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Getting Started with Government Contracting

Basic Requirements

Marketing to any level of government, federal, state or local, is often quite different than the commercial marketplace. You will often hear references to how large and lucrative the government marketplace is for small businesses. That can be true but it’s most likely going to be frustrating if you don’t pay attention to the fundamentals. Remember that as a new player in the market you will need to convince buyers or partners that you are capable, reliable and able to deliver what you are promising (i.e., they need to trust you). Past performance is a key concept in government procurement – as the new company trying to break into the market, there is no short-cut. One of the best ways to increase the likelihood of success is to be prepared for a long-term marketing effort that may not pay off for several years – this is especially true if you are looking to land a large contract. Expecting quick results often ends in failure and can also severely affect your existing business. The PTACs have decades of experience advising clients on how to succeed in the government marketplace – here is some of what we have learned.

Threshold Qualifications


A.   Develop or update your business plan. The very first step that a company needs to take when considering moving into a large new market is to ensure that the company’s business plan supports the initiative. This means you should analyze the corporate structure, financial status, administrative capabilities, production and distribution capabilities, and delivery methods to determine if you can sustain a long-term commitment to a marketing effort that may not produce revenue for several years and then deliver as promised when you have an opportunity. 
 
B.   2-3 years of commercial experience. Newly formed companies should not target a large specialized market, like the government marketplace, as their initial market. Government buyers are risk adverse and have no incentive to take a chance on a new company. Government contracting officers want to ensure they are dealing with a company that has a successful track record and that demonstrates they can deliver the goods or services they are seeking to market. They are looking for past performance and if you are new to the government market that means you should be able to show them a track record in the commercial marketplace.
 
C.   Electronically capable. Virtually all government contracts are advertised, negotiated, and awarded electronically. Additionally, most government invoices and payments are made electronically. You are at a severe disadvantage if you are not able to conduct business online. There are also many government purchasing mechanisms that are only are conducted on the web. A good user-friendly web site is also often very helpful for conducting business with government. You should make doing business with you as easy as possible since the government marketplace is very competitive. Use an Internet provider that is capable of transmitting large files and provides a professional business appearance – personal Internet services such as AOL or Hotmail are generally not adequate to handle online business transactions.
 
D.   Financially stable. Similar to the issues of a start-up business, you should not attempt to enter a large specialized market if you are struggling to make payroll or have an inadequate cash flow. The government procurement process is not an inexpensive proposition and contracting officers are not in the business of helping companies out of debt. They are looking to buy the best possible goods and services for the least expensive price – we as taxpayers expect as much. Ensure that your company is able to sustain the financial obligations required to work through the procurement process before entering the government marketplace.
 
E.   Good customer mix. Large specialized markets like the government marketplace can make dramatic shifts in their focus because of events such as a war or a natural disaster. If a company is too dependent on these markets a shift of emphasis to respond to a major event can be devastating. To ensure business stability over the long term, it is recommended that the government marketplace make up no more than 20% - 30% of the total company sales. 


 If you meet all of these Threshold Qualifications, you most likely qualify for our free Bid-Matching program.

Learn more about Bid-Match now!

Government Marketing Success Factors:

  • Develop or update your business plan
  • 2-3 years of commercial experience
  • Electronically capable
  • Financially stable
  • Good customer mix

Sub-Contracting

If you don’t meet these Threshold qualifications, for some small businesses sub-contracting to a Prime Contractor is a great way to “get a foot in the door” of government contracting. As a sub-contractor, you can provide goods or services that support a larger contract that you may not have been able to handle on your own. It’s a great way to start developing your record of performance without taking on the entire risk of a large contract. In addition, if you successfully complete a sub-contract, you will develop good relationships with people you may need to know as you attempt to become a prime contractor.

For assistance with sub-contracting, contact your local PTAC consultant.