"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.
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 firstname.lastname@example.org.
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
Before registering with the CCR, you will need:
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,
- 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 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
Applicable SIC Codes can also be obtained from a
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
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:
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
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.
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
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
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
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--
End User vs. Official Buyer
- 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."
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
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:
We'll talk about the challenge of identifying the customer in later
- 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.
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:
Threshold: Under $2,500
Purchasing procedure: Sole source using a government credit card
Sales cycle: Same day
Purchasing procedure: Three informal quotes by phone, fax, email or regular mail
Sales cycle: Same day to several days
Threshold: Over $25,000
Purchasing procedure: Public advertising and formal documentation of procurement
Sales cycle: Several weeks to a year or more
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
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.
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 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
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
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
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
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
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
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.
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
Go to FirstGov, and find the FEMA
homepage using the keywords, "Federal Emergency Management
Agency." The first listing in the search results is
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
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
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
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
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
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
- The Federal Procurement Data Center, http://www.fpdc.gov/fpdc/agency_reports.htm, (FPDC) publishes
contract award data for all procurements exceeding $25,000.
- 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.
- For buys under $25,000, purchasing offices maintain paper
records of awards, and these are available upon request.
- 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.)
- 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.
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
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:
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.)
- 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.
Finding buyers is considerably easier than finding end-users for the following reasons.
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.
- 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.
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
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.
State and Local: Google, http://www.google.com
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:
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.
Doing Business with the State
Selling to the State
Procurement Division Directory
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
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:
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.
- Their own vendor files and personal knowledge.
- Their own manual or electronic bidders list (vendor registration
- 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.
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
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/
Fedmarket.com is about to begin offering FedBiz Now,
, http://fedbiz.bidengine.com/, an enhanced FedBizOpps subscription service. It has enhanced
features that include:
Receiving federal procurement notices early can be important for some
companies. Two examples where early notification can be important are:
- 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.
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.
- 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.
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
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
Fedmarket.com also offers CD-Roms of Federal, State, and Local Purchasing
Agency Web site addresses for those companies electing to bookmark bid
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
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.
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.
Reading contract award information can also alert you to future
procurements. Why? For one basic reason: contracts tend to
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.
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
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:
The focus, in both cases, is on the government agency itself.
- Getting to the right official buyers or end-users; and
- Finding bid opportunities (either early or when they're formally announced)
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.
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
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
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
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
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
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
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
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.
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:
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
- Agency name
- Cardholder name and address
- Telephone number
- Email address (sometimes)
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.
What type of message you send will depend on the type of contact
information available for the target audience you want to reach. As
- 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.
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
- 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.
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
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
Special Opportunities for Small Businesses
- 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.
Here are two principle reasons the small purchase market segment
is ideal for small businesses:
Selling in the Small Purchase Market Segment
- 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
- Buyers like to keep their small purchases local, buying from
businesses that are part of the community they live in.
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
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.
- Their own vendor files and personal knowledge. (Hopefully, your
sales visits and/or telephone calls have made a difference in this
- 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.
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
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:
- At Fedmarket.com, we sell a CD-Rom of Federal, State,
and Local Buyers.
- 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
- 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
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:
The "it’s impossible" view includes:
- 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?
As you might suspect, the realistic view falls somewhere in between
these extremes: government contracting is not easy but it’s not
- Government contracting is political and funneled to the insiders.
- The big guys grab all the business and the little guys get
- I’ll never know enough about this mysterious market to have any
success in it.
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:
Let’s discuss further this third element. Not surprisingly, sales
costs and barriers to market entry increase with procurement size.
- 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.
- 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.
- 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.
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
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.
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
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
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
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
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
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.
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
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
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:
As you can probably surmise, use of best value analysis has a major
impact on the sales process.
- Special features of the supply or service required for effective
- Trade-in considerations
- Probable life of the item selected as compared with that of a
- Warranty considerations
- Maintenance availability
- Past performance
- Environmental and energy efficiency considerations
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
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,
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 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
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
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.
Commercial vs. Government Procurement
- 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.
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 Award Decision
- 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.
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
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
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.)
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.
What does all this tell us?
- Get there early and sell your project management, personnel
qualifications, proven solutions, product feature and benefits, and
company experience and reputation.
- 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.
- Do not write an expensive proposal in response to an RFP unless you have done the two steps
- 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
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:
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.
- 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).
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
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:
Further, you may request the following information about an existing
contract from the agency's Freedom of Information Act (FOIA) Officer:
- The existing (or incumbent) contractor's name.
- The total amount of the contract and line item pricing.
- An overview of the requirements.
The FOIA Officer will omit any information from the winning bid or
proposal considered proprietary.
- Winning bids and proposals.
- The contract itself, including any modification.
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:
Responding to Negotiated Procurements
- 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
- 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
- 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 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:
Indications of a no 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
- You know that you can bid a competitive price.
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.
- 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.
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