Do You Sell to the Federal Government or Subcontract From a Company Who Does? Changes are coming to the cleaning industry that will leave a a couple of winners and everyone else loses!

Critical information has come to me from Professor Samuel Bornstein and need to alert the JanSan industry of changes to the Federal Procurement process that will cut off opportunities and possibly cause massive job losses.

FROM PROFESSOR SAMUEL BORNSTEIN:

Attention all vendors selling Janitorial and Sanitation (JanSan) or Maintenance and Repair (MRO) products, supplies and SERVICES to the federal government GSA Schedule 51V - Hardware ;  Schedule 56 - Buildings and Building Material/Industrial Services and Supplies;  Schedule 73 - Food Service, Hospitality, Cleaning Equipment and Supplies, Chemicals and Services;  Schedule 75 - Office Products/Supplies and Services and New Product/Technology;  Schedule 81 IB - Shipping, Packaging and Packing Supplies.

The General Services Administration (GSA) leases or occupies over 8,100 Public Buildings Service (PBS) leases and 1,500 government owned buildings.  This alert applies to all vendors selling JanSan and MRO to federal government agencies.

The GSA is working with Office of Management and Budget (OMB) and all Federal Government Agencies to create 10 new government‐wide Federal Strategic Sourcing programs (FSSI) for commonly purchased products and services. One of these new programs will be for Janitorial and Sanitation supplies and services (JanSan) and Maintenance, Repair and Operation supplies and services (MRO).  If you are selling products or services in the above named GSA Schedules or you are hoping to in the future, you are at-risk of losing a substantial amount of your government business as GSA implements the FSSI for JanSan and MRO next month.

GSA’s FSSI JanSan and MRO initiatives will impact more than 20 federal agencies, both military and civilian, as active participants in this FSSI program. The FSSI program is intended to leverage the purchasing power of the federal government by awarding Blanket Purchase Agreements (BPA)s to a select few vendors who will provide the federal government with the lowest price. This FSSI process was first initiated in 2010 for Schedule 75 Office Supplies vendors where FSSI BPAs were awarded to only 15 vendors out of 560+ who were previously doing business with the federal government.

The outcome was the displacement of a significant number of small and large businesses with the resulting job losses which accompanied the financial distress from the loss of government sales.  There were a few winners but significantly more non-winners.  My Bornstein and Song research indicates that the FSSI program must be reevaluated due to the negative impact on these businesses and the US economy.  My intent is to prevent this from happening to you!

Janitorial Subcontracting Network, a free networking group on LinkedIn has grown to hundreds of companies

A free networking group to bring together National and large regional janitorial and facility maintenance companies seeking janitorial service providers as subcontractors and local janitorial companies seeking contracts from larger companies, was launched in March on LinkedIn.com attracting both local and national companies. http://www.linkedin.com/groups/Janitorial-Subcontracting-Network-4343478

Ed Selkow for 6 years worked as an executive for national facility management companies and performed all janitorial services through subcontractors. According to Selkow who started the group, “I saw a need for an online network where large companies could find and then connect with small local companies to provide janitorial services to their clients.

Many national janitorial companies subcontract cleaning work to local cleaning service providers but do not want their national clients to know. The trend is for large retailers or other multi-location businesses to deal with only one company, so they turn to national organizations that are in reality, remote vendor management services but call themselves cleaning or more often maintenance services.


Thousands of locations for a retail company with a chain of locations can be stretched across several states or across the entire country. Outsourcing the cleaning to hundreds or even thousands of local cleaning services can be a management nightmare and is always more expensive.

By having only one national cleaning management company, the cost of cleaning can be reduced by 20 to 60 percent. The national companies who sell cleaning services to thousands of buildings do not have the management or the staff to perform any of their own cleaning. Most national cleaning contractors have to work through local service providers and have to develop a network of subcontractors.

National cleaning franchise companies also subcontract out local work. If a national franchise company sells a cleaning contract to a large banking chain for example, they can supply their local unit franchise owners with buildings to clean but if the unit franchise owners are not in place already because they have not sold a unit franchise in that particular area, the buildings still have to be serviced. They turn to local independent cleaning service providers as subcontractors.”

For the small local independent cleaning service owner, subcontracting is not a profitable avenue for growth. Essentially, the local janitorial service owner is taking the contract at a wholesale rate based on hundreds or thousands of locations. Accounts they sell by themselves are more profitable at what could be considered a retail price. Profit on a subcontracted job will always be smaller.

Subcontractors are typically paid 70 to 80% of what the main contract holder has negotiated. The fee a subcontractor receives from the main contract holder is the payout. The degree of difficulty or the location of the client’s building may change the payout of the job.

Subcontracting can work to a small company’s advantage though if it fits with their operational objectives. Subcontracts can help a small company expand in a new area or fill in work schedules for valued employees. Sometimes large companies who work through subcontractors pay quickly so cash flow for the small operator is improved.

Subcontracting should never be more than 25% of total revenues however and companies that provides services only subcontractors almost never grow to become healthy companies. Subcontracting should never take the place of an active, multi-channel sales and marketing program. Subcontracts need to be viewed as supplementary to their main portfolio of clients with more realistic profit margins for a healthy company.

Local janitorial service owners who are looking to add subcontracts from larger companies need to have a LinkedIn account in order to join the group. A LinkedIn account is free and group membership in the Janitorial Subcontracting Network is free.

Companies looking for subcontractors are posting their needs on the network also and their number is growing. A library of documents for both large contract holders and small subcontractors is also growing from within the group.

For more information about this topic, please contact Ed Selkow by calling 561-376-4086, or e-mail Ed at edselkow@janitorialgrowthsolutions.com