Download GSA Schedules - A Vendor`s Path to Federal Sales

Closing a Federal Sale
by Richard White, President
Fedmarket
(888) 661 - 4094
www.fedmarket.com
© 2008 Fedmarket.com. All rights reserved. Reproduction and distribution strictly prohibited without prior consent.
Having a way to close a federal sale is critical to success in the federal market. The most prevalent
methods used to close sales transactions are through modifications or extensions of existing contracts
and or through multi-vendor blanket contracts. Insiders have an edge because they have these two types
of closing mechanisms.
Making sales in the commercial sector can be difficult but closing a sale usually isn’t. In the commercial
sector, a senior manager works with vendors to decide which product best suits his or her company's
needs. The purchase is then consummated through the use of a credit card or, in the case of a highdollar transaction; the purchase is completed by the company’s purchasing department. Actually making
the purchase once a decision has been made is relatively simple.
Making a purchase in the federal arena is not that simple. The process is the same up to the point of
completing the transaction. The end user in the federal arena may meet with one or more vendors and
obtain information about the features, benefits, and past performance of a company's product or service.
The end user then meets with the contracting officer, who will ask how much money is involved and will
remind the end user of the necessity for strict adherence to applicable procurement rules. This is where
the process becomes complex.
The following summarizes the methods in which a federal purchase can be closed or transacted:
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A credit card buy (the quickest and simplest manner)
The issuance of a purchase order for amounts under $25,000; the federal purchaser must first
obtain three quotes (relatively simple)
Through a public bid (long, lengthy, expensive, and to be avoided if possible)
Through a multi-vendor contract which allows the government to purchase from a select list of
vendors who are pre-qualified (including pre-negotiated prices) in anticipation of future
purchasing needs
Through a subcontract with a prime contractor which already has a federal contract
Through a subcontract with a “preferred” small business that the government can contract with
quickly and with very limited competition (e.g., a small disadvantaged business, Alaskan Native
Corporation, etc.)
The manner in which a purchase is completed depends on the size of the transaction. Credit card buys
under $2,500 can be single sourced by the end user and can be transacted without the contracting
officer’s involvement. More liberal credit card limits apply in emergency and national security situations.
For purchases in the $2,500 to $25,000 range, the federal purchaser must obtain quotes from three
vendors to meet the “best value determination” required under procurement rules. Purchases exceeding
$25,000 are made either through a public bid process or through a multiple vendor contract. Public bids
are open to everyone and the process is lengthy -- the average time from the posting of a bid to the actual
contract award is more than two hundred days. From the government’s perspective, a public bid is an
expensive process requiring considerable, and often unavailable, staff resources. If nothing else,
Hurricane Katrina demonstrated how inefficient the government’s public bid process can be. Vital services
that were needed in response to the emergency could not be procured quickly and efficiently.
Why would the government select a public bid as the closing procedure of choice given the horrendous
lead time and cost? Contracting officers do their very best to avoid them. Although it is true that public
bids are the method of last resort, a project is often so large and publicly visible that a public procurement
is the only acceptable procedure as far as vendors, the taxpayer and the press are concerned. In rare
instances, a public bid is issued when a vendor has sold an opportunity but doesn't have an appropriate
closing procedure. Unfortunately for the contracting officer and the vendor, putting a contract out for bid
may be the only option when a desired vendor doesn’t have a closing mechanism.
Purchases in excess of $25,000 can also be made through companies holding multi-vendor contracts
(such as GSA Schedule contracts). Bids are usually solicited from three or more vendors holding such a
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contract and the successful vendor is selected from that list. Purchases made through multi-vendor
contracts are quick and cost effective for the government. From the vendor’s perspective, competition is
minimized and a deal can be closed quickly if a multi-vendor contract is used. GSA Schedule contracts
are the best closing mechanisms for small and medium-sized businesses that cannot afford to hold
several multi-vendor contracts.
Subcontracting to a prime contractor is a valid way to close a sale but it has drawbacks. The primary
drawback is that a subcontract with a prime contractor doesn't give your company its first step toward
achieving insider status. When acting as a subcontractor, you do not have a contract with the federal
government. Instead your business has a commercial contract with the prime contractor. The prime
contractor controls your company’s prices, your sales growth, and your destiny with the federal customer.
A savvy prime contractor also insulates the federal customer from its subcontractors. A variation on the
prime contractor/subcontractor approach to closing a sale is to become a subcontractor to a small
business under one of the federal government’s many small business preference programs. These
programs allow quick purchases with preferred types of small businesses under rules allowing limited
competition.
A sole-source contract is another alternative for closing a sale; however sole sourcing is extremely rare
unless there is truly only a single source for a product or service. Among other challenges, sole-source
contracts require special, hard-to-obtain approval from above. The government does its best to keep such
contracts under the public’s radar.
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About the Author
Mr. White is a national authority on federal, state, and local government marketing and sales. He is the
founder, President, and CEO of Fedmarket.com, the premier organization for all things government salesrelated. He has unsurpassed knowledge of all aspects of doing business with the federal government
using GSA Schedules. He is the author of three books on federal government contracting including “GSA
Schedules: The Shortest Path to Federal Dollars”, a look at how GSA Schedules fit into the federal sales
game.
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