The United States Federal Government – A Viable Customer For

Foreign Companies

COPYRIGHT 2009 v.2 ©

The US Government is the largest purchaser of goods and services in the WORLD

spending over $400 Billion annually. This figure does not take into consideration the

2009 American Reinvestment and Recovery Act / Stimulus Funding. The government

purchases everything from products to services including IT services to law enforcement

equipment and office supplies.

The US Government fiscal year runs from October 1 – September 30. Although selling to

the government is not recession-proof, it is a great way to mitigate risk and diversify

your client base. Budgets are set in advance and normally follow buying patterns, such

as a spike in purchases during the fourth quarter. Government works on a “Use it or

lose it” fiscal policy, so July, August and September are the three months where the

Procurement Officers are utilizing remaining funding. These procurements are fast and
furious and most likely end up in the hands of the contractors who have the relationships

and are viewed as “solution providers” and “partners”.

Every vertical market has their nuances and so does business-to-government, or B2G. A

high level sale in any sector is usually the result of a relationship, although some

companies are lucky. Because the government is a risk-adverse client, the importance of

the relationship and trust-building is increased. Having a physical presence in the

Washington, DC area where the decisions are made and policy is established is very

important. There are also ample resources available to those wishing to enter this

market. Some resources are government run and free while others are commercially

priced.

This document will provide a list of the main resources and some price estimates to help

you in understanding the investment and budget needed to be successful in this complex

sales market. B2G is a long-term sales investment and requires patience, persistence

and perseverance.

Government Consultants

Government Consultants can be beneficial to help determine how much and if there is

ROI (Return on Investment) for your product/service. Information on your competitors’

government sales figures as well as their government pricing is quickly accessible for

these individuals. They can also assist with formulating a sales strategy and determining
which government agencies have the budget and the propensity to purchase your

solution.

Government Consultants can also help determine if your foreign entity would benefit

from having a US presence through pursuit of establishing a US subsidiary or leveraging

a registered agent or attorney to form a brand new US headquartered entity.

COST: These individuals or firms may charge an hourly rate ranging from $100-$200

or may charge a flat fee for a specific deliverable. They also work on a monthly retainer

to provide you complete and dedicated expertise ranging from $3-8,000 per month.

Attorney fees for establishing a US entity may range from $200-$500+ per hour.

Sales Representation

Sales teams are your face to the customer and absolutely necessary. They can include

full-time and part-time federal experts. These individuals can be hired as part of your

regular staff or they can be individuals hired as contractors. In either scenario they

should be well versed in your offering and also have strong relationships within agencies

that are the best fit for your firm. These individuals should be experts in government

sales. Direct compensation to the sales rep will normally be based on a monthly rate

plus a commission (percentage) for successful contracts won. COST: Seasoned sales

representatives on a full-time basis normally range from $75-150,00 plus commissions

and benefits. Part-time sales representatives may range from $3-8,000 per month plus

commissions, depending upon the time allotment. Many sales recruiters specialize in

placing government sales individuals and may include those with Security Clearances.
COST: Recruiters may charge placement rates that range from $3-20,000 based on your

requirements.

Lobbyist

Lobbyist can be beneficial by strengthening your sales efforts. These organizations or

individuals will advocate on various levels for you. They tend to be connected at both

the political levels with elected officials and also high levels within agencies – usually an

appointed position. Most lobbying firms have representation with both political parties

and some may specialize in a particular industry (ie. healthcare, etc.) They can help

influence law makers who are writing bills for certain industries, products and involved

in appropriation of government funding. This industry has become much more regulated

in the recent months/years. Much of their work must be documented and reported on

public websites. COST: These individuals or firms will range from $5-40,000 based on

services provided.

Networking and Trade Shows

There are plenty of for-profit companies helping to bridge the gap between industry and

government. These companies will host many trade shows and conferences which may

be agency specific and/or industry specific. Many government employees and decisions

makers are in attendance. 1105 Media Group www.1105GovInfo.com is one of the

largest host of B2G events. Government organizations including the SBA and GSA (see

below for more details) also host trade shows for vendors with government employees as

the main attendees. FPED – www.fped7.org Force Protection Equipment

Demonstration is an organization that host a military related free exhibit for vendors and

attendees every 18 months in the DC metro area. COST: Conferences can range from

free to $2,000. Trade shows (as an exhibitor) ca range from $4-20,000+ and free to

$2,000 as an attendee.

Networking events are abundant in the DC metro area for B2G vendors and B2G curious

vendors. Organizations like The ASBC (American Small Business Coalition

www.TheASBC.org ), WIPP (Women Impacting Public Policy www.WIPP.org ), The

Washington Network Group (WNG) www.WashingtonNetworkingGroup.com , and many

others. Many of these organizations are beginning to build their websites to allow

members to access and network virtually – similar to many of the on-line social

networking sites. This can be a benefit for foreign companies or those outside the DC

area. COST: These organizations typically charge an annual fee ($80-$120) and may

charge a nominal fee for attendance at events ($5-$100) depending upon the event.

On-line social networking sites are growing in popularity and the US government has

begun to open these sites up to employees. The most frequently utilized sites for the

government contractors are: www.LinkedIn.com (visit the MANY subgroups related to

government), www.GovLoop.com , The Federal Contractor Network www.TFCN.com ,

www.MySBX.com (this is good for identifying partner companies). COST: These sites

are free to register for basic service - and most offer additional level of services for a fee.

Marketing Content, Intel & Resources

www.LeadershipDirectories.com, www.Input.com , www.Onvia.com ,

www.FindRFP.com are for-profit organizations providing government marketing

information. This can include a list of agencies, contact names, phone numbers and

email addresses. Additionally, they may also provide solicitation notifications which can

be tailored to a particular segment of government – federal, state, local – as well as a

geographic region and an industry category. COST: These can range from $30 a month

to $10,000 depending upon the level of service selected.

Solicitations are the method by which government typically procures its goods and

services. Solicitations can include RFP, RFQ, RFI, Sources Sought Notifications, etc.

Request for Proposals, Request for Quotes, Request for Information and Sources Sought

are ways the government obtains information about the technical capabilities of a

company, product and/or service as well as pricing information. Federal solicitations

over $25,000 USD are required to be posted on the Federal Business Opportunities

website or www.FBO.gov. Companies can be alerted to solicitation notifications that

meet their industry codes. This free government hosted website publishes bidding

opportunities daily. Searches by agency, industry, date and many other fields are

available. Because the B2G industry is relationship centric, most of these opportunities

have an intended recipient or recipients in mind. This information is not to be discarded

and does not mean that you should skip the bidding process. The solicitations contain

contact information of the government purchasing officer which can be utilized to begin

the relationship building process for a future procurement. Additionally, an “Interested

Vendors” tab is available which contains information on the companies bidding. This
can be used to determine if these organizations are potential competitors, partners or

clients. COST: This is a free service offered by the US Government.

Proposal Writers

Proposal writers can be beneficial in the bidding process. This is not always necessary,

but may be important for a foreign entity who wants to ensure their proposal language is

clear and speaks to each point in the Statement of Work (SOW) in the solicitation.

COST: Proposal Writers can range from $80-$200 per hour. Some may charge a

success fee which would be a percentage of the contract upon award/winning. This can

range from 1-5% depending upon your margins and negotiations.

Prime Contractors

Prime Contractors obtain about 80% of the government contracts. These are companies

such as Lockheed Martin, Northrop Grumman, Raytheon, SAIC, etc. Navigating within

these companies is just as daunting as navigating the federal government. These

organizations are required to subcontract out a percentage of their contracts to small

businesses. Because these companies are so large, they also have a Small Business

Liaison Office and also a foreign presence. Most also have a Vendor Registration on

their website. For non-US companies, it may be beneficial to build relationships within

the local country office. COST: Your sales representative and/or lobbyist may have

connections at these companies.

SBA – Small Business Administration

The Small Business Administration www.SBA.gov is a significant government agency.

The SBA provides many functions and resources for small businesses, including loans,

bonds, equity and advocacy. There are various small business designations that a

business can achieve such as women-owned, minority-owned, Alaska-native, HUB-zone

(Historically Underutilized Business Area – this is based on US Zip codes), 8a, Veteran-

owned, Service-Disabled, etc. SBA is the agency overseeing and certifying in some

instances) these designations. SBA works with the other agencies to ensure that at least

25% of contracts are awarded to small businesses. Each agency receives a report card

at the end of the fiscal year based on their contract awarded. This information can be

used as part of your sales strategy if you are a small business (ie. locate the agency that

did not meet its small business goals and is under scrutiny). Foreign companies may

wish to also partner with small businesses for strategic purposes. COST: This is a free

service offered by the US Government. Some of the designations including the 8a

Certification require an abundance of paperwork and registrations. Many companies

choose to outsource this to an SBA/Government consultant who specializes in this area.

Rates can range from $100-$200 per hour or a flat fee for the certification.

SCORE

The Service Corp of Retired Executives www.SCORE.org are counselors to America’s

small businesses and a resource partner with the SBA, Small Business Administration

www.SBA.gov COST: This is a free service offered by the US Government.

PTAC – Procurement Technical Assistance Centers

PTAC www.aPTAC-us.org offices are available to assist companies who are interested

in conducting business with the government. They may hold educational seminars about

events within government agencies. The PTAC offices are segmented by geographic

area. COST: This is a free service offered by the US Government.

OSDBU – Office Of Small and Disadvantage Business Utilization

OSDBU offices are located in every federal agency. These offices work with the small

business to help them identify opportunities related to their product/service. The

OSDBU offices sometimes host educational events. There is also an annual event where

all of the OSDU officers meet with companies and a 1:1 session is available. COST:

This is a free service offered by the US Government. Trade shows and conferences may

have a nominal fee.

GSA – General Services Administration

The General Services Administration www.GSA.gov is a non-appropriated agency which

oversees contracts between commercial companies and the US Government. The GSA

Schedules are contracts which are segmented by industry and offer pre-negotiated

pricing for your products and/or services. This is usually your lowest and “most-favored-

customer-pricing”. GSA Schedules are your license to sell to the government, but do not
guarantee any sales or inquiries. (Many state & local government agencies as well as

quasi-government agencies can also leverage this contract vehicle.)

Some examples of the most popular Schedules include GSA Schedule 84 - designated for

security and law enforcement and GSA Schedule 70 - designated for IT Services. These

Schedules are 5 year contracts with 3 five year renewable periods, making it a 20 year

potential contract. GSA does not receive tax-payer funding, so they asses a .75%

Industrial Funding Fee (IFF) every quarter to each GSA Schedule holder. This fee is

assessed on GSA Schedule sales only. Additionally, GSA requires a $25,000 sales quota

for the first 24 months and $25,000 for each year after. If this quota is not met, GSA has

the right to revoke the contract – and they will!

GSA Schedules must also comply with various Trade Agreement Acts (TAA) and Buy

America Act clauses (BAA). More information can be found on TAA and BAA in the

Federal Acquisition Regulation (FAR). If there are exceptions to these guidelines, they

are normally handled through the United States Trade Representative (USTR).

www.USTR,gov These exceptions are usually when a company provides such a unique

and exceptional service/product that it cannot be located anywhere else in the world.

There are many obstacles to overcome to obtain a GSA Schedule and it is a labor, time

and paper-intensive process. Most companies evaluate the opportunity cost associated

with in-house completion and usually outsource this to a GSA Schedule consultant.

COST: The GSA consultant rates can range from $10-$30,000 - depending upon the level

of service provided. GSA also offers “How To” courses on completing the GSA

Schedule.
Government Database Registration

The following registrations are part of the GSA Schedule process. Most government

contractors are registered in these. It is the first step in the process.

Dun and Bradstreet www.DnB.com is a commercial credit company. D&B list every

company worldwide and basic demographic/business details associated with that

organization. The D&B database feeds the main government database, CCR. Therefore,

if your D&B information is incorrect you must fix this prior to registering in CCR.

The Central Contractor Registration www.CCR.gov is the government database that

allows vendors to get paid. A Federal Tax ID number or Social Security Number is

required along with banking information.

ORCA – OnLine Representation and Certifications https://orca.bpn.gov/ is a

Government registration site certifying that your products are not manufactured in a

“watch-list” country. COST: There is no cost to register in these US Government

databases.

Selling to any new vertical market will include a learning curve that can cost time and

significant monetary investment. The US Government is an attractive client by being the

largest consumer in the world - purchasing both products and services. There are ample

resources – some government sponsored and others as private enterprise – available to

educate and guide companies to B2G success. Product companies, service companies,

domestic or foreign, large or small must all rely on basic sales skills (“relationships”) to
win contracts and be profitable. The sales cycle/relationship building can range from 6-

24 months, sometimes longer. Some companies do get lucky but most significant

purchases ($25,000+) are based on the customers trust and knowledge that a particular

service or product will solve their problem, ease their pain or significantly improve the

agency’s objectives and goals. It is that easy and that difficult!

Jennifer Schaus is a government consultant in Washington, DC. She is the principal of Jennifer

Schaus & Associates. Ms. Schaus works with domestic and international clients who provide services

and products to the US Government. Her expertise is in representing clients to complete the GSA

Schedule process and advising on government sales strategies. She also provides Venture Capital

financing for existing businesses. To contact Jennifer Schaus, please visit: www.JenniferSchaus.com

or call + 1 - 2 0 2 – 3 6 5 – 0 5 9 8.

COPYRIGHT 2009 v.2 ©