you exactly where you can push back where you can, how we can maximize profits on those. We will be glad you did enjoy the episode. Thanks. It's very much appreciated. If you're interested in selling products and services to the Department of Defense, I have something for you that you're not going to find anywhere else in the world. The team and I created a program that takes everything you need to win defense contracts and put it into one place. Up until now, only large defense companies and a small amount of people in the know have had access to how products and services are really sold to the Department of Defense. I've taken all of that information and put it in a step-by-step training module that shows you how to consistently sell to the US military to join our membership. Not only do you get the model, but you get weekly sessions with former DOD acquisitions officers for training and guidance to answer your questions and a community of like minded business owners that want to partner on different opportunities to bid for subcontracting and teaming, or just to discuss general strategy on how to sell to the DOD. You'll have access to every course I've created, every coaching session I've ever recorded, and every interview with an acquisition professional that I've ever conducted. And we cover topics range from defense sales planning and competitor analysis to SBIR and STTR foreign military sales. The list goes on. Go to Dodcontract.com if you are interested and I would love to see you in the membership.

You can also check out my interview with Chelsea Meggitt on OTAs or other transaction authority where she shares her in-depth knowledge of OTAs and one of the methods that she likes to use when helping clients.

If you have any questions, feel free to reach out to us here and we will get back to you as soon as we can.