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 federal
government; 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
Can a company like mine really have the federal government as a customer?
The federal government is the largest single customer in the world. They spend over $500 billion per year on goods and services.
Not all federal contracts are with huge corporations. In FY2011 the federal government awarded more than $91.5 billion in federal contracts to small businesses, which represented 21.65 percent of small business eligible federal contract dollars. And 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.
What does the federal government buy?
The government buys everything from agricultural supplies, machined parts, construction, and R&D to furniture and telephone service. There are several ways to find out what the government is currently looking for; those include:
How does the government buy goods and services?
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
GSA Advantage and a purchasing system called
- The Defense Logistics Agency uses the
Internet Bid Board System
(DIBBS) to purchase supply items
- The Department of Defense uses an on-line system called
- FedBid is a commercial systems used by a growing number of agencies
to purchase commercial goods and services using a reverse bid
My business has not been doing very well. I need some quick sales. How can the
federal government help?
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.
How do I get started?
The bureaucracy and paperwork of government
contracting is intricate and time consuming – therefore is it worth
my time to become a federal vendor?
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 federal government can be a great
Bureaucracy is part of government work. With FREE resources to
assist you in navigating the process, it does not have to be
overwhelming. We can help you take the mystery out of federal
What should I expect? And how long should it take to get a contract?
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
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.
Do I have to be politically active to succeed in the federal market?
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.
I have heard that the government payment process is complex and not very
reliable. Can I depend on the government paying me for my work?
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.
President Obama announced his new “QuickPay” plan for small
businesses on Sept. 14, 2011. It requires agencies to cut checks in
15 days, instead of 30 days, after they receive a valid invoice. The
15-day payments apply only to prime contractors.