Navigating the intricacies of government contracting is an important skill for businesses seeking to expand their presence in the federal market. While both federal and commercial avenues offer opportunities for growth and profitability, they come with their own unique sets of challenges and strategies. You’re most likely very familiar with the commercial world now, but may not have as much experience selling to the government. In this blog, we'll dive into the differences between selling to the government vs. commercially to provide you with a comprehensive understanding of how you can succeed in the government market.
Advantages of the Federal Market
In order to expand your business, tapping into the U.S. federal market spending opens up a plethora of new opportunities. Firstly, the federal government is the single largest buyer in the world, with a vast array of goods and services procured annually, and a strong focus on setting aside opportunities and setting goals for small businesses. In the commercial world, there aren’t as many regulations driving customers to prioritize small business spend. This allows both small and large businesses to grow with the federal market.
Additionally, government contracts like the General Services Administration (GSA) Multiple Award Schedule (MAS) tend to be more stable and long-term especially during times of economic uncertainty and natural disasters, providing businesses with a predictable revenue stream and greater financial security.
Through large contract vehicles like MAS, you also have access to the wide array of government customers, which is not the case in commercial sales. With a GSA Schedule, you can sell to federal agencies and other eligible entities. Under certain circumstances, you can also sell to state and local governments using a GSA Schedule. This allows you easier access than having to go through a state or local government’s own procurement process.
Cooperative purchasing allows GSA Schedule holders to regularly sell IT products and services and law enforcement equipment to state and local governments. GSA can also open up sales in other areas to state and local customers under disaster recovery situations, such as after declaration of a State of Emergency.
Understanding Government Procurement Processes
Government procurement processes are often perceived as excessively complex and difficult to understand, and for good reason. Unlike commercial sales, which would typically involve negotiations between a seller and a buyer, selling to the government necessitates adherence to strict regulations and procedures. From soliciting bids to awarding contracts, the government procurement process is governed by rules designed to ensure fairness, transparency, and accountability.
Compliance and Federal Regulations
One of the primary distinctions between selling to the government and selling commercially lies within compliance and regulations. Government contracts are subject to a myriad of laws and regulations, including the Federal Acquisition Regulation (FAR) and various agency-specific rules. Failure to comply with these regulations can result in severe consequences, including contract termination and potential legal action. As such, you must familiarize themselves with the applicable regulations and ensure strict adherence throughout the procurement process.
The Federal Acquisition Regulation, or FAR, governs most federal contracting, while there are other more specific bodies of regulations, such as the DFARS for defense contracting and the GSAM for GSA contracts.
In order to sell to the federal government, you need to put in more time and effort upfront to ensure compliance with various government requirements, but this can pay off with a stable revenue stream. These regulations are in place in vehicles such as the MAS program so government customers can ensure they are purchasing solutions from a vetted contractor and are getting the best value. It also means agencies can cut through a lot of the red tape and acquire a product or service they need in a more efficient way, making GSA Schedule contracts one of the most popular forms of acquisition among government customers.
While purchasing is more complicated than the commercial world, once you secure a contract vehicle you have access to a range of opportunities that are unique to the government marketplace.
There are also other options for businesses who want to sell to the government through a GSA Schedule, but don’t want to take on as many responsibilities. If you want to sell to the government with less worry about compliance risk, you may want to consider partnering with a GSA reseller on their GSA Schedule.
Government Fiscal Years and Q4
Unlike most commercial industries, the federal government’s fiscal year runs from October 1 to September 30. If your business is experiencing some downtime or needs to pick up in profit, government sales are at their highest toward the end of the federal government’s quarters, when agencies are looking to use up their budgets.
This is especially true of Q4 (July through September), during which about 1/3 of federal contract dollars are awarded, as many federal agencies must use or lose their budget. Planning ahead, preparing responses to different government Request for Quotes (RFQs) and Requests for Proposals (RFPs), and getting in touch with federal customers in advance can pay off for savvy government contractors.
Are You Interested in Becoming a Government Contractor?
While selling to the government and selling commercially share some similarities, they also have distinct challenges and strategies. Understanding the nuances of government procurement processes, compliance requirements, and leveraging set-aside programs are essential for success in the government contracting world.
At Winvale, we specialize in helping businesses navigate the complexities of government contracting. Whether you're a seasoned government contractor or exploring opportunities in the public sector for the first time, our team of experts is here to provide guidance and support every step of the way. Contact us today to learn more about how we can help you achieve your government contracting goals.
