Installment 7: Fundamentals of Federal Contracting

Outsider Perception: In order to participate in the federal market, you must accept the mountains of red tape that come with handling such business.

Reality: The red tape is not so onerous that it should scare your business away from participating in the federal arena.

Lesson: Don't let the red tape scare you. It's a series of administrative tasks which, although tedious, can be easily tackled.


Many people lose sight of the fact that doing business with the federal government is done according to a contract. A federal contract is nothing more than an agreement between your company and the federal government under which your business agrees to provide a product or service in accordance with the terms of the document. The contract dictates the parameters of the deal and is the underlying basis for your relationship with the customer. Federal contracts contain countless pages of boilerplate language and convoluted clauses. Don't let the terms of the contract scare you - the contract is only onerous on the surface. Pick out the wheat from the chaff and perform as you would with your commercial customers. Go to the contract when issues arise and let the contract dictate how disputes are resolved or an issue should be addressed.

The role of the federal contracting officer is central in the federal purchasing process. The contracting officer is the person authorized to execute federal contracts and orders. He or she is the only person with the legal authority to act for the government. Think of the contracting officer as the equivalent of the purchasing agent in a larger company. The contracting officer is charged with ensuring that, as required under the Federal Acquisition Regulation, the required amount of competition occurs. To say the least, the procurement rules are complex and long.

The contracting officer has considerable latitude in determining how a buy is made and can consider subjective factors in determining how to close a sale. "Factors" is the operative word here. Factors that can affect the contracting officer's final decision include the dollar amount of the buy, when the product or service is needed, the type of businesses competing, the qualifications of the bidders and more.

When commodities are purchased (such as office supplies), contracting officers are often the sole decision makers in determining who gets the business. In contrast, the federal end user is the person consuming or using what you sell. They buy to support their program or operational responsibilities and make the final purchasing decisions concerning the acquisition of more complex products and professional services. An end user makes procurement decisions based on opinions they have formed from meetings or telephone discussions with corporate sales people and through their experience in working with a particular company in the past.

End users often find themselves in conflict with contracting officers. They are averse to taking risks and, as most of us do, they generally protect their self interest. Furthermore, end users usually want what is needed quickly and without hassle. The purchasing process is often slowed down by contracting officers who are charged with ensuring that the rules are being followed. Because a contracting officer cannot realistically monitor a particular company's performance or make substantive decisions regarding a particular product or service's value, he or she will delegate these responsibilities to the end user.

Think of the end user and contracting officers as partners. Then think of yourself as the third partner in the deal who has been entrusted with the responsibility of performing and delivering under the terms of the contract. This may seem trite but your key to success will be constant (sometimes daily) communication with both government partners. They want to know and trust their business partner. This is why it is critical that you become a partner (or an insider) and gain this trust.

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.

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