March 9 2012 Copyright (c) 2012 Business Research Services Inc. 301-229-5561 All rights reserved.

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  • Contractor Survey: Out-of-Scope Work, Late Pay

    Four out of five contractors said government customers asked them to perform out-of-scope work at least occasionally, without a contract modification, according to a survey by Grant Thornton.

    Only about 16% of contractors said they always refused those requests, which violate acquisition regulations. Grant Thornton warned, “[T]he frequency of such requests should be a matter of serious concern for government officials.

    The annual survey of contractors documents a small but growing sign of friction between contractors and contracting officers. About 10% of respondents described their relations with contracting officers as fair or poor, twice as many as in the previous year’s survey.

    The report reveals that two Obama administration initiatives are not gaining much traction. While the administration has pushed for increased use of fixed price contracts, those contracts accounted for only 20% of the companies’ revenues, about the same as in previous years. Respondents said 45% of revenue came from cost reimbursable contracts and 35% from time-and-materials contracts.

    The majority of contractors said the government paid them within 30 to 60 days. Only 21% reported being paid in less than 30 days. The administration last year ordered agencies to set a goal of paying small businesses within 15 days.

    Other findings:

    Profit rates improved slightly compared with previous years. Thirty-one percent of respondents reported profit rates of 1% to 5% of revenue; 3.7% reported 6% to 10%; 26% saw profit rates higher than 10%. About 6% of the companies said they broke even or lost money.

    Half the companies said their revenue from government contracts increased during the year, while 29% reported lower revenue and 21% said there was no significant change.

    Thirty-five percent of respondents said they had received a stop-work order in the previous three years, but only 30% of them said they requested an equitable adjustment. Grant Thornton said the others probably feared antagonizing the customer


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