by Seth Fineberg
New York - Million-dollar auditing contracts don’t come by every day. Particularly if you’re not a member of the Big Four.
But if your firm has experience working with state and local government agencies, it may pay dividends - literally - to get on the General Services Administration schedule to work with the federal government.
The GSA’s schedules are contracts that allow federal customers to acquire more than four million services and products directly from more than 8,600 commercial suppliers. These can range from office supplies and copier paper, to computers, laboratory equipment, and services ranging from accounting to graphic design and landscaping.
Once on the schedule, a firm must book approximately $25,000 in federal contract work every two years. The GSA earns 1 percent of the fees from every contract, mostly to keep the program running.
Cherry Bekaert & Holland - the largest regional CPA and consulting firm in the Southeast - is one of several firms that maintain that being on the GSA schedule is worth it.
In May, CB&H became the most recent firm to be classified under the Financial and Business Solutions Schedule 520-7. Categories of services available under Schedule 520-7 include due diligence and support services, financial and performance audits, recovery audits, accounting, budgeting, complementary financial services and outsourcing of financial management services.
The firm has helped many businesses work with federal, state and local agencies for nearly three years. Being on the GSA schedule expands CB&H’s overall service offerings into an area where it feels little competition, according to Susan Moser, partner-in-charge of the firm’s federal contracting group.
“Outside of a few national firms, we have not seen others that have multiple locations that could provide these services on a firm-wide basis,” said Moser. “It is a natural extension for our firm to move into governmental accounting.”
The firm has offices in areas where there is a significant federal agency presence, including Atlanta, Charlotte, N.C., Orlando, Fla., Raleigh, N.C., Richmond, Va., and most recently, Vienna, Va., through the acquisition of Offutt Childers & Putnam - a local CPA firm with expertise in federal contracting work.
Moser said that helping companies deal with federal government contract work takes “a certain knowledge and skill set many firms don’t have.” She also noted that it can be very lucrative once companies “know the ins an outs” of the niche.
“There are plenty of opportunities in this area,” Moser said. “Federal agencies contract for over $200 billion annually in goods and services - now CB&H is one of a few regional CPA firms with a direct conduit to this business.”
Other firms attest that, while getting on the GSA schedule may be easy, there are certain downsides - but, in the end, they feel that the benefits outweigh the obstacles.
For example, though the Big Four are on the GSA schedule, the vast majority of the 52 firms on the list are small-to-midsized local and regional firms, all with some experience in providing government agency work. The small number of firms on the schedule, of course, makes for some tight competition for contracts, but the prospect of money and prestige that comes with a federal government contract seems to make it worthwhile.
New York-based CPA firm Watson Rice LLP has provided government audit work over its entire 33-year history. The firm got on to GSA Schedule 520-7 three years ago and recently landed an audit contract with the U.S. Postal Service.
“This contract is only our second federal one; there is no question it contributes to our bottom line,” said senior partner Conrad Cruz. “The thing that the GSA schedule eliminates is pre-qualification. If you are listed, people get the impression you will do the job well, more often than not, but it’s still competitive.”
His only gripe is that, once in a while, a firm that wins a contract over his will not post their rates. As part of the process, firms are required to publish contract rates on their Web sites, but Cruz said that not all firms on the GSA schedule have done that.
That aside, Cruz noted that having even a few federal contracts helps “even out the peaks and valleys,” since state and local government work is not always so steady or comparatively lucrative.
Government audit work (state, local and federal) makes up approximately 75 percent of Watson Rice’s revenue. The remaining 25 percent stems mostly from nonprofit organizations and some tax work.
Omaha, Neb.-based CPA firm Blank & Associates has provided state and local government audit work for 20 years, but was only awarded its service contract schedule last year. The firm has yet to land a major federal audit contract, but audit manager Jason Tonjes is not discouraged.
“We still have a vision of what we want, we just aren’t there yet, but we will be,” Tonjes said. “We are not looking for small jobs, we are looking for those million-dollar contracts. If we are going to travel around and do all the work involved, which we have, we need more than a $50,000 contract.”
Tonjes also noted that it has been a positive learning experience and he does not regret the day one of his government contractors recommended his firm get on the GSA schedule.
“Proponents say ‘Just get on and the work will start coming.’ But, honestly, the best advantage of being on it is if you have good contacts in the [federal] government already,” Tonjes added. “If you are linked up, it allows [contractors] to select you more easily.”
His 20-person firm is ready to double its staff when the big contracts finally come in.
Additional details about the GSA schedule can be found at www.gsa.gov.
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