Can I Really Sell to the Government?
Multi-million dollar federal government contracts awarded to large defense and aerospace conglomerates often get a lot of attention through the media. But don’t let that discourage you from getting your company in a position to sell to the government – federal, state, or local.
There are plenty of opportunities for small and medium size businesses, as well. The following Q&A’s will help you determine if your company is a likely candidate to sell to the government.
The federal government is the largest single customer in the world. They spend over $500 billion per year on goods and services. The government is looking businesses that can provide quality goods and services, on time, and at a fair and reasonable price.
Not all federal contracts are with huge corporations. In Fiscal Year 2019, the federal government awarded more than $132.9 billion in federal contracts to small businesses, which represented 26.50 percent of small business eligible federal contract dollars. In addition, large federal contractors with large contracts must also subcontract to small businesses.
Many think the process of being a federal vendor is perplexing and has become too competitive. However, over the last 25 years, the federal government has worked diligently to simplify and automate the procurement process. With an understanding of the process and the market, a business can see great success in the federal market.
The government almost buys everything including agricultural supplies, machined parts, construction, furniture, telephone service and Research and Development. There are several ways to find out what the government is currently looking for; those include:
The government uses a variety of methods to purchase goods and service – from multi-year negotiated complex billion dollar contracts to simple commercial item credit card purchases.
The federal government continues to move the purchasing process to the internet. For example,
- The U.S. General Services Administration (GSA) uses a website called GSA Advantage and a purchasing system called e-Buy. A GSA contract is required to participate in GSA Advantage and e-Buy.
- The Defense Logistics Agency (DLA) uses the Internet Bid Board System (DIBBS) to purchase supply items.
- The Department of Defense (DOD) uses an on-line system called FedMall.
- Unison Marketplace is a commercial system used by a number of federal agencies to purchase commercial goods and services using a reverse bid process.
Open market procurements over $25,000 must be published to the Federal Government’s Contract Opportunities portal at SAM.gov. Procurements under the simplified acquisition threshold ($250,000) are reserved for qualified small businesses.
The government market may not be your best option if you are looking for a quick sale. Success is not overnight. It can take more than a year to get your first order.
- First do some market research to determine your market potential and competition. A good place to do some historical research is at SAM.gov, or at USASpending.gov.
- Register as a federal contractor at www.SAM.gov.
- Determine whether your business qualifies for any of the US Small Business Administration small business contracting program certifications: 8A, HUBZone, Woman Owned Business, and the Veterans Administration Service Disabled Veteran Owned Business/ Veteran’s First program. Learn more about these programs from the U.S. Small Business Administration.
- Contact the Wisconsin Procurement Institute at 414-270-3600 or at email@example.com.
As with any other major business decision an evaluation of the potential return on your investment is important. Entering and growing your government customer will require an investment of time, money and other resources – the barriers to entry can be significant. BUT, the federal government can be a great customer.
Bureaucracy is part of government work. With the NO-COST resources that WPI can provide to assist you in navigating the process, it does not have to be overwhelming. WPI staff can assist you in evaluating your potential, entering the market, and growing your federal sales.
You should expect to have to work hard and to take the time to learn the federal procurement process and responsibilities. You should expect to devote focused resources, be willing to travel, be willing to open your facility and business records, and be willing to treat the government as your best customer. You should be able to “do business” online, have good financial standing and be able to build your capacity and capability to meet the government requirements.
You should be able to “do business” online, have good financial standing, and be able to build your capacity and capability to meet the government’s requirements.
First success may occur within the first two years depending on the products/services that your company offers and on the government’s priorities, requirements and budget.
No. However, it is important to understand what role politics and government play in the procurement process. Remember that your congressmen and senators are the ones who decide how federal tax dollars are budgeted.
Yes. The government has made great strides to maximize the use of the Internet, electronic payment processes (EFT) and other technology to improve the acceptance and payment process. The federal government uses credit cards for many of its purchases. The Prompt Payment (1991) Act ensures that federal agencies pay vendors in a timely manner. If there are delays, the Prompt Payment Act assesses late interest penalties against agencies that pay vendors after a payment due date.
As with any business transaction, it pays to develop good relationships when selling to the federal government. Such relationships can alleviate challenges should they arise. The contractor is responsible to provide the government with a properly prepared invoice so timely payment can be made by the government.