Contractors' general reluctance to consider outsourcing the administration.

In this article, we are addressing contractors' general reluctance to consider outsourcing the administration of their fringe benefit programs. You know, military base commanders typically acknowledge the value of outsourcing, but only after a task has been contracted-out successfully. Only then do they see they have gained a valuable partner and become more cost-competitive in the overall process. Just as base commanders are eventually convinced, contractors may come to recognize the value of competent third-party benefits administrators, too.

Presidents, CFO's, and operations personnel within contracting companies typically are very quick to realize the value of contracting-out their SCA-fringe benefit administration. After a cost-savings analysis is presented, they realize the potential they have to derive the same type of savings the government realizes from outsourcing. Maintaining, communicating, accounting for the designated fringe dollars, and the tracking of sick leave, all may be included in the fringe benefits amount when an independent third-party performs the work, something that cannot be accomplished if the contractor is doing this work by itself. In many instances, however, contractors' Human Resource and Benefit Administrative personnel may not be as quick to view outsourcing as beneficial. Although they may also recognize the potential for cost savings through outsourcing, the prospect of relying on an outside source to administer their plans is not always perceived as beneficial.

There are few business opportunities these days where all parties can be considered winners. However, the contracting-out of benefit administration is just that--contractors win by saving money and becoming more competitive when bidding work; government wins because a more competitive bid means savings to the contract; and, employees win by being able to look to the third party for unbiased support and access to their benefits. Hence, a win-win, and win situation.

Two additional by-products of outsourcing benefits administration include the Department of Labor looking directly to the third-party to verify that the contractor has incurred the proper cost, and the benefit plans being bona-fide and reasonable. Most unions are more likely to be satisfied with a third-party arrangement rather than obtaining benefits directly from the contractor.

Importantly, every size and category of government contractor can benefit from outsourcing. Small companies may be able to forestall establishing a risk and benefits department altogether. Mid-sized companies can contract-out without losing control while allowing management to work on more central issues. Large companies can stop spending such an inordinate amount of time accounting for and watching compliance for the SCA portion of their business. Using an established, reputable, third-party administrator, all contractors will benefit by gaining a strategic partner at no bottom-line cost.

Outsourcing makes sense for the contractor just like it does for the government.

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