Contractor Question - What they charge vs. what you make

ramrunner800 wrote: »

In my experience working as a contractor in the Federal space is totally different than as a contractor in a private company. Working for a large federal contractor you ARE a direct employee with full benefits. For all intents and purposes it's not different than working for any other Fortune 500 company(I've done that too, and speak from experience), except you go to a federal facility every day. Contracts come and go, you transfer around, but you always stay with the company. There was never any impression of being considered anything like the help. It's very different from how contractors are handled out in private industry, to the point that to even refer to them in the same way is misleading.

In large comany government contracts I always heard that the billing rate was roughly 400% of the employees actual salary. This can't be compared to contractors like TEKSYSTEMS or RH, they both are called contractors, but the employment arrangements aren't really the same. I know my employer has some contractors right now who we are paying alot more than 400% for right now.

Thank you for sharing your perspective!

at the end of the day, i'm just a loudmouth with a keyboard; but i still appreciate the insight of others :]

I hear what you're saying about "how you are treated"; but i guess my gripe is based on something else.
In this office of say, 150 people, 90% of the workers will get a paycheck that says "uncle sam".
Along with this, they get all of uncle sam's perks & benefits.

But the other 10% (where i would fall under) are not part of the "family". We may still be treated nicely.... but at the end of the day... we are NOT like the majority of the work group.
that's my gripe.

Honest question for you:
How do you think those 90% would react if they came to work today, and found out that:
A) they've ALL been fired,
but

they've ALL been offerred their same positions back (with the same pay).... except now they work under LEROY's contract house,
and C) the previously mentioned 10%, they are now ALL direct/federal employees.

How do you really think THAT would play out?
;]

TLeTourneau

In my experience it's around 60-65%. My last contact gig I got$125/hr and the company got $200/hr. I will only do Corp to Corp, no W2 or 1099.

tmtex

tletourneau wrote: »

my last contact gig i got$125/hr

holy sh$t

Verities wrote: »

In my experience with Gov contracting you make roughly 20-30% of what they(contractor) charge per hour to the Government.

I had a friend that was in the position to know what the profit managing was on government contracts and he told me it was about 33% after expenses (paid vacations, medical, holiday pay, 401k matches). As for staffing firms, usually they don't pay benefits, and what health insurance they are forced to offer are expensive. I don't think it costs them a dime when you get there insurance, it's a "benefit" you pay for. Staffing firms profit margins are any where from 5% to 250%, it really just depends on the contract, I think short term contracts have higher profit margins than longer term ones. I seen one Teksystem short term contract where they were charging the client $50 a hour, and paying as little as $16 a hour, with no benefits.

devilbones wrote: »

It really depends on what type of benefits the company offers. If they match 401k and have good health insurance the company would need to charge about 4x as much just to make a profit.

LoL, how much do you think benefits cost anyway? The company I work for used to tell us what our total benefits were, totaling your salary, health benefit costs, vacation, 401k Stock option, etc, it was around 30k more than my salary. This figure would true for an employee making 50k or 100k, since health costs would be the same for both workers, probably only increase to 35k based on higher vacation and 401k matching costs.

sj4088 wrote: »

Well anytime one person leave and you have to replace them the amount of knowledge they are taking out the door with them honestly a lot of time you can't put a price tag on it. Especially if they have been at the company a year or year or longer. That's what a lot of managers and higher ups seems to miss. You can't just replace Jane who has been a network engineer at the company for two years with Sally without expecting a huge dropoff in productivity assuming Jane was a half way decent employee and network engineer.

I completely agree with assessment, contracting works out great for lower level positions, but for higher level positions, it just doesn't make sense. The extra bucks your saving could cost you thousands if things go sideways. If it was my company, I would want trusted full time employees in critical positions than a contractor that could up and leave tomorrow. While it's true your full time employees could leave too, I think there's a certain amount of loyality there that makes it a lot less likely. assuming you treating them well.

TLeTourneau wrote: »

In my experience it's around 60-65%. My last contact gig I got$125/hr and the company got $200/hr. I will only do Corp to Corp, no W2 or 1099.

Contracting works out for some (especially if benefits are covered by your spouse), but still think most people would prefer to be a full time employee than a contractor.

As for government contractors being the same as Federal employees, they are the same until the cutbacks come. All the contractors go before any Federal employees, and some were lazy and incompetence. (I also worked with intelligent, motivated Federal employees as well) When the sequester cut came in 2013, 100's of thousands of Federal contractors were let go, many of them worked in there positions for decades, only to come into work one day and told they were gone, clean out your desk, goodbye.

volfkhat wrote: »

In this office of say, 150 people, 90% of the workers will get a paycheck that says "uncle sam".
Along with this, they get all of uncle sam's perks & benefits.

But the other 10% (where i would fall under) are not part of the "family". We may still be treated nicely.... but at the end of the day... we are NOT like the majority of the work group.
that's my gripe.

Many federal employees would counter that contractors get paid better, have better promotion opportunities, and don't have to put up with the same federal rules/requirements. The grass is often greener on the other side of the fence and all that.

I've known contractors working in federal offices that wouldn't dream of taking a federal position because the pay is lower and they'd have less flexibility in what assignments/duties they accept. I've also known contractors who worked in federal offices just waiting for a federal opening there so they can apply for it (they'd have already proven their qualifications and reliability). I've NEVER seen federal offices treat contractors badly... seriously, if you don't perform you might be gone the next day, but its not because contractors are second class citizens. Just the opposite, contractors are often thought of as the technical experts that keep things going.

It's often easier to add contract positions than to add federal positions, so if an office needs more people the quickest solution is to contract it out. There's nothing nefarious about that.

Just my 2 cents.
Joe

ramrunner800

volfkhat wrote: »

Thank you for sharing your perspective!

at the end of the day, i'm just a loudmouth with a keyboard; but i still appreciate the insight of others :]

I hear what you're saying about "how you are treated"; but i guess my gripe is based on something else.
In this office of say, 150 people, 90% of the workers will get a paycheck that says "uncle sam".
Along with this, they get all of uncle sam's perks & benefits.

But the other 10% (where i would fall under) are not part of the "family". We may still be treated nicely.... but at the end of the day... we are NOT like the majority of the work group.
that's my gripe.

Honest question for you:
How do you think those 90% would react if they came to work today, and found out that:
A) they've ALL been fired,
but they've ALL been offerred their same positions back (with the same pay).... except now they work under LEROY's contract house,
and C) the previously mentioned 10%, they are now ALL direct/federal employees.

How do you really think THAT would play out?
;]

In my experience the ratios of Feds to contractors has been reversed from what you proposed here, but I'm sure in some shops it's different. In the outfits I've been a part of, the contractors do all the technical work and conduct operations, while govies are simply project managers, and are a very small proportion of the work group. I think I get what you mean with your questions, but I think it's much more complicated than you propose.

First, like I said above, govies and contractors don't generally do the same kinds of jobs.

Second, while the stability and retirement package of government employment are nice benefits, they are also a curse. I couldn't count the number of civil servants I ran across who were just generally bored of their lives, in their late 20's/early 30's just killing time til they reached retirement age. Several folks like this are good friends of mine, but it is totally sad to watch. We had contractor-to-govie conversions going on in a few shops I worked in, and a fair number of people turned those down, because taking the govie job was a life sentence to that job. Sure you CAN leave, but for most the safety of the stability was too much.

The third thing is, when you work for a big contractor or for a good small company, it's not like the govies have a better gig with more perks than you do. The benefit packages and memberships available to employees of LM, Booze, or Northrop Grumman don't compare unfavorably to what is offered by the government. The big differentiators are the retirement package (which when I looked into it wasn't as lucrative as I had imagined), and the fact that you can't be fired for being incompetent in your job. The first is pretty nice, I'll admit, but isn't too much of a big deal for me personally because good contracting companies offer good packages too. The second is honestly a pretty big turnoff.

Lastly, life is easier as a contractor. This begins even at the hiring process. Getting hired as a govie is a months, and often years long process. Unless you're going for certain special positions, hiring isn't based simply on who is the best candidate for the job, so I hope you are able to tick all the boxes they're looking for this week before you even get to the question of competence. As a contractor it's pretty easy to jump around from agency to agency, trying different things out, learning different cultures. As a govie, moving to another agency is a more involved process. That is but one area where your life as a govie will be filled with tremendously more paperwork and pain.

I think being a government employee in the right environment could be a great thing. There are some vibrant and innovative workplaces in the government, where the government employees are engaged, and pushing themselves. These tend to be highly mission oriented organizations. In most government offices, I'd much prefer to be a contractor, with the freedom to move on and do something else.

Joe, Ram,
you guys make some damn good points.

Yes, the grass is always greener on the other side. (a timeless truth).

Additionaly,
If it's harder to fire someone who is incompetent.... then it's possible to be amongst coworkers who refuse to train/stay current with new technologies.
(not exactly a great place to learn)

But Gromit makes the (all too true) counter:
when the layoffs come.... contractors are the first Out the Door.
And some of the 'dead-weight' gets to stay.

Personally, i still think that Everyone should just be DIRECT; thus everyone is treated the same.
When layoffs come... cut the deadweight.
When promotions come... reward the best workers.

However, i acknowledge that's probably not realistic.
I bet we've ALL witnessed Deadweight that never gets canned (because of WHO they know)
Slackers get promotions (again, because of WHO they know),
and hard workers passed over (because of WHO they Don't know).

In this scenario, i suppose that Contracting "could" be a viable alternative for those who are ambitious enough.
You guys/gals have definitely given me something to think about (and may have won me over).

TechGromit wrote: »

When the sequester cut came in 2013, 100's of thousands of Federal contractors were let go, many of them worked in there positions for decades, only to come into work one day and told they were gone, clean out your desk, goodbye.

~ Now that is the true Lesson Learned.
Those who stayed in their contract positions over a Long period.... made a blunderous miscalculation.
They treated their jobs/positions as an FTE... and Not as a Contract.
Most of them probably should have quit/moved-on years ago.

Which brings this thread Full Circle, doesn't it?

As already posted,
a contact positition "screams High turnover rate".

SJ4088 Nailed it...
and now i understand Why.

There is no real advantage in staying "long term";
when times get ruff... you are the FIRST to go.

Honestly,
anyone who accepts a contract positition... should Already have an "Exit Date" circled on their calendar at home!
:]

That way, they have a mindset of:
Get IN,
Learn As Much as Possible,
Get OUT.

and if the Employer is Negatively affected by the knowledge-drain caused by my Exit..... TOO BAD
(that's the price you pay for going the Contract Route).
lol

josephandre

I've been contracting for roughly 12 years, and during the sequestration we were largely unaffected while the government employees were impacted in some capacity across the board. Our contracts were funded and the money already paid out so budget freezes didn't matter.

Also we have to make the distinction between govt contractors and staffing agencies. Govt contractors are hired to augment the military workforce on missions they couldn't otherwise accomplish, or would have to pull from other areas of need. So they have parcels of work and specific projects that they offer up to private companies who submit bids and proposals towards the work and upon winning the big, sign a contract. Those companies then hire (or assign existing) employees to work on the contract. They are full time employees of the company, just working on a contract that the company has won. It's not temp work in the same sense as working for a temp/staffing agency.

TLeTourneau

tmtex wrote: »

holy sh$t

When I do contract work I normally work short term contracts that require specific knowledge so the rate is not bad.

josephandre wrote: »

Also we have to make the distinction between govt contractors and staffing agencies. Govt contractors are hired to augment the military workforce on missions they couldn't otherwise accomplish, or would have to pull from other areas of need.

Hmmm... that's a good point.
but we might have to parse that even further.

I've contracted for a local city, as well as, County; both of which are "Government" contracts, correct?
Well, i can tell you it felt very "mom & pop"-ish;They felt very similar to some dumpy staff company.
(many of my coworkers felt this way as well)

It sounds like the "military" contactrs are a bit different (better organized & more rewarding).

Interesting...

josephandre

yeah I tend to forget govt covers city, state, federal. I'm so used to it being synonymous with DOD that it becomes the default. but yes primarily DOD/Military.

volfkhat wrote: »

when the layoffs come.... contractors are the first Out the Door.
And some of the 'dead-weight' gets to stay.
lol

But that's not always true. It all depends on why numbers are cut -- if it's due to budget cuts, it depends which budgets. Govies get paid from a pot of money different from contractors. I remember one instance when government positions were cut from about 220 to about 130 people while the number of contractors stayed the same (might have even gone up slightly, can't remember now).

Government seems to swing in cycles, in my opinion. There will be years when agencies are able to get more money to put against contracts to build up contracted staffs and there will be years when they reduce, but that holds true for the govies too. Entire agencies, divisions, task forces, etc. can be established or disestablished practically over night. Govies typically have the advantage of being priority hires for other government jobs when their position gets cut, but often that's sideswiped by sheer silliness. I just heard a story yesterday about a govie who had priority placement and was offered a position teaching a specialized course... she had no experience in that at all (nothing remotely close), but she was priority, offered the position, she turned it down, bam, no longer a priority placement.

On the flip side, the worst part about being a government contractor to me is that every time your company's contract is up for compete (every 1, 3, 5 or whatever years, depending on the contract duration), there's the chance another company will win the contract. When a different company wins the gig they usually (in my experience) offer to hire many/most/all the incumbent contractors to continue on, but not always and sometimes they offer lower salaries (which makes sense since they usually win by being a lower bidder). So I've known contractors who have worked at the same federal agency for a decade or more doing the same jobs, but under two, three, or more different firms over the course of their time there. To me, that's pretty stressful when you're paying a mortgage, kids' college, or whatever. Just another risk/reward thing that's got to be weighed, and some folks find it so lucrative that its well worth the risk.

BTW, it's not true that govies can't be fired. Incompetence can certainly be justly rewarded. There are, however, a lot of rules that make it a longer, possibly frustrating experience. It is definitely different from the private sector and it can take a while, but even that depends on what the grounds for dismissal are.

AverageJoe wrote: »

Many federal employees would counter that contractors get paid better ...

Sometimes true, sometimes not. I know a Federal employee that's been her position for 20 years makes over 100k a year, but a contractor with the same title be lucky to make half what she does. On the other hand, I know a Federal Contractor that turned down an opportunity to become a federal employee because it would have been a cut in pay. A five years later in 2013 when the sequester cuts hit he got laid off, after an extended period of unemployment he's earning about half of what he was making. If he would taken the federal job, yes he would have earned 15 or 20% less then his contractor salary, but he still be employed.

I believe in the long run the job security far outweighs the extra money you could earn being a contractor. You might be lucky and never be unemployed and face a tough job market, but are you willing gamble with your families security?

josephandre

Contracting requires you to constantly be aware of the landscape, and to utilize foresight. Most times you accept a position you will do so knowing how long the contract is for,, when it's up for re-bid etc etc. you used to be fairly safe going with large companies with a solid track record, but as initiatives have changed, small businesses are the focus and are unseating large incumbents regularly.

The thing is, the scope of work doesn't change much at all within similar spaces so you can move around fairly easily and I've never been out of work as a contractor. I've seen several colleagues wind up unemployed for stretches though, or get placed in lesser positions by the company that lost the contract. Not everyone is built to live one foot in / one foot out.

I've made a LOT more money over the past ten years though than I would have in a comparable ft tole, but I'd also be half way to retirement. It's really just your preference and comfort.

TechGromit wrote: »

Sometimes true, sometimes not.

Of course. I only said many, not all.

TechGromit wrote: »

I believe in the long run the job security far outweighs the extra money you could earn being a contractor. You might be lucky and never be unemployed and face a tough job market, but are you willing gamble with your families security?

I said similar regarding mortgages and kids' college tuition in my next post. But part of it depends on how much risk you can afford to take and what job offerings are available at a given point in time.

ramrunner800

AverageJoe wrote: »

BTW, it's not true that govies can't be fired. Incompetence can certainly be justly rewarded. There are, however, a lot of rules that make it a longer, possibly frustrating experience. It is definitely different from the private sector and it can take a while, but even that depends on what the grounds for dismissal are.

So, this is only somewhat true. The technical ability to fire an incompetent government worker does exist, but in many environments it's impossible to exercise. I was in an environment where we had two particularly lazy/incompetent govies. One came in every day, turned off her computer monitors, and pulled out the newspaper. She was dealt with by moving her to a task that was more heavily staffed with some of the better contractors in the org. With these folks her non-effort was not particularly damaging. The other would actually disappear from the office for hours at a time in the middle of the day, with no explanation. When she did attempt to work, the result was actually worse than when she wasn't in the office. Management made an active effort to fire this individual, going to great lengths to keep tabs on her and document everything. This became a nearly full time job for one member of the management staff. 6+ months into the process of firing her, they had zero traction, and gave up so that the manager could focus on doing productive work. So yeah, you can technically fire a govie, but good luck with that.

Yep, I agree that it's often a very difficult road to go down (again, depending on the grounds for dismissal, but also the category of employment). A lot of folks don't even try because, as you indicated, it's usually easier to move the person or ignore the person than to fire them.

Personally, while frustrating when dealing with a bad employee, I think the overall difficulty in firing govies is generally a good thing since leadership of government agencies is often done by political appointment. I think we've deliberately made it hard to fire some categories of government employees so employees don't have to be worried about getting fired as repercussion for political or other non-performance reasons. Unfortunately, that means you really have to make a case when it is a performance based consideration.

AverageJoe wrote: »

... I think the overall difficulty in firing govies is generally a good thing since leadership of government agencies is often done by political appointment. I think we've deliberately made it hard to fire some categories of government employees so employees don't have to be worried about getting fired as repercussion for political or other non-performance reasons.

Disagree.

I can be in a great situation (through a private-sector employer) with a great boss.
One day, the boss transfers (takes another position at another company, etc).
Now, i have a New boss who is a total incompetent D-bag.

He's always blaming his subordinates to cover for his own screw-ups.
And Now, i find myself at risk of being (unjustly) fired.

Through no fault of my own, i'm in a situation with little protection and zilch recourse.

It's not just the "govies" who need protection from bad situations...

AverageJoe wrote: »

So I've known contractors who have worked at the same federal agency for a decade or more doing the same jobs, but under two, three, or more different firms over the course of their time there. To me, that's pretty stressful when you're paying a mortgage, kids' college, or whatever. Just another risk/reward thing that's got to be weighed, and some folks find it so lucrative that its well worth the risk.

Agree.

In fact, i now believe that contracting should be approached exclusively as short-term.
People should Not allow themselves to stay in the same (contract) position 5-10 years, etc.

Fight the inertia!
Do more with your life!
(or at least do Other things)

ramrunner800 wrote: »

I was in an environment where we had two particularly lazy/incompetent govies. One came in every day, turned off her computer monitors, and pulled out the newspaper. She was dealt with by moving her to a task that was more heavily staffed with some of the better contractors in the org. With these folks her non-effort was not particularly damaging. The other would actually disappear from the office for hours at a time in the middle of the day, with no explanation. When she did attempt to work, the result was actually worse than when she wasn't in the office. Management made an active effort to fire this individual, going to great lengths to keep tabs on her and document everything. This became a nearly full time job for one member of the management staff. 6+ months into the process of firing her, they had zero traction, and gave up so that the manager could focus on doing productive work. So yeah, you can technically fire a govie, but good luck with that.

lol
Thank you for this post :]

volfkhat wrote: »

It's not just the "govies" who need protection from bad situations...

Agree! I never said only govies should have protection, I only said that I'm glad they do. Do I think non-govies should have similar protection? Yes.

volfkhat wrote: »

Agree.

In fact, i now believe that contracting should be approached exclusively as short-term.
People should Not allow themselves to stay in the same (contract) position 5-10 years, etc.

Well, it works for some folks. Again, that risk-reward ratio and all that. More power to them, in my opinion. Just like any type of job, you'll have those willing to accept certain terms and others who won't. Variety and options are good.

AverageJoe wrote: »

Agree! I never said only govies should have protection, I only said that I'm glad they do. Do I think non-govies should have similar protection? Yes.

Yep, i believe you are right.

Arguably, this would be the role of Unions...

scaredoftests

volfkhat wrote: »

Yep, i believe you are right.

Arguably, this would be the role of Unions...

Ugh, unions are useless (my opinion). The union I was in, it just seemed the money was just used on union management, plus every time, there was a raise, my hours were reduced. I was down to 16 hours before I quit and went on to getting another degree and moving on.