The Business of Defense Contracting
By Ryan Weaver
There are hundreds of thousands of private citizens that work with the government as contractors. Almost 14,000 of those citizens have contracts to work in Georgia on bases such as Robins Air Force Base.
With billions of dollars being spent in the defense field, the contracting business is very lucrative but can also leave contractors in limbo when contracts come up for renewal.
Innovate, International, Intelligence, & Integration, or simply I-4 LLC, is a small company that has both profited and been hurt by the competitive and fierce market.
Kevin Thompson is an employee of I-4 and has worked as a contractor for two decades since retiring from the Air Force. Thompson feels that at times when the government does a re-compete, allowing other companies to bid for the work already done by a company, they will pick whichever company offers to do the work for the lowest price.
“If you’ve been around this business a lot you realize that unfortunately a lot of times the re-compete … comes down to a what I call a low-price shootout,” Thompson said.
“The government has really pushed back hard,” said Ann Kane, the owner, president and CEO of I-4. “I now see them kind of turning away from that.”
Kane said she believes the government moving away from just accepting the lowest bid is because the government have seen that the lowest price doesn’t guarantee them the “best value.”
However, the government going with the lowest bidder doesn’t seem to lower the federal budget for defense. In 2015, the federal budget was set at $3.8 trillion and of that almost $600 billion was allotted for defense spending. Of that $600 billion, $6.4 billion was spent to hire 49,558 contractors to do government work.
In Middle Georgia, 13,656 people were hired to do $2.7 billion worth of work in the aerospace field — work that is often connected to Robins Air Force Base.
When new companies are awarded existing contracts, this effects employee salary and benefits. For example, a company that wins a bid that is half of the current contract value, that means they have less money for employees and their benefits.
In many cases, the winning company will turn to the current contract holder to fill its vacancies. This happened to Kane and Thompson, who said those job offers come with serious negatives.
“You get used to a certain income level and your lifestyle is adjusted to that and someone comes in and they want to reduce your salary by 30 percent,” Thompson said.
For Kane, the reduction in pay and benefits of her former employees is hard to stomach.
“They’ll come in and say ‘OK we want to hire all of your people to did work on this contract.’ A lot of cases you see them taking 10, 15 … 35 percent pay cuts,” she said. “And that’s not fair to the employees because of their experience and their dedication to that customer and that mission and then they just get treated like that.”
The possible loss of income and benefits affects more than just one person, it can affect whole families if the employee has one.
“If there’s a single breadwinner and they’ve got their bills that they’re used to you know for the amount salary or income coming in and all sudden here comes a new company and they’re saying ‘we are going to reduce by 30 percent’ that can be quite quite stressful,” Thompson said.
Adding to the stress of not knowing year to year if they will have work, contractors have to deal with some misconceptions.
“When I was active duty we used to joke and say ‘How do you know the contractors lying?’ and say ‘When their lips are moving’,” Thompson said.
Thompson said that those type of thoughts by him and other airmen come from “ignorance” of not interacting with contractors. Thompson believes that he started to learn what contractors were actually like when he started his post-service life as one.
Kane places most of the public misunderstanding of contractors on those she calls “bad actors” that make a lot of money for doing simple work such as making and “selling [a] $25,000 toilet seat to go on an airplane.” That kind of work contributes to the thought by the public that contractors are looking for any possible way to make more money for doing less.
Kane paints most contractors as small companies that are wanting enough for a comfortable life and to deliver the government the “best product” and “best service” possible.
