Here the top 10 myths of Government Contracting:
MYTH #1- The Government does not pay, or it takes forever to get paid.
Notwithstanding media coverage on some states and organizations that have not paid their “bills”, when we discuss Federal contracting specifically, upon receipt of a correct invoice, payment is made within 30 days, and in some cases 15 days. Pretty good huh?
MYTH #2- “No one will talk to me, or I can’t even talk to anyone in the Government, etc.”
The Federal Government did their own version of mythbusters and this is one of their points. In reality, government officials can and should have one on one discussions with companies, as long as no company received preferential treatment. Early exchanges of information with industry are encouraged. On a smaller scale, the state of Iowa procurement officials also encourage direct communication with industry.
MYTH #3- Talking to Government officials/marketing doesn’t really matter nor have any value.
At both a Federal and State level, Government agencies count on companies marketing their goods/services to assist with their own market research and to know what is available in industry. This interaction also helps with identification of small businesses, as well as provides more companies an opportunity to receive Requests to Quote that may not be publicly advertised. If they don’t know you, they will go to someone they do know!
MYTH #4- Getting “registered” is enough, or being in the Government’s “database” is all I have to do.
Unfortunately, there is no one stop shop for all things government contracting, including a universal registration or computer system that magically ensures that you will always know about every opportunity to bid. You will have some required registrations, but this is where being educated on the process is necessary, to ensure that you are registered and looking in the “right place”.
MYTH #5- Government sales is “easy money”.
There is a lot of competition for government projects and sales, and while there is a great potential for success if you put in the initial time investment, this is not the market to enter if you are looking for a quick way to increase sales. While there are exceptions, there have been articles/studies that say that on average it takes a company 18 months to secure their first contract. It is a marathon, not a sprint, but with realistic expectations you will see the ROI.
MYTH #6- It will be impossible to make any money.
Just to piggyback on myth #5 from last week, and give a positive spin, the Federal Government is one of the largest buyers, and your state government also have a large budget for procurement of goods/services. If you take the time to identify your best potential customers and learn the system, you have the potential to increase sales significantly. One Iowa company increased sales 25% with the addition of government contracting.
MYTH #7- I am too small of a company to be competitive, only the large companies are successful.
One way the Federal Government specifically differs from the commercial sector is their socioeconomic goals. They have goals on their contracting spend for a variety of small businesses, including women owned, veteran owned and more. Their regulations allow them and require in many case to “set aside” opportunities to small businesses, meaning they will be the only ones bidding. The state of Iowa also has some programs for small businesses. This doesn’t mean this is what you hang your hat on, but it is another differentiator and competitive advantage that you have over the “big dogs”.
MYTH #8- You need a GSA schedule to be successful in the Government market.
Some of you are probably like “GSA? Huh?”, and that’s ok. General Services Administration Schedules program is one way the Federal Government buys things, but it is not REQUIRED and is not the ONLY way to receive contracts and orders. I have been to enough conferences (and maybe you have to) to know that this is not always the message, but believe me you do not need a schedule to do business with the government.
MYTH #9- The low bidder always wins anyway.
Of course you will never get away from certain procurements being awarded to the lowest priced bid, just by nature of some products purchased. However, both the Federal Government, as well as state agencies do have the discretion to award contracts to the offer that represents the best value to the agency, other than just the price. While it may be slightly behind the curve, the government has realized that low price does not always mean “low price” if there are quality issues, requests for changes etc. They are trying to be more like private industry in this regard, and it is becoming more of the norm than the exception.
MYTH #10- There is too much red tape to work with the government.
I saved the most common phrase I hear for last; it is the best to me! Yes, of course there are some requirements to work with the government; they are of course spending public dollars. However, in my opinion entering the government market can actually be easier than trying to penetrate other commercial markets. You don’t have to really do anything “special” to be able to compete and win. It just takes education, focusing your attention on the best potential customers and using your best sales/marketing/pricing to win business. Nothing outrageous, and nothing different than I would imagine the rest of your customers- every one of your customers expects something a little different from you, your government customer is no different.