Installment 5: Competition and Price Sensitivity in the Federal Market

Outsider Perception: The federal market is open and competitive.

Reality: Competition does take place but, for most transactions, it is limited so that purchases can be made quickly and at reasonable costs to the taxpayer.

Lesson: Learn how purchases are made under the rules for limited competition and use this knowledge to win business


It is a fallacy that federal purchases are made only after full and open competition takes place. Competition may or may not occur but, when it does, it is usually limited. In most instances, a company is not going to win a federal bid opportunity it stumbled onto online. The truth is that your competitors met with the federal buyers long before the opportunity was publicly announced and the federal buyer already has one or more companies in mind. Federal bureaucrats do not like to admit this reality because they are tasked with the responsibility of getting the best value for the American taxpayer. The reality is that federal purchasing rules not only allow federal buyers to meet with vendors prior to the announcement of a public bid but they actually encourage it. How else would a federal buyer assess the value of proffered products and services?

On the surface, this reality may seem discouraging. On the other hand, those companies with aggressive sales people and a distinct message should have no problem becoming one of the few companies being considered for a contract or order. Learn how to limit competition and become one of the chosen few. Treat the market just like your current market and go after federal end users.

A second myth is that federal buying decisions are made based solely on price considerations. Once again, the federal market is like the commercial market in that you can sell based on value rather than on price. And best value is defined broadly in federal purchasing rules. My father used to say, "Son, you get what you pay for." While it is true that, at one point in time, federal government buyers made purchasing decisions based primarily on price, the government has modernized its regulations to allow buying decisions based on best value.

As a taxpayer, you should be happy that best value can now be considered. As a sales person, it's an answer to your prayers. It gives government buyers the latitude to use their judgment and the sales person the opportunity to sell quality, features, benefits, results, and past performance. All of these factors can be considered in determining best value. Making direct sales calls to government buyers will pay off in the long run as long as you are selling quality and value.

Most federal sales, like commercial sales, start with a customer relationship. To be successful in the market, you must consider the entire sales cycle as a business process. Many outsiders think that they can jump into the middle of the process. Because the federal government publicizes its bidding opportunities at a central web site, companies hoping to win government business think they can simply conduct a search and pick and choose projects on which they hope to bid. They are setting themselves up for failure. Your company must commit to doing the dirty work prior to the bid's announcement or it will have no chance for success.

Installment Series:

Installment 1: The Best Offense is a Good Defense
Installment 2: Make the World's Biggest Customer Your Own
Installment 3: Market Research in the Federal Sector
Installment 4: Become an Insider in the Federal Market
Installment 5: Competition and Price Sensitivity in the Federal Market
Installment 6: Are Federal Bids Wired?
Installment 7: Fundamentals of Federal Contracting
Installment 8: Making a Federal Sale
Installment 9: Closing a Federal Sale
Installment 10: Start with the Credit Card and Quick Buy Markets for Smaller Transactions
Installment 11: Consider Starting as a Subcontractor to a Prime
Installment 12: Selling Directly to Prime Contractors
Installment 13: Pre-approved Government Price Lists
Installment 14: Getting a Pre-approved Federal Price List for Your Company
Installment 15: Small Business Preference Programs
Installment 16: Distinguishing Messages Win in the Federal Market
Installment 17: Selling to Federal Agencies Located in Your Backyard
Installment 18: Getting Started in Federal Sales
Installment 19: Don't Get Caught Up in Red Tape
Installment 20: Steps to Take After Winning Your First Federal Contract 
Installment 21: Learn How to Write Federal Proposals
Installment 22: Prosper in the Federal Market

Fedmarket has been helping companies win government business since 1995. We have been featured in the Wall Street Journal, the Washington Post, and other trade publications. Our customer testimonials speak to our competence and expertise in helping customers win federal business. We have been singled out by public and private organizations -- including the Small Business Administration and federally-funded Procurement Technical Assistance Centers -- as the most comprehensive government contracting resource in the industry. Our web site's free content includes informative newsletters on GSA Schedules, Proposal Writing and Federal Business Development.

Visit Fedmarket
For inquiries, call 888 661 4094. Press 2.

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