How to Sell to the Government – 7 Helpful Tips to Landing a Government Contract

This year roughly 4 trillion dollars in federal government contracts are projected to be awarded to private contractors. What's more, with new leadership in Washington D.C., additional spending on new programs appears quite likely. Even now, there are over 30,000 federal government contracts up for bid on government websites. The DLA (the Defense Logistics Agency) reports that they make between 9,000 and 10,000 individual contract actions on a typical day. There are thousands and thousands of firms across the nation trying to figure out how to sell to the government and get their slice of that enormous pie. The competition can be fierce. The public procurement process is often difficult and complicated. Many would-be contractors, especially smaller firms, give up in frustration. This seven step guide is designed to help you best determine how to sell to the government.

1. Understand the mindset of the employees involved in the public procurement process

Start by putting yourself in the shoes of a public procurement specialist attempting to fill a significant number of procurement assignments in a given day. There are actually fewer public procurement specialists now than in years past, due to the downsizing of those positions. The amount of funds flowing through your offices, however, continues to increase. You are busy. You're trying to move through each bid as quickly as possible. Most of the federal government contracts are competitive, meaning that there are a significant number of companies placing bids. Essentially, what you are trying to do is to find reasons to disqualify companies in order to narrow down the possible options.

It is vital that you understand this mindset. By and large, purchasing agents are looking for a reason to remove your company from consideration in order to make their job quicker and easier. Moreover, public procurement specialists need to protect their positions by making sure that the firm they choose to fulfill a given government contract is reliable, meets the required standards, and fulfills the order in a timely manner. As such, public procurement agents tend to rely on trusted firms with proven track records.

As a vendor attempting to secure a government contract, it helps to view your application and paperwork through this paradigm. Is all of the data complete? Have you included any documentation or certifications that you may need to substantiate? Is there anything that would disqualify you without sufficient explanation? If so, have you included that explanation? Are there things you can do to reinforce the fact that you are a reliable, trusted provider? It is helpful to be brief and straightforward with public procurement agents. Nonetheless, it is even more helpful to over-qualify yourself. It is better to provide documentation that is not required (or not required at this time) than it is to leave a public procurement agent looking for documentation they cannot find. This is especially true if you qualify for special considerations. (Please see Tip #3, below.) Include clearly labeled documentation so public procurement specialists can view what they want when they want it, and not have to ask for follow up documentation.

Perhaps the most helpful way for the average firm to develop this mindset is to think about a time you have had a large number of applicants for a particular job opening. The goal of the hiring manager typically was to weed through resumes as quickly as possible in order to qualify a handful of candidates for an interview. It doesn’t matter whether a particular candidate possessed the skillset, certifications or qualifications that the hiring manager was looking for. If that candidate did not include that information in their resume or cover letter, they were simply not considered. In the same way, when applying for government contracts, your firm must actively demonstrate that you meet all of the requirements, possess the necessary certifications, and have the relevant skills and experience in order to fulfill the order.

2. How to bid federal government contracts

In theory, the bids on any government contract are supposed to be the decisive factor in determining which firm is awarded the contract. All things being equal, agencies are directed to choose the lowest bidder. Military standards, certifications, and other requirements are designed to ensure that anything purchased by the government should meet their standards and needs. In the real world, a number of factors, including turnaround times, track records, and personal relationships all can impact which vendor is chosen to fulfill a government contract. In principal, however, the lowest bid should be awarded the contract. Hence, a common approach when trying to settle on an appropriate bid is to simply look at the last time a particular order was placed, and to undercut that price per unit by a small margin. Our database is an incredibly useful tool in helping to track successful bids on similar products, and help you to determine what is likely to be a successful bid. However, there is more to it than simply looking at the last successful bid.

Here are a few important things to consider when evaluating your bid on a particular federal government contract. How long has it been since a similar order was fulfilled? If it has only been several weeks, then the last bid is likely to provide a very good indicator as to what competitors are likely to bid on the contract in question. If, however, it has been several months or even years since the order was fulfilled, the older data is likely to be less relevant. What is the trend for this particular component? Are the successful bid prices going up or down? Is there any seasonality involved in the pricing of this component? Our database provides exhaustive data to help you in your research. We have historical data that can help you to identify trends. If you are having difficulty accessing this data or figuring out the fastest way to use the database, please feel free to call your representative and allow us to help you get the data you need to make a successful bid. Have materials for the component seen significant price swings? If a component is composed largely of copper, and copper prices have shot up or down significantly since the last bid was fulfilled, it is safe to say the bids will be affected by these changes. Adjust your bids accordingly.

3. Learn how to better sell to the government using your status in a specially designated category.

Federal government contracts are awarded with the intention of promoting small businesses, veteran-owned businesses, firms located in specific localities, and businesses owned by populations that have historically faced special economic challenges. If your firm can qualify for one of more of these advantageous categories, it can provide you with a substantial advantage in the public procurement process.

Small Business Status

Initiatives have been in place for years to give small businesses a fighting chance to land a government contract, and goals are in place to make sure small businesses get their slice of the pie. Approximately 23% of all federal government contracts are awarded to small businesses each year. Public procurement specialists will often favor small businesses in order to achieve these goals. As such, if your firm is a small business, it is vital that you claim it and document your status as an advantaged group. To see if your firm qualifies as a small business, review this table.

Government Contract and Development Hub Zones

The government has identified several geographic areas across the US where it is trying to promote economic development. In accordance with those goals, some of these areas have been declared Hub Zones. Firms that operate in these Hub Zones get an advantageous status for landing government contracts. To see if you qualify for this advantageous status, review this map.

Veteran-Owned Businesses

Businesses owned or co-owned by veterans also qualify for advantageous status in landing a government contract. Not only do public procurement specialists award government contracts to veteran-owned firms because they are attempting to meet certain goals, but these agents also tend to view veterans as particularly trustworthy and reliable. The government particularly wants to reward firms owned by service-disabled veterans. The goal is that 3% of all federal government contracts would go to this very small group of businesses. There have been significant initiatives in Washington D.C. to make it easier for wounded veterans to figure out how to sell to the government. If you have the opportunity to claim veteran status, or service-disabled veteran status, it is essential that you do so.

Groups that Have Historically Faced Economic Challenges

The government tries to promote diversity and empower the disadvantaged by ensuring that a portion of all federal government contracts are awarded to those in groups that face economic challenges. This is commonly defined as ownership having "at least one objective distinguishing feature such as race, ethnic origin, gender, or physical handicap, long-term residence in an environment isolated from the mainstream of American society, or other similar causes not common to individuals who are not socially disadvantaged." Such groups include the following:

  • Women
  • Black Americans
  • Hispanic Americans
  • Native Americans
  • Asian Pacific Americans
  • Subcontinent Asian American
  • Persons with Disabilities
  • Personal experiences of substantial and chronic social disadvantage in American society, not in other countries.
  • Negative impact on the individual’s entrance into the business world or advancement in the business world because of the stated disadvantage(s).

The most recent data suggests that women-owned businesses account for only 4% of all federal government contracts. This, in particular, has received a lot of attention in Washington D.C. Hispanic-owned companies receive about 8.4% of all contracts and black-owned companies receive about 7.2% of all contracts. There have been significant initiatives in Washington D.C. to help these groups better determine how to sell to the government. If your firm qualifies for this special status, it is a very good idea to claim and document your status.

If you are having trouble finding the proper forms to document your specials status, or have specific questions about the forms themselves, please call your Govgistics representative. We would be happy to help.

4. Think long term when trying to figure out how to sell to the government

As we have already indicated, each public procurement specialist’s job performance is based, in part, on how successfully vendors fulfill contracts. As such, trust and reliability are valuable currency. Providing free samples, or lending out a product to prove the quality of your workmanship and to build trust has worked for some firms. Don’t send in your pushiest salespeople. What works in the public arena does not necessarily work to land a government contract. Focus on earning a public procurement agent’s trust and respect first. Build relationships with these decision makers. If at all possible, meet decision makers face to face at events, their offices, etc. You should expect to spend considerable time, and even money, to win government contracts. One 2014 study found that small businesses submitted five prime contract bids and three subcontract bids for every contract won. Obviously, following these tips and consulting with our expert staff is intended to improve those odds for you and your firm.

Remember to stay focused on the long term value of the client. Once won, some contracts are simply renewed, without having to go through the bid process again. Once a firm has established itself as reliable with a public procurement specialist and with a government agency, the potential for growth is enormous. Remain focused on the lifetime value of the contract, and don’t get discouraged.

5. Don’t limit yourself to the main bids on federal government contracts

Certainly, most vendors would love to land the most lucrative prime government contracts. There are, however, many other opportunities. First, we strongly encourage our vendors to consider subcontracting on federal government contracts, especially if they are relatively new and trying to earn the trust of purchasing procurement agents. There are several advantages to this approach. First and foremost, fewer of the largest firms compete for subcontracted projects, which means the competition is typically less intense. Second, it is often easier to convince decision makers to give you a chance to prove yourself as a subcontractor rather than a prime contractor. Check out the subcontracting directory to explore the many options available to you. If you are having trouble navigating the directory, please contact your Govgistics representative, and we would be happy to help you out.

Also you should consider applying for a state or municipal government contract. In many ways, this is a very different animal than federal government contracts. Obviously, there is no central database and there are many more players to have to deal with. State and municipal governments often have rules unique to them. You will find, however, that the Govgistics database can still be a useful tool. Small businesses that engage in both federal and state/municipal contracting report that roughly 17% of their revenue comes from federal government contracts, while roughly 12% come from state and municipal governments. Those businesses that do engage at both levels find diversification expands revenue streams and offers a buffer against budget cuts at the federal level.

6. Make sure you provide all the necessary documentation

It almost goes without saying, but you need to make sure that you have all of the necessary documentation in order to land a government contract, and that this information is up to date and complete. Don’t let something like an old address or expired document derail your bid. Make sure your registration is current and the following is included in your documentation:

  • NAICS codes
  • Data Universal Numbering System (DUNS)
  • Federal Tax Identification Number (TIN or EIN)
  • Standard Industrial Classification (SIC) codes
  • Product Service codes
  • Federal Supply Classification codes
  • Persons with Disabilities
  • Personal experiences of substantial and chronic social disadvantage in American society, not in other countries.
  • Negative impact on the individual’s entrance into the business world or advancement in the business world because of the stated disadvantage(s).

7. Get help with a government contract when you need it

These first six tips can go a long way towards helping you better learn how to sell to the government. The truth is, however, this process can be grueling and confusing. Fortunately, you have access to experts who have navigated these systems for years. Please don’t hesitate to give your Govgistics representative a call to help answer any questions and to aid in the research that will land you federal government contracts. If you want to better learn how to sell to the government, the answer is only a phone call away.