Federal Contracting Myths

Federal Market

Shh - What Your Federal Competitors Don't Want You To Know

By MARY PODGORNY

"You will either step forward into growth,

or step back into safety."

- Abraham Maslow

While many companies can achieve growth in the private sector through referrals or word of mouth, the government market requires concentrated, directed effort to obtain clients. The silver lining to this required effort is that in and of itself sometimes limits competition. If you are still asking yourself if you should get in the game - and it is a game - consider this: the U.S. federal government spends over $500 billion per year purchasing goods and services, with small business goals of 23%, which equates to more than $100 billion per year targeted for small business. Even armed with this data, many small businesses are still reluctant to enter the federal market.

Why would any organization ever decide to not pursue the world's single largest customer, and likely the largest purchaser of their goods and/or services? The answers vary, but they are almost always based on misconceptions about the federal market. We explore some of these below.

Before most successful contractors first entered the federal market, they believed some or all of these statements to be true too. While the market can be challenging to penetrate, this is outweighed by the substantial return on investment you can realize by providing your goods or services to meet the vast demands of the federal government. Challenging - yes. Impossible - no. Let's address these misconceptions more in-depth.

"It's just too difficult to do business with the federal government." The federal government has made great strides in streamlining the acquisition process and improvements continue each year. All of the changes center around making it easier for private industry to do business with the government, from on-line access to opportunities, systems and certification process consolidation, paperless transactions and electronic payments.

"They are slow pay." The Prompt Payment Act ensures that federal agencies pay vendors in a timely manner. The government maximizes use of the internet, electronic payment processes (EFT), credit cards and other technology to further ensure timely payments. In fact, 70% of all government procurement transactions are facilitated with a credit card, resulting in prompt payments. Many providers find that their federal customers are oftentimes their fastest paying customers and most will tell you they are one of their biggest and best customers.

"We are too small." "We can't handle the volume." Having small business status is actually an advantage in the federal market. Many solicitations limit competition to only small business, where large businesses are precluded from being allowed to bid on these particular opportunities. Regarding volume, multiple awards may be issued to multiple small businesses, parceling out how much volume each company can handle. A small business can also position themselves as a subcontractor to a large business, thereby helping large business meet the government's requirement for them to subcontract a certain amount of their awarded work to small business. Small businesses drive economic growth in the U.S. and government policy provides for prime and subcontracting opportunities specifically for small firms. Sometimes agencies don't meet their small business goals simply because they are not aware that companies like yours exist.

"I don't think they use our goods or services." The federal government buys just about every service and commodity available, from dog food to airplanes. Chances are they have a requirement for your goods or services, and we will provide you with an overview of what agencies are buying your goods and/or services, how often, and in what quantities. Agencies are like any other customer - they are seeking responsible and financially stable companies who can meet their needs. When they contract with a company that meets or exceeds their expectations, they are also loyal customers who will go out of their way to maintain their relationship with you if they are satisfied. Sometimes your goods or services can be utilized by the government in a different way than used by your commercial customers, so it is important to understand the various needs of the government and think from their point of view how your offerings may potentially present as a solution to their unique challenges and missions.

"Too much red tape." "We'll never get any business." The government continues to streamline their processes which has resulted in it being easier than ever to enter the market. With proper positioning, planning, directed effort and a clear understanding of the rules, processes and marketplace, businesses can achieve great success in the public sector. There is one guarantee - you won't ever get any federal business if you don't try.

"Not worth the effort." Whether you are entering the market for the first time or considering doubling your current efforts to penetrate the market or you are looking to expand your existing government portfolio, like any other major business decision you need to evaluate your return on investment. Successfully penetrating the federal market requires time, effort, money and other resources. With laser focused, directed effort and proper strategic positioning of your company, your chances of winning business are greatly increased in this lucrative market. There are also many free resources available, and we will guide you to ensure you don't pay for services that are available elsewhere at not cost. Does obtaining federal business business require considerable effort? Yes. Is it worth it? Yes. If you ask contractors who have had success in the market if they feel the effort was worth the revenue generated, they would most likely tell you - absolutely. Most contracts have a minimum five year term, adding substantial recurring revenue and diversifying your overall customer base over the long term.

"Price-driven business." "Low bid." When purchasing, the government values the same particulars as private sector customers. They want to purchase from a company who is responsible and responsive, who has the wherewithal and ability to meet their needs. They want a good and reliable product or service, at a reasonable price, and they value companies that have been in business for two or more years with a good reputation with their commercial customers. When it comes to pricing, depending on the product or service, the government oftentimes will reserve the right to not select the lowest priced bid based on their needs.

"Wouldn't know where to begin." The first step would be to assess and scope the size of the government market for your goods and services, identify which agencies are buying, in what quantities, and what contract vehicles they are using. As stated before, there are many resources available to assist you with doing business with the government, and you can conduct initial research on the internet. There are over 120 agencies within the federal government; chances are at least one of them has a need for your goods or services.

"It's just too difficult."

"They are slow pay."

"We are too small."

"We can't handle the volume."

"I don't think they use our goods/services."

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