Booncast Episode 5: Government Contractors Fight Inflation
Rapidly rising costs have impacted every facet of the economy and that is especially true within the government contracting industry. Businesses everywhere are testing the limits of their adaptability and cutting costs is paramount. Like any challenge in the government contracting space, inflation can be confronted with a strategic approach and the right solution.
Anna Harrell, a Senior Regional Consultant at Boon, joins Booncast to share her insight on the impact that inflation has had on the government contracting community and what her experience has been in finding solutions that help contractors fight inflation.
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Hello and welcome to Booncast, a podcast where we discuss evolving healthcare needs and flexible employee benefit solutions. Join our experts for unique insight into the niche market of fringe administration, solutions to address the needs of the American employer and the hourly worker, compliance concerns, and updates on developing topics in the industry.
Caitlin Kennedy with Booncast: Welcome back to Booncast. Today’s guest host is Anna Harrell, a Senior Regional Consultant here at Boon. Today’s topic has definitely been at the top of everyone’s minds — and that’s inflation. Anna is here to share with us the impact that inflation has had on the government contracting community and her experience in finding solutions that address the challenge head-on. Anna, thank you so much for stopping by and please introduce yourself to the listeners.
Anna Harrell: Thanks, Caitlin. It is a pleasure to be here. Very excited for today’s topic. So I, as you stated, am a Senior Regional Consultant here at Boon focusing on the Southeast region. So for me, that’s Georgia, Alabama, Tennessee, Mississippi and Florida. Been with Boon for almost four years, it’ll be four years in September, and located here in Atlanta. Born and raised Georgia girl and yeah, just really excited to dive into today’s topic.
Caitlin Kennedy: So, before we go in on inflation, can you walk the listeners briefly through the different types of contractors that you work with at Boon?
Anna Harrell: Absolutely. So, there are several different types of different contractors that we work with. Basically, if you have a contract with the federal government, and there is a health and welfare fringe dollar attached to that contract, we can help you. Overall, there’s about four different main types of contracts that you’ll run into.
So, the first one being the Davis-Bacon Act, or DBA. Think construction. If you’re located here in Atlanta and you’re driving down 400, all of those roads and bridges being built, they’re probably a federal government contract in itself. Second is the Service Contract Act or SCA. So, for example, think janitorial, or even security in that instance. Healthy Terminals Act, this is a little bit of a newer one. So, it pertains to any hourly employee working in the terminal at certain airports. So that law has been passed in New York, New Jersey, and then Philadelphia, it has been passed. And then when it comes to benefits, that’s going to start actually in July of 2023. And then, our ever-favorite, prevailing wage that certain cities have throughout the US.
Caitlin Kennedy: Okay, awesome. So, you are one of Boon’s subject matter experts on all things government contracting. So, why is now the prime opportunity for contractors to take advantage of your knowledge?
Anna Harrell: Great question, Caitlin. So first and foremost, let’s be real, it’s always time. Regardless of where the world is, or what we’re going through, we’re always here for contractors to take advantage of Boon’s knowledge. You know, right now in particular it’s a real hot topic: inflation. We all see it, whether you’re driving down the road and passing a gas station, or in the grocery store itself. But it’s an opportunity for us to work with companies, take a step back, see what’s going on under the hood. Is there an opportunity there to help them in this area, when it comes especially to cost savings, and overall be able to provide a solution that can not only help them as an employer but help the employees as well.
Caitlin Kennedy: So, as you touched on, and the topic of this podcast, inflation is a top national concern across industries and at every level of business and as you said, in the lives of many individuals. So in particular, how have contractors been impacted by inflation?
Anna Harrell: In several, several different ways. So, one is just the price of goods going up. The easiest example for this is especially your Davis-Bacon workers. You know, they are construction, and you have to have the resources in order to be able to do that job and I mean, you can just go walk into your local Home Depot and see the empty shelves. Or the price of, you know, what you have to pay now versus when you probably bid on a contract six months ago.
So just being able to have the resources to do the job and the prices going up. You know, going along that — fuel prices. You have to be able to get those goods and resources from job to job. So as a result, those prices are going up and with that the price of labor. You know, as humans, we need to be able to provide for ourselves day to day. And if everything’s going up, that means you know what we gain in our paychecks every month, that needs to go up.
And so, it’s just really facing this tight marketplace, you know, adding inflation to it. You have to take a step back, you know. You have to look, as an employer, you have to look at your own bottom line, “Where can we cut costs in order to not only help us but help our employees?”
And the employees are looking at their paycheck going, “Hey. This is what I make now. You know, I used to be able to afford all of this and now I’m having to cut things out myself.” So, you know employee retention, in the same breath, companies are having issues. So that’s, you know, from at least my end, and I know, a couple of my co-workers as well, that’s what we’ve seen.
Caitlin Kennedy: So, what are some of the ways that the solutions offered at Boon can directly address these concerns?
Anna Harrell: Yeah! So — and I’ve stated this, I’ll probably state it a few times — but it’s really just looking under the hood, at what is going on. And so, there’s three areas of focus for Boon as a solution. And that’s, you know, first and foremost cost savings. Looking at what you’re doing now when it comes to your health and welfare fringe. How are you spending it? What is going to be the best possible way to lower that bottom line for you, and make it more affordable for your employees? So that and then as a result, that’s keeping you more compliant.
You know, another aspect to it is that the DOL is getting after government contractors. You know, making sure that they’re compliant in their bids and in their work that they’re actually doing. The contracts that they have. And if they’re not, then that could result in a penalty for these government contractors, and just be more money out of their pockets. Which nobody wants to pay! So that’s the second one.
And then the third is really just helping them be more competitive by being compliant, by saving on costs. Lowering the bottom line. Helping them be more competitive in their bid process, so that they ultimately win more work, more money’s flowing in and more jobs for their employees.
Caitlin Kennedy: Could you walk listeners through an example of this concept at work?
Anna Harrell: Yeah, absolutely! So, I’ve mentioned it a few times, which is a cost savings analysis. So, let’s just say that either you’re paying your employees completely out in cash, that health and welfare fringe, or even a partial cash. You’re putting some of it into benefits but paying the rest in their paycheck. For a company, you know, we’re going to take that and we’re going to show them a side-by-side view of, “Hey, this is what you’re spending right now, per hour per month.” And then if this contract is five years, five years down the road.
And then on the other side, we’re going to show him, “Hey, if you put that health and welfare fringe rate into a bona fide benefit (a compliant benefit program) this is how much you’re going to be saving per employee.” And so they can really see that side by side difference. Look at the financial number itself. Which can be pretty astronomical, depending on the size of your group. I mean, we’ve seen it from, you know, startup government contractors, where it’s just a couple $1,000 in savings. Which of course can add up over time. And then we’ve seen large government contractors where it’s a six figure dollar savings right off the bat. Which is, you know, again, pretty astronomical.
So, looking at that, and that’s where we can really show the company where we can help them save in their bottom line. And then from the employee side, they might be having to pay out of pocket for their current benefit program or benefits, or whatever they are enrolled in. So, it’s utilizing that health and welfare fringe, putting it into a bona fide benefit program, which can include, you know, medical, ancillaries, even retirement. So that they are not having to come out of pocket themselves. They get what we call a net zero cost for benefits. Because let’s be real, it’s, you know, when we talk about inflation, healthcare costs, those are rising as well. And it’s getting harder and harder for individuals like you, like me to be able to afford it. So, this is a way that we can kind of fit it with all in the fringe, keep the company compliant, lower the bottom line, and get them healthcare coverage that they need.
Caitlin Kennedy: I mean, and that’s the umbrella over this entire conversation. It’s cost savings. Finding ways to cut those costs, finding ways to get the most bang for your buck, and that is… that’s value. Anna, we’re coming to the end of our time, but I just wanted to give you the opportunity in your own words to bring the discussion of value to Boon, specifically. What value does Boon provide to contractors?
Anna Harrell: Absolutely! I mean, from everything that we’ve talked about it is saving on costs. It is providing benefits — a bona fide benefit major medical program. That can be a net zero cost to the employer, but then also make it super affordable for the employee because it’s covered by that health and welfare fringe. So, they’re able to, you know, afford health care for themselves and their family. So that’s really the ultimate value. But, you know, when it comes to the contractors itself, you know, it’s really about them.
And, you know, we are here to listen to them, listen to their needs, listen to their wants. Goals, because every company has them, every individual has them. You know, where do you want to get? And again, I’ve used the term before, looking under that hood. What are you doing now? How can we help you get to where you want to go?
And another value add is feet on the ground. You know, I’m located here in Atlanta. You know, just last week picked up because a group asked me to come out last minute and was able to do so, and all of our in-house experts are able to do that. And it’s a whole team that can support these companies and help them, from start to finish. And helping them with the administration their benefits. I could go on, and on, and on about it, but it’s really about the company and how we can help them reach their goals.
Caitlin Kennedy: Anna, thank you so, so much for coming on today and discussing this really hot topic, and bringing it into conversation with a very hopeful, optimistic angle. I think we could all use some hope and optimism right now.
Anna Harrell: Absolutely.
Caitlin Kennedy: Thank you.
That’s all for this episode of Booncast! Thank you for listening! Visit us on www.boongroup.com for more podcasts, blog posts, and information on Boon’s benefit offerings.