Selling in the Federal Marketplace

Up until the actual close of a sale, selling in the federal market is essentially the same as selling in the commercial market. You have to find out who buys what you sell, knock on their door, be prepared for rejection if you are unknown to the federal buyers, and then find a way to get around their resistance to newcomers. In the federal market, as in the commercial market, businesses must sell to the end users of the product or service they offer. The difference with the federal market is that it is critical that you have a way to close the sale.

Your representative in Congress and Small Business Administration (SBA) staff may be marginally helpful in assisting you to win federal business. However, the bottom line is that your company will only win federal contract dollars if it puts an emphasis on direct and focused sales efforts. Relying on others to sell for you usually results in the delusion that your business is on its way to a sale when, in fact, it may be spinning its wheels. The basic steps in the federal sales process are as follows:

  1. Identify federal end users or contracting officers who need what you sell. For commodities, the purchasing decision maker is usually a contracting officer. For technology products and services, the purchasing decision maker is a program manager, a facilities manager, an engineer, or professional with program responsibilities (end user). Finding sales opportunities is a difficult process for those unfamiliar with federal web sites, staff directories, and sales transaction databases. Hundreds of thousands of federal end users are spread throughout the world and finding end users with a problem and money to solve it can be frustrating. Making an identification of an actual sales opportunity becomes progressively easier as you become more experienced in the market.
  2. Establish a relationship with the decision maker. If your company offers commodities, relationships will probably be developed on the telephone. For those companies offering solutions or services, the relationship will most likely be established in person. Relationships are built between the buyer and the seller through mutual agreement on a solution, the establishment of trust, and assurances that your solution will mitigate risk to the buyer.
  3. Close the sale through a procedure or contractual mechanism that is consistent with the rules for competition in the public sector. The procedure for closing the sale is normally dictated and implemented by the contracting officer unless the purchase is a small one made with a federal credit card.

As discussed earlier, the federal sales process is identical to the commercial sales process up to the point of closing the sale. This is where the rubber hits the road and where most novices run into road blocks, particularly for buys exceeding $25,000.

A sale over $ 25,000 requires that the buy be made through a competitive public bidding process or through a blanket, indefinite quantity type contract with pre-negotiated prices (called a "multi-vendor contract"). The federal government has placed an increasing emphasis on multi-vendor contracts. When the need for a product or service arises, the end user can turn to the list of pre-approved vendors and make a purchase quickly and efficiently. The time and expense involved with a public bid are avoided because the vendors holding this type of contract have agreed-upon price lists which become the basis for bids on individual task orders (services) or delivery orders (products).

The federal government will, for large purchases, typically favor multi-vendor contracts over public bids because the public bidding process requires use of scarce procurement staff and takes far too long. Since the majority of businesses hoping to enter the federal market do not have a multi-vendor contract in place, they are operating at a disadvantage when they actually take the plunge.

The most popular and most widely used multi-vendor contract is a GSA Schedule contract. It is, in fact, extremely difficult to compete for federal business without one. Without a Schedule contract, newcomers are often forced to act as a subcontractor to a prime contractor. For this and other reasons, the uninitiated should start the process of obtaining a GSA Schedule contract immediately upon deciding to enter the market because it can take three to nine months, or more, to get an award of such a contract.



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