Government Contracting Abuse: Yes, It Does Exist

Government contracting is a great idea.  Non-profits are guaranteed money and work for extended periods of time, which means guaranteed growth while doing what they love to do.  Conversely, governments are provided with a source of expertise to do the work rather than wasting precious time trying to figure it out themselves.

By all indications it would seem that government contracting is a great idea.  Unfortunately, the world of non-profit government contracts is rife with insufficient funding, late payments (if they were  made in the first place), random contract changes, time-consuming processes – and, believe or not, these are only a handful of the many abuses that non-profits suffer when contracted by governments.

The issue of government contracting abuse is important because it hurts everyone – from the smallest non-profit to the largest government to nations on the whole.  Ordinary citizens suffer from the abuses when paying their taxes and the economy suffers the effects of the abuse in fewer jobs and decreased salaries.

Yet while it may seem as though the situation is hopeless, the effects of government contracting abuse can be mitigated by educating your non-profit on the dangers of government contracting, and staying aware of any deceptive practices.

There are five major problems to watch out for when your non-profit is under a government contract:

1.    Failing to pay the full costs of the services they request.
2.    Changing the terms of contracts mid-way through performance.
3.    Making late payments.
4.    Complex processes (e.g. applications).
5.    Complex reporting and oversight requirements.

As far as mitigation, keep the following in mind:

1.    Get informed.  A great website to visit is the National Council of Nonprofits’s non-profit government contracting page, found here: http://www.govtcontracting.org/
2.    Join your non-profit State Association.  It may seem as though non-profits are powerless to change government action.  But as with any issue, the more voices that join together, the louder and better they will be heard.
3.    Keep the five major problems in mind (as listed above), and prepare yourself accordingly – take care with processes, and make sure to review the contract periodically.

Despite the potential for abuse, the fact remains: government contracting can be beneficial to non-profits – you just have to know what to look out for.

Further reading:

The Philanthropy Journal has an eye-opening article on the bad effects of government contracting here: http://www.philanthropyjournal.org/news/government-contracting-hurts-nonprofits

Nonprofit Maine has another interesting article here: http://blog.nonprofitmaine.org/2010/10/07/new-report-shines-light-on-state-government-contracting-issues-nation-wide/

One more from The Progressive Pulse here: http://pulse.ncpolicywatch.org/2010/10/08/nonprofits-working-with-government-funding-is-no-piece-of-cake/

The Washington Post has an article about what President Obama has to say on the topic here: http://voices.washingtonpost.com/government-inc/2009/03/president_aims_at_fraud_waste.html