What is government contracting?
January 17, 2017 3 Comments
By Chris Wiedemann, consultant
Are you surprised by our headline? Don’t be. Selling to the government is like doing business with a foreign country. It has its own culture, language and customs and it’s truly unlike doing business in the commercial world.
Our industry is so full of terms and nuances that are hard for many of us to define to a layperson, which is why we’re kicking off a monthly “What is…” blog series to help alleviate some of the head scratching. So let’s get started.
The U.S. government is the world’s largest customer, buying about $3.5 trillion worth of products and services per year in more than 4,000 categories. We’re talking everything from pencils and notepads to complex cybersecurity solutions and weapons systems. The government is incredibly particular about how it makes purchases because, as the Small Business Administration explains it, competition has to be fair and open, products and services have to be competitively priced, the government has to make sure it gets what it pays for and the government and the contractor have to comply with several laws. The government also wants to make sure that part of its business is going to companies in certain socioeconomic categories. It’s taxpayer money after all.
Most of those procurement laws can be found in the Federal Acquisition Regulation. If you’ve ever seen a printed copy of it, you know it’s several inches thick and weighs as much as a small child. The government also includes mandatory clauses in all its contracts, giving it the right to change contract terms and conditions or to even terminate the contract. And one other big difference is the government’s special status as a sovereign entity, which means that claims and litigation follow the unique procedures of the Contract Disputes Act.
A company can’t just decide to one day start tapping into the government market. Businesses have to register in the government’s System for Award Management and provide enough documentation to allow the government to investigate whether it’s been barred from doing business before. Businesses also need a Data Universal Numbering System number from Dun & Bradstreet and a Commercial and Government Entity code if your company wants to do business with the Department of Defense, Coast Guard or NASA. Businesses will also get North American Industry Classification System codes so that agencies know the products and services they provide.
Once your company is officially a government contractor, it will go through a fairly prescribed 8-step process for generating business, starting with the agency’s vision for what it needs and ending with the contract award. One of the benefits of selling to the government is the fact that much of this 8-step process is done in the open. Even what the government is looking for is described in the Commerce Business Daily. Contract losers are able to protest the end result and possibly have the outcome changed. But the sales cycle is a lengthy one, much longer than selling to a commercial entity, so it’s not for anyone looking for a quick, easy buck.
So there’s the biggest marketplace explained in about 500 words. Need more details? Watch our presentation on Fundamentals of Selling to the Federal Government.