16 Reasons to Hate County and State Contracts
County and state contracts are not the best way to go. Plain and simple. They may be the “safe route” and hate may be a strong word, but by the end of this you’ll understand why this route is not the most beneficial.
But can’t you make money working these contracts? Yes, you absolutely can make money working county and state contracts. However, there will be a lot more effort and time spent, with a result that is nowhere near the federal level.
County and state contract results are incomparable to the results federal contracts give you. It might be easier or quicker to bid county and state contracts, but after all of the unsuccessful proposals you will need to design, you’re going to burn out. Once you are burned out bidding jobs unsuccessfully, then you’ll start to understand why we don’t suggest going this route.
16 REASONS TO HATE COUNTY AND STATE CONTRACTS
Rare to Begin And Make Millions Of Dollars
Working on smaller projects allows you to become comfortable and stay stagnant for years to come. There will be little progress as the years pass and once you get comfortable, the millions and larger projects will probably never be touched.
No Ability To Scale
You can’t hire an outside man and they can’t hire an outside man. If you go this route, you better be ready to do all of the work. With federal contracts, you can bring in whoever you need to as long as the job gets done and the people you hire can also bring in whoever they need to.
Requires That You Have All The Tools
You won’t be able to leverage other people and other team member’s resources. If you don’t have the money or the tools to do it yourself, you are out of luck. It’s a big never-ending cycle. In the federal arena, you can work as a subcontractor on a half or million-dollar project and the prime will cover the bonding. Meanwhile, you get the experience to increase your bonding level.
Pay Is Slow More Often Times Than Pay Is Fast
The number one complaint from small-business owners? The local and state governments pay is slow. Being paid slow versus being paid fast is the norm. If you are a subcontractor, you are waiting double the time. Whereas, the federal government pays on time.
Allows For Underbidding
Bidding and winning a job that the county and state know you will not be able to afford, is a risk you shouldn’t want to take. Starting out, you don’t have any money to lose, so why would you put yourself at a disadvantage right out the gate? It’s a waste of time for everyone.
They Award Projects Without Securing Funding
This is scary. If you are doing a project, don’t you want to assure you will get paid and that money has been allocated to receive payment? The federal government allocates money so when the job is done, you get paid. State and local governments? They need something done but have no idea how they will pay for it. After you do all of the work, all of a sudden, “they are sorry and trying to get the funding.” I don’t know about you, but we much rather be assured that after all of the work that goes into completing these projects, there is money for everyone to get paid.
No Blackball List; Not Widely Used
Ethics is what is comes down to. You don’t want to work with someone who is unethical. However, the local governments do not blackball contractors who take advantage of disabled and elderly people, walk out on jobs, fail to complete jobs or pay their sub-contractors. This also means that the prime contact can abuse you and never be removed from an approved vendor’s list. Sounds comforting? Didn’t think so.
Designed For Handymen
These contracts are made for people who are going to self-perform the work or bid so cheap as though they are going to self-perform the work. There are also no opportunities for you to scale or grow a team this way. They want you to do all of the work but pay you as if you’re doing them a favor or are hiring and paying others under the table. Not based on your expertise, experience and what it actually requires to complete the job and pay an experienced team.
Do Not Offer Maximum Leverage
Local levels do not support joint ventures. This is such a shame. Because they do not support joint ventures, there is no way or opportunity to actually leverage your abilities and talents to grow a business out.
There Are Prejudices Based On Race, Location and Relationships
Don’t get upset over what you just read. Take a second to understand. There are still minority, section 3, public housing and similar type of programs out there. However, these contracts won’t actually scale your business and lead you to success. On the other hand, they can actually get you in trouble. You cannot get success by demand. Find the best company to work with and for you. You want to be the best company and work with the best companies regardless of what they look like, who they are and where they’re at.
No Training Contract Officers
With the lack of stability in maintaining positions and the constant revolving of moving people to different positions, people who lack the experience are the ones judging the contracts. Whereas in the federal arena, a contracting officer is a contracting officer no matter where they go.
Funding Is Tied To Federal Or State Grants And Subsidy Programs Like CDBG
Did you ever stop to think where the county gets their money from? Yes, some of it comes from tax payers. But the rest of the money comes from the state, which comes from the federal government. If their dollars are coming from the federal agency, why don’t you just work for the federal agency? If it’s good enough for the state and the municipal government to rely upon, don’t you think it’s good enough for you to rely upon?
Constantly Changing People
Relationships are key to maximizing opportunities. If the people in the positions are constantly being changed, how can you have or build these relationships? You should be looking to maximize opportunities and leverage skillsets to grow your business.
Inconsistent Bid Process
With so many different departments within the counties, the bid process is inconsistent. This means you are creating new proposals for each bid. However, with the federal government, you follow one rule book—the FAR or Federal Acquisitions Regulations. They use the Standard Form 1449. Therefore, one bid process is almost identical to the other. Meaning, the first proposal you invested time into, you now only have to change names, prices and details.
Can Cancel A Contract With No Apparent Reason
If you want to be spending time going after opportunities for someone that turns you away and doesn’t give you a chance over something like a protest, then the county is the way to go. But who wants to waste all of that time for nothing? No one.
Big Enough To Screw You, Small Enough To Overextend And Not Pay You
There was a man who had a contract to build the Pinecrest Library. Once built, the real estate market crashed and he was told he would never get paid. Not because they didn’t owe him the money, but because there was no money to pay him. End note, they are big enough to screw you, small enough to overextend and not pay you. Don’t be that guy.
As a beginner, federal contracts might be intimidating but being new and ignorant is your blessing here. It’s actually a strength that you are at a disadvantage, because you don’t know any better.
When you don’t know any better, if you pursue a multi-million-dollar federal contract with limited experience and limited knowledge and you land that job, then everything works out. Whereas, if you start small, these numbers will seem unattainable and you’ll never give yourself the opportunity to reach these limits.
At this point, you probably changed your mind and despise county and state contracts too. We say, go for it. Start with the “scary.” Go for the federal contracts. You’ll be happy you did in the long run.