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Lowering Your Wrap Rate

Did you make it into your desired beach bod state this summer?  Or was time for the gym illusive?  Did you cut back on the dessert or did you enjoy a ton of gelato?

Much like dieting and maintaining good health, government contractors must maintain a “sexy” multiplier/wrap rate.  Even if you are in a less competitive field or have a unique offering for a customer with a ton of funding (if you are, good on you), you must still monitor and maintain your wrap rate.

Companies can sometimes view this exercise as an annual corporate budget, where you occasionally look at how you are doing and often look back and ponder “what were we thinking?”  This is not enough by a long shot.  Best practice is to review your financials each month and include analysis on how you are performing on your wrap rate.  Review monthly, adjust quarterly, consider a complete overhaul semi-annually.

Most companies find that they need to tighten the belt a smidge, especially as we push into the fourth quarter.  For some, it may be too late to rein it in this year, but that doesn’t mean that you shouldn’t start pushing for the 2019 indirect diet.  For others, it may be a great time to lose a few pounds before the year-end festivities.  Here are some suggestions for both year-end and next year:

  • Space – do you really use it; do you need it and what is your company culture? Larger System Integrators are shedding their bloated infrastructure.  Don’t build one unless you’ve got 5-year POP’s with all contractor site rates.  And even then, keep it lean.
  • Wellness – When was the last time you competitively shopped your benefits? Or even your broker?  Don’t get tied up in the same old “we only have a 2-5% increase, so that’s great” mentality.  Depending upon your size, self-funding in some capacity may be of interest.  Does anyone actually use the vision policy?  What about dental?  Have you considered reducing your contribution?  Not always popular but it may lead to new work.
  • Training – with all of the online options these days, does your team really need individualized training or would an online package work? You could offer this benefit to more employees at a lower overall cost.
  • Education – consider reducing the tuition reimbursement if very few people are using it. It’s nice to tout to potential new hires, but in reality, it’s not a deal-breaker.  If it is, bonus the employee out to cover the costs.
  • Business Development – is the team on track to meet their goals this year or has performance been underwhelming? It is time to take stock of what’s working and what isn’t and shed a quarter’s worth of labor costs for non-performers.  Let them go now while the job market is still firing up.  Layoffs or terminations after Veterans Day essentially mean no job until after New Year’s.  Make the hard call now.

Keep working at the wrap rate and make sure it’s as lean as you can survive on.  Not bloated, but not extra thin either – you need a little wiggle room to ensure a healthy company.

Lucky or Good?

As we head into the second half of the government fiscal year, do you find yourself looking at contractors who are on a winning streak and asking, “why do they keep winning?”  What is the secret sauce?  They don’t (at least from an outsider’s perspective) seem to be doing anything differently.  Their service offerings aren’t different than others.  They are winning with new clients, so it can’t be incumbent insider intel.  They aren’t the cheapest on the block, so they aren’t low-balling their bids to buy their way in.  Are they just lucky?  Or is it well deserved?

For those of us who work in GovCon all day, every day, we start to pick up on who will be successful and who will die on the vine.  Those that are winning have some of the following qualities:

  • Some differentiator in their service offering.  It doesn’t matter how loosely held that differentiator is.  I can go on for hours about lack of differentiation within GovCon and how “your people are the best athletes on the field” is NOT a differentiator. Those that win have glommed onto something they can promote as different.
  • Proposal machines.  These folks know the extra work required for going after some of these bids.  They successfully shift or delegate their work to others to allow them to ramp up on proposal work.  This is not necessarily the same as having a proposal shop.  It just means they know how to prioritize and delegate and have put in the mechanisms to do so.
  • Competitive rates.  Not necessarily low-ball rates, but something that is in line with their customers budgets, their main competition and the infrastructure that allows them to profit.  If you are winning often, you do NOT have to “buy your way in” on a new customer.
  • Recruiting machines.  They’ve got great candidates that they can flip to employees quickly.  Their resumes sing.  They have been working these candidates since they first smelled the pre-solicitation.
  • Competitive Intel.  Someone there has been working the opportunity and the customer for months, if not years.  From the outside, this win may look like a total bluebird, but someone has been working it hard, quietly.

With a few wins, the leadership strives for more, recruiters have an easier sell to candidates, employee referrals go up, teaming partners start to line up.  There is something about being a winner in this town that makes folks want to work for or with the company.
Throw in a little luck and timing, and that’s how you get the GovCon Swagger.  At least until the re-compete.

While you may need to define some of these pieces for yourself, BOOST can assist with the prioritization and delegation of your most important tasks. We specialize in accounting, contracts, HR and/or recruiting. Pick one, two or a combination of all four to free up your work time to become a proposal machine. Send an email to [email protected] and let’s discuss how you can get started.