How To Do Business With The World's Biggest Business (Part 2)

You have narrowed your target market down to which agency or agencies will purchase your product or service.  Now you need to know how they purchase.  What systems and methods do the various government agencies use when procuring goods and services?  Here are some examples of how certain agencies purchase: 

The General Services Administration (GSA) uses the Federal Supply Schedule  as the first source.   Therefore if  your customer is the GSA, you need to be on the Schedule to be considered for a contract. 

The Veterans Administration has their own schedule, but only for certain goods and/or services that they procure (i.e. uniforms). You would need to contact them directly to match your product and/or service to their schedule to see if it pays to fill out the paperwork for that Schedule.   

The Social Security Administration does not have its own schedule and therefore is not mandated or required to look to the Schedule first. Therefore, if they are the customer you are targeting you do not have to be on the Schedule to be considered.  

Selection Criteria

After determining how the target agencies purchase, you need to know the criteria used in their decision making.  Each agency will conduct its own due diligence before deciding which of the prospective vendors will win the contract.  There are various determining factors involved in awarding contracts.  They include past performance, pricing and ""best value"" and your company's ability to support the contract. 

Past Performance Evaluations:   A review of your past performance is critical in determing whether your firm has the ability to be successful in fulfilling the contract.  This review consists of the most recent (no more than 3 years old) contracts within similar scope, size and dollar amount.   In providing this information, nearly every Request for Proposal has a section dedicated to your company's past performance and references. It is a good practice to call the agencies or companies whose name you are disclosing to the government agency to let them know that they may be receiving correspondence from that agency about a rating of your performance.

While your company's past performance is not the sole determinating factor, it is one of the most important components in the decision process. 

Pricing and "Best Value"

In the area of pricing, bear in mind that “best value” is the standard by which the agency will award the contract.   ""Best Value"" is determined by contract pricing as well as past performance experience.  Also, be aware that being the lowest bidder does not mean that your company will get the contract.  You must be able to explain the basis for your pricing structure.  If you are offering a product or service to the government for one price, they want to make sure that you are not offering it to the private sector for less.

Supporting the Contract

This relates to your financial capabilities.  For example, if the contract requires staffing to be supplied then the agency must be confident that the firms bidding on the contract have the financial resources to cover the wages and any other incidentals during the life of the contract.

In order to become conversant with the pricing process, you may want to take the time to consult about your pricing with a firm which is well versed in the area of government proposals.  Alternately, there are software programs that provide some help in pricing structure and are industry specific.  Most of these programs, however, can be expensive and may not be able to be tailored to the degree your business requires.  Accordingly, it may be money well spent to retain the services of consultants who are proficient in this area and who know what the government is looking for.

Conclusion

Doing business with the government is an arduous task, but one worth learning.  Considering that the government spends over $264 billion in contracts, the return on your investment of time could be very well spent.