1099 employment statuses are complex in the government contracting world; particularly within Department of Defense (DoD) contracts. This is due to contract specific parameters; to include the staffing plan, which is typically defined during the proposal stage. The proposal stage is the contractor’s initial submission for the work and that occurs prior to a contract award. It is within this proposal that companies identify their partnering teammates that will be supporting the work efforts, as well as outline their complete staffing plans. The staffing plan will typically identify the methodology in which the company plans to utilize in order to staff all open positions.
Adding a 1099 employee to a contract
The first step for a 1099 employee to be added to a contract would be to add the “1099 company” as a teammate to the existing contract. Under most common DoD contracts, normal standards would require approvals by the government to add another subcontractor to the preexisting team. Once the necessary approvals are obtained, the existing contract would need to be updated to reflect the newly identified employer, i.e. the 1099 employee. The 1099 employee is considered a new teammate, since the individual will operate as a single person company on the contract. In order to be eligible to join a contract as a 1099 employee (operating as a company), a specific criteria must be met.
In order to be eligible to be added to support a contract, the 1099 employee would need to establish a company compliant with all state and federal regulations. This company would have to be fully registered as a business within its state of incorporation and have a valid Employer Identification Number (EIN). The next criteria is an active government clearance, this clearance would need to be changed from a personal clearance, to a company facilitated clearance. In order to have facility clearance, the prime company on the contract would need to sponsor a facility clearance under the operating company’s name. This process is managed through the prime company’s Facility Security Officer.
1099 Employment – Not a Quick & Easy Solution
To hire a 1099 employee is a complex and lengthy process and is not swiftly accomplished. The prime company will typically undertake this process for higher level positions that require subject matter-level experts in their fields. The time and effort necessary to accomplish hiring a 1099 employee are often not afforded to average skill positions.
Even though it requires significant paperwork to add a 1099 employee to an existing DoD contact, there are some noteworthy advantages for employers to pursue this form of a business relationship. The primary advantage in taking these extra steps would be the fulfillment of a difficult skilled position. It allows the prime contractor to more easily fill the more challenging staffing requirements and therefore satisfy the client’s needs within predetermined time constraints.
Time is of the essence when it comes to filling a vacant spot for a government client. A common recruiting goal is to fill a vacant spot with the best qualified, available candidate in the shortest timeframe. The recruiter has to supply the best candidate to fill the open position while attempting to locate a candidate whose disposition is suited to that government agency’s culture. Unfortunately, due to the length of time required to hire 1099 employees, many companies are straying away from pursuit of 1099 employment and only seeking out viable candidates to hire as W2 employees.