What Makes Government Contracting Different
As a Government Contractor, you're competing in a complex and highly competitive market. The government is huge and has a complex structure that can be difficult to navigate. Although not as big, multinationals can also be complex. So what makes doing business with the government different than dealing with companies in the commercial sector? We’ll discuss some of these basic differences and give tips for additional resources.
Before we get started it’s important to point out that the government’s purpose is to protect and serve the people, whereas most independent companies exist to make a profit. This means that the goods and services contracted by the government will be designated for such things as building roadways, populating research organizations, and enhancing our country’s defense systems. In addition, government business must be handled carefully; there are laws to ensure that the process is fair, efficient, and in the best interest of taxpayers.
It takes many policies to keep the big ship of government sailing. Because voters keep an eye on government officials, it’s imperative for them to meet a high standard of transparency and business ethics while contracting for goods and services.
- Federal Acquisition Regulation (FAR): This is the principal set of rules, the “code” of federal procurement. The main principles of FAR include meeting the buyer’s needs in terms of cost, quality, and timeliness; minimizing administrative operating costs; ensuring integrity, fairness, and openness; and fulfilling other public policy objectives.
- Transparency: There is no flying under the radar when selling to the government. Contractors must follow a strict set of do’s and don’ts in the bidding process, and must conduct their business with a large degree of openness and transparency.
The budget process
At the macro level, the budget process can be a time consuming tug-of-war between the executive and legislative branches. If Congress doesn’t approve the President’s budget request, it’ll make its own changes. If Congress fails to pass a budget, the result could be no money to spend, and a government shutdown until the impasse is resolved. For more information download a free copy of “Government Contracting for Dummies”.
Federal buying fundamentals
In government contracting, two offices serve to successfully supply and execute the agreement. These two organizations are:
- The Program Office (PO): This is the “customer” to whom government contractors are selling. They have the money to spend on contracted goods and services, and decide important contract specifications. This specifications include: who the stakeholders are (who will be using what’s being purchased), what the functional capabilities and needs are, and what the overall cost encompasses. When the Program Office has spelled out the requirements and determined the funding, the contract moves on to the Contracting Office.
- The Contracting Office (CO): Although the PO is the department that contractors must sell to, the Contracting Office assists in the execution of the contracts and is also responsible for ensuring your payment. Acting as a personal shopper for the PO, the Contracting Office is considered the “buyer” of the acquisition process, making sure that all the laws are followed and that the PO is getting the best value from the contracts it purchases.
With government contracts and requirements getting bigger and bigger, sometimes it’s better to team with another contractor organization to tackle a proposal. Partnering up and combining assets and services can be especially advantageous for small government contractors.
Unlike private business, where it takes the consent of two parties to make a deal, in government contracting this isn’t the case. Government contracting involves oversight and includes requirements regarding which companies your organization is allowed to team with, and in some cases, which ones you are not allowed to team with.
There are research and consulting organizations that can assist you with finding teaming partners. Deltek GovWin IQ is the essential source for information, teaming and software solutions to help organizations find, manage and win government business.
The government sets aside a certain percentage of its purchases for small and/or underrepresented businesses (sometimes denoted by socioeconomic status), to guarantee that disadvantaged business owners are given fair opportunity to compete for government business. For more information on the classifications of businesses that qualify download “Government Contracting for Dummies”.
The GSA Schedule
When you’re competing for federal contract opportunities there are other things to keep in mind. For instance, there are lots of hoops to jump through to get on a GSA Schedule. A GSA Schedule is more than a directory; it includes lists of all the prices that the federal government has negotiated to pay for a contractor’s goods or services. It’s like a menu of prenegotiated contracts.
If that doesn’t sound like a particularly appealing way of doing business, think of a GSA Schedule instead as the Yellow Pages. Get on the schedule and you have increased visibility, not just for the prepriced goods and services, but for things that may go beyond what’s listed there and that may have larger profit margins.
The application process to be approved for placement in a GSA contract is arduous. The government, represented by the Contracting Office, wants to make sure it’s getting the best price for your services, which means extensive audits and history checks.
- This is an excerpt from Deltek’s special edition “Government Contracting for Dummies”. Download your free copy of “Government Contracting for Dummies” to learn strategies to keep ahead of the competition and win more government business.
- Deltek ERP for Government Contractors has a strong heritage of understanding the intricacies of government contracts and the way government contractors work. Learn more about Deltek Costpoint, the industry’s leading ERP system for Government Contractors.
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