By Deborah L. Cohen
Chicago (Reuters.com) – In 2006, William Witcher’s company did virtually no business with the federal government. Last year, his Walpole, Massachusetts-based Minuteman Trucks Inc., sold some $1.2 million worth of truck parts to the federal government – primarily the U.S. military – and he expects to more than double its sales in 2008.
“The economy has been slip sliding away,” says Witcher, whose 75-man operation also sells and services big rigs and is the Northeast’s largest supplier of Pierce fire trucks. “We decided we wanted another place we could sell.”
As the economy slows, this is a good time to take a closer look at the federal government, the largest buyer of goods and services in the world. The advantages are clear. The budget is set; the government typically lets vendors know where they stand throughout the bidding process; and, best of all, bills are paid on time, typically within 30 days.
Witcher says he has become a government convert. After hiring a consultant to learn how to navigate the complicated process of bidding for federal work, he shifted his inventory control officer to the full-time task of researching potential contracts and has amassed a database that tracks all the bids the company has submitted – won and lost – to learn from its history.
“The federal government is my No. 1 customer now when it comes to parts,” Witcher says. “It has been continually on a growth pattern for us.”
Under statutory law, federal agencies ranging from the Department of the Interior to the Environmental Protection Agency must offer most business contracts estimated at $100,000 or less to small companies. They’re aiming to fulfill a goal of giving 23 percent of a multi-billion-dollar procurement budget to small businesses.
Stigma of corruption?
The government buys virtually everything the private sector does, from condoms to coffeemakers to the services of publicists, pest control experts to entertainers. Yet for some, the idea of doing business with the government raises images of can’t win backroom deals. That’s just not the case with contracts in the small business arena, says Malcolm Parvey, a marketing consultant who has coached Witcher’s company and others on how to win federal bids.
Most of the work is awarded electronically, he notes, through a rigorous procurement process that takes time to master. There’s a high level of transparency, too. The government even lets bidders see who their competitors were and how they priced once the job is awarded.
“I know that small businesses have a great interest in this market; they just don’t have the time and they don’t have the expertise to go after it,” says Parvey, co-author of a new book, “Winning Government Contracts,” due out in February from Career Press.
The book is the latest attempt to simplify what can look like an insiders’ game. There are many guides on how to get federal work, including the government’s own tutorials at the Web sites of agencies such as the U.S. Small Business Administration and the U.S. General Services Administration as well as popular sites for searching federal procurement such as FedBizOpps.
“With the Internet what used to take 10 days now takes 10 minutes,” he says. “There are more and more agencies that are allowing competitive bidding to be done over the Internet.”
Roadblocks to entry
Manufacturers and suppliers may be able to get up and rolling with the process in just a few months, but it’s not unusual for consultants and other service providers to wait a year or more from the time of certification to the start of their first job.
That was the case with Shawn Keough-Hartz, president of a small medical billing and consulting firm in Erie, PA. Her company, Provider Resources Inc., began researching federal work in late 2006, got certified in March of 2007, and secured its first contract in August. The company is looking forward next month to finally starting a job as a subcontractor to a larger service provider for the National Institute of Health.
“You’re selling the qualifications of your people, their areas of expertise, their ability to perform as well as the company’s ability to perform and team with other companies for the benefit of the customer,” she says. “You have to be able to prove your performance.”
And there’s already more competition in some areas, such as construction, where the slowdown in commercial business has prompted many contractors to look more seriously for government jobs.
“It’s a competitive situation; it’s a tight margin,” says Marjorie Herter, president of Vee See Construction Co. Inc., an Oak Lawn, Illinois-based commercial contracting firm that has done work for the Environmental Protection Agency, the Federal Emergency Management Agency and the Internal Revenue Service.
“As work becomes more scarce, contractors who might not have previously thought of the federal government as a prospective client, will now be looking at them,” she says. “They’re a major purchaser and everybody wants to get at it.”
That’s part of the reason government experts caution newcomers to research potential government markets well.
“The most important thing would be really to assess the market, to be sure that the there is truly federal demand for the good or service,” says Arthur Collins, director of government contracting policy for the U.S. Small Business Administration.
“It is becoming increasingly more like the commercial world,” he says.
Deborah Cohen covers small business for Reuters.com. She can be reached at firstname.lastname@example.org
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