Security Business

FEB 2019

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10 Security Business / / February 2019 SECURITY WATCH BY JOEL GRIFFIN, EDITOR, SECURITYINFOWATCH.COM Top Story Shutdown Wreaked Havoc on Contractors The government may be open for now, but the shutdown's effects are still being felt as the threat of another may be looming As this issue went to press, President Trump announced a short-term funding bill to reopen the government through Feb. 15; however, he said that if he cannot reach a deal with Congress to build the border wall, the government may again be shut down. It may be a respite that enables contractors to finally be paid after more than month of work, but the shutdown and the threat of another will have lasting effects on federal contractors, including security integrators and guard service providers. “The security industry (felt) real effects from the government shutdown, particularly for companies doing business on federally-funded projects,” explains Jake Parker, Director of Government Relations for the Security Industry Association (SIA). For security companies who depend on cash flow from government contracts to keep them and their employees afloat, the threat of another shutdown is dire. “(It) turned into a grave scenario for large and small federal contractors,” says Derek Radoski, President of The Integration Company (TIC), the top-ranked Fast50 company last year, which does extensive government work. Radoski says many projects were not funded during the shutdown. “TIC (was) instructed to not show up on site, stop all deliveries and not perform work on unfunded projects,” he explains. “Yet, we (had) due dates that passed (or were) approaching.” Even more concerning, according to Radoski, is that TIC was not able to bill the government for the labor provided by two-thirds of his team on various contracts. “At the end of the day, we want to take care of our team members so they can take care of their families,” Radoski adds. Moving forward, Radoski says that TIC will pay much more attention to and negotiate Federal Acquisition Regulation clauses related to “availability of funds” – which essentially provides legal immunity to the government in cases where funds are not available or allocated for a project. Due to its past success, TIC was well-funded enough to make it through a more than month-long shutdown; however, Radoski says small businesses and even large, publicly-traded firms will likely post woeful financial quarters due to the hit their revenues will take as a result of the shutdown. “Payments from December 2018 (may be) outstanding or slowed because those who are needed to sign off on them (were) sent home,” Radoski says. “So, TIC’s focus is on immediate delivery of commercial projects and maximizing the existing federal funded projects.” Mitigating the Impact of a Shutdown Timothy Lozier, Director of Marketing for workforce management software provider Valiant Solutions, offers four things executives should be aware of to mitigate a company's risk during a government shutdown: 1. Essential government contractors are required to work during a shutdown: Essential government contractors – such as TSA screeners – must continue to have their employees report to their posts. “All of our services under our respective contracts (were) considered essential,” explains Lisa Dolan, Owner of Securit, a provider of guard services and security installation. The company was required to pay employees during the shutdown, but was asked to hold off on invoicing the federal government. 2. Protect yourself with a line of credit: During a shutdown, businesses should ensure they have a substantial line of credit to help support their payroll. 3. Mitigate risk by diversifying your portfolio: Security firms that rely heavily on federal work will ultimately run a risk of lost short-term revenue in the event of a shutdown. This can be a danger to smaller businesses. “Diversify your portfolio to include a good percentage of private-sector work, so there is a healthy balance,” Dolan says. 4. Document time and labor diligently: For firms whose teams are required to work during a shutdown, make sure time and labor management systems are documenting every shift and post to specific detail. This will go a long way in helping companies demonstrate what was worked, when and where. ■

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