How to Sell to the Federal Government

Last Updated Jul 9, 2009 4:35 PM EDT

While the government is omnivorous, buying everything from
staples to aircraft carriers, it's a challenging marketplace for
sellers. The myriad of rules that make the federal procurement process fair and
transparent also make it slow and difficult to navigate. But here's
the good news: Government buyers go on an annual spending binge July through
September to empty their use-it-or-lose-it budgets before the fiscal year ends —
a deadline that explains infamously wasteful href="http://www.pogo.org/pogo-files/testimony/national-security/ns-wds-20021108.html">$7,600
coffeemakers and the $436 hammer. "Their mission No. 1 is to
spend their budgets," says Malcolm Parvey, co-author of Winning
Government Contracts.
And, right now, that could make Uncle Sam one of your
most lucrative clients. Here's how to learn what the government
wants, find the right decision makers, and make it easy for the world's
biggest customer to buy from you.



Understand That the Government Operates Differently


Goal: Assess whether your company can succeed in this
market.


Unlike private companies and consumers — who determine
their own sometimes arbitrary criteria for purchase decisions —
government buyers must follow rules set out in the 1,600-plus-page Federal
Acquisition Regulations (FAR), which seek to make procurement decisions fair,
transparent, and a good value for taxpayers. The rules largely succeed at those
goals; but they also make the process extremely complicated. Books with 1600
pages will do that.

Before you even set out to learn the procurement process,
understand that the government often uses its buying power to squeeze sellers’
margins, with profits on some contracts even capped by law. For a government
contract to be worth the effort, then, you have to make it up in volume. (And
it’s not hard to do when the typical contract runs $10 million to $20
million and higher.) Also realize that the bureaucracy makes for a long sales
cycle. “The government doesn’t pay until it receives
something, even if it’s a professional service, like support for
software,” says Brian Dunn, managing partner at the Winvale Group, a
Washington-based consultancy that helps companies sell to the government.

So look before you leap, says Judy Bradt, CEO of Virginia-based href="http://www.summitinsight.com/">Summit Insight, which advises
companies on how to land government contracts. Think about how selling to the
government fits into your overall business strategy: What are your core
competencies and which agencies need what you provide; what sets you apart; and
are you willing and able to devote the necessary resources to win the
government’s business? “Look at the time and money it can
take to finance, to develop, to win, and to perform this business,”
she says. “When you get to the end of this process, you have a
tentative go or no go.”

Case Study

How Gallup Wins Government Bids

Three years ago the polling and consulting company Gallup
decided to get serious about selling to the government. Gallup spent nine
months developing a business plan for its government practice, which included
identifying three areas of expertise — organizational performance,
global security, and health — that would be relevant to the work of
agencies like the Department of Defense and
Health and Human Services. The company then developed strategies and even
internal structures to effectively sell that expertise to the government. For
example, Gallup teams product experts with workers who know how different
government agencies purchase services — managing partner Warren Wright
refers to them as “Indian guides.” The result: Gallup’s
government sales increased from $9 million three years ago to an expected $50
million this year — more than 12 percent of the company’s
overall business.


Know the Customer


Goal: Identify what you have that the government
needs.


Nobody generates reports and statistics like the government.
Which is a good thing for businesses; because it means that a wealth of market
research is available free and online that can genuinely help you target the
agencies that may need what you do. Start at FedBizOpps,
where the government lists requests for proposals (RFPs) for the vast majority
of competitive bids over $25,000. The site posts spending forecasts for each
governmental agency, which detail exactly what the agency plans to buy, how
much it wants to spend, and when they’ll make the purchase.

That’s just the beginning. Susan Zeleniak, president
of Verizon’s federal sales group, also looks at each agency’s
five-year strategic plan to get a sense for their upcoming priorities; but then
she goes deeper. “I sell technology, so I look at the CIO’s
plan for the next five years and see what business problems they have and how
we could help,” she says. You can
anticipate future business opportunities by tracking bills as they work their
way through Congress and by monitoring the priorities of the administration.

It’s also worth noting which agencies are on the hot
seat. Let’s say the General Accounting Office (GAO), Congress’s
investigative arm, blisters the Social Security Administration for not
processing payments quickly enough. If that leads to hearings and media
coverage, you can be pretty sure that the government will launch an initiative
to improve that process shortly thereafter.

Nitty Gritty

How to Dig Deeper

Try using the investigative reporter’s favorite
tool, the Freedom of Information Act (FOIA), to get
an agency’s buying trends, competitors’ past bids,
and other valuable information. Each agency has a FOIA officer whose job is to
respond to such requests. You have to make FOIA requests in writing; label them
on the envelope and at the top of the letter as an FOIA request. Be as specific
as you can about what you’re looking for, particularly if you happen
to know the title of the documents you seek. If you want to sell print
cartridges, for example, and would like to know who your competitors are, ask
for the names of all businesses that received contracts for print cartridges
over the past year.



Get on a GSA Schedule Contract


Goal: Make it easy for the government to buy from your
company.


The first time you land a government contract, you’ll
quickly hear about the General Services Administration’s (GSA)
Schedules Program
. The GSA, which is the government’s purchasing
agent, can make long-term agreements to buy from you at what are called “most
favored customer” rates. These schedule contracts let the government
buy quickly without the hassle of going through competitive bidding. Becoming a
GSA schedule contractor can be highly profitable in its own right; just as
important, though, it prequalifies you for just about any government work you
pursue, including competitive bids. “A GSA schedule contract is sort
of a ticket to play,” says Bill Crosley, national vice president of
government sales for J&J Industries, a 50-plus-year-old Georgia-based
carpet manufacturer.

But schedule contracts are not easy to get, often taking months
to process as the government thoroughly vets a company’s financials,
operations, and references. “They went to our operations center,
interviewed finance and accounting people, and looked at paperwork. They go
deep,” says Wright. Some indication of what’s needed comes
from the GSA Web site:

Be prepared to furnish price lists for your products
and services.
Also, be ready to disclose how you arrived at those prices
and to provide information about your discounting practices.

Get a Dun & Bradstreet (DUNS) reference check and
register at the government’s Central Contractor Registration (CCR)
database
.

Follow instructions carefully. There are dozens of supply
schedules — so it’s vital to both find the schedule that
covers what you offer and respond precisely to all that the solicitation
requests. Hurrying and making mistakes can mean having to start over from the
very beginning.

Danger! Danger! Danger!

A GSA Contract Guarantees Nothing

Not only does a GSA schedule contract guarantee you a total
of zero sales, your contract, which typically lasts about five years, can
actually be canceled if you don’t generate any business. A schedule
contract is “necessary but not sufficient,” says Wright.


Get in Front of the Decision Makers


Goal: Boost your odds of winning a bid.


Despite all the rules and procedures, people ultimately make the
buying decisions. Finding the right people, hearing what they need, and telling
them how you can help is essential, but it’s not easy. “It’s
very difficult to get anyone from the government to respond,” says
Crosley. Start by understanding that the contracting officer (CO) typically
ensures that buyers and sellers follow the procurement rules (essentially an
administrative function), while program officers, end users, and CIOs and the
like are the people who know what an agency needs and drive the buying
decisions.

How do you find these decision makers? Tireless networking. “You
can go the traditional trade-show route, or you can go to events that they are
hosting,” says Collis Jones, director of business development with
heavy-equipment manufacturer John Deere, which has over half a century of
experience selling to the federal government.

On a large procurement, the government might invite you to
attend a prebid conference or to submit an invitation for bid (IFB) as a way to
solicit feedback on how to structure the official RFP. If invited, go. The
conference or IFB gives you a chance to influence how the government puts
together a bid so that you have a better chance of landing it. “If
all you’re doing is responding to RFPs that you never knew were going
to come out, you’re just not going to do as well,” says
Wright. And as Jones points out, once your bid is officially submitted, there’s
not much else you can do. “You can’t reach out to them, you’re
in a holding pattern,” he says. “Those can be some of the
most gut-wrenching weeks, days, and months — waiting to hear the
answer.”

Technically Speaking

Submitting the Bid: Master the Minutiae

It’s hard to overemphasize how much the small
details matter in winning government contracts. In soliciting bids for work,
federal agencies are precise and detailed about what they want, and they expect
you to respond in kind: If they ask for a proposal in 10-point font, with no
attachments, delivered by 10 a.m. on a Tuesday, either do it exactly or forget
about winning.

“Everything is supposed to be judged on the same
criteria. So if one company has a lot more graphics or they are using smaller
fonts and can include more information than someone else, that could be
construed as an advantage,” says Dunn. Consider making it someone’s
job to ensure that you don’t lose out on a multimillion-dollar
contract because you overlooked the fine print.


Request a Debriefing


Goal: Learn from your past proposals.


In the private sector, you may lose out on a big sale because
the potential buyer had a bad day or because, unknown to you, your competition
included the purchaser’s son-in-law. Yes, selling to the government
can be a tedious process, but it’s also much more transparent. If
your company loses a bid, you have the right to request a debriefing to find
out why. “They have to explain to you where you were weak and where
you were strong,” says Scott Stanberry, author of Federal
Contracting Made Easy
.

In fact, most federal contractors request debriefings on a
regular basis, says Stanberry, and even suing if you feel you lost out on a
contract unfairly is not entirely unusual. Keep in mind that winners, too,
benefit from debriefings. “I always do it,” says Zeleniak. “I
want to understand why I won. There’s no more effective way to learn.”

Other Resources

  • href="http://www.amazon.com/Federal-Contracting-Made-Easy-3rd/dp/1567262317/ref=sr_1_1?ie=UTF8&s=books&qid=1237349041&sr=1-1">Federal Contracting Made Easy by Scott Stanberry (ManagementConcepts, 2009)
  • href="http://www.amazon.com/Winning-Government-Contracts-Business-Federal/dp/1564149757/ref=sr_1_1?ie=UTF8&s=books&qid=1237349107&sr=1-1">Winning Government Contracts by Malcolm Parvey and Deborah Alston (Career Press, 2008)
  • General Services Administration Web site
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