• 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

• 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."

• 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.

• 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
  

• CD-Roms of Federal Credit Card Holders,
• CD-Roms of Government Internet Sites, from new product tour,
• CD-Rom of Official Buyers,
• Bidengine.com provides a convenient way to find buyer contact data at the federal, state and local levels. Bidengine searches about 1,000 Internet pages containing buyer contact data key word. If you sell office supplies, Bidengine can tell you what agencies have purchased your product using the keywords "office supplies."

1. The Federal Procurement Data Center, http://www.fpdc.gov/fpdc/agency_reports.htm, (FPDC) publishes contract award data for all procurements exceeding $25,000.
   
   
2. The Defense Logistics Agency, http://progate.daps.mil/home/, publishes source and pricing data for products assigned a National Stock Number (NSN). The source and pricing data is published for procurements of any size.
   
   
3. For buys under $25,000, purchasing offices maintain paper records of awards, and these are available upon request.
   
   
4. Browse or search notices of award at FedBizOpps. (Go to http://www.fedbizopps.gov and click on the "Vendors" icon in the lower left part of the page. Search using keywords at http://vsearch1.eps.gov/servlet/SearchServlet. Be sure check the "awards" radio button.)
   
   
5. Search for awards at Navy Electronic Commerce Online (NECO). Specifically, go to http://www.neco.navy.mil/synopsis/synopsis.cfm and use the Advanced Search option.

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

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

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

• They have a broad understanding of what the agency buys.
• They make the buying decisions for commodities, non-technical products, and routine services.
• They can tell you who the end-users are for complex product and services.
• Though they may not USE them, they can certainly influence the decision on which technical or complex products to buy.
• They are the source for awards data, including who has provided what product/service in the past, the pricing and other contract details.
• They have knowledge of the agency’s planned future procurements.

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

• They are concentrated in the purchasing organization, as opposed to end-users who can be located anywhere in an agency.
• Often a buyer directory is published at an agency’s web site. If you’re lucky, a buyer directory will show the types of products or services that each buyer is responsible for purchasing.
• The employee breakdown of the purchasing organization is usually shown in published, paper directories available from the public information office.
• At a minimum, the public information office will provide you with contact information for the head of the purchasing organization.

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

Federal: FirstGov, http://www.firstgov.gov
State and Local: Google, http://www.google.com

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

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

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

  Business
    Doing Business with the State
      Selling to the State
        Procurement Division Directory

The 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.

• Their own vendor files and personal knowledge.
• Their own manual or electronic bidders list (vendor registration usually required).
• Agency- or government-wide vendor directories like the federal Central Contractor Registration and PRO-Net databases. Most states have a central vendor directory.
• Industry directories like Thomas Register.
• Government e-procurement systems. Most large states have them and the federal government has several. Some of these systems are catalog-based, some are RFQ-based, and some are both.
• Commercial business-to-government e-procurement systems like our own Govcommerce.net.

• 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.
  
  

• 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.

• Bidengine is a specialized search engine that covers over 2,000 state and local bid posting sites. A no obligation, free trial of this service is offered at http://www.bidengine.com/trial.html.
  
  
• ITBids is a focused bid collection system tailored specifically for the IT industry. A no obligation, free trial of this service is offered at http://itbids.bidengine.com/free_trial.html.

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

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

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

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

Procurement Forecasts

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

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

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

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

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

Sources Sought and Requests for Information

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

Contract Awards

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

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

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

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

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

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

Buyer and End-User Purchasing History

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

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

Budgets

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

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

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

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

• 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.

SUBCONTRACTING BIDS

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

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

SUBCONTRACTING COORDINATORS

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

First: finding companies that match up

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

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

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

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

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

• Texas Bid Tabulations and Award Information, http://www.tbpc.state.tx.us/procinfo.html.
• Missouri Bid Awards, http://www.oa.state.mo.us/purch/cgi/bidaward2.cgi.
• New Jersey Notices of Award, http://www.state.nj.us/treasury/purchase/contracts.htm.

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:

• DOD Subcontracting Directory, http://www.acq.osd.mil/sadbu/publications/subdir/.
• DOD Comprehensive Subcontracting Plan Test Program, http://www.acq.osd.mil/sadbu/csp/index.html.
• Department of the Treasury, Small Business Subcontracting Opportunities, http://www.treas.gov/sba/rfqlist.html.
• Small Business Administration, Subcontracting Opportunities Directory, http://www.sba.gov/GC/sbsd.html.

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

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

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

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

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

Market Size

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

The Hidden Market

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

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

Start With a Basic, Low Cost Approach

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

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

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

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

Marketing to Credit Card Holders

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

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

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

• Agency name
• Cardholder name and address
• Telephone number
• Email address (sometimes)

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

Targeting Credit Card Holders

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

As examples:

• An office supplies company might contact every cardholder in its geographic shipping zone. The bigger the zone the more emphasis should be placed on fast shipping at low costs and customer service.
• A company selling motor vehicles wouldn't focus on credit card holders, since they typically do not make purchases of this size, at least at the federal level.
• A medical supplies company might contact the cardholders in health- related agencies.

• 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 or service.

• 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.

• Small business preference procedures vary, but as a general rule most small purchases are set aside for small and small disadvantaged businesses, unless this type of company cannot be found to satisfy the requirement.
• Buyers like to keep their small purchases local, buying from businesses that are part of the community they live in.

• Their own vendor files and personal knowledge. (Hopefully, your sales visits and/or telephone calls have made a difference in this regard.)
• Their own manual or electronic bidders' lists.
• Agency- or government-wide vendor directories like the federal Central Contractor Registration and PRO-Net databases. (Most states have a central vendor directory.)
• Industry directories like Thomas Register.
• Government e-procurement systems. Most large states have them and the federal government has several. Some of these systems are catalog-based, some are RFQ-based, and some are both.
• Commercial business-to-government e-procurement systems like our own Govcommerce.net.

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

• 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?

• Government contracting is political and funneled to the insiders.
• The big guys grab all the business and the little guys get screwed.
• I’ll never know enough about this mysterious market to have any success in it.

1. Start with a small group of agencies: The three levels of government (federal, state and local) are composed of about 85,000 agencies. That number alone should be enough to convince you of the need for intensely focusing your sales efforts on a few selected agencies. Start small and expand your focus after finding success. Focus your efforts on a small, targeted set of potential customers as a trial and learn from the experience. In general terms, this focus should be by geography for service businesses, and type of customer for products.
   
   
2. Focus on buyers who actually buy your stuff: Do the research to understand agency missions and the needs of agency end-users. Find customers who actually NEED what you sell.
   
   
3. Target procurements of a size your company can realistically win: As a general rule small businesses should sell in the micro purchase, small purchase and subcontracting markets. Leave the large purchases (fixed price and negotiated) to the medium- and large-sized businesses. There are two main reasons for this: the costs of bid preparation are high, and often only medium or large businesses are capable of performing under the resulting contracts.

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

The Sealed IFB Process

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

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

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

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

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

Selling in the IFB Market

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

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

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

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

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

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

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

Pricing IFBs

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

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

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

Finding End-users and Buyers

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

• Special features of the supply or service required for effective program performance
• Trade-in considerations
• Probable life of the item selected as compared with that of a comparable item
• Warranty considerations
• Maintenance availability
• Past performance
• Environmental and energy efficiency considerations

• 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 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 price.

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

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

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

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

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

Sales Environment

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

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

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

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

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

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

Sales Strategies

What does all this tell us?

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

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

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

• Know your strengths and capabilities (and weaknesses too) and go after business that fits your strengths. Spend marketing dollars up front to find the opportunities that fit your company perfectly. In other words, narrow as much as possible the number of prospective customers to whom you try to sell.
• Sell aggressively to the prospective customer well before negotiated procurements are publicly announced.
• Use the information gathered by "early selling" to make intelligent bid/no bid decisions. Don't write an expensive proposal if your intelligence indicates that your chances of winning are not excellent. Losing is not only costly but often emotionally draining. (Most companies ask their key people to work at night and weekends to write proposals.) Carefully thought-out no bid decisions are critical to keeping your win percentage high. Bail out of potential opportunities early and save sales costs if up-front research indicates that your chances of winning are not good (e.g., if your intelligence says that an incumbent contractor is well liked by the customer).

Gathering Bidding Intelligence Information

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

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

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

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

Gathering Information on the Competition

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

• The existing (or incumbent) contractor's name.
• The total amount of the contract and line item pricing.
• An overview of the requirements.

• 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:

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

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

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

Indicators for a yes bid decision are:

• You know the procurement history and have information on your chances of success.
• Your capabilities are a perfect or near perfect match with the requirements. Remember that missing capabilities can be filled by a subcontractor. Bid consortiums and complex subcontracting are becoming increasingly common in large, technically complex federal bids.
• You know that you can bid a competitive price.

• 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 installment.