Government contractors must have a chief financial officer who understands operations, business development and other critical issues that affect a company's success.
Bill Goss is executive vice president and chief financial officer at QinetiQ North America.
The government contracting arena – by definition, a challenging place – faces stagnant or reduced budgets as well as outright uncertainty in funding of new and existing federal contracts. Over the next two to three years, the contracting community expects tough competition for potentially shrinking opportunities.
This outlook gives chief financial officers a greater opportunity to make a valuable contribution to the health and well-being of their companies. But to make informed decisions about resource allocation, the CFO must become an integral part of not just the financial team but all facets of the organization.
The smart CFO must follow three key priorities:
1. Get involved.
It is up to the CFO to understand all of the organization’s business operations – the new business pipeline, bid and proposal process, product development, acquisitions, divestitures, and more.
The CFO cannot make decisions based solely on spreadsheet entries. He or she must cultivate broad involvement in key planning and strategy meetings across all business units and processes in order to develop a keen understanding of operations, capabilities and business development efforts.
For example, the CFO should consistently participate in pipeline reviews to understand current business development opportunities and how they align with the existing capabilities of the business. With budgets for bids and proposals, business development staff and product development at stake, this deeper knowledge of the business makes the CFO a more strategic part of the organization.
The smart CFO invests the time, asks good questions and makes better decisions as a result of his or her active involvement in the strategic planning process.
2. Connect the dots.
Many government contractors function via multiple business units. Each of these groups pursues specific opportunities within its own areas of strength.
Through involvement across the organization, the CFO often can recognize opportunities for one business unit to leverage the capabilities, partners or resources of another. In addition to connecting the dots across business units, the CFO can also help to make sure that no one is working at cross purposes or duplicating effort.
An understanding of the various business units and their activities develops over time – an investment that can pay big dividends for the entire organization. The smart CFO keeps his or her ear to the ground to look for these opportunities.
3. Tune up the organization.
Audits are not getting any easier. The Defense Contract Audit Agency has become more aggressive in its audit approach. If DCAA identifies a problem, the resulting delays, distractions and outright impediments to an organization’s bids can cripple business development efforts.
The smart CFO prepares by implementing and tuning up all processes in advance, paying particular attention to the procedures that meet the requirements of the DCAA. This includes involving the internal audit group as well as external advisers to assess, perfect and test all policies and procedures. This ensures the compliance of the organization before any outside audit begins.
For the foreseeable future, the government contracting community expects more pressure than ever from government customers as price and value receive increasing scrutiny. As a result, CFOs must focus even more on fully understanding their organization’s capabilities and opportunities.
By getting involved, connecting the dots and tuning up key processes, the smart CFO is armed to make tough choices that will truly help the organization succeed.