Natural Disasters can be a time of crisis or opportunity for small business government contractors. According to the Federal Emergency Management Agency (FEMA) website, up to 40% of businesses affected by a natural or human-caused disaster never reopen (Source: Insurance Information Institute). Several reasons contribute to this statistic including the fact that customers outside the disaster area need products and services to be provided on time and customers inside the disaster area can only wait a short time for their vendors to get up and running again. Failure to be functional is very costly.

On the other hand, the Thomas T. Stafford Disaster Relief and Emergency Assistance Act, passed in 2007, requires FEMA to contract with businesses located in the affected area when feasible and practicable, which brings unexpected and often substantial contracting opportunities in the wake of a disaster.

Therefore, it is important that vendors be proactive and prepared. They need to understand both what steps to take so they can function during the situation and how to capture some of the opportunities that arise out of disasters.

All government contractors are expected to have a disaster plan in place that includes how they will resume work on their contracts; such planning can prove critical to commercial vendors as well. Take advantage of the Five Steps to Developing a Plan and other valuable resources provided by FEMA.  Time and effort spent up front developing such a plan – which should include identifying regulations, assessing hazards and risks and analyzing their likely impact on your business, and determining how you will address such issues as resource management, crisis communications and business continuity – will make your business stronger in the short term and may well determine your ability to survive in the event of a catastrophe.

Government contractors should know that the Termination For Default (T4D) FAR Clause makes them responsible for completing the contract on time unless the cause of delay is unforeseeable and beyond their control (both conditions apply in order to be excused from T4D). The Government will impose that clause, and small businesses without a mitigation plan may go bankrupt because of it. Some disasters, hurricanes for example, are forecast several days in advance. If the organization has a plan for moving their operations to “high ground” or subcontracting to a shop in a safer region, they probably will have time to implement the plan before the storm hits. Contractors should take the conservative road and have a good Disaster Plan or run the very high risk that a disaster will not excuse them from T4D.

By Liz Kallen, Rockland Economic Development Corporation PTAC

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