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Government Contracting, the Defense Production Act, and How to Help Bridge Supply Chain Gaps

By April 7, 2020 No Comments
government contracting

Government contracting may not have been top of mind in the past, but could it be in your future? Can your business help fill gaps in the supply chain?

Government contracting is probably not something you’ve considered for your small to mid-sized business unless you are already engaged in it. However, now that COVID-19 has led to an economic shutdown for many companies, is it time to reconsider? Many businesses are capable of manufacturing items that are needed to win the battle against this coronavirus in 2020 and beyond. Today there is need where there was none before. Can you repurpose your plant quickly? And, is it even worthwhile?

Many of the markets for products in healthcare and grocery supply do not need to go through federal agencies at this time. Nevertheless, they may still require that your company enter an entirely new market. Where do you begin? Manhattan Resources, as well as other business solutions firms, can help you take a quick look at the big picture to see if the move will be sustainable.

Hand Sanitizers

Distilleries are hard at work making hand sanitizers. Source: Instagram/oldfourthdistillery and Twitter/audreytweil

Is Government Contracting the Way to Go?

Maybe you have the perfect setup to produce large quantities of ventilators or surgical face masks and you just don’t understand why the government doesn’t contact you. If this is the case, chances are they can’t find you. Or, on the other hand, this is not an item you are known for. The first question to address is whether or not you really want to step up to do this work. If the answer is yes, then you need to move fast.

As coronavirus continues to spread in the United States, and south of the equator, it is increasingly painful to see the lack of critical supplies such as soap, toilet paper, bottled water, face masks, ventilators, bleach, alcohol, hand sanitizer, disinfecting sprays, laundry detergent, perishable foods, non-perishable foods, and so much more. These shortages are affecting all populations around the world.

Determine what product your company can supply quickly and easily. Working with an internal or external expert, develop a strategy to determine the quickest route to market. If your goal is to go for a government contract in the U.S., visit the federally-funded website USAgov for step-by-step instructions to help you win government contracts. A faster path to help in the current COVID-19 pandemic might be a direct-to-distributor approach.

government contracting

Test kit swabs 3D printed by Formlabs.

Understanding the Defense Production Act and Its Role in Government Contracting

On March 27, President Donald Trump invoked the Defense Production Act on General Motors Company to prioritize the manufacturing of ventilators. The Defense Production Act, passed in 1950, authorizes the President to requisition property, force industry to expand production and the supply of basic resources, impose wage and price controls, settle labor disputes, control consumer and real estate credit, establish contractual priorities, and allocate raw materials towards national defense.

While all other businesses are closed down, this could be a nice bonus if your business is able to meet some of the government needs during this time. However, to date, the President has been avoiding using the powers of the DPA unless absolutely necessary. For now, it has fallen to the individual states and hospitals, grocery stores, drug stores, and other providers to sources their own needs in a very competitive market. As a result, the story changes at a rapid pace and it is hard to predict what will happen.

It is true, many businesses are ramping up now to fill growing gaps in the supply chain. One good example is distilleries filling the gap for hand sanitizers in grocery stores and hospitals. Similarly, clothing and athletic-wear manufacturers are now making surgical masks and gowns.

government contracting

Sports apparel maker Fanatics is using its 360,000 square-foot manufacturing plant in Easton, Pennsylvania to make protective masks and gowns for healthcare workers. Source: Fanatics

Some Business Changes Will Be Dramatic, Long-Lasting, Even Permanent

As a company owner, you understand that change is part of doing business. However, this shift is more dramatic than many have experienced in a lifetime. Entrepreneur magazine reports that we are already seeing a shift in the way consumers and businesses behave. In addition, they point out that pandemics and recessions are fuel for innovation which drives new business ideas and startups. Expect to see entirely new categories of business spring up.

If you have not started thinking about your business from new perspectives, this is the time to do it. Try not to get too hung up on what you were doing. Think about what you would like to improve upon given the chance — because now is the chance. Consider what was working and why. Are the things that made you successful over the past few years likely to be in place when you return? Or will the dynamics be shifting? Can you get ahead of shifting dynamics now?

“This is not the time to panic or let fear dominate your mindset. You were strong enough to build a successful business in the first place, you are strong enough to steer the ship and make this transition now,” said CEO Chris Schoettelkotte of Manhattan Resources. “Stay focused on what you want, not on what you don’t want, and work toward those positive goals and the longer-term destination. For many small to mid-size companies that look for emerging opportunities now, the next 6-12 months could present surprising opportunities.” If you are considering solutions and need to talk through your options, you are invited to contact Chris or a member of his team.

supply chain gaps

U.S. businesses have an opportunity to prevent future supply chain shortfalls.

About Manhattan Resources

Manhattan Resources is a retained executive search and advisory services firm with deep experience assisting our clients in building high-performance teams. We specialize in oil & gas, retail energy, power & utilities, petrochemicals, manufacturing, distribution, and engineering. For this reason, Manhattan Resources invites you to experience an executive search and business solutions partner like no other. As always, we’re there to help you fill mission-critical leadership roles, build high-performance teams, and tackle your most significant challenges. We measure our success the same way you do. Making sure your team is exceeding corporate objectives and measuring how much our people move the needle for your company. Manhattan Resources has the agility, innovation and business acumen to assume a bold approach. As a result, we will help you take your business to the next level. Find out how the experts can help. Contact Us >>.