Making sales in the commercial sector can be difficult but closing a sale usually isn't. In the commercial sector, a senior manager works with vendors to decide what product best suits his or her company's needs and then makes the purchase using a credit card or, in the case of a high-dollar transaction, the purchase is consummated by the company's purchasing department. Actually making the purchase once a decision has been made is relatively simple.
Making a purchase in the federal arena is not that simple. The process is the same up to the point of completing the transaction. The end user in the federal arena may meet with one or more vendors and obtain information about the features, benefits, and past performance of a company's product or service. The end user then meets with the contracting officer, who will ask how much money is involved and will remind the end user of the necessity for strict adherence to applicable procurement rules. This is where the process becomes complex.
The following summarizes the methods in which a federal purchase can be closed or transacted:
- A credit card buy (the quickest and simplest)
- The issuance of a purchase order for amounts under $25,000; the federal purchaser must first obtain three quotes (relatively simple)
- A public bid (long, lengthy, expensive, and to be avoided if possible)
- A multi-vendor contract that allows the government to purchase from a select list of vendors who are pre-qualified (including pre-negotiated prices) in anticipation of future purchasing needs
- A subcontract with a prime contractor that already has a federal contract
- A subcontract with a "preferred" small business that the government can contract with quickly and with limited competition (e.g., a small disadvantaged business, Alaskan Native Corporation, etc.)
The manner in which a purchase is completed depends on the size of the transaction. Credit card buys under $2,500 can be single sourced by the end user and can be transacted without the contracting officer's involvement. More liberal credit card limits apply in emergency and national security situations. For purchases in the $2,500 to $25,000 range, the federal purchaser must obtain quotes from three vendors to meet the "best value determination" required under procurement rules.
Purchases exceeding $25,000 are made either through a public bid process or through a multiple vendor contract. Public bids are open to everyone and the process is lengthy--the average time from posting a bid to contract award is more than two hundred days. From the government's perspective, a public bid is an expensive process requiring considerable, and often unavailable, staff resources. If nothing else, Hurricane Katrina demonstrated how inefficient the government's public bid process can be. Vital services that were needed in response to the emergency could not be procured quickly and efficiently.
This article is an excerpt form the new book "Rolling the Dice in DC". The book is written for managers and sales people and describes the day-to-day dogfight of competing and winning in the federal market. Read this book if you want to know the good, bad, and the ugly of the federal market, what it takes to enter the market, and the potential returns.
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