Your taxpayer dollars at work ... building red tape
So, anyway, 69% of government contractors last year made profits of less than 10 percent from their government business, and seven percent of those contractors actually made no profits. Only 12 percent of the more than 100 government contractors queried brought in more than 15 percent from their government contracts in fiscal 2006.
And some of the reasons companies aren't making profits? Surprisingly, there's an awful lot of red tape involved when working with the government. I, for one, as Captain Renault in Casablanca famously said, "Shocked, shocked to find that gambling is going on here." OK, the quote doesn't match up completely to this example.
Or maybe it does. After all, it turns out it's kind of a gamble when you work for the government. As the Federal Times explains, the contractors are often asked to use cost-reimbursable contracts, which require more audits, reporting and investigations than commercially styled fixed-price contracts. (Of course, to be fair, when contractors rip off the government, we naturally and rightfully complain, and that leads to contracts like this.)
But then there's the simple fact that when a new governor, mayor, president or what have you is elected, or simply the ever-evolving budgetary agenda changes, programs can be eliminated, suddenly making the work that you or your business was doing for the government -- well -- obsolete. That has to be devastating, though, I guess on the bright side, as a taxpayer, you might be happy to be saving the money.
(I'm not going to get audited for writing this, am I?)
Geoff Williams is a business journalist, primarily for Entrepreneur magazine, and is the author of C.C. Pyle's Amazing Foot Race: The True Story of the 1928 Coast-to-Coast Run Across America (Rodale, 2007).