Replies to This Discussion

Permalink Reply by Sandra McCartt on April 20, 2011 at 9:12pm

Lisa,

The way i understand this you are providing people to another recruiting firm who will then put them either perm or contract or contract to hire with the company who pays the bills.  In order to make any suggestion i would need to know who bills whom.  Do you send a statement to the Prime vendor or do you bill the client who pays the bills direct then split with the prime vendor.  I would assume that you would be billing the prime then they would be paying you so i am not clear on what you mean by "hired consultant remains on your books for the length of the contract."

 

It looks like the financial arrangements are in place so would need to clarify  when you would be paid who bears the cost of collection if no payment is made, and some sort of language to clarify how long your candidate will remain yours if they are not hired immediately after you submit to the prime vendor.

 

I would want to clarify the billing process, ie; will the prime pay you twice monthy with supporting documentation to show hours, rate and applicable tax and administrative fee for each contractor.

 

Need more info.

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Permalink Reply by Jerry Albright on April 21, 2011 at 8:47am

I subcontract frequently.  To sum it up:

 

I hire the contractor.   I bill the Prime with an agreed upon payment time structure (often being within 5 days of receipt of payment from end client.)  They are on my "books" the entire time.  If the end client hires them directly and a fee is due - the fee is split 50/50.

 

Typically we just come to a reasonable hourly billing rate for me to bill the prime and don't get too involved in the actual net cost of contractor (taxes, funding, etc.) and leave it at that.  It's much cleaner that way.  I've never liked trying to figure the true cost and split the margin 50/50.  It's a hassle - and the numbers change over time.

 

Good luck!

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Permalink Reply by Tom Dimmick on April 21, 2011 at 11:15am

Lisa - I think this is a great forum in which to surface this issue.  I recommend the following:

Keep your agreement with the Prime separate from their agreement with the client.  That means, be careful not to be drawn into their issues.

In short, I think you should avoid trying to tie too many things into one agreement.  A simple 50/50 fee split is straight forward and should be a contract on its own.  Similarly, hourly work performed by you at the Prime's request should also be a separate agreement.  If you are providing services via a consultant on your payroll, treat the Prime as you would any of your other clients and contract accordingly.

Hope this helps.

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Permalink Reply by Jerry Albright on April 21, 2011 at 11:17am

Good point Tom.  The end client is not YOUR client.  Your client is the Prime.  (But of course you know this....)

 

 

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Permalink Reply by Lisa J. Green on April 21, 2011 at 12:10pm

Hi Sandra,

Thank you for taking time to respond; I apologize for not being clearer the first time around.

I am providing people directly to the Prime Vendor (my client) who places them on contract with the their client (end client). Regardless of which "arrangement" we use, I always bill the Prime Vendor (my client) every 30 days and they pay me within 10 days of receipt, whether they have been paid by their client (end client) or not- this wording is very clear in the main contract already signed by both companies.

What I mean by "hired consultant remains on my company books" is that my company (not my client) has the work contract with the consultant (most of them are 1099). You are right, the financial arrangements are in place but it is the language to clarify how long my candidate remains mine if not placed under contract AND how long they remain mine if they are placed under contract...that is exactly what I do NOT have and I'm looking for.

Does this explain more and provide the additional info you need to know? Thank you.

Sandra McCartt said:

Lisa,

The way i understand this you are providing people to another recruiting firm who will then put them either perm or contract or contract to hire with the company who pays the bills.  In order to make any suggestion i would need to know who bills whom.  Do you send a statement to the Prime vendor or do you bill the client who pays the bills direct then split with the prime vendor.  I would assume that you would be billing the prime then they would be paying you so i am not clear on what you mean by "hired consultant remains on your books for the length of the contract."

 

It looks like the financial arrangements are in place so would need to clarify  when you would be paid who bears the cost of collection if no payment is made, and some sort of language to clarify how long your candidate will remain yours if they are not hired immediately after you submit to the prime vendor.

 

I would want to clarify the billing process, ie; will the prime pay you twice monthy with supporting documentation to show hours, rate and applicable tax and administrative fee for each contractor.

 

Need more info.

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Permalink Reply by Lisa J. Green on April 21, 2011 at 12:30pm

Hi Tom,

Thank you for your recommendatons; I believe this is how we are doing it. There is a main contract that includes relationship, confidentiality, compensation, non-compete...things that will remain the same regardless of which "agreement" we choose to use. There is an addendum page included for each resource placed that spells out the SOW and terms of the chosen "agreement". This is the first time I have been a direct Sub to a Prime Government contractor so I appreciate any and all recommendations and thoughts.

 

Tom Dimmick said:

Lisa - I think this is a great forum in which to surface this issue.  I recommend the following:

Keep your agreement with the Prime separate from their agreement with the client.  That means, be careful not to be drawn into their issues.

In short, I think you should avoid trying to tie too many things into one agreement.  A simple 50/50 fee split is straight forward and should be a contract on its own.  Similarly, hourly work performed by you at the Prime's request should also be a separate agreement.  If you are providing services via a consultant on your payroll, treat the Prime as you would any of your other clients and contract accordingly.

Hope this helps.

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Permalink Reply by Jerry Albright on April 21, 2011 at 12:33pm

This is just off the top of my head.....

 

"Candidates accepted under the terms of this agreement shall remain consultants of "Your Company Name" for the duration of assignment.  In no event shall "Prime Vendor" utilize the services of consultants proposed or accepted under the terms of this agreement, whether as consultant or employee, through any service or agency other than "Your Company Name".

 

 

How does that sound Lisa?

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Permalink Reply by Lisa J. Green on April 21, 2011 at 12:47pm

Hi Jerry,

There are a couple of reasons why both companies need and want several different "agreement" options; my client is a Prime Government Vendor and some contracts his company has mandate the resources to be on "his books". In those cases we either do a 50/50 split or my company is paid a fee. This is a great opportunity for my company so if I can keep resources on my books, I want to do it and the Prime (my client) understands. I understand not wanting to get nitty gritty with the tax %, admin fees and such...I'm all for keeping it as clean and easy as possible. I hope this make sense...I'm trying to gain some exposure but need to flexible to get it. Thank you for your suggestions, comments, and thoughts - if you have any more, don't hesitate.

Jerry Albright said:

I subcontract frequently.  To sum it up:

 

I hire the contractor.   I bill the Prime with an agreed upon payment time structure (often being within 5 days of receipt of payment from end client.)  They are on my "books" the entire time.  If the end client hires them directly and a fee is due - the fee is split 50/50.

 

Typically we just come to a reasonable hourly billing rate for me to bill the prime and don't get too involved in the actual net cost of contractor (taxes, funding, etc.) and leave it at that.  It's much cleaner that way.  I've never liked trying to figure the true cost and split the margin 50/50.  It's a hassle - and the numbers change over time.

 

Good luck!

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Permalink Reply by Lisa J. Green on April 21, 2011 at 12:54pm

Sounds pretty good Jerry...is it reasonable to add "and for 6 or 12 months after the duration of the assignment"? I had a client last year that ended an assignment early and tried to bring back the consultant 2 weeks later; I was fortunate the consultant was on my books and had signed the contract which included a 12 month non-compete clause. Thoughts?  Thank you! 

Jerry Albright said:

This is just off the top of my head.....

 

"Candidates accepted under the terms of this agreement shall remain consultants of "Your Company Name" for the duration of assignment.  In no event shall "Prime Vendor" utilize the services of consultants proposed or accepted under the terms of this agreement, whether as consultant or employee, through any service or agency other than "Your Company Name".

 

 

How does that sound Lisa?

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Permalink Reply by Jerry Albright on April 21, 2011 at 1:03pm

That sure is reasonable.  Not only reasonable - it's mandatory.  Here is the specific clause from my contracts:

 

At no time during the course of this agreement and for a period of one (1) year following completion of services for Customer shall Customer or its affiliated organizations directly or indirectly utilize the services of any Consultant proposed or assigned to Customer under this agreement without the express consent of "My Company Name".

 

            * Should client wish to hire consultant directly a fee of 30% will be charged based on the initial starting salary.

Lisa J. Green said:

Sounds pretty good Jerry...is it reasonable to add "and for 6 or 12 months after the duration of the assignment"? I had a client last year that ended an assignment early and tried to bring back the consultant 2 weeks later; I was fortunate the consultant was on my books and had signed the contract which included a 12 month non-compete clause. Thoughts?  Thank you! 

Jerry Albright said:

This is just off the top of my head.....

 

"Candidates accepted under the terms of this agreement shall remain consultants of "Your Company Name" for the duration of assignment.  In no event shall "Prime Vendor" utilize the services of consultants proposed or accepted under the terms of this agreement, whether as consultant or employee, through any service or agency other than "Your Company Name".

 

 

How does that sound Lisa?

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Permalink Reply by Lisa J. Green on April 21, 2011 at 2:30pm

That's what I'm looking for...thank you Jerry! 

Jerry Albright said:

That sure is reasonable.  Not only reasonable - it's mandatory.  Here is the specific clause from my contracts:

 

At no time during the course of this agreement and for a period of one (1) year following completion of services for Customer shall Customer or its affiliated organizations directly or indirectly utilize the services of any Consultant proposed or assigned to Customer under this agreement without the express consent of "My Company Name".

 

            * Should client wish to hire consultant directly a fee of 30% will be charged based on the initial starting salary.

Lisa J. Green said:

Sounds pretty good Jerry...is it reasonable to add "and for 6 or 12 months after the duration of the assignment"? I had a client last year that ended an assignment early and tried to bring back the consultant 2 weeks later; I was fortunate the consultant was on my books and had signed the contract which included a 12 month non-compete clause. Thoughts?  Thank you! 

Jerry Albright said:

This is just off the top of my head.....

 

"Candidates accepted under the terms of this agreement shall remain consultants of "Your Company Name" for the duration of assignment.  In no event shall "Prime Vendor" utilize the services of consultants proposed or accepted under the terms of this agreement, whether as consultant or employee, through any service or agency other than "Your Company Name".

 

 

How does that sound Lisa?

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Permalink Reply by Sandra McCartt on April 23, 2011 at 1:54am

The only Thing iwould add to what Jerry has suggested is if your prime has to have the contractors on their books put a clause in to specifically cover that situation as it would be unique to the other arrangements.. If they are to pay you under the same arrangements and the one year specifics will still apply just a few lines that indicate in the event prime is required to have contractors on their books for compliance purposes all compensation ,non hire, or permanent hire agreements shall apply as stated in paragraph (whatever paragraph specifies ).

It might be good to get it worked out written and verbally agreed upon between you and the prime then have an attorney look it over before you sign it.

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