A common question that arises when speaking with contractors around the country:
“Now that we’ve won this contract, what should we do next?”
Let’s take a look at the factors that should be considered after a successful bid to ensure a profitable contract. An example of a typical scenario:
A new company with twenty employees receives notice that they’ve been awarded a contract on a bid submitted months ago. The pre-solicitation process and hard work is finally paying off. However, the initial excitement often leads to questions about payroll, compliance, administration and fringe rates. And that’s just the beginning!
Benefits as a Foundation for Success
How will health and welfare dollars be applied to the employees working on the contract? Good question. And it’s a question your employees will have, as well.
A top priority should be to establish a solid foundation on which a contractor or employer can grow. Second priority is to be aware of any considerations that arise within the regulations and specifications of a particular contract, such as state and local regulations. Finally, the employer or contractor should educate its employees on the benefit options being made available to them.
So, what’s the advantage to putting the fringe dollars into bona fide benefits?
By putting those additional fringe dollars toward bona fide benefits – versus simply paying cash to its employees – the contractor would receive recurring payroll savings.
Fringe dollars can be applied toward a medical benefit plan – whether that be fixed indemnity or major medical – ancillary benefits, a retirement contribution, or a combination of these options.
The unique position for the contractor is they have the option to spend those fringe dollars for bona fide benefits – depending on the contract – at its discretion, with some exceptions. It can be a win-win for the contractor and the employee. The contractor saves money, and the employee receives employer provided benefits.
How can employers lay that foundation?
Start off by establishing a precedent on how the company handles fringe dollars. Will you pay the fringe dollars out in cash or through a bona fide fringe benefit? If you offer a combination of cash, medical benefits, and retirement contributions, for example, that can result in an inconsistent message and can cause confusion with employees.
Plus, it creates additional administrative work for your team to track both cash and benefit options. It is important to make the decision, communicate it clearly to your team, and have a straightforward plan in place for managing fringe dollars.
By streamlining the process and setting clear expectations from the outset, you set the precedent with employees and staff. Offering benefits keeps your employees in the know regarding fringe dollars and saves you money — a perfect formula for growth and sustainability.
Administration, Compliance and Cost
Another key component that must be addressed with the new award is how to handle benefit administration. It takes a lot of time and energy to account for and maintain an accurate record of the hours worked by these employees, and to ensure that those details are handled in compliance with the ruling legal and local obligations and requirements.
You never know what may come up and it pays to be prepared.
Not anticipating that this amount of work might cause unexpected burdens on a contractor can be a harsh reality. We’re talking additional hours in the office, new employees to manage the workload, and meticulous tracking of employee hours.
However, as a benefit provider, The Boon Group’s product offerings include providing benefits on an hourly basis and Boon’s services are a functional component that helps you document and achieve compliance. At Boon, our partnership philosophy with our carriers and plan benefit providers position us perfectly to be a benefit to your business.
Path to Success
A contractor that understands their obligations under the specific wage determination and is aware of how different options can benefit their company is a contractor that is better equipped to win contracts.
The road to a win can sometimes be long and full of challenges. The path to success is to clearly define your game plan, this will propel that award into action for you and your employees!
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