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Security Contracting: A Different Kind Of Business

By Edited Dec 21, 2013 0 0

Just so everyone reading this has a real good idea of exactly how low-speed I’ve become over the past two years, you should know that right now I’m shopping for a minivan.  YES, A MINIVAN.  Not even an up-armored one either.  You people can just go ahead and get all your laughs out of the way now, so you can come back and focus on the serious stuff.  But this past weekend, while the salespeople were going on about folding bench seats and flip-down DVD entertainment systems, I found myself paying a lot of attention to how their companies market products to potential buyers.  And for those of you who might have worked a civilian job or two after leaving the military, one thing you need to be aware of is that security contracting is an entirely different kind of business!

                Using the example of automakers for this real basic business lesson, let’s think of how Ford makes their money.  The company invests a lot of cash into designing their SWEET new 2011 Windstar minivan, and then they shell out just as much dough to actually manufacture the cars.  They’re in the hole for millions of dollars in costs long before you even show up at the dealership, so it’s a safe bet that any low-selling models won’t be around for very long.  But for today’s post, all you really need to know is that as a “traditional” business, a car company will make a complete product first and then try to sell it afterwards.

                Contractors, whether they’re the kind that renovate your kitchen or the kind that work overseas security jobs, have to run their businesses a little differently.  Basically these folks will wait for potential customers to advertise that they need a certain amount of work done, and companies compete for the right to do the job.  The biggest factor in this competition is usually the bid amount that each company submits, but other factors such as past performance and previous complaints play a significant role in the final decision.  That’s probably the simplest (and most incomplete) business lesson that you’ll ever get, but what you really need to know is that working as a civilian contractor involves an entirely different way of doing business than your typical civilian job.

                For example, while traditional companies like Ford or even Coke might try to sell their products to anyone who can buy them, defense contractors almost exclusively rely on the federal government to be their sole customer.  This varies a little for the biggest firms who do business with other allied nations or private industries as well, but for the most part the big money is always coming in from Washington DC.  And when you’re running off government funding, you’ve got to get used to working on government timetables.  Each fiscal year runs from 1 October to 30 September, so major shifts in funding or contract modifications will usually occur around October.  Also, in cases like this year where Congress still hasn’t approved the President’s budget for FY 2011, temporary government operations are funded by a “Continuing Resolution” until a final budget can be approved. 
                What this means for you, the applicant, is that a number of new contracts might not be awarded until the sponsoring government agency is certain that they’ll actually have the money to spend.  If you’re applying to any “Blue Sky” or “Notional Opportunity” requisitions in anticipation of the contract award, you might be sitting at home for a month or two longer than you anticipated.  This past year we had a series of Continuing Resolutions, it was a pretty interesting process to watch!  Whatever your personal political views, as a security contractor, you’ve always got to be aware of the role that politics plays in determining the final budget. 

                And as long as I’m being such a ray of sunshine this morning, I might as well take this opportunity to remind you that since the government is the one writing the check, they’re probably going to get their way most of the time.  Have you ever heard that old expression, “Don’t bite the hand that feeds you?”  Well for most defense contractors, there’s only ever going to be that one hand passing out the chow.  Executives face enormous pressure to maintain a company’s reputation, particularly when responding to customer complaints.  With security contracting there’s always that constant reality that poor performance could result in the work being awarded to another company, sometimes on very little notice!

                This is a big reason that defense contractors tend to be very strict about employee discipline, particularly if a complaint originates from the government.   Most complaints, even for relatively minor offenses, are likely to be documented with a warning letter if only so the company can show how responsive they are.   I haven’t personally seen very many cases of security contractors getting “thrown under the bus” just to appease the government, but it does happen.  Even though firing an employee means that a company’s just wasted all the money they’ve invested in hiring and training, when you consider that cost compared to the cost of losing the contract entirely, it’s a no-brainer for any program director.

                I’m not trying to be a downer, but I am trying to help you keep realistic expectations from your future career field.   You know that pay raise you were looking forward to on 1 October?  Or how about that new job the recruiters said you were next in line for?  Neither one is going to happen without the funding, so you might be waiting for a while.  Every job comes with some unique hassles, and these issues are just a few more facts of life for overseas security contractors.

               

 

 

 

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