The United States Government Is A Very Powerful Client With Deep Pockets
The Federal government usually spends around 500 billion dollars a year on goods and services. This makes the U.S. government an extremely attractive client. There are few other organizations with this type of spending power and clout.
The government also tends to buy goods and services in bulk. If your business has the infrastructure to handle large orders, then the government can help you grow substantially at an accelerated pace.
Government agencies also buy goods and services in large quantities. Large orders can be a double-edged sword for small businesses. However, if managed correctly, they can help you grow substantially and rapidly. You also should be aware that working for such a large and powerful client is not without challenges.
What Is Government Contracting?
Government contracting is when specific government agencies contract with private companies for specific goods or services. The agencies usually put out a contract or often a request for proposal (RFP) and various companies can place bids for the project. Once an agency selects a particular business, a contract is signed, and that business is now considered a government contractor.
Do Your Research
Once you have selected some agencies that need your goods and services, it is very important to research your customers. Luckily, nowadays you can find out a lot about an organization online.
At the end of the day, the United States government is a customer just like any other. However, this customer has deep pockets and unlimited needs. A small business can cater to the government by following a strategy in which the customer’s needs always come first. Identify what the government agency’s pain points are and then offer them your innovative solutions to their problems. This type of discipline always wins big points with the government. Here are a couple of examples of how you can find the information you need to win lucrative government contracts:
- Inquire about the vendor Outreach Sessions and when will they be held
- Inquire how your company’s products/services could help with the agency’s missions
- Request meetings with Agency Program managers leading the contract requirements you’re pursuing
If you would like to do additional research, you can also check www.fbo.gov, an online listing of government contracts that detail all contracts with a value exceeding $25,000. Another available resource is www.usaspending.gov, a site that details how government money is spent, what agency is issuing awards, and who the federal government is buying from.
Understanding The Marketplace
It might at first feel like working for the government is very unpredictable. Contractors can be affected by a variety of factors such as budget cuts, regulatory pressures, change of administration, and stringent accounting rules.
However, all marketplaces can be volatile and change rapidly according to the whims of consumers. A company needs to make sure that they have a deep understanding of the end buyer and why they want to use their products and services.
This is also true for the United States Government. You will need to develop relationships and cultivate trust that allows you to showcase your competitive advantage. Strategically managing the right relationships might guarantee you the federal government as a solid client that can assure your business of a bright future.
Keeping Pace
Many people think that governments are slow to change. However, as the world becomes more complex, a contractor needs to keep pace with the changing federal marketplace.
For example, in times of plenty, the government often goes for a “best value” procurement. This means that they are looking to award the contract to the company that can prove they can best handle a project because of past performance, subject matter expertise, and management capabilities.
When funding is more restrained, then the government contracts are often given out on a “lowest price, technically acceptable” (LPTA) principle. This means that the decision will be much more driven by the bottom line of price even in complex projects. A company needs to understand what type of methodology a government agency is using to structure their bids correctly for a higher chance of winning the contract.
Accounting
The standard is higher for government accounting when compared to private commercial markets. Contractors will face challenges in making sure that the federal government’s stringent accounting standards are met in a precise manner.
Remember the government has to prove how efficient they are with money because they are spending taxpayer dollars. This means that federal contractors must be meticulous in their accounting methodology in case of an audit.
At first, these stringent rules of accounting can seem very daunting. However, today many cutting-edge technologies can take the pressure off by making even the most complex accounting procedures quite simple. Also, having a strong accounting system in place will only make your company better in the long run.