Archive for August 2012

Top Down Indicators of Federal Market Size

Federal market statistics are notoriously confusing, incomplete, and difficult to find and analyze. GSA schedules are the biggest and widest multiple award contracts. GSA schedule sales are reasonably accurate; around $ 40 billion annually for all schedules, and represent about 20% of new contract awards. They can be used as a measure of the federal market for most products and services. A rough estimate of the annual market for what you sell is five (5) times GSA schedule sales. This is a gross measure and should be considered as a guideline only. But the measure is better than other contact award
statistics published by the federal government.  Top down market analyses (government-wide or at an agency level) will only tell you that federal agencies buy what you sell in gross amounts. They don’t tell you what specific products and services were bought or who bought them.

The Mysterious Federal Contracting Process

The federal purchasing process often does not reflect what is really going on concerning the amount of competition for a bidding opportunity because of the need to show the public the perception of competition for taxpayer contracting dollars; why?

  1. Open competition is too expensive and time consuming for most federal purchases. The government would grind to a halt if open competition were used for every purchase.
  2. Federal buyers cannot just purchase a product of service without following rules concerning the amount of competition required. Limited competition is allowed and the number of bids required depends on the dollar amount of the purchase.
  3. The actual competition is usually less than allowed by the rules.
  4. Discussions with vendors early in the buying process is critical so end users know the features, benefits, and value of what they are buying.
  5. Contracting officials often discourage early discussions (pre-selling) when in fact the federal purchasing regulations actually encourage it.
  6. Contracting officers do not tell prospective bidders about pre-selling activity that may or may not have taken place; in order to give the appearance of a level playing field.
  7. The award file and what it shows on paper is the all-important document in federal contracting.
  8. The appearance of completion in the award file is as important as actual competition because the file has to pass the scrutiny of superiors and the unsuccessful competitors, and survive an audit by federal auditors.

What should you know as a newcomer to the federal market?

  1. Federal end users (the decision makers) are risk averse because their jobs and reputations depend on contractor performance. As a result, in most cases they will select the known company over the new company.
  2. Incumbent contractors usually win reoccurring contracts. They have an inherent edge because they know the contract and the customer inside and out. Some say they should not be able to compete for contracts that they hold but that would be not be practical or cost effective for the federal government.
  3. Companies with federal customers have a built in sales network because they are known to their customers and use customers for referrals to other customers. They can pre-sell as they preform contracts at little cost.
  4. Aggressive pre-sellers have an edge (whether new to the market or insiders) because they know the customer and the customer knows them at the time of the bid.
  5. In short, newcomers to the market have a tough sales job and experience long lead times. Yet the government selects new comers every day who execute aggressive sales programs, and get to know the customers well ahead of the announcement of a contract opportunity. In some cases before the customer has even defined the purchasing requirement. Newcomers also need to know the purchasing rules and the ways to close deals they have sold within the rules.

Call me directly, I’m happy to answer your basic federal contracting questions.

Richard White
301 908 0546 (cell)