Closing a Sale Part Two

Companies holding multi-vendor contracts minimize the amount of competition they face since a public bid isn't necessary. Vendors who don't hold a multi-vendor contract may have to start out as a subcontractor to an existing federal contractor, commonly called a "prime contractor," in order to close a sale. For example, your company could sell a product or service to an end user at a particular agency and the agency may decide that the best way to close your sale is through a subcontract with a trusted prime contractor (as opposed to going through a lengthy and expensive public bid process). The prime contractor may already have a contract with the agency or hold a multi-vendor contact that can be used to close the sale.

Subcontracting is a valid way to close a sale but it has drawbacks. The primary drawback is that a subcontract with a prime contractor doesn't give you your first step toward achieving insider status. When acting as a subcontractor, you do not have a contract with the federal government. Instead your business has a commercial contract with the prime contractor. The prime contractor controls your company's prices, your sales growth, and your destiny with the federal customer. A savvy prime contractor also insulates the federal customer from its subcontractors so the subcontractors never really achieve insider status.

GSA Schedule contracts are the best closing mechanisms for small and medium-sized businesses that cannot afford to hold several multi-vendor contracts. Under a GSA Schedule contract, the federal government and the vendor agree to pre-approved prices for the vendor's products and services. More importantly, such contracts are quick and easy for any federal agency to use.

Keep in mind that GSA Schedule vendors still need to sell the end user just as they would in the commercial sector. Newcomers 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.

A variation on the prime contractor/subcontractor approach to closing a sale is to become a subcontractor to a small business under one of the federal government's many small business preference programs. These programs allow quick purchases with preferred types of small businesses under rules allowing limited competition.

A sole-source contract is another alternative for closing a sale; however sole sourcing is extremely rare unless there is truly only a single source for a product or service. Among other challenges, sole-source contracts require special, hard-to-obtain approval from above. The government does its best to keep such contracts under the public's radar.


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