Selling to the government

Looking for new customers? Well, don't forget the world's largest customer; the one that spends close to half a trillion dollars a year on products and services.

I'm talking about the government, including federal, state, and local agencies.

Selling to the government can be frustrating and trying, but it can also be very lucrative. There are thousands of companies whose main customer is the government and having been making sizable profits year after year. With all the talk about downsizing, streamlining, and privatizing government, opportunities to sell to the government will continue to rise.

How do you get your fair share? First, you have to recognize the differences between marketing to the government versus the private sector. The main difference is that most government contracts are awarded on the basis of a competitive bidding process, wherein the firms ("bidders") who are interested in the contract must submit a bid. If the contract is for a commodity or construction, it is awarded to the bidder who submits the lowest bid and meets all other administrative requirements. If the contract is for a service, bidders will usually have to submit a proposal that details how they will perform the services required by the contract, and will be judged by other pre-specified criteria.

Here are a few tips on selling to the government:

1) Know what you have to sell. Government agencies are not interested in what you can do, only what you have done. You will need to be able to show that you have a track record in selling your product or service.

2) Target your market. There are hundreds of government agencies in the Bay Area alone, including the regional offices of numerous federal agencies, military bases, county government, city government, transportation agencies, public schools, and universities. You will need to sift through all of these agencies to find the subset of those that buy a significant amount of what you sell.

3) Assess your competition. Once you have targeted your market, you can find out how competitive it has been. If the winning bidder for the last few contracts you're interested in won the bid at a price lower than you're willing to bid, then it's probably not worth your time to bid. Move on to the next agency. If you find that you cannot be competitive, the public sector market may not be for you.

4) Market aggressively. Once you find a good potential customer, you should market to him or her the same way you would a private sector customer. You can do this is two ways: 1) by ensuring that they are aware of your capabilities and 2) by staying in touch. Many of the smaller contracts do not have to be formally bid and you can put yourself in a good position to get business by being persistent. In addition, the relationship you have with your agency contacts will be an important factor even if the contract needs to be formally bid. The agency's contracting officials are much more likely to select a firm they have worked with previously or know personally.

5) Make sure you complete that first contract successfully. After you win that first contract, your potential for winning others depends on whether you can show that you can do the job in a quality fashion. If you do a great job, it increases your chances of getting more contracts because you are now a known entity. The reverse is also true. If you do a lousy job, your reputation will precede you and it will be much more difficult to win a contract with that agency.

Time to field a related question on the topic:

Q: My firm recently bid on a government contract. We did not win the contract even though we submitted the lowest bid. Is that allowed?

A: According to California Public Contract Code, contracts being awarded by a state or local agency must be awarded to the "lowest responsible bidder". Note that this does not necessarily mean lowest bidder. In order to also be a responsible bidder, you must meet all of the other criteria associated with the bid. This may include financial criteria such as showing evidence of insurance or the posting of a bond. It may include qualification criteria such as experience on previous projects, years in business, or experience of the firm's staff. There also is administrative criteria such as properly filling out the forms required by the bid.

If you have met all of the required criteria on your bid in order to be considered responsible and that bid was being awarded on cost alone, you should have been awarded the contract. If it is not too late, you can protest the award of the contract. There are specific procedures the awarding agency must follow by law to allow you to contest the award. I would suggest that you consult a qualified attorney if you choose to go that route.

For more information about government contracting, see our sister site:  www.EthnicMajority.com/government_contracts.htm.