Every year, the U.S. federal government spends billions of dollars on commercial products (e.g., office supplies, building materials, computers, furniture, etc.) and professional and technical services (e.g., IT services, training, HR Consulting, media and marketing, electricians, and engineering services).
You name it, and the federal government probably needs it.
However, selling to the federal government is intimidating to a lot of businesses, and many think you need to know the secret handshake in order to succeed.
Yes, it takes time to break into the market – an average of 19 months, according to an American Express survey. But new firms break in every year, and the trend in government procurement has been to make things simpler for both the government and vendors alike. While not exactly simple, it is far easier to get work from the government than it was just 10 years ago.
In order to protect taxpayer dollars, the government constructed a labyrinth of rules call the Federal Acquisition Regulations (FAR). Since the late 1990s, Congress has mandated a simplification of contracting. The FAR outlines a variety of programs and rules for procuring goods and services, but let’s focus on some key programs for businesses to sell to the government. The names of these programs may sound daunting (I sometimes believe bureaucrats create jargon simply to confuse us mere mortals), but the concepts are pretty easy to understand.
- Micro-Purchase: If your firm sells goods or services that cost less than $3,000, then agencies can buy from you, without competition, using their government purchase cards (another name for Visa or MasterCard).
- Simplified Acquisition Process (SAP): For purchases that are estimated to cost between $3,000 and $150,000, agencies are supposed to restrict competition to small businesses. Exceptions to this rule exist, but a search on FedBizOpps (www.fbo,gov) also reveals vast opportunities under this program. The paperwork that is required from the proposing vendor is far simpler than ordinary public bids.
- Open Procurements: For all opportunities exceeding $25,000, agencies are required to post requests for proposals (RFPs) at fbo.gov. These are lengthy and complex solicitations requiring a lot of work. Too many businesses spend disproportionate time responding to these opportunities without first laying the groundwork with the agency for succeeding. There’s an old adage that’s largely true: if you see an opportunity for the first time on fbo.gov, it’s already too late. The reason? Many other firms have already met with the agency, understand its needs, and have already communicated their value.
You will also see requests for information (RFIs) and “sources sought” notices that agencies post when they’re considering solutions to problems. These represent opportunities to make your firm known to agencies — but don’t spend too much time on them, because agencies are often just fishing.
- Prime Contractors: For many firms entering the market, working through prime contractors may be a good strategy. They already have federal clients and are required to subcontract to small businesses. So if your firm has something unique to offer, selling to prime contractors is a great way to get your foot in the door to this lucrative market. The downside is that this requires building relationships with prime contractors, and that takes effort as well.
- GSA Schedules: Also known as Federal Supply Schedules (and VA Schedules for medical products and services), this program has been a boon to many firms. It’s open to all qualified businesses and allows you to sell to any agency of the federal government and many other organizations, including state and local governments under some conditions. Getting a GSA schedule contract takes effort, but once you have it in hand, you have eliminated the contracting hurdle and can focus on doing what you do well: selling to customers! This program is very popular and has grown from about $2 billion in contracts in 2000 to more than $38 billion last year.
The above info focuses on the mechanics of contracting, and regardless of which approach or combination of approaches you pursue, the real challenge is implementing a cost-effective federal marketing strategy. Establishing a strategy at the outset will help you to reach your target audience much more efficiently, and ensure greater success.
Unlike commercial clients, agencies publish their anticipated future procurement needs so you can see if they have already identified a need for your type of service. For example, all IT projects are well publicized by the Office of Management and Budget (OMB) even before Congress appropriates money, so you have a chance to see if you might offer a solution. Many councils and groups exist where government-wide policies are developed and might inform you of future agency needs. For example, if you sell leadership development or executive coaching, you might want to get to know more about the Chief Human Capital Officers Council (chcoc.gov).
Agencies also have small business liaison offices to help you find agency programs that may need your service. Researching competitors’ contracts and past agency spending is straightforward due to publicly available data on sites such as usaspending.gov and fpds.gov.
Ultimately, federal business development comes down to understanding your customer’s needs and building relationships at different levels of the organization. In the federal market, there are different types of buyers: the end users, the program managers, and contracting officials. The end users have the need, and they influence buying decisions. The program managers run the programs and control the purse strings. The contracting officials ensure strict compliance with the FAR and are the government’s gate keepers. Getting to know and respond to the needs of all these parties is essential.
Traditional outbound marketing programs can be adapted to the federal market, but be sure to rewrite marketing literature to eliminate concepts that don’t apply. For example, talk of increasing profits is irrelevant to a federal employee, but cost containment is (I know, I can hear you snickering, but this is a key government priority these days). Overall, however, the ROI of costly outbound marketing programs is greatly diminished as agencies use alternative methods to find solutions.
Agencies increasingly rely on online research to find solutions to their problems. For anyone pursuing federal sales, especially newer players in the federal market who don’t have offices inside the beltway (that’s the highway loop around Washington, D.C.), it’s imperative to maximize the use of federal inbound narketing strategies to get noticed, attract federal visitors, convert leads, and nurture opportunities.
Contrary to popular belief, there is no magic or secret handshake needed to sell to the Federal Government. Different approaches work for different firms in different industries. You still need to segment the market, target appropriate agencies, sell the benefits and value of your solutions, demonstrate credibility, and establish and maintain relationships with your customers. Having a contract such as a GSA schedule gives you added benefits, but it does not guarantee business. Smart strategy, sufficient effort, and management commitment is essential for successfully selling to the federal market.
Robert Kelly has been developing federal business since 1985 and has held executive management, marketing, and business development roles for a Fortune-30 firm, a mid-sized professional services firm, and a training start-up. Kelly’s previous positions include marketing director for a $20 million-a-year technical services division, project director and regional business development nanager for a $250 million engineering / environmental consulting firm, business development for an IT and management consulting division, and CEO of a training and e-learning products company. Visit his business website at TurboGSA.com.