The requirements
to selling to the government:

The
U.S. government is the largest buyer in the world purchasing nearly $100
billion worth of goods and services from small businesses each year. Many small
businesses are considering taking part in this lucrative business opportunity.
From the outside the U.S. government may seem intimating since selling to the
government requires a different business plan than it would from the commercial
sector. It’s an intricate and tedious process that when done right with
planning and research can be profitable and rewarding.

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Before
starting, it’s important to do market research to figure out how different
agencies purchases goods and services. For example, Department of Defense purchases
start at one of three steps: Sole source procurement, procurement under an
existing multiple award contract and normal procurement. The Multiple award
contract (MAC), such as GSA schedules are becoming more commonly used method of
procurement. Only those companies with a multiple award contract can compete
for the task orders, and the numbers of companies competing for the resulting
task orders is much smaller. The DoD spends all other agencies on the GSA
schedule contract. In 2016, The DoD spent $4 trillion on GSA schedule
contracts.

GSA
schedules are a set of long-term government contracts that segments what the
government purchases into categories, and it can streamline the sells process
and provide additional opportunities. There’s 20,000 GSA schedules, and they
all fall into 43 categories ranging from furniture to sports, science, and
medical equipment. The GSA Schedule are popular because they represent
pre-approved products and services at prices that have been negotiated on
behalf of the federal government. To be eligible for a GSA schedule, a company
needs to make sure their products fit within the GSA schedule program, have
been in business for at least two years, are financial stable, and their
products must be created in the US or a designed country (“Beginners Guide to
GSA schedule” 2016 p.5).

After
determining eligibility, it’s time to assess the company’s potential for
success. Online resources like the GSA schedule Sales Query, the GSA eLibrary,
and USAspending.gov are useful for review existing contractors, their sales,
and agency spending. Getting started, it’s a GSA schedule requirement to obtain
a Dun & Bradstreet DUNS number, and register on the System for Award
Management (SAM). The Data Universal Numbering System (DUNS) assigns a unique
nine-digit number for each physical location for a company’s business and SAM
is a database of all businesses that sell to the government. It streamlines the
sells process, eliminates the need to input repeat data, and makes the process
of doing business with the government more organized. Then, it is time to
select a proper category for GSA schedules and prepare a proposal of request.
It’s necessary to choose the appropriate GSA schedule based on what products
and services allowed under each schedule. If not identified properly, preparing
a proposal will be a waste of months of effort because it would end up being
rejected. Going to the GSA eLibrary website can help with reviewing the list of
available GSA schedules and downloading the 100 – 300-page Request for Proposal
forms needed for each GSA schedule. The review period for proposal period can
vary depending upon the GSA schedule, and the amount of offers. After approving
and completing negotiations, GSA will request a Final Proposal Revision, which
is a document that summarizes the finalized proposal and pricing and after that
is submitted GSA will award the company with a Contract number that is used to
sell to any U.S. federal agency and is valid for 5-year with 3 5-year extension
options.  (“Beginners Guide to GSA
schedule” 2016 p.6).

Selling
to the government required maneuvering around a lot of red tape, and that red
tape is called the Federal Acquisition Regulations (The FAR). The FAR are the
policies and procedures that governs the process the federal government uses
for making purchases, and its purpose is to make sure the purchasing procedures
have a standard and are conducted fairly. It is made up of four stages:
identifying what’s needed, assessing if it is required, researching if a
product or service will fit the agency’s needs, and providing the proper
documents to obtain the product or service. Many large federal agencies have
their seperate supplemental regulations, like The DoD has the Defense Federal
Acquisition Regulation Supplement (D-FAR). Standardized buying procedures and
rules are outlined in the FAR.

As
mentioned in a prior section, GSA Schedules are just one of many contracting
methods used by the government. The primary contracting methods used by the
government are micropurchasing, Simplified acquisition Procedures, sealed
bidding, contract negotiation, and consolidated purchasing. Government
purchases of individual items under $3,000 are considered micropurchases. These
are purchases that can be done with a credit card (SmartPay), can be made from
any legitimate vendor, and doesn’t require a contract. 70% of all government
procurement transactions are done with a credit card. Purchases over $3,000 and
under $100,000 are considered simplified acquisition procedures. It requires
less administrative hassle for the buyer, lower approval levels, and less
overall documentation. For a more complicated process for companies selling to
the government, Contract negotiation are used.  Usually for purchases over $100,000 or when trying
to obtain a highly technical products or goods, a Request for Proposal (RFP) is
issued or if the government is merely checking the possibility of acquiring a
product or service it issues a Request for Quotation (RFQ). In a typical RFP, the
government will identify and request a good or service from potential
contractors and they must write a report about how they would complete the
request, and their prices RFP are subjected to negotiation after submission (“Guide
for small business” SBA p.10). Sealed Bidding is how the government contracts
compete when its requirements are clear, accurate and complete also known as
invitations for bid (IFB). The bids are opened in public, and the most
responsive low bidder wins. Some companies will receive the IFB directly and
other companies will find them linked on the Federal Business Opportunities
website. Consolidated purchasing programs also known as multiple awards
schedules occurs when agencies want to group the purchases of certain products
and services. The most common MAS are GSA schedules and Government Wide
Acquisition Contracts (G-WACS). (“Guide for small business” SBA p.11)

Federal
supply schedule

Sub-contracting
opportunities

DoD
small-business programs

 

 

 

 

 

 

 

 

 

 

 

Example
of Firms who have successfully sold to the government:

In
the book Selling to the Government,
Former CEO of Falcon Microsystem, Dendy Young recounts a story of when Apple
did business with the federal government with the assistance of his company.
Apple has just come out with The Lisa, which was their vision of consumer-based
computing. It introduced many features that would be later reused in the Mac.
Steven jobs was initially reluctant to sell to the government, disagreeing with
their decisions concerning the Vietnam war, so when Government agency wanted to
purchase Apple computers they had a tough time doing so. They didn’t want to
purchase it from the store fronts, they wanted the sales procedure and support organizations
they were used to. Falcon Microsystems offered Apple a proposition that they
would act as a shield and protect Apple from the complexities of doing business
with the government. Reluctantly, they agreed. Falcon put Apple products on the
GSA schedule and began gain contract for Apple. Soon, third party manufacturers
came out to fill in the holes that the Apple products had and Apple Co. didn’t
want to provide, like larger or smaller screens. Despite, Apple’s lack of
interest in selling to the government, Falcon helped build a company that sold
hundreds of millions of dollars’ worth of product. When entering the government
market, it’s better to work with an organization that has experience until the
companies has enough revenue to create its own government division that can
focus on developing and maintaining government clients. (“Selling to the
government” Amtower p.37)

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