Commerciality: Establishing pricing to the federal government

October 20, 2022 by Leave a comment

By Skyler Handl, Corporate Counsel, Public Sector

Selling to public sector customers is different from selling to the commercial market. For example, how much do you know about the government acquisition concept of “commerciality”? To preserve margins in government sales, you need to know how to comply with this concept.

Public sector customers typically require vendors to disclose cost data and then negotiate a profit, or “fee.” This flows through the entire government acquisition supply chain.

Commerciality was introduced as an exception to the general rule of cost disclosure to streamline government acquisition of commercial technology through requirements aligned to commercial market practices. Commercial technology is vetted by the open market, which mitigates risk, and reduces the expense of government acquisitions as development costs are spread across the commercial market. You wouldn’t expect to pay a one-time non-recurring engineering fee for the latest cellphone; it is baked into the price.

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Filed under Contracting, Market Intelligence, Sales Tagged with , , ,

Accelerating Growth in a New Era of Government Procurement

April 8, 2019 by Leave a comment

By Tim Larkins, Senior Director, Market Intelligence and Corporate Development

Government is evolving both in how it does business and in its approach towards technology. It’s changing procurement strategies, changing the way it pays for IT capabilities and changing the types of technology it buys.

Government’s focus has shifted from technology for its own sake to optimizing performance – making sure that its business and operations are functional and efficient. Customers are looking to develop integrated solutions that help them accomplish their missions – a much more business-oriented engagement.

Procurement now has a much stronger emphasis on flexibility and consumption-based models. The mandate of the Lowest Price Technically Acceptable (LPTA) as the primary procurement strategy is shifting to one of mission effectiveness through of best-of-breed technology. LPTA ultimately led to a “race to the bottom” approach from industry, as companies were forced to commoditize their products, resulting in government buying what’s cheap – not what’s best.

In light of the ever-evolving technology procurement landscape, immixGroup wants to ensure that our suppliers and partners are positioned in a way that they can adequately service their public sector customers – not just today, but well into the foreseeable future. Read more of this post

Filed under Market Intelligence, Sales Tagged with , ,

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