The Realities of the Federal Market
From GOVSALESWIKI
Installment [ 01 ] The Realities of the Federal Market By Richard White
Let’s say you’re a medium-sized information technology company from a Midwestern city and your commercial sales are flat. What about that big, scary market called the federal government? Hasn’t 9/11 and the recent war created an insatiable demand for products and services on the part of the federal government?
Like most things in life, the answer is yes and no.
- Spending is up but the insiders are getting most of the dollars.
- Cracking the market requires time, money, and a serious commitment, but once inside it is a wonderful place to do business.
- The market is fraught with confusion and misunderstandings for those not already doing federal business.
You have heard that the market is not for the feint of heart, but what are the real barriers?
- Doesn’t the government maintain a level playing field so that all vendors have an equal chance at winning business?
- Can’t we just go to the Internet sites where public bids are posted, pick one in which we’re qualified, write an excellent proposal, and win?
- Can’t I find a retired military person who knows the ropes and have this person help me win business on a contingency basis?
- Can’t I get one of those Federal Supply Service contracts offered by the General Services Administration that pre-qualifies us and then sit back and wait for the orders to come in?
- Can’t I go to one of those conferences held by the Small Business Administration and get business through the buyers I meet there?
The answer to all of these common questions is -- generally speaking -- no.
The commercial market is not a level playing field. Why would you expect playing in the federal market to be a fair game?
People buy from people who have sold them on their product/service in the federal sector just like the commercial sector. Complex products and services (as opposed to commodities) cannot be bought and sold without people making value judgments, whether it's in the commercial or in the government sector.
The federal government tries to keep the playing field level as possible because the taxpayer’s money is being spent. But true and open competition is rare in the federal sector. Why? Because of:
- Increased interest from the commercial sector, causing intense, competitive pre-selling for almost all sales opportunities. When competition does exist, it is among the aggressive companies that have done the pre-selling.
- Emergence of government-wide multiple award schedule contracts (primarily GSA schedules).
- Emergence of agency-specific indefinite duration, indefinite quantity contracts (IDIQ) contracts (primarily for IT products and services, office supplies, medical supplies, and large volume military supplies).
- Bundling of small contracts into single, large multi-year contracts.
- Prime contractor dominance.
- Best value analysis (people making subjective judgments about value).
What do you do given this environment?
The federal government tries diligently to keep the playing field level, and it is in this sense: all vendors have an equal opportunity to make a sales call. If there’s one key to successful federal sales, it’s that. (More about the criticality of the sales call in an upcoming installment.)
The government doesn’t buy, people do.
Government program managers depend on contractors to assist them in maximizing the effectiveness of their programs and, indirectly, their own personal performance. Thus, contractor selection is a critical decision for them, and the decision is usually based on a strong trust relationship with the contractor.
Barriers to entry to the federal market include red tape, long lead times, etc., but the biggest barrier is finding purchasing decision-makers with whom to establish the trust relationship. Those already doing business with the government have the inside track on finding these decision-makers, simply because they’ve been there longer. The sales cycle in government contracting can be long, but one you’re “in” – i.e., once you’ve established those critical trust relationships -- you can be “in” for a long time.