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Doing Business with the Government

Doing Business with Government
"Doing Business with Government" is a collection of articles that offer Tips, Ideas and Advice on what you need to do or where to get started, if you wanted to do business with the government and don't know where or how to begin.

Source: Fedmarket.com





Richard White, President of Fedmarket.com


Often companies will write to us and say something like the following: "My company offers this great product/service, and I know government agencies will find it very useful. So what do I do?"

Talk about a loaded question. Unfortunately, the question "What do I do?" is one that we can never answer completely even if we have all the time in the world. And the answers change depending on what you sell and to whom you’re selling. Fortunately, though, there are common elements found in almost all the advice that can be given.

Our aim over the course of the next few months is to outline these common elements in a very simple "how to" format. We’ll add a new installment about every two weeks. We hope you find these topics useful. If you have any comments or questions -- or thoughts on other important topics -- please send me an email at rwhite@fedmarket.com.

INSTALLMENT 1: GETTING STARTED

Sometimes people will ask me, "Where do I start?" which is often another way of asking, "Where do I go to begin filling out all the forms?" To be honest, if you’re a good salesperson and you offer a fantastic product at a competitive price, you might be able to sell it to an agency BEFORE you go through the red tape.

For most companies, though, my advice is to have your ducks in line first. For one thing, you’ll generally look more credible to the buyer if you’re already an approved vendor when they hear from you. For another, you’ll likely have to go through the red tape at some point anyway.

This means, at minimum, you need to be registered with the governmental entity you’re trying to sell to. (There are exceptions to this. If you’re selling to a state, or especially local government, there may be no registration requirement, particularly for lower-priced products. To access state and local procurement rules and regulations, a good place to start is our own State and Local Jumpstation , http://www.fedmarket.com/sales_resources/jumpstation/bids/state_local.html, at Fedmarket.com.).

Registering with CCR

If you’re selling to the Defense Department, you must register with Central Contractor Registration (CCR), http://www.ccr2000.com. There are a few exceptions, such as purchases paid with a government-wide commercial purchase card. For other exceptions, go to http://www.ccr2000.com/ccrpol.cfm.

Government agencies and private industry are only required to register in the database once with subsequent requirements for annual updates. Registering with CCR automatically registers you with every Defense agency. CCR is the single source from which the DOD receives business information on all vendors.

We recommend that you first download the instructions and forms for registration and go over them before you begin to enter the data online. This will ensure that you have all the required business information at hand so you can submit a complete application online.

Before registering with the CCR, you will need:
  • Data Universal Numbering System (DUNS) number
  • Commercial and Government Entity (CAGE) code
  • Taxpayer Identification Number (TIN)
  • Standard Industrial Classification (SIC) codes
  • Finance and banking information
The Data Universal Numbering System (DUNS) number is a unique nine-digit company identification number. To obtain a DUNS number, call Dun & Bradstreet (D&B) at 1-800-333-0505. The process takes about ten minutes and is free of charge. If your company already has a DUNS number, the D&B representative will advise you over the telephone. Parent companies can add four additional characters (alphanumeric or number) of their choice to their DUNS number to identify and enable each subsidiary to establish a separate trading partner profile in CCR. These four alphanumeric or number identifiers are assigned and maintained by the parent company NOT D&B. For additional information on DUNS Numbers, visit D&B’s web site, http://www.dnb.com.

The Tax Identification Number (TIN) is either the Employee Identification Number (EIN) issued by the Internal Revenue Service or the company Social Security Number (SSN). Check for the TIN with the accounting, payroll, and/or personnel department. The IRS can also be contacted, at 1-800-829-1040, to verify the TIN. If operating as an individual/sole proprietorship, you must use the number under which you file taxes. If your taxes are paid by a parent company, indicate the parent company’s TIN.

The Standard Industrial Classification (SIC) codes are part of a numbering system that identifies the type of products and/or services the company provides. The following web site offers search capabilities for matching codes based on keyword descriptions: http://www.osha.gov/oshstats/sicser.html. Applicable SIC Codes can also be obtained from a Procurement Technical Assistance Center (PTAC), http://www.rcacwv.com/ptac.htm, located in your state. A minimum of one primary code and as many secondary codes as necessary should be listed.

For more detail on CCR registration, go to http://www.ccr2000.com/handbook.cfm.

Registering with PRO-Net

If your business is small, woman-, or minority-owned, you should register with SBA’s PRO-Net. It’s not mandatory, but it’s a good place to showcase your company’s capabilities. The site can be found at the following URL: http://pro-net.sba.gov.

PRO-Net is an Internet database of information on more than 195,000 small, disadvantaged, 8(a), HUBZone, and women-owned businesses. It’s free to federal and state government agencies as well as prime and other contractors seeking small business contractors, subcontractors and/or partnership opportunities. The site is open to all small firms seeking federal, state and private contracts.

Businesses profiled can be searched by SIC codes, key words, location, quality certifications, business type, ownership race and gender, EDI capability, etc.

Registration starts here: http://pro-net.sba.gov/pro-net/register.html.

Registering with State and Local Governments

Unfortunately, there is no one place to register with state and local governments. You have to contact them individually, either on the web or by phone. One good place to find state and local government web sites is, again, our Jumpstation at Fedmarket.com. Or better yet, check out our procurement search engine, Bidengine.com. There you can find procurement information on over 2,000 federal, state and local government agencies.

Final Thoughts

Registering to do business with government agencies can be cumbersome. Focus first on only those with whom you will actually conduct business in the short term. Don’t spend too much time until you’ve determined there’s a reasonable probability the agency is going to become a customer, an agency requires registration before it will let you access a bidding opportunity, or you’ve already made a sale and the agency requires registration before signing a purchase order or contract.



Richard White, President of Fedmarket.com


At a fundamental level, selling to governments is no different than selling to private companies: you must identify a potential customer and sell to that person directly.

Focus Your Sales Efforts

If you are new to government sales, focus on one target agency (or at most a few if you have the resources), make a sale, and then nurture your new, small customer into a large customer. Government agencies tend to be loyal customers. In many cases, they’ll return for your product or service again and again if you serve them well.

Suppose that a government has a local office in your city, where you own a small business selling office supplies. You need to call on that office and talk to the person there that purchases office supplies. Find out where he or she is currently buying them. Find out what that person is buying and how much that person is paying for those products. Drop in and pay the buyer a visit, leave a catalog and contact information, and take with you the buyer’s contact information.

After the initial sales call, it’s up to you to close a sale by analyzing the prices of your competition, making more personal visits and telephone calls, and providing additional product/service information until you receive the first order or sign the first contract.

Remember this: federal, state, and local government agencies have issued over 800,000 credit cards to government employees so that they can efficiently buy virtually anything under $2,500 on a single source basis. This market segment is much like the commercial world and should not be intimidating, even for the first-time government contractor.

So stay focused. Find success in a few places first. With too broad an approach you can end up with some broad and diluted brand identity, but little or no sales.

Establish a Personal Relationship

It's common sense, but it's worth emphasizing: government buyers and program personnel (or "end users") want to feel comfortable with the people with whom they’re doing business. As you deliver products and services effectively, they become more and more comfortable with you and keep coming back to you.

Generally speaking, government buyers--
  • Abhor poor product quality or service performance because they reflect poorly on them. (Vendors behind such products or services go into the "bad vendor" file.)

  • Want to do business with a vendor who makes life easier with no hassles, even if this means a higher price. (Such vendors go into the "good vendor" file.)

  • Want to be dealt with in a truthful, straightforward manner.

  • Want to be productive, play within the rules, avoid problems and get to the much-sought-after "next grade level."
End User vs. Official Buyer

For complex products, the most important person to sell is the government end user. For example, a scientist in a government research organization would be the person to focus on if you sell scientific instruments. This person usually knows exactly what his or her specifications are for a particular instrument and, in fact, may already have a brand and model number in mind -- perhaps yours or perhaps a competitor’s.

The end user will formally or informally communicate requirements and desires to an official buyer. If the instrument must be compatible with other instruments, the end user will formally communicate this to the buyer, and a brand name and model will probably be specified for the purchase. If the end user has been "pre-sold" by you or your competition, he or she will probably communicate the preference informally, and an "equivalent to" the preferred model requirement will end up a part of the purchase document.

The official buyer in the purchasing division or contracting office is the focal point for sales of commodity-like products. For example, end user requisitions for office supplies will usually not specify make and model, and it will be up to the official buyer to make the purchase from companies he’s dealt with in the past -- or from you if you’ve made those important sales calls discussed earlier.

Services are similar. An end user would be the focal point for the sale of complex computer networking or security services. For boiler maintenance services, the official buyer would probably look to one or more local plumbing companies that she knows and has dealt with in the past. Again, one of these companies could be yours if you’ve called on the buyer.

Vendor Diversity

Many buyers feel that their pool of vendors from which to purchase could be larger. Generally speaking, it’s a buyer’s job to find more vendors to increase purchasing efficiency and lower prices. So think of it this way: by calling on them, you’re helping them -- that is, if you sell a product or service they need.

End users will also welcome your sales call if you’re selling solutions that fit with their program objectives. You should, however, make the sales call before a procurement is formalized. Generally, end users are not allowed to talk to vendors once a procurement requirement is documented.

Identifying the Customer

Identifying potential customers can be one of the most difficult aspects of government sales. But it depends on who you are. Here are two examples from opposite ends of the spectrum:
  • The number of individual markets for IBM is nearly the entire universe of federal, state and local agencies. IBM is probably registered to do business with a majority of the over 80,000 governmental entities.

  • The number of individual markets for a specialized service or product firm may be only a handful -- e.g., veterinarian care for laboratory animals or a specialized speech recognition software product.
We'll talk about the challenge of identifying the customer in later installments.

Summary of Keys to Success
  • Identify agencies buying your product/service
  • Call on the customer
  • Bid with knowledge and insight until you win
  • Nurture the new customer into a reliable, ongoing customer




Richard White, President of Fedmarket.com


In doing business with government -- whether it is federal, state or local -- the rules of the game depend largely on the market segment in which you’re selling. In this discussion, we’re speaking of market segments divided by purchasing threshold amounts rather than by industry. The purpose of this installment is to give you a broad overview of these market segments.

Market segments vary from jurisdiction to jurisdiction, but they can be roughly divided into three types: micro, small and large. The following summarizes these three segments:

Micro Purchase
Threshold: Under $2,500
Purchasing procedure: Sole source using a government credit card
Sales cycle: Same day

Small Purchase
Threshold: $2,500-$25,000
Purchasing procedure: Three informal quotes by phone, fax, email or regular mail
Sales cycle: Same day to several days

Large Purchase
Threshold: Over $25,000
Purchasing procedure: Public advertising and formal documentation of procurement
Sales cycle: Several weeks to a year or more

Micro Purchase

Government micro purchases can be made without competition. In practice, program personnel (end users) and official buyers are encouraged to make sure that prices are reasonable and purchases are distributed fairly among vendors. End users with a government credit card make most micro-purchases, although purchase orders are sometimes used if an official buyer makes the purchase.

The micro-purchase market segment was created to make life easier for end users managing and operating government programs or field offices. A manager of a government field office can buy office equipment and supplies under $2,500 by merely calling a local vendor, giving the vendor his/her credit card number, and requesting same day delivery.

Government credit cards (formally called purchase cards) are widely used and account for around 50% of all government buys. Credit cards are increasingly being used to make higher dollar buys.

If you want to compete in this commercial-like market segment, set up a merchant account (if you don’t already have one) and sell to the government installations in your local area just like you would a commercial customer.

Small Purchase

Over the past five years, governments generally have loosened their procedures for making small purchases. They can now be made with three informal quotes obtained by telephone, fax, email or regular mail. Payment is made with a credit card or purchase order. The quotes themselves make up the purchase documentation so a buyer can act quickly and efficiently.

Official buyers make small purchases for end users. As we discussed in the prior installment, end users may or may not provide buyers with preferred suppliers. They might for, say, a scientific instrument but not for something like office supplies.

Buyers find suppliers using manual or electronic bidders lists (maintained by individual purchasing offices), centralized electronic vendor directories (both on and off the Internet), or other vendor sources like Thomas Register and the local yellow pages.

Small business preference procedures vary considerably, but as a general rule most small purchases are set aside for small and small disadvantaged businesses unless this type of company cannot be found to satisfy the requirement.

A small purchase can be done in a day, but several days or a week or more would be more typical.

Buyers typically rotate companies they contact for a quote, often the last supplier plus two new sources. As I tried to emphasize in the last installment, your company will not be contacted if they don’t know you exist. Get out there and sell! If you have a technical or complex product or service, sell the end user. If you’re successful, the end user will let the buyer know that your company is a preferred source for the required product or service. If you sell common commodities, focus on the buyer.

Large Purchase

Large purchase procedures vary widely among government jurisdictions. The dollar threshold used to define a large purchase can be as low as $10,000 for smaller cities and counties and as high as $100,000 for the federal government. (The federal government requires formal advertising for most purchases exceeding $25,000, but all purchases up to $100,000 are defined as small and are set aside for small businesses.)

In most state and local jurisdictions, the dollar threshold defining a large purchase and the threshold for formal advertising are the same.

Large purchases require formal advertising and more stringent and formal purchase documentation. The required method for public advertisement of a large purchase is specified in a jurisdiction’s procurement regulations. Possible methods include city newspapers, periodicals published by agencies, Internet sites, or some combination of these.

More and more jurisdictions are using the Internet as their primary medium for publishing large procurements. The Federal government has recently designated the Internet site FedBizOpps, http://www.fedbizopps.gov, as its official publishing medium for all procurements exceeding $25,000. The Commerce Business Daily paper publication and Internet site are being eliminated effective January 1, 2002.

Large purchases require strict, formal documentation concerning how and why the successful vendor was selected. The contacting mechanism is usually an Invitation for Bid (IFB) for a sealed, fixed-price buy or formal Request for Quote (RFQ) for a non-sealed fixed-price buy. (Sealed bids require a formal, public opening and a subsequent formal public posting of all bids.)

A Request for Proposal (RFP) is used for negotiated procurements. Negotiated procurements are used for complex procurements where many factors besides price enter into the buy. The contract does not necessarily go to the vendor with the lowest bid, although price is usually a major factor in making the selection. This method is used when the government is seeking a solution to a problem, buying a complex product or contracting for a complex service.

Fixed-priced procurements can take 30 to 90 days to complete and negotiated procurements can take from three months to a year, and, in some cases, even longer.

Future installments in this series will be devoted to selling in each of these three market segments.


Richard White, President of Fedmarket.com


Finding agencies and end-users that buy what you sell is one of the most difficult aspects of government sales. And yet it is one of the most important since it is the key to focusing your sales efforts. Throughout this primer series you will be advised over and over again to focus your sales efforts. Finding the people who buy your product or service is the critical first step in a focused sales program.

Each government program purchases goods and services to carry out its particular mission. As an example, the federal Department of Defense buys nearly every product ever made and service ever provided. Guns, clothing, vehicles, consumer goods for the PXs, military base maintenance and operational services, paper clips, computers, and funeral and Chaplin services, just to name a few.

Within the Army, thousands of program managers, program professionals, operating supervisors, engineers, and scientists participate in deciding what to purchase and from whom.

Finding your potential customer is an art, not a science, and how you approach the process depends on the type of products or services you offer.

UNDERSTAND AGENCY MISSIONS

Common sense and intuition can direct you to starting points for further research concerning who buys what.

Unique or Specific Products and Services

The more specific a product/service is, the easier it is to pinpoint potential customers. Firefighter hoses, for example, are specific. Thousands of firefighting agencies nationwide buy firefighting equipment, and it doesn’t take long to figure out which agencies in your area are involved in firefighting.

Another example: suppose that you sell a device to reduce the time needed to fill a sand bag. The Federal Emergency Management Service (FEMA), the Forest Service, the Bureau of Land Management, and the Army Corp of Engineers would be places to start. Further research, usually on the Internet, will point you to other agencies that fill sand bags.

At the state and local levels, you’d look for towns, cities, and counties near rivers that have experienced flooding. You’d dig into FEMA records by making telephone calls and if necessary written requests under the Federal Freedom of Information Act (FOIA) to find where the emergency funds flow.

Commodities and General Services

In contrast, almost every government agency purchases office supplies, so you would need to focus on geographic areas that you can reach economically, both from sales costs and shipping costs viewpoints. Office equipment and supplies, office furniture, reproduction equipment and supplies, and office leasing would all fall into this category. Again, the Internet can be helpful in finding agencies within your geographic area of business. Look at your state website and, for federal information, try FirstGov, http://www.firstgov.gov. In the case of office supplies, you’ll have more potential customers, but the downside is that for each one of them the competition will be keener.

The Department of Defense Internet site, Selling to the Military, http://www.acq.osd.mil/sadbu/publications/selling/, provides information on military buying by purchasing office. Go to Part 2: Products and Services Bought By Major Military Purchasing Offices.

Our CD-Rom of Government Internet Sites is helpful in locating agencies within your state. More information about this new product can be found at Fedmarket, http://www.fedmarket.com/vtools/cd_urls.html.

INTERNET SEARCHING

The Internet has become a panacea for conducting market research. Market research using the Internet is such a broad topic that it is best illustrated with an example. Let’s consider FEMA again. In your research you might do the following:

Go to FirstGov, and find the FEMA homepage using the keywords, "Federal Emergency Management Agency." The first listing in the search results is Fema.gov, http://www.fema.gov/.

For state and local government, use the search engine at Google.com. For more efficient searching, try Bidengine, http://www.bidengine.com, or, again, our CD-Rom of Government Internet Sites, at Fedmarket.

At the FEMA site, start your research at the "Doing Business with FEMA" web page. Most of the information here is helpful, especially two sections:

1. The "Listing of Active Contracts" section shows what FEMA has bought in the past through large contracts and the end dates for these contracts. The contract listings are not tied to end-users, but are, nonetheless, excellent starting points for determining if FEMA buys what you sell. (Not all federal sites list active contract data but many state sites do.)

2. The "Doing Business Guide" section lists program offices and what they buy.

Let’s assume that you’ve now identified a program office that buys what you sell. Now is when the market research gets a bit more challenging. You must find who is in each program office and what their responsibilities are. Then you must determine how to get a hold of them. For example, the training program head within a program office would be the obvious person purchasing training-related products and services. This would probably be the first person you’d call if you worked for a training company.

Each agency’s web site will be different in how it presents personnel and organizational information. In the case of FEMA, the web site shows key personnel and their contact information, although you have to go several places to tie it all together. The site contains the names of program managers and staff. Email addresses have a common format, allowing you to formulate a person’s email address from their name.

Frequently, you’ll have to go beyond the Internet to find relevant end-users. If you can’t find end-users at the site, call the agency’s public affairs office and/or small business office and ask for staff directories, organization charts, and written information about the agency’s programs. Don’t be shy! It’s all public information, and it’s their job to assist you.

If you visit an agency, make a personal call on the public affairs office and the small business office. They may not be much help in finding you specific business opportunities, but they can be useful in providing you with end-user contact information.

Official buyers also are an excellent source for information on end-users. They know who buys what in their agency and it’s their job to assist you in finding the end-users who buy what you sell. Buyer contact information often can be found at an agency’s purchasing web site.

Just to sum up how we might be helpful to you in this area, the following Fedmarket.com products are designed to assist you in finding end-users and buyers.

Award Information Published by Agencies

Awards information is public (with rare exceptions) and is published in many forms and formats, verbal, paper, and electronic. Generally, the information will tell you what was bought and for how much, when it was delivered and who won.

Awards information tells you what the agency buys, but it usually takes work to find out the program office and/or person who made the purchase. An awards notice usually lists the official buyer for the contract; call him or her and find out the name and number of the end-user. Also, ask for background information on the procurement and a copy of the contract if you think that will be useful.

At the federal level, you can obtain awards information in a number of ways. Here are three that immediately come to mind:
  1. The Federal Procurement Data Center, http://www.fpdc.gov/fpdc/agency_reports.htm, (FPDC) publishes contract award data for all procurements exceeding $25,000.

  2. The Defense Logistics Agency, http://progate.daps.mil/home/, publishes source and pricing data for products assigned a National Stock Number (NSN). The source and pricing data is published for procurements of any size.

  3. For buys under $25,000, purchasing offices maintain paper records of awards, and these are available upon request.

  4. Browse or search notices of award at FedBizOpps. (Go to http://www.fedbizopps.gov and click on the "Vendors" icon in the lower left part of the page. Search using keywords at http://vsearch1.eps.gov/servlet/SearchServlet. Be sure check the "awards" radio button.)

  5. Search for awards at Navy Electronic Commerce Online (NECO). Specifically, go to http://www.neco.navy.mil/synopsis/synopsis.cfm and use the Advanced Search option.
Not all of these sites are what I'd call "user-friendly," so be patient. It may take some time to muddle through at first, but searching becomes reasonably routine once you’ve gained some experience.

A note on the FPDC database: it doesn't allow searching by product/service at an individual contract award level of detail. This is a major limitation since contract detail is required to determine the contracting officer’s name and, in turn, the contact information for end-users.

Fedmarket.com offers the full fiscal year 2000 FPDC awards database in exportable format and special reports by product/ service code and geographic area. We sell this information at a lower price than FPDC.

State and local governments publish award data in much the same way as the federal government. Many large states, counties, and cities publish awards data at their web sites. If it’s not at the web site, call and ask for it.

Agencies using a sealed bid procurement procedure publish award amounts and non-winning bid prices at the public bid opening.

Bidengine.com provides a convenient way to find awards data at the state and local level. Bidengine searches about 500 state and local Internet pages containing awards data by keyword. If you sell centrifugal pumps, for example, Bidengine can tell you what agencies have purchased your product using the keywords "centrifugal pumps." Usually, the awards data found by Bidengine will tell you what type of pumps were bought, from whom, and the price paid per unit. Remember, if the agency bought pumps once, they will probably buy them again. A call to the buyer will tell you the name of the end-user who ordered the pump.

The use of awards and price data as intelligence information for preparing bids and quotes will be the subject of a later installment.


Richard White, President of Fedmarket.com


In the last installment, we discussed how to find end-users, the people in government who’ll actually USE your product or service. This time we’re going to talk about the official buyers, those folks who are responsible for making formal purchases.

As I’ve explained before, these two groups often work together. As a vendor, you generally focus on the end-users if you sell technical or complex products -- i.e., products where the user has a real vested interest in performance.

If you sell lab filtering flasks, for example, and the Director of Lab Services for your state’s Department of Agriculture and Food prefers filtering flasks made by Indigo Instruments, well, then that’s something you need to know if you’re going to have any success in selling to that agency. You’ll have to sell Indigo’s product or convince the lab head yours is better.

But it’s important to know official buyers, too, for reasons that include the following:

  • They have a broad understanding of what the agency buys.
  • They make the buying decisions for commodities, non-technical products, and routine services.
  • They can tell you who the end-users are for complex product and services.
  • Though they may not USE them, they can certainly influence the decision on which technical or complex products to buy.
  • They are the source for awards data, including who has provided what product/service in the past, the pricing and other contract details.
  • They have knowledge of the agency’s planned future procurements.
Generally, buyers are accustomed to sharing information with vendors. Sometimes they’ll provide it for the asking; other times you’ll have to make formal information requests. (Freedom of Information Act requests at the federal level.)

Finding buyers is considerably easier than finding end-users for the following reasons.

  • They are concentrated in the purchasing organization, as opposed to end-users who can be located anywhere in an agency.
  • Often a buyer directory is published at an agency’s web site. If you’re lucky, a buyer directory will show the types of products or services that each buyer is responsible for purchasing.
  • The employee breakdown of the purchasing organization is usually shown in published, paper directories available from the public information office.
  • At a minimum, the public information office will provide you with contact information for the head of the purchasing organization.
These days, the Internet is the place to start to find buyers. The research can be laborious if you’re interested in many agencies, but manageable if you’re focusing on only a few.

To find the main agency site, try using the following search engines and the keywords representing the agency’s name.

    Federal: FirstGov, http://www.firstgov.gov
    State and Local: Google, http://www.google.com
Once at the main agency page, generally it is easy to find the purchasing organization page and then the buyer directory within the purchasing page. Call the purchasing director and ask for a buyer directory if it’s not posted at the site.

Using the State of California as an example, you’d find the buyer directory as follows:

Entering "state California" into Google.com produces a link to the state site, http://www.ca.gov/state/portal/myca_homepage.jsp.

At the home page, click through the following link hierarchy:

      Business
        Doing Business with the State
          Selling to the State
            Procurement Division Directory
The Procurement Division Directory in California tells you buyer names and telephone numbers by product/service category, but does not show email addresses. Some government agencies show email addresses in their directories and others don’t.

The California home page provides links to directories of California counties and cities with web sites. Directories like these are valuable tools for finding local government buyers.

The California example is a fairly typical outline of the path you’d follow for large and medium sized states. The purchasing organization’s directory is reasonably easy to find by following an intuitive path starting on the state home page and clicking on a link called "Business", "Doing Business with", "Business Opportunities" or "Vendor Information."

In smaller states, counties, and cities, you may find only contact information for the head of the purchasing organization, rather than a directory of individual buyers.




Richard White, President of Fedmarket.com


Until now we’ve been discussing the fact that, for most companies, it is helpful (often crucial) to reach the official buyers or end-users that may need your products or services. Communicating with these folks can be important because a lot of purchasing activity takes place outside the world of formal public bidding -- e.g., micro, small and multiple award schedule purchases. And even where public bids are involved, it's often prudent to know the needs of an agency (specifically the needs of end-users) before a formal bid is published.

In this installment, we take a closer look at bidding opportunities (both published and unpublished) that emanate from government buyers.

Unpublished Bidding Opportunities

Small, unpublished procurements make up what is sometimes called the "hidden government market." Although it is unquestionably huge, no one seems to have a handle on its exact size. We think the market may range from $250 to $280 billion of the total federal, state, and local $700-billion market.

As we discussed in Installment 3, Market Segments, http://www2.wrt-oracle.com/ows4/plsql/showInstallmentPak.showDocs?doc=installment3.html, buyers in the so-called hidden market often seek verbal quotes from three or more vendors. This may be the best example of why you need to get to know the needs of the agency and talk to the right people.

The goal of course is to be one of the three vendors that get the phone call, fax or email seeking a quote.

It might be helpful at this point to consider some of the various methods buyers use to find the right vendors in this situation. At all levels of government, buyers will often rely on one or more of the following sources:
  • Their own vendor files and personal knowledge.
  • Their own manual or electronic bidders list (vendor registration usually required).
  • Agency- or government-wide vendor directories like the federal Central Contractor Registration and PRO-Net databases. Most states have a central vendor directory.
  • Industry directories like Thomas Register.
  • Government e-procurement systems. Most large states have them and the federal government has several. Some of these systems are catalog-based, some are RFQ-based, and some are both.
  • Commercial business-to-government e-procurement systems like our own Govcommerce.net.
When you’re talking to a buyer, ask him how he locates vendors for small purchases. In some instances, it will be critical to be in that particular location. For example, if that buyer is with a certain agency in, say, North Carolina and that agency only uses the state’s e-procurement system for obtaining its three-or-more quotes, then you’d better register with the system.

Again, focusing is the key. (Are you detecting a theme throughout this series?) Don’t scatter your company information around in various directories just for the heck of it. Concentrate on those that matter to your target agencies.

Published Bidding Opportunities

That said, most companies that wish to thrive in government contracting must still stay on top of publicly-posted bid notices This is especially true for companies trying to win contracts worth $25,000 or more.

Bidding opportunities for large purchases are published in the media specified in the agency’s purchasing regulations (usually a local newspaper), at an agency’s procurement Web site, or both.

The dollar threshold used to define a large purchase can be as low as $10,000 for smaller cities and counties and as high as $50,000 for a few states (e.g., California). The federal government requires formal advertising for purchases exceeding $25,000. We will use that threshold for purposes of this discussion.

Publication of small procurements (those under $25,000) is unpredictable. Generally, publication is not required by law and is at the discretion of the buyer.

An agency usually elects to publish its under-$25,000 procurements when it doesn’t know sources for the product or service or when the agency is seeking new vendors. If published, small procurements will appear at an agency’s Web site or local bid board and maybe in the local newspaper.

Some federal agencies choose to publish under-$25,000 procurements at FedBizOpps, others publish them at their agency’s web site, and others choose not to publish them at all.

Federal Bidding Opportunities

Finding published federal procurement notices is relatively easy. By law, all federal procurements over $25,000 are published at the FedBizOpps , http://www.fedbizopps.gov, Internet site. Under-$25,000 opportunities may appear at FedBizOpps at the discretion of the buyer.

FedBizOpps is a free Internet service and the service will email procurement opportunities to vendors at no charge based on selected product/ service categories.

Fedmarket.com is about to begin offering FedBiz Now, , http://fedbiz.bidengine.com/, an enhanced FedBizOpps subscription service. It has enhanced features that include:
  • Bidding opportunities, modifications and awards are delivered to your desktop within an hour of posting at FedBizOpps.

  • Detailed information about the agency posting a solicitation, including links to advice on how to do business with the agency, buyer and end-user contact information, and related federal agencies, offices and locations.

  • Search for bid opportunities beyond what's available at FedBizOpps:
    1. Search federal bid boards posting under-$25,000 bid opportunities.
    2. Search state and local opportunities available through Bidengine.

Receiving federal procurement notices early can be important for some companies. Two examples where early notification can be important are:
  • Service procurements often require recruiting an incumbent contractor’s staff. The first company to call an incumbent contractor’s project manager may have the edge in signing him/her to an exclusive employment contract.

  • Frequently a day’s lead can make the difference in preparing a high quality proposal in response to a complex requirement.
In many cases, however, the early notice will not be critical -- e.g., fixed price quotes that do not take a lot of time to prepare.

State And Local Bidding Opportunities

There are about 80,000 public purchasing authorities in the United States. About 45 states and 3,000 cities and counties publish bids on the Internet. These Internet sites represent the bulk of U.S. public purchasing dollars. The rest of the 80,000 are small counties, cities, and other public purchasing authorities that rely on newspapers or local bid boards to publish their bids.

State and local bidding opportunities are spread over thousands of Web sites. A number of subscription bid services attempt to cover this activity. Annual subscription fees range from $200 to over $1,000. It is impossible for a bid service to cover the nearly 80,000 state and local jurisdictions. Some have good coverage of Web site postings, some format the bids from Web sites and selected newspapers, and others do some of both.

Which service(s) do you select? Again, focusing your sales efforts is the key. Once you have focused on the agencies you want to target, you can select a bid service based on how well the service covers your the particular area.

Companies with only a few target agencies may elect to bookmark bid posting sites and use local newspapers to follow purchasing activity. This approach is cheap but breaks down if you are attempting to cover more than, say, ten agencies with Web sites.

Fedmarket.com offers two subscription bid services that you may find helpful: Fedmarket.com also offers CD-Roms of Federal, State, and Local Purchasing Agency Web site addresses for those companies electing to bookmark bid posting sites.

Our own competitors in this area include Bidnet, http://www.bidnet.com, and Bidline, http://www.bidline.com. Try us, try others and see where you’re getting the best coverage. Use one or more that provide you the best coverage for your target agencies.



Richard White, President of Fedmarket.com


In our last installment we talked about finding formal bid opportunity announcements, more popularly referred to as "bids." That’s a fairly basic subject, one that is rather easy to discuss. Most of us understand bids because they’re unequivocal sales opportunities where an agency is announcing to the world its readiness to purchase.

Now we’re going to talk about information that is a bit subtler -- requiring a bit more digging, if you will -- but no less important: future procurements.

Savvy contractors understand that information on future procurements is invaluable. Why? Because knowing about future procurements is the key to getting to the prospective customer before competitors do.

When the formal bid comes out, everyone knows about it. When the opportunity is only in the planning stage, however, you may be the first to know about it. That's a great position to be in: you’ll have the edge in understanding agency objectives and in preparing your proposal or otherwise explaining your company’s products and services. This is particularly important for technical services and complex products where the end-user often makes the purchasing decision.

But what do you look for? There are five important areas of information: procurement forecasts, sources sought/requests for information, contract awards, buyer and end-user purchasing histories and budgets.

Procurement Forecasts

Government agencies routinely publish forecasts of upcoming procurements. They do this to give contractors a "heads up" on future business opportunities by providing information on what the agencies are planning to buy and, in many cases, how much money they plan to spend.

While forecasts are for informational purposes and do not represent specific contractual obligations, they can be wonderful gold nuggets on where business will likely be down the road.

Where do you find them? Some government agencies publish procurement forecasts on the Internet. In fact, most federal agencies publish forecasts in various degrees of detail. An example is the Department of Justice forecast page, http://www.usdoj.gov/jmd/osdbu/forecast_2002.htm. We publish a list of federal procurement forecasts in our Jumpstation, http://www.fedmarket.com/sales_resources/jumpstation/forecasts/federal.html.

State and local agencies are less likely to publish procurement forecasts on the Internet. We also publish a rather small list of state and local forecasts in our Jumpstation, http://www.fedmarket.com/sales_resources/jumpstation/forecasts/state_local.html.

Bidengine.com, provides a more convenient way to find procurement forecasts on the Internet. Bidengine searches by keyword about 478 Web pages (416 federal and 62 state and local) containing procurement forecast data. If you sold janitorial services, for example, Bidengine would tell you which agencies are planning to buy your services just by searching using the keyword JANITORIAL.

Sources Sought and Requests for Information

Sources sought and requests for information also can alert you to future procurements. Notices of this type -- which are more detailed than forecasts -- are generally published among an agency’s bid opportunities. (For more on bid opportunities, see Installment 6, http://www2.wrt-oracle.com/ows4/plsql/showInstallmentPak.showDocs?doc=installment6.html.) At the federal level, both of these types of notices are published at the FedBizOpps, http://www.fedbizopps.gov site.

Contract Awards

Reading contract award information can also alert you to future procurements. Why? For one basic reason: contracts tend to "repeat" themselves.

Most service contracts repeat themselves in a very predictable fashion. An agency won’t, for example, decide to stop cleaning a building or maintaining a facility. Contracts for these types of services must be re-procured with a start date IMMEDIATELY following the expiration date of the current contract.

Most product procurements repeat themselves too, although not necessarily concurrently. An agency buying office supplies will buy them again and again simply because it has to in order to operate. A state highway agency that bought trucks will buy new ones when the old ones wear out.

The key is to zero in on the end dates of existing contracts that match up with your capabilities. Three months to a year from the end date of a current contract, for example, is probably about right for a wide variety of opportunities. That range gives you time to convince agency program managers that your company will be the ideal one to replace the incumbent contractor. But the ideal lead-time does vary. For large federal contracts, for example, companies often begin the sales process several years in advance of the end date of the existing contract.

General strategy once you have contract information: Ask the buyer who the end-users are for the current contracts. Then get to the end-user with your sales pitch. Ask him how he likes the incumbent service contractor or how he likes the particular product. Research service or product pricing and quality. Focus on how your company can do the job better when the contract comes up for a "re-bid."

For more on contract awards, read Installment 4, "Finding Agencies and End-Users", http://www2.wrt-oracle.com/ows4/plsql/showInstallmentPak.showDocs?doc=installment4.html. Scroll down to the header, "Award Information Published by Agencies."

Buyer and End-User Purchasing History

Knowing what individual buyers have bought and when they bought it can provide great insight in predicting future procurements. This kind of data is only readily available at the federal level. Our online service FedBiz Intelligence (FBI) , http://fbi.bidengine.com/, is one source that summarizes federal buying history. FBI tells you, by product/service category, the dates and dollar amounts of purchases made by individual federal buyers.

When you’ve located a federal buyer who has bought the sort of stuff you sell, call him or her up and ask who the end-user is and when the next purchase is planned. This level of questioning would best be done with a personal visit, as opposed to a telephone call or a formal Freedom of Information request. Requests for public data can be time-consuming for a buyer, and it doesn’t do much good to obtain a lot of information and find yourself dealing with an angry buyer. A personal data collection visit would cut down on the impact on the buyer and allow you to begin to establish a personal relationship.

Budgets

This probably goes without saying, but I'll say it anyway: the value of budget information in predicting procurement activity is proportional to the detail actually provided in the published budget. If the budget breaks things out to a level that reflects the products or services you sell, then you'll probably find important information there.

Basically, what you’re looking for are trends in spending with regard to your individual product or service category. If you own, say, an accounting firm in Portland, Oregon and you find that the city has doubled its accounting services budget for fiscal year 2002, that’s critical information if you want to do business with the city. There will likely be some procurement announcements coming in the near future, and you will be more prepared to respond effectively when they’re published.

Locating and analyzing budget information can be hard work. Like we often suggest, start with the government Web site to lead you to contact information or even (if you’re very lucky) the budget itself. In most cases, after you’ve done the site review, you’ll need to grab the phone and start dialing.

There are consulting firms that can do this work for you if you’re willing to pay top dollar. The more well known ones (FedSources and Input, for example) focus almost exclusively on the information technology sector.




Richard White, President of Fedmarket.com


Up to this point in our primer series we've been discussing issues that fall generally under two broad categories:
  • Getting to the right official buyers or end-users; and
  • Finding bid opportunities (either early or when they're formally announced)
The focus, in both cases, is on the government agency itself.

Now we're shifting gears a bit to talk about subcontracting, where the marketing focus is on companies that hold government contracts.

Finding subcontracting business is a bit like finding prime contracting business: you can focus on the bids as they come out (and be a part of the crowd), or you can get ahead of the game by talking to the right people BEFORE the bids come out. Let's begin with the former strategy.

SUBCONTRACTING BIDS

Where do you go to find subcontracting bids? One place to check is SBA's SUB-net, http://web.sba.gov/subnet. Last time I checked there were 43 subcontracting bids posted there. Now, that's not a lot of activity when consider how many federal subcontracting opportunities there are on any given day.

Why only 43? Here's one reason: prime contractors don't want the entire world of subcontractors coming at them and creating unnecessary work. They like working with companies that have performed well for them in the past. For many contracts, primes don't need to look beyond their circle of "friends," those with whom they have a shared history, etc. -- which leads us to our next section.

SUBCONTRACTING COORDINATORS

At large businesses subcontracting coordinators are somewhat analogous to government buyers. Often you need to market to these folks so that you're a part of the planning before a contract is awarded or, better yet, before a solicitation is posted.

First: finding companies that match up

How do you find the right subcontracting coordinators? (Or, if that title isn't used, the person in the company who sources and/or works with subcontractors.)

First make sure you locate large businesses that are winning, or are likely to win, contracts that have performance elements that match up with your company's capabilities. In this regard, award notices can be helpful. As we discussed in the last two installments, FedBizOpps, http://www.fedbizopps.gov/, is the place to go, not only for solicitation announcements, but award announcements as well. Our new product, FedBiz, http://fedbiz.bidengine.com, now emails these same federal award announcements every hour. Go to http://www.bidengine.com/trial.html for a free trial.

Keep in mind, though, to analyze seriously whether your company's capabilities match up on any given contract, you'll want to get to the solicitations. Award notices, as a rule, only provide basic information.

For a broad picture of the prime's contracting activities, you might check federal contract history data. As we've discussed, the Federal Procurement Data Center (FPDC) publishes contract award data for all procurements exceeding $25,000. Fedmarket.com offers the full fiscal year 2000 FPDC awards database in exportable format, along with special reports by product/service code and geographic area.

What about the state and local levels? As you can imagine, award information among state and local governments is decentralized, scattered all over the Internet. But here are some example locations:

This is one area where Bidengine, http://www.bidengine.com, can be very helpful because it allows you to search about 500 state and local awards pages by keyword, all at the same time. It's a time-saver.

Where a state, county or city doesn't post awards on the Internet, you'll have to pick up the telephone and call the procurement office and ask for the information. Okay, here's that word again: focus. Limit your calls to only those agencies with which you have a reasonable expectation of doing business.

The buyer may just send you award documents on all recent activity (which means you'll have to sift through a lot of irrelevant information), or he may give you a heads-up on upcoming opportunities, or even suggest to you a prime contractor to contact. You won't know, of course, till you call.

Subcontracting directories also are potential starting points for establishing long-term prime contractor relationships. Some example federal subcontracting directories:

Second: getting to the right person

Once you've found the right company, now you have to get to the right person. If the name of the subcontracting coordinator is a mystery, call the prime's main corporate number and ask for the government contracting organization. The manager of this unit will get you to the subcontracting coordinator (if they have one) or the end-user.

For large contract awards, chances are you can get to a winning company's subcontracting coordinator without too much difficulty. Large companies tend to have subcontracting coordinators on staff because they're not only necessary but also required by law. (Under federal regulations (the FAR) contracting officers require large businesses that win contracts valued greater than $500,000 (construction contracts in excess of $1,000,000) to submit a small business subcontracting plan. The plan includes the name of the business.)

Ideally, the coordinator will already have your capabilities on file from a previous visit, and now you're calling about the specific contract or bid opportunity you saw announced at FedBizOpps, a state site, a local site, etc.




Richard White, President of Fedmarket.com


A number of important changes came out of the federal Procurement Reform Era of the mid 1990s. Perhaps the most significant of these was the emergence of widespread government credit card purchasing.

In an effort to reduce red tape and increase efficiency, federal end-users were given the power to make simple purchases with a government-issued purchasing card (called an IMPAC card, but basically just a credit card).

A manager of a federal government field office, for example, can drive down to the local Office Depot and buy equipment and supplies for the office, just like you and me. He doesn't have to put the purchase out for bid, doesn't have to call up two other office supply stores for quotes, etc. He can just find what he wants and make the purchase, as long as the total doesn't exceed $2,500.

Market Size

Over 700,000 federal, state, and local government employees possess credit card purchasing power. Government agency credit card use is estimated to exceed $18 billion in fiscal year 2002, up from $15 billion last year. The majority of government cardholders are federal end-users who have been delegated authority to make purchases up to $2,500 from a single source. The $2,500 ceiling for a single purchase is a federal limit. Some states and municipalities have limits that are much higher.

The Hidden Market

The government credit card market segment is "hidden" because there is no convenient way to find out what local card holders buy other than surmising based on their position or the agency they work for. For example, the office manager of a local social security office in your city probably buys office supplies and computer equipment, while the head of a motor pool at the military base down the road probably buys auto parts.

The invisibility of the market is a double-edged sword: Card holders probably are located in various government offices in your locale and it takes work to find them and determine what they buy. The effort required to find them, however, may be more than offset by the reduced competition resulting from their invisibility. If you own a local computer store, Dell may not have found its way to the local credit card holders who buy computer equipment. And these local card holders may prefer to do business locally.

Start With a Basic, Low Cost Approach

How do you sell to government credit card holders? If yours is a small business, start off with a simple, low cost approach. Obtain the most comprehensive telephone directory for your area. The "Blue Pages" of the directory usually will show a comprehensive listing of federal, state, county, and city agencies in your geographic area, with addresses and telephone numbers. Use these contact listings as your starting point. Call the agencies and find out who buys what with credit cards.

As an example, suppose you are a small business selling office supplies in a medium-sized city. Use the local telephone directory to find one or more federal, state, county, or city government offices in your city. Those offices will have an office manager or administrator who buys office supplies. This person will probably have a credit card and can buy from you directly without having to consider other sources (that is, under certain established thresholds, as discussed above).

Sound like the commercial market? It should because there isn't much difference between the two. Will the card holder in this example have an office supply vendor that he is perfectly happy with? Probably. Will he want to buy from you immediately? Probably not. But, hey, what else is new in sales, right?

A prospective commercial customer will undoubtedly act much the same as a government card holder. He will already work with a vendor and not have much interest in you unless you can distinguish yourself by price and/or exceptional service. One helpful distinction to keep in mind, though, between commercial buyers and government credit card holders: the latter are encouraged to rotate their buys. Be persistent so that the next rotation goes to you, and then perform well so that you stay in the rotation down the road.

Marketing to Credit Card Holders

If you have success with the low-cost approach, you might try reaching out to credit card holders with a marketing campaign followed by direct sales from the leads you generate. Keep your campaign as focused and targeted as possible.

At the low cost end, you can email an electronic brochure to a targeted group of hundreds or thousands of cardholders. But first you must find out who they are.

Most government agencies maintain lists of credit card holders, which are available to the public under freedom of information laws. The availability of cardholder data varies by agency, and the content of cardholder records can range from name and address only to full contact information. Cardholder records will often have:

  • Agency name
  • Cardholder name and address
  • Telephone number
  • Email address (sometimes)
You can obtain this public credit card data yourself for agencies in your business area. Many federal Web sites publish credit card holder contact data, but few state and local sites do. When the data is not at an agency's Web site, you will have to request it using formal public information request procedures. Expect to find the data in varying formats, in both electronic form and paper. (Only roughly 20% of credit card data is available in electronic form.)

Alternatively, you can purchase the Fedmarket.com CD-ROM of federal credit card holders, which contains data for about 118,000 credit card holders. Custom searches of the credit card holder database are also available. Our CD-Rom of Federal, State, and Local Purchasing Agency Web Site Addresses will save you considerable time if you decide to try to find the credit card holder data yourself. The Internet addresses of purchasing sites are available by state. Bidengine.com is a similar time-saver.

Targeting Credit Card Holders

One of the keys to selling in the government credit card market is to determine how you can cost-effectively reach credit card holders using public contact lists. How you do this will depend on the products or services you offer.

As examples:

  • An office supplies company might contact every cardholder in its geographic shipping zone. The bigger the zone the more emphasis should be placed on fast shipping at low costs and customer service.
  • A company selling motor vehicles wouldn't focus on credit card holders, since they typically do not make purchases of this size, at least at the federal level.
  • A medical supplies company might contact the cardholders in health- related agencies.
What type of message you send will depend on the type of contact information available for the target audience you want to reach. As examples:
  • A laboratory supply company might send a targeted email message to all or a subset of cardholders with email addresses with a link back to catalog information maintained at its Web site.
  • A small services company might start by personally calling a test group of cardholders in its home city.
  • A janitorial supply company might direct mail its brochure or catalog to credit card holders in its shipping zone.
You should consider starting with several targeted campaigns--i.e., test samples using different contact techniques and messages. Test campaigns are particularly important for direct mail because of its high cost.

We do not recommend sending sales literature to fax numbers without first obtaining express permission from the recipient. There are specific federal laws against this practice. Also, depending on where recipients reside, there may be specific state laws against sending untargeted and/or unsolicited email. The law in this area is in flux and far from uniform right now. Before beginning any email campaign, it's prudent to do thorough legal research or consult with an attorney.

In any case, email campaigns should be targeted based on expected interest. Give buyers the opportunity to "opt out" of future messages, and be diligent and responsive with regard to their requests. Needless to say, there are no benefits to be gained in trying to communicate with buyers that have no use for your product or service.




Richard White, President of Fedmarket.com


In this installment we talk about small purchases, defined here as government buys in the $2,500 to $25,000 range. We've touched on this subject in past installments. This time we devote an entire installment to it, and get into a bit more detail.

The Market Segment Features

Here are some of the key features of the small purchase market segment:
  • Like under-$2,500 procurements (or micropurchases), small procurements tend to be "hidden" from the public. Generally, small procurements are not publicly advertised. Some exceptions: when a buyer is looking to increase competition or a particular product/service is difficult to find.
  • Size ranges from $250 to $280 billion of the total federal, state, and local $700-billion market.
  • Purchases are made with three informal quotes obtained by telephone, fax, email or regular mail.
  • Payment is made with a credit card or purchase order.
  • Quotes make up the purchase documentation so a buyer can act quickly and efficiently.
  • Official buyers perform small purchases for end-users. (Note the distinction here: in the under-$2,500 micropurchase segment, end-users, using their own government-issued credit cards, often buy for themselves). As we discussed in a prior installment, end-users may or may not provide buyers with preferred suppliers. They might for a scientific instrument, for example, but not for items like office supplies.
Special Opportunities for Small Businesses

Here are two principle reasons the small purchase market segment is ideal for small businesses:
  • Small business preference procedures vary, but as a general rule most small purchases are set aside for small and small disadvantaged businesses, unless this type of company cannot be found to satisfy the requirement.
  • Buyers like to keep their small purchases local, buying from businesses that are part of the community they live in.
Selling in the Small Purchase Market Segment

Buyers making small purchases use various methods to find the right vendors for their three-or-more quotes. At all levels of government, buyers will often rely on one or more of the following sources:
  • Their own vendor files and personal knowledge. (Hopefully, your sales visits and/or telephone calls have made a difference in this regard.)
  • Their own manual or electronic bidders' lists.
  • Agency- or government-wide vendor directories like the federal Central Contractor Registration and PRO-Net databases. (Most states have a central vendor directory.)
  • Industry directories like Thomas Register.
  • Government e-procurement systems. Most large states have them and the federal government has several. Some of these systems are catalog-based, some are RFQ-based, and some are both.
  • Commercial business-to-government e-procurement systems like our own Govcommerce.net.
Become a part of the above resources, but remember: focus. Don’t scatter your company information around in various directories just for the heck of it. Concentrate on those locations that matter to your target agencies.

Buyers typically rotate companies they contact for a quote: often the last supplier plus two new sources. As we've emphasized over and over, your company will not be contacted if buyers don’t know you exist. Get out there and sell!

If you have a technical or complex product or service, sell the end-user. If you’re successful, the end-user will let the buyer know that your company is a preferred source for the required product or service. If you sell common commodities, focus on the buyer.

Finding Buyers

Here are some tips on becoming known to buyers:
  • First, define your geographic area: How far away can services be performed effectively? How far can products be shipped without excessive shipping costs?
  • Second, find the buying offices and official buyers within your geographic area. We have some products that can help in this regard:
    1. At Fedmarket.com, we sell a CD-Rom of Federal, State, and Local Buyers.
    2. Consider using our CD-Rom, http://www.fedmarket.com/products/cd_urls.html, of Federal, State, and Local Procurement Site Web Addressees. This product allows you to find the purchasing agencies in your area, buyer contact information, and related information on how to do business with the agency. The Internet addresses of purchasing sites are available by state.
    3. Subscribe to our brand new online buyer information service, FedBuying Intelligence (FBI), http://www.fedmarket.com/products/fed_buy_intel.html. FBI tells you: what federal buyers bought; when they bought it; how much they paid; which agency the buyers work for; how to contact the buyers.
  • Third, get on each targeted buying office's bidders' list. Find out how each office locate vendors -- e.g., their own internal bidders' list, PRO-Net, Fedmarket.com's Mammoth Vendor Directory, state vendor databases, etc.
  • Fourth, target mail and e-mail brochures, catalogs, and company Web site addresses to buyers when personal sales calls are not practical. This should be done in conjunction with getting on buying office bidders' lists.
  • Finally, follow up with telephone sales calls to the targeted buyers.
Conclusion

To sell in the under-$25,000 market, a business must generally be more diligent in becoming known to government buyers. Because the buyer is relatively free to pick and choose as he wishes, vendors need to make sure their companies come to mind when the buyer is ready to seek his three quotes.

Like the commercial market, sales are made most effectively through one-on-one personal contact. Sell government buyers like the commercial customer down the street: let them know who you are and what you have to offer.



Richard White, President of Fedmarket.com


Throughout the series we’ve talked here and there about "focus" and "commitment", a couple of words that are easy to toss around: "You’ve got to be focused." "You must be committed." But what do we really mean? In this installment, we explain in a bit more detail:

The cool economy and the war on terrorism have created an intense interest in the government market, especially at the federal level. In the expanding economy of two years ago, many commercial sector companies had no taste for what they considered to be a strange, low margin market. Now, attitudes have generally shifted to, "Hmmm, tell me more about government contracting."

The government market often is misunderstood with the preconceived notions ranging from "it’s easy" to "it’s impossible." The "it’s easy" view typically goes like this:
  • Where do I go to have government agencies give me business? or
  • My company has hit a downturn; how do I quickly switch gears to selling to government?
The "it’s impossible" view includes:
  • Government contracting is political and funneled to the insiders.
  • The big guys grab all the business and the little guys get screwed.
  • I’ll never know enough about this mysterious market to have any success in it.
As you might suspect, the realistic view falls somewhere in between these extremes: government contracting is not easy but it’s not impossible either.

Inexperienced companies can enter the government market with entry costs that are commensurate with the size of the company and the expected return on investment. Like most successful business endeavors, it first takes a full commitment from management and then requires focus, persistence, and patience.

Commitment to the market means you’re willing to spend time and money to achieve success. But be prudent. Spend your time and money wisely. Focus intensely on finding government customers who are ready to buy your product/service. That’s really what it comes down to. Don’t waste your money in the government marketplace if you are not first willing to make that commitment.

After Commitment, Then What?

Assign yourself (if you’re the business owner) or a senior sales person the responsibility of market entry, providing yourself or him or her a realistic budget to work with.

YOU have to do the work: Don’t fall into the trap of assuming that government-employed small business advocates are going to deliver business to you. At best, they’ll point you to a general group of potential customers and, at worst, point you to reading material and conferences that are only marginally useful. ("Time-occupiers" that can lull you into thinking you’re accomplishing something.) You have to do the selling with your own sweat and blood. No one will do it for you. But you already knew that.

YOU have to find the customers: Don’t assume that end-users and buyers will find you. Seek them out and sell them directly with personal sales calls. Don’t assume that direct mailing, faxing, or emailing alone will sell your products or services. These may be valid marketing techniques but recognize them for what they are: marketing not sales.

Use Sales Focus to Keep Your Sales Costs Manageable

Sales focus has three primary elements:
  1. Start with a small group of agencies: The three levels of government (federal, state and local) are composed of about 85,000 agencies. That number alone should be enough to convince you of the need for intensely focusing your sales efforts on a few selected agencies. Start small and expand your focus after finding success. Focus your efforts on a small, targeted set of potential customers as a trial and learn from the experience. In general terms, this focus should be by geography for service businesses, and type of customer for products.

  2. Focus on buyers who actually buy your stuff: Do the research to understand agency missions and the needs of agency end-users. Find customers who actually NEED what you sell.

  3. Target procurements of a size your company can realistically win: As a general rule small businesses should sell in the micro purchase, small purchase and subcontracting markets. Leave the large purchases (fixed price and negotiated) to the medium- and large-sized businesses. There are two main reasons for this: the costs of bid preparation are high, and often only medium or large businesses are capable of performing under the resulting contracts.
Let’s discuss further this third element. Not surprisingly, sales costs and barriers to market entry increase with procurement size.

Micro Purchases

Governments have issued credit cards to over 800,000 end-users. You only need to find the credit card holders close to you geographically or those who buy your product nationally (assuming you can cost- effectively ship throughout the country). Remember: once you’ve made an end-user happy, he can buy from you without seeking out competition. Likely, your sales/close ratio will be the best of the three size-based market segments.

Your primary sales costs are in finding the cardholders, finding out what they buy, and making a personal or telephone sales call. The finding part might seem daunting but it isn’t if you (again) focus. Use the local telephone directory, procurement web sites, small business specialists, or the Fedmarket.com credit card holder CD-Rom to find cardholders. Call them and ask what they buy.

Small Purchase Market

Governments employ over 150,000 official buyers who make purchases with informal requests for quotes from three vendors. Like micro purchases, you only need to find the right official buyers (and sometimes end-users) close to you geographically or who buy your product nationally if you can cost effectively ship. Most small purchases are not publicly advertised, so your sales/close ratio should be considerably better than it would be for publicly advertised requests for quotes.

As in the micro market segment, your primary sales costs are in finding the buyers, finding out what they buy, and making a personal or telephone sales call. Find them by using the general sources mentioned above, or Fedmarket products such as FedBuying Intelligence (FBI) and our CD-Rom of Official Government Buyers.

Large Purchases

The paperwork and competition associated with large purchases make them out of reach for most small businesses. Leave these for larger businesses unless you sell in a complex product/service niche where you stand up well to the competition. Go after the subcontracts instead.

Success Story

A reader called us recently and said the following:

"I am the sole proprietor of a small business. I do about $150,000 a year providing whatever the government needs in commodities and unique parts. I find buyers however I can, by using the Internet and telephoning the agencies. I find credit card holders by digging on the Internet and using Freedom of Information Act requests. I sell by calling buyers and telling them that I will provide whatever they need quickly. I ask them to give me a try and see for themselves. The purchases average about $10,000. I’ve been reading your installment series and like it a lot. How can I do better? What can you do to help me?"

Talk about commitment. This person is doing direct sales by himself after personally and persistently digging out buyer contact information. He is focused and going after business aggressively.

My comments back to him were as follows:

"You seem to have plenty of buyer contacts, so continue spending your limited resources making sales calls. You have found your niche in the small purchase market. You’re finding buyers, calling on them, asking for their business, and serving them well. You’re doing very well! There’s probably not much we can do to help you, at least at your present size."

Are there any lessons here for larger businesses? Yes, it’s all about focus, commitment and exceptional performance. For businesses of any size, there’s not much more to it than that.



Richard White, President of Fedmarket.com


Publicly-advertised fixed price procurements are made using either a sealed Invitation for Bid (IFB) or a Request for Quote (RFQ). Governments require more formality in these larger procurements because there is more money at stake: they want to be especially careful that they get the best value and that everyone is treated equally in the vendor selection process. The downside of this extra care is more paperwork and higher bidding costs for everyone involved.

Before the enactment of major procurement reform laws in the mid-1990s, most publicly-advertised fixed price procurements were made using the formal Invitation for Bid (IFB) process. IFBs were used almost exclusively at the federal, state, and local levels for products or services that could be clearly defined in specifications. IFBs are still used extensively for construction bids at all levels of government. They continue to be the primary solicitation mechanism at the state and local levels for public fixed price procurements. We focus on IFBs in this installment.

The Sealed IFB Process

IFBs require that the government accept sealed bids that are opened at a public place where the prices are displayed for public viewing. In this regard, the Federal Acquisition Regulation (FAR) states:

"After bids are publicly opened, an award will be made with reasonable promptness to that responsible bidder whose bid, conforming to the invitation for bids, will be most advantageous to the Government, considering only price and the price-related factors included in the invitation."

For all practical purposes, this means the lowest bid price wins (unless it’s TOO low, as discussed below), unless the government has included in the IFB a clearly documented means of quantifying the "other price-related factors." (Remember: the agency’s award decision must stand up to public scrutiny and be consistent with its procurement regulations.)

Regulations also state that the low bidder must be responsive (meet all of the specifications) and responsible (reputable and financially sound). This may sound ominous but it really isn’t in practice. If yours is a reputable company with a sound balance sheet and you’ve responded to all the material elements of the bid document, then you should be fine.

In a case where your company is the low bidder but is denied an award on the basis of irresponsibility or unresponsiveness, it might be wise to consult with an experienced government contracts lawyer.

Selling in the IFB Market

Personal sales and relationship building are still the keys to success, even for large, fixed price procurements. The playing field is never completely level in government bidding -- even with IFBs -- because the process involves people (with all of their natural biases) making subjective judgments.

In preparing to bid on a project, you need to gather information on pricing and performance expectations. In gathering information, sell your capabilities whenever possible -- keeping in mind the subjective nature of the process.

What kind of information are you looking for? Mainly you’re trying to gauge performance, and especially pricing, expectations.

If your bid price is too high, you have no chance of winning. And if your bid is too low, you may have problems as well. Suppose, for example, that you own a construction firm and the local army base needs to construct new housing for military personal. At a minimum, you need to find out the pricing for such housing built in the recent past. In that process of information gathering, suppose that you discover the base most recently paid "x" dollars per square foot for similar housing, and this equates to a bid of around $900,000 on the current project. This is roughly the number the base will expect to pay.

Let’s say you bid $600,000 and end up the low bidder. Because you’re so far below what was expected, official buyers will probably scrutinize your bid with great care: Did your bid assume the quality of materials specified? Are you violating any service contract labor laws? Are you short on project management costs? Did you fail to understand the specifications, and is that failure reflected in your bid? More generally, can your firm be trusted to build quality housing?

Pricing information is public information. In the case of IFBs, even the losing bids’ pricing information is available. (Remember: bid prices are revealed at the public opening and available for review after that.) You need to assemble that information before bidding so that your numbers are within the range of what’s expected. Again, if you are high, your bid will not even be considered, and if you are substantially lower than the government’s estimate, your bid will be put under a microscope. That doesn’t mean a lower-than-expected bid will lose. It simply means that yours may be thrown out if it doesn’t withstand the close scrutiny.

Construction is used as an example here, but the same principles apply to any type of product or service acquired under sealed bidding. Remember: price with care; the accuracy and precision of your bid price will determine your profit (or lack of it). With an IFB you are bidding a "fixed" price, and there is little to no room for cost/price maneuvering if you are awarded the contract. So, before submitting your bid, it’s critical to have as much relevant information as you can get your hands on.

Pricing IFBs

Let’s talk a bit more about gathering pricing information:

Buyers are more willing to talk if you meet with them before the procurement is published. After publication, your questions to buyers have to be answered in writing and sent to the other bidders. If, on the other hand, you are there before the procurement is published, a buyer is required by public information laws to give you what you ask for (with some exceptions, such as trade secret and classified information) and your competition won’t even know you were there.

Don’t feel too smug if you obtained valuable insights before the public announcement. Your competition may have been there before you and know just as much -- and you may never know it. Buyers generally do not divulge whom they’ve talked to in the pre-bid stage.

Finding End-users and Buyers

As we’ve said before, to talk to buyers you’ve got to know where the relevant ones are. The following Fedmarket.com products are designed to assist you in finding end-users and buyers. (Remember, finding end-users can be difficult but it is a lot easier if you ask buyers which end-users in their organization require your product or service.)

  • FedBuying Intelligence, http://fbi.bidengine.com, tells you which federal buyers bought your product/service, when they bought it, how much they paid, and from whom they bought it.

  • Bidengine, http://www.bidengine.com, provides a convenient way to find awards data at the state and local level. Bidengine searches about 500 state and local Web pages containing awards data by keyword. If you sell facility repair services, for example, Bidengine can tell you what agencies have purchased your services using the keywords "repair" and "maintenance." Often the awards Bidengine uncovers will tell you what type of repair services were bought, from whom, and the price paid per project, unit, or hour. Remember: if the agency bought repair services once, they will probably buy them again. A call to the buyer should result in the name of the end-user who requires the repair services.



  • Richard White, President of Fedmarket.com


    Requests for Quotes (RFQs)

    Since the advent of major procurement reform, the federal government and selected state and local governments are now using requests for quotes (RFQs) to buy commercial products and services. The RFQ procedure is a simpler, more streamlined way of making a buy. Specifications are based on standard commercial definitions, rather than lengthy government-written specifications.

    Awards following RFQs usually go to the low bidder -- but not always. In most jurisdictions, buyers are allowed to conduct a "best value analysis" and issue an award on the basis of that analysis. Some factors that a buyer will typically consider:
    • Special features of the supply or service required for effective program performance
    • Trade-in considerations
    • Probable life of the item selected as compared with that of a comparable item
    • Warranty considerations
    • Maintenance availability
    • Past performance
    • Environmental and energy efficiency considerations
    As you can probably surmise, use of best value analysis has a major impact on the sales process.

    Some government procurement regulations allow the use of brand name in the RFQ, but, more and more, the use of brand name is being discouraged. Even when brand name is mentioned in the specifications, the regulations usually require a general description of the physical, functional, or performance characteristics of the brand name, along with a statement that an "equal" item that meets the description will be acceptable for award.

    At the state or local levels, consult the purchasing regulations of the jurisdiction posting the RFQ to determine if the government uses best value analysis and, if so, what non-price factors are considered in conducting the analysis.

    At the federal level, FAR §§ 8.404 (b)(2) (best value direct ordering factors under Federal Supply Schedules), 13.106-2(b), and Subpart 15.1 (Source Selection Processes and Techniques) are worth reviewing to get a better understanding of buyer best value guidelines. (ARNET is a good place to read the FAR: http://www.arnet.gov/far/loadmainre.html.)

    Selling in the RFQ Market

    What’s your strategy when best value analysis is applied to the price?

    Obviously, find out what factors the buyer is allowed to consider and emphasize the features in which you’re strongest -- warranty terms or maintenance availability, for example. Don’t hesitate to ask the buyer what factors she’ll be considering. The answer can help you determine what to stress in the bid and, equally important, not to bid at all if you don’t quite measure up in those critical factors and features that are important to the buyer.

    A "no bid" is a strategic decision that can save sales dollars, not to mention disappointment. Successful government sales units consider making the intelligent no bid decision a critical part of what they do. Although simplistic, the saying "Only sell to people who are ready to buy your product" rings true in making no bid decisions.

    Frequently, you'll have to sell an end-user aggressively to overcome "brand preference." For example, assume that you sell a product that is not a nationally known brand. Just like you and me, buyers are often subject to brand preferences.

    Branding is accomplished with big money, national advertising, and large aggressive sales forces. When going up against all that, make sure that you stress local accountability (you’re there at a moment’s notice, etc.), customer service, replacement product availability, and warranty terms.

    Selling Services Specified in an RFQ

    Prior to procurement reform, services that could be purchased using a fixed price procedure were bought using invitations for bids (IFBs). Services are often purchased now using RFQs, at least in cases where the services performed can be expressed in units -- e.g., dumpsters emptied, hours of work, etc.

    In large fixed price service procurements, you should sell the quality and effectiveness of your service, along with your ability to manage the delivery of the service. You’ll need to focus heavily on your past successes, mainly because service pricing is so subjective and difficult for the government to evaluate. For example, how does a buyer decide whether a computer programmer is worth $150 per hour without first hiring the programmer and evaluating his work? Is a researcher with a master’s degree worth $50 per hour more than one with a bachelor’s degree? Who knows?

    In the end, the most important factor is trust. Generally, end-users want to know about the company (its work, its reputation, its personnel) before deciding to hire.

    Selling Ahead of the Procurement Announcement

    Throughout this installment series we’ve stressed the importance of selling ahead of the procurement announcement. In the case of current government customers, keep them happy and ask them what’s coming down the road. Perform well, in other words, and work hard to find new business with those same customers. Keep the flow of business coming. There are few customers better than a happy government customer.

    How do you "pre-sell" buyers and end-users with whom you’ve never done business? For some ideas, you might go back and read Installments 4 and 5 of this series, http://www.fedmarket.com/vtools/articles/index.html.

    Also, FedBuying Intelligence (FBI), http://fbi.bidengine.com, and Bidengine, http://www.bidengine.com, are both powerful research tools that can help you get it done. (Remember, oftentimes the first step is to locate buyers. Finding end-users can be difficult, but it can be a lot easier if you first ask the easier-to-find buyers which end-users in their organizations require your product or service.)

    Pricing RFQs

    Pricing fixed priced bids is risky because the amount of your profit (or loss) will depend on the precision of your bid price. Know all you can about your competitors’ prices and find out the previous prices paid by the government for the product or service being purchased.

    Unlike the commercial sector, government must divulge what it has paid for the same product or service in the past. Unlike IFB awards, RFQ awards do not involve a public opening of all the bids. Prices are available upon request but usually only for the winning bid.

    Increasingly, pricing data are available on the Internet. For example, the Defense Logistics Agency publishes on the Web price history data by National Stock Number (NSN). DLA price histories show past purchases of an NSN item and the price paid for each purchase. Similar data is sometimes shown at state and local purchasing sites. If you can’t find it on the Internet, ask the buyer.

    In closing, I wanted to let you know that we’ve added some great new features to Bidengine. As a part of your search of state and local procurement sites, you now have the option of searching FedBizOpps (the official federal bid site) and federal "bid boards" (to locate federal opportunities not posted at FedBizOpps). These are unique features you won’t find anywhere else. You can test drive Bidengine for a week to see for yourself! Just click on the free trial link on the left side of the page, http://www.bidengine.com.



    Richard White, President of Fedmarket.com


    The publicly-advertised negotiated procurement market segment is a new world for companies that have not bid on negotiated procurements using requests for proposal (RFP) procedures. Responding to RFPs is unique for several reasons.
    • Proposal preparation is a complex, expensive process with high stakes both for the winners and the losers.
    • The award decision is placed in the hands of end-users, with oversight performed by the official procurement organization.
    • The proposal evaluation process is subjective, leaving a tremendous amount of latitude on the part of end-users in making an award decision.
    • The negotiated procurement segment is one of the least commercial-like of the government market segments.
    Commercial vs. Government Procurement

    When making purchases, companies of course are not subject to public procurement laws and thus have the luxury of making large, complex purchases in a more streamlined (and perhaps rational) manner than governments. Some issue RFPs for large projects but, when they do, they usually send the RFP to a select set of vendors, and the selection of the vendor does not necessarily have to be quantified and stand up to public and legal scrutiny. They take all factors into account and make a rational judgments on which vendor will be the best for the company.

    Governments try to do the same thing as commercial companies in procuring large, complex products or services, except they are subject to procurements laws requiring that:

    • The procurement is open to bids from all qualified companies.
    • The award decision is quantified wherever possible to level the playing field when comparing vendor proposals.
    • The award decision is documented in a manner designed to withstand public scrutiny and a formal, legal protest from a losing vendor.
    The Award Decision

    Government award procedures generally are as follows:

    An RFP is issued containing the project specifications, requirements for the content of technical and price proposals, formal technical and price proposal evaluation procedures, and numerous clauses and detailed bid submission instructions.

    The basis of the evaluation procedure is usually a numeric scoring scheme establishing a maximum number of points assigned to evaluation factors (criteria) such as understanding of the problem, technical approach, project team experience, and company qualifications. End-users and contracting officers jointly decide the factors and the scoring weights. Price usually is not assigned points but it can be. In most RFPs, a statement is made about the importance of price.

    An evaluation committee is formed usually comprising end-users (e.g., Chief Information Office or his designate for an IT service procurement) and primary stake holders (e.g., users who are impacted by the project). Like scoring factors, the size of the evaluation committee varies among procurements.

    Each evaluation committee member scores vendor proposals according to the evaluation procedure published in the RFP. Price is always an important factor and prices are weighed against technical scores. An award recommendation is then made, documented, and sent to the contracting office.

    The Purchasing Office Director (state and local agencies) and the contracting officer (federal government) play an important role in the award process and are delegated the responsibility of making the final award decision. They (or those working for them) write the RFP with input from the end-user, and they oversee the proposal process. Their job is to ensure that the playing field is as level as possible given the inherent subjective nature of the process. Stated simply, their job is to interface with the bidders on all RFP issues and questions, make sure the procurement regulations are followed, and ensure the integrity of the process.

    Generally speaking, government proposal evaluation practices are about as fair as they can be, given the "unscientific" nature of the process. In spite of the formality of point scoring and weighing of prices versus point scores, the decision, in the end is, is fraught with subjectivity. There's just no avoiding that.

    Reading GAO Bid Protest Decisions often helps one get a sense of the subjective nature of the negotiated procurement process. One example is Matter of SelRico Services, Inc., at http://www.gao.gov/decisions/bidpro/2866644.htm. (In that case, GAO upheld a contract award to a lower-priced, lower-rated offeror in a procurement where price was stated as the least important evaluation factor.)

    Sales Environment

    End-users are the keys to selling products and services purchased using RFPs. Often they will be professional managers, scientists, or engineers, who know their industry, communicate with other professionals, read trade journals, and attend trade shows and association meetings. Their jobs, performance ratings, and salaries are often tied to the quality of the contractors they select.

    If the RFP is for services, they are intensely interested in your project manager and the quality of personnel you can provide. They'll want to know what work you have done in the past, references, and, in general, something more concrete than just reading a paper proposal.

    If the RFP is for complex technical products or a solution (products and services), they'll often have preconceived opinions of what products or services they want. They do not operate in a vacuum and act much like commercial end-users who know their industry and the products and services offered therein.

    Mainly because of their size and importance to the end-user, many negotiated procurements have "behind the scenes" stuff going on that greatly influence the selection of a contractor. Here are some examples:

    • Firms may have already completed selling efforts with end-users. You can safely assume at least one company has pre-sold end-users before a procurement is publicly announced. This is not illegal if it's done early enough in the procurement process (i.e., the conceptualization phase). This doesn't mean that the end-user has already selected a contractor. On the other hand, it does mean that pre-selling has taken place, often aggressively and effectively, and this could affect the award decision.
    • With highly specialized services (e.g., research and development) program personnel may have ongoing relationships with firms that go back many years, or program personnel may know the "experts in their field" as part of their day-to-day work.
    • There may be an incumbent contractor performing identical or similar work.

    Under a subjective system you cannot assume that the only factors involved in the evaluation of your firm is what is on the written page. Large government contractors employ ex-government personnel, retain lobbyists, put former top officials of the government on their boards of directors, and socialize with government personnel. These practices are not illegal. Medium and small firms follow similar practices to varying degrees. Just keep in mind that these practices can make a difference in seeking negotiated contracts.

    Sales Strategies

    What does all this tell us?

    1. Get there early and sell your project management, personnel qualifications, proven solutions, product feature and benefits, and company experience and reputation.
    2. Find out who has already been there selling the incumbent contractor (if it is a repeat contract), whom they have worked with in the past, and pricing data.
    3. Do not write an expensive proposal in response to an RFP unless you have done the two steps outlined above.
    4. Early on, in the "conceptualization stage," develop personal, professional relationships with end-users and key decision-makers. Why? Here's an example: suppose an end-user has to evaluate and assign points to the resume of a project manager. A few more points may creep into the score if the end-user knows and respects the person behind the resume. Remember that the end-user may have to work with the manager every day during the project and the manager's performance may well reflect on the end-user.
    Sales Costs

    Heavy front-end sales efforts and large, expensive proposals cause sales costs to be high for negotiated procurements. On the other hand, your wins tend to be large dollar and you can nurture a single customer for many years if you provide exceptional contract performance.

    The key to keeping sales costs reasonable is a high win percentage. You will win often if you:

    • Know your strengths and capabilities (and weaknesses too) and go after business that fits your strengths. Spend marketing dollars up front to find the opportunities that fit your company perfectly. In other words, narrow as much as possible the number of prospective customers to whom you try to sell.
    • Sell aggressively to the prospective customer well before negotiated procurements are publicly announced.
    • Use the information gathered by "early selling" to make intelligent bid/no bid decisions. Don't write an expensive proposal if your intelligence indicates that your chances of winning are not excellent. Losing is not only costly but often emotionally draining. (Most companies ask their key people to work at night and weekends to write proposals.) Carefully thought-out no bid decisions are critical to keeping your win percentage high. Bail out of potential opportunities early and save sales costs if up-front research indicates that your chances of winning are not good (e.g., if your intelligence says that an incumbent contractor is well liked by the customer).
    On the surface, the negotiated procurement process may seem overly formal and subject to gross manipulation. Under the surface, it really isn't that much different than what you do in selecting an accountant, a computer developer, or a complex product. In the end, it boils down to a rather subjective decision arrived at after considering a wide range of factors. Think of the sales process as an educational process helping the end-user make the best possible decision.



    Richard White, President of Fedmarket.com


    In the previous three installments we discussed how to sell in the publicly-advertised IFB, RFQ, and RFP markets. In this installment we discuss how to respond (prepare a bid) to bid requests.

    Gathering Bidding Intelligence Information

    Previous installments in this series discussed the need for aggressive sales efforts prior to the public procurement announcement. In the early selling stage, you will also be gathering valuable information for writing your proposal (if one is required), making a bid/no bid decision, and pricing the bid.

    As we said earlier, blind bids on public procurements usually do not win and are therefore extremely costly. Even if you should win a blind bid, you run the risk of a low, unprofitable price because you did not completely understand the requirements and/or the performance environment.

    As part of the sales process, find out everything you can about the procurement, including insights into the requirements, possible difficulties in performing the work or delivering a product, and any other factors that could influence your costs and price.

    Most importantly, if you decide to bid, you will need to prepare a proposal that gives the prospective customer exactly what he wants. Find out what they are by asking for. Ask about the customer's problems, specific needs, and desires. Find out what the customer perceives as value, how they define value, and what their real "hot buttons" are from the end-user prospective.

    Gathering Information on the Competition

    You can generally obtain the following information from the contracting officer for winning bids (either sealed or negotiated), or for existing contracts that are being re-solicited:

    • The existing (or incumbent) contractor's name.
    • The total amount of the contract and line item pricing.
    • An overview of the requirements.
    Further, you may request the following information about an existing contract from the agency's Freedom of Information Act (FOIA) Officer:
    • Winning bids and proposals.
    • The contract itself, including any modification.
    The FOIA Officer will omit any information from the winning bid or proposal considered proprietary.

    Whenever possible, ask the contracting officer for information before making a FOIA request. Answers to FOIA requests sometimes take weeks or months, and often the government charges for the information. Recently, the government has been excluding more and more information from responses to FOIA request under the grounds of confidentiality or national security.

    Often contracting officers will prefer answering your questions about a procurement rather than having to do the paperwork to satisfy your FOIA request. Generally speaking, they will be happier with you if you use the informal questioning approach. Sometimes lower level clerks will provide more information than the contracting officer. Find out early who is willing to tell what.

    Preparing Bids and Proposals

    Preparing bids (IFBs and RFQs) and proposals (negotiated procurements) is time consuming and costly, especially if you do not win your share of the business. The following basic rules apply to all three types of public bids:

    • Price and deliver exactly what the customer wants, nothing more and nothing less. Offering less will result in a non-responsive offer and more will price you out of the competition.
    • Ask questions when you do not understand the specifications. Attend scheduled bidder conferences (if held) and ask questions by telephone or electronically.
    • When responding to a request for proposal (RFP), answer every question and requirement specified in the RFP. One trick is to isolate all of the "shall" statements to make sure you do not miss a single requirement.
    • Submit on or before the due date. Proposals submitted past the deadline are not accepted.
    • If a company wishes to change or withdraw a bid, it may send a letter or telegram to this effect to the procurement office. However, the notification must reach the office prior to the time set for the bid opening. Similarly, a bid or proposal that arrives late -- even one minute -- cannot be accepted.
    Responding to Negotiated Procurements

    Responding to negotiated procurements is a specialized field because of the need to write technical and cost/price proposals in response to a request for proposal (RFP). (Occasionally large service IFBs require technical proposals to establish responsiveness, but this is the exception rather than the rule.)

    Making the bid/no bid decision is the single most important step in the process. Each bid will require a lengthy technical proposal that is both costly in dollars and in technical person hours. Accordingly, bid wisely and selectively. A no bid decision can save a lot of money.

    Indicators for a yes bid decision are:

    • You know the procurement history and have information on your chances of success.
    • Your capabilities are a perfect or near perfect match with the requirements. Remember that missing capabilities can be filled by a subcontractor. Bid consortiums and complex subcontracting are becoming increasingly common in large, technically complex federal bids.
    • You know that you can bid a competitive price.
    Indications of a no bid decision are:
    • You are bidding blindly on a public procurement and all the information you have is in the RFP.
    • You are attempting to stretch your qualifications and capabilities to meet the requirements.
    • There is an incumbent contractor. Most incumbents re-win their contracts. You probably shouldn't bid unless you know the customer is unhappy or you have special knowledge of the procurement.
    Spend time and money in gathering information for the bid/no bid decision. It will be far less costly to spend the time and money up front than spending it on losing technical proposals.

    If you decide to bid, your next step will be to prepare a technical proposal. Thousands of articles and many books have been written on writing effective proposals. We will cover the essential elements of proposal writing in Installment 17.

    You will be required to prepare a project task and expense plan as part of your technical proposal. Knowing exactly who will do what under the proposed contract, and what material and related resources will be required, will become the basis for your cost/price proposal. Costing and pricing bids will be discussed in the next installment.

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