Government Accounts

Contracts to clean state, local, and federal offices and buildings come up regularly. They will all be referred to here as the -government. Government buildings historically have a bulletin board where they post bidding notices in the purchaser's office. However, most government Requests for Proposals are now handled electronically on the Internet. Legally, they must be published in some public way making them available to the general public for a set period of time. You may find out exactly how it is handled in your city by contacting the government purchasing office.

The posting or notice will provide you with specific information on what they would like a bid on, when it is due, when you can tour the location, and what requirements are necessary. If there are actual tours, they usually have everyone meet at the same building at the same time. If there are a number of buildings on the tour, as there usually are, you will board a bus and someone from the governments purchasing office will be your guide. So, for a morning or even most of the day, you will be on a bus with 30 or more of your competitors.

Before it goes this far, but definitely when your bid is submitted, the government will require that you submit copies of your insurance for verification. This usually includes general liability insurance for a specific amount, Workmen's Compensation and a surety bond.

They also usually ask you for a financial statement or balance sheet on your business from a Certified Public Accountant. They request the balance sheet because they want to make sure you have the financial resources to handle the job. To handle a government building, your payroll may be very large. The cost of supplies and materials may also be a big expense as well. The government entity needs to make sure you have the ability to pay your employees, your quarterly taxes, your insurance, supplies and suppliers and continue servicing the government before you get paid. Most government locations pay within 45 to 60 days.

They will give you a detailed specification list of what they expect to be cleaned nightly. Usually the bid amount will include carpet cleaning once or twice per year and floor work and window cleaning on a set schedule. They may also ask that you bid on the paper products and supplies for the building.

Your proposal will be due on or before a certain date in order to be considered. Include many references with phone numbers, contact persons, addresses, and a description of the buildings or types of businesses. Re-submit all the insurance specifications they have requested and the financial statement.

Many government offices are still required to accept the lowest bidder who can meet the criteria and job requirements. Some government offices give preferences to certain groups and minorities that meet the job requirements. Other government offices accept bids just like private companies, basing their decision on a review of the estimate, the references, and interviews with the contractor. The bid accepted is made public so you can see how your estimate compares to the one selected.

Government contracts have many strong points. They usually pay reasonably well. The contracts themselves are often for one to three years in length and can be -rolled over- for another one to three years. As a result, they are some of the most solid and stable agreements you can get anywhere in the cleaning business. This means, for the duration of the contract, the government will not take any other bids from any other contractors.

Since government contracts are so solid, if you have considered selling your business, this is often a good time to give it more serious thought. The contract will stay with the business and your buyer will be very impressed and glad to have it.

However, it does not mean that the job is yours -no matter what- for the length of the contract. If there are problems with the cleaning, there will be a verbal or oral complaint made or filed. The contract will usually specify how many days you have to rectify the situation. If it is not corrected, the government, just like a private business, may send you a 30-day termination of service notice.

There are some drawbacks when dealing with government buildings. The biggest concern is that the government can be a little slow in paying their bills. This is probably the most serious issue and it is definitely not true everywhere. But if they are slow, it will have a major impact on your cash flow for at least the first three or four months of service.

With private industry, you may bill at the start of the month, for the month of service, and request payment by the end of the month of service. Government offices will usually not honor an invoice until the service has been rendered. As an example, you would bill in July for the services and products provided in June. So, for your service in June, expect a payment sometime in August. Some localities may pay much faster.

Many years ago we cleaned several offices for Caltrans, the transportation department of the State of California. We submitted our invoice to the main office that we cleaned in Santa Rosa, California. That office gathered all their invoices every couple of weeks, processed them, and sent them to Oakland, California. That office assembled an even larger batch of invoices and paperwork, processed those, and sent them to Concord, Calif. From Concord, they went through another stage of processing and then on to Sacramento. Eventually a computer printed out the check. If I was not paid within 50 days, I called Santa Rosa first then Oakland, then Concord, trying to find where the invoice was in the bureaucracy. Sometimes it was held up for some minor reason and I had to resubmit my invoice to that specific office. Sometimes it was lost altogether. These problems can happened every seven or eight months and it was not fun.

Bottom Line

Government accounts are good and solid. They pay reasonably well. As long as you have the insurance and resources to handle them, they are a very good source of business.

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Information provided in these cleaning tips is of a general nature and may not be appropriate in all situations. Consequently the author makes no representation of warranty as to the completeness, correctness, or utility of the information contained in the cleaning tips as it may apply to a specific situation. Therefore, readers are encouraged to consult with ProSTAR industries for specific information and guidance.