With more than 50 state governments, 3,034 counties and 19,429 municipalities, the U.S. government is the world's largest market for goods and services.
According to the Census Bureau, government spending represents more than 25% of gross domestic product. That translates into billions of dollars. And with an $825 billion stimulus package being hashed out between Congress and the White House, expect even more business opportunities this year. So if you haven't considered pitching to the government and landing some contracts, you're missing out.
But before you set up a pitch meeting with your mayor or local congressman, here are nine essential things to get under your belt:
Learn the lingo:
The government has its own language and procedures. You need to know jargon like General Services Administration (GSA) schedule, which means you've been approved to be a contractor, before even thinking about pitching. If you don't know how to speak their language, you won't get very far.
Learn the law:
The Buy American Act restricts what you can sell to the government, especially if your product is assembled overseas or your service is based outside of the U.S. Check before you pitch and commit.
Have a strategy:
Know what your business is and what it is capable of. You'll need it when you register at CCR.gov, the Central Contractor Registration database. There, you'll fill out forms like a capability statement and core competency statement. "This goes back to terminology," says Gloria Berthold Larkin, president of
at Marketing Outsource Associates. "If you show that you understand the terminology, you'll get short-listed because they will think you know what you're doing."
But just because you must register at CCR, don't think business will instantly pick up. "Although the CCR is a primary way federal agencies learn about prospective vendors, it's up to the small-business owners to aggressively market their firms to those agencies," explains David Loines, acting deputy director for government contracting at the SBA.
Credit is king:
A sure-fire way to get some government business, even if you don't land a contract, is to accept its credit card, called SmartPay. According to Mark Amtower, author of "Government Marketing Best Practices" (Government Market Press), agencies can buy up to $3,000 worth of products and services at any given time on these credit cards without needing a contract. "Sooner or later, they will say it'll be better to have a contract. Then you start migrating up the food chain," he says. Meanwhile, federal spending by SmartPay in 2007 totaled $18.3 billion; at the state and local levels, it was $54 billion.
Setting up a pitch meeting with the mayor or congressman probably won't help. You need to learn who the decision makers are, and often it's the career government employee who has the legal authority to buy goods and services. "It's still people buying from people," says Larkin, who is also author of "Veterans Business Guide: How to Build a Successful Government Contracting Business" (TargetGov). "They must have a relationship based on knowledge that you can do what you say you can and a trust that you can do it for the long term." So chat up the facilities supervisor at the local courthouse to see if they're looking for a new lawn-mowing company. Own an oil-change shop? Visit the local police department and find out who changes its cruisers' oil.
And it's not a good idea to throw around the fact that you're best friends with the mayor. One of the biggest mistakes you can make is to challenge the authority of those whose job it is to buy things for the government, says Jeswald Salacuse, author of "Seven Secrets for Negotiating with Government" (AMACOM). "If you challenge their authority, their reaction is,
do have the authority. It's like if a cop on the highway stops you -- you don't challenge his authority. Be courteous and respect the job they are doing."
As important as it is to know who has the power to close the deal, you also need to be aware of who the constituents are of that particular office or agency. Their voice in support or opposition of your product or service can sometimes make or break the deal.
Be ready to bare all:
"I call it the open kimono market," says Larkin. "You have to show everything to everyone. This can be nerve-wracking, especially for entrepreneurs who like to guard their pricing structure and processes. Much of your intellectual property and pricing can become public knowledge."
Conversely, you can see how your potential competition has been doing for the past six years through the GSA schedules, says Amtower, who is also a founding partner of Amtower & Co., a marketing-consulting company that specializes in business-to-government buying. (For more free advice, go to his
For companies that want to do more than $25,000 of business, also check out Fedbizopps.gov. This single government point of entry, says Loines, is where government buyers can publicize their procurement needs. "Commercial vendors seeking federal markets can search, monitor and retrieve opportunities solicited by the entire federal contracting community."
Negotiating is the name of the game:
Just because you quote the government agency a price, that doesn't mean it's what it will pay. Expect to negotiate and, in many cases, renegotiate, says Salacuse, who is also the Henry J. Braker professor of commercial law at the Fletcher School of Law & Diplomacy at Tufts University. "Government feels they have the right to renegotiate. Something changes. Politics change. There is also a feeling that because the government is there to defend the public interest, they are not ordinary contractors. They are there to do the public's business and that gives them special powers."
Where to start? Head to your local Procurement Technical Assistance Center for a chat with the staff. Its job is to help companies figure out if they should be pitching to the government and how to do it properly. The advice is free or at a low cost. For a listing, click
Another good resource is a Small Business Development Center, says Loines. "It provides management assistance to current and prospective small-business owners. SBDCs offer one-stop assistance to individuals and small businesses by providing a variety of information and guidance in central and easily accessible branch locations."
Also don't forget to reach out to the SBA. It not only administers several programs that help the federal government buy from small businesses, it also provides free advice like the Opening Doors to Federal Government Contracting Opportunities
, and several online
If you're looking for even more help, there are consultants who specialize in government contracting and work on an hourly basis (expect to pay about $250 per hour) or on a project-by-project basis (starting at $10,000).
Lan Nguyen is a freelance writer based in New York City. She has written for the New York Daily News, The Wall Street Journal, Worth magazine and Star magazine.