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10 Myths about Selling to the Government

Introduction Combined, U.S. government agencies (federal, state & local) represent the largest customer in the world. There are 90,000 government agencies spending over $7 trillion per year…just under $20 billion per day (every day) — that is A LOT of money. The federal government spends over $4 trillion per year, and state & local agencies spend over $3 trillion. Government spending is the largest “industry” in the United States…representing over 13% of U.S. Gross Domestic Product (GDP) — with manufacturing second at 12% of GDP. However, some companies decide not to pursue the enormous opportunity of doing business with the government because of common misconceptions about the government sales process. This report debunks the most prevalent myths about doing business with the government. To continue to read "10 myths about Selling to the Government", download the full report here.


The Low-Down on the Fiscal Year: When does the government buy?

While most of us consider the fiscal year and the calendar year to be one-and-the-same (beginning in January, ending in December, just like we all learned in kindergarten), government entities operate on a completely different schedule. If you’re selling to the government—and you should be selling to the government—it’s important that you know how this calendar functions. Once you understand your target’s fiscal year, you can tailor your sales strategy to match… which means you can swoop in with the right product or service, at the right time. If you don’t know where to start—don’t stress! We’re here to break it down, so you can become the sales hero you’ve always wanted to be. Federal vs. State First, you should know which branch you’re dealing with. While the federal government always begins its year in October and ends the following September, the local level varies. According to the law, states have the right to define their own fiscal year—and, in true American fashion, they haven’t taken these liberties for granted. So, let’s get down to brass tacks. Forty-six of the fifty states keep it simple and unilaterally end on the 30th of June. Four states, however, run on their own schedule: Alabama: September 30Michigan: September 30New York: March 31Texas: August 31 Whether you do business on the federal level, with all 50 states or just your local government offices and schools, knowing these dates is essential. That’s because winning the bid isn’t only about the right price, but it’s also about timing. When does the government buy? When you synchronize your sales cycle with your target agencies’ purchasing cycle, you give yourself an edge over the competition. For example, at the very start of their fiscal year, agencies spend their time planning their budget for the upcoming months. That doesn’t mean the government avoids making purchases altogether (you should still keep an eye out for open bids or contracts), but with budget due-dates looming, planning is the priority. During the first three months of your target fiscal year, you should be engaging your agency contacts and doing market research, so you can ensure that you fit into their spending plans. How about the rest of the year? Well, searching GovSpend’s historical spending database, you’ll find that $106.73 million were spent across 21,393 federal, local, and state government agencies in the fiscal year of 2019. That’s a pretty big pie that you could be getting a piece of! According to a study done by Harvard, 16% of government dollars are spent in the last month of the fiscal year—a whopping 8% of that is spent in the last week. Why? Studies show that the “use it or lose it” mentality leads to a huge spike in agency buying activity. So, whether your agencies end their fiscal years in March, June, December or August, you will find your biggest opportunities towards the end of the line. In 2020, you could be working to cut yourself a tremendous slice of government business. The new fiscal year is , which means this is your chance to be proactive—do your research, stack your pipeline, and get ready to make this fiscal year YOURS. Need help? With GovSpend, you’ll have access to hundreds-of-thousands of agency contacts, price checking, and a one-of-a-kind eQuoting platform (where you can start bidding for government business today).

‘Lowest Price’ vs. ‘Best Value’: Why money really “isn’t everything” in GovSales

If you’ve started working on your GovSales strategy, you’ve likely heard some talk about agencies always choosing “the cheapest price.” This is one of the most widely-spread myths of selling to the government, but it does come from somewhere. In the public sector, selecting a vendor is significantly more complicated than our typical process when choosing between two brands in the grocery store. Unlike those of us shopping for ourselves, agency buyers must justify their purchasing choices. When choosing a higher-priced item, they’ll need an excellent reason for spending those additional taxpayer dollars. That’s why such in-depth processes—like bids, RFPs, the “three quotes” method, etc.—were created. It’s essential that agencies are mindful of every cent they spend. When it comes to government contracts, there are two main pricing evaluations: LPTA (Lowest Price Technically Acceptable) and BVP (Best Value Procurement). As a vendor, it’s essential to know the difference and, more importantly, know the priority of the agencies you work with. The ‘Acceptable’ Price The Lowest Price Technically Acceptable method is black-and-white. An LPTA contract evaluates one dimension: price. If an offer meets the requirements of the request, it’s considered on the same playing field as the others—in other words, “We’re looking for a chair, this is a chair, and its price is lowest.” You, as the seller, will not be considered above others if your chair offers things the others don’t, such as a special fabric or accent. For most contracts, this method is considered ineffective by procurement experts. In fact, the F.A.R. Council released regulations that limited the kinds of contracts that can utilize LPTA, as of 2019. The Department of Defense has eliminated it entirely for engineering and manufacturing projects. This outdated method is now rarely seen outside the bulk purchase of staple items (paper products, office supplies, snacks, etc.) ‘Best Value’ Procurement More often, government contracts follow a newer method known as Best Value Procurement (BVA). If the agency is quoted $300, $500 and $800 for that chair, for example, things like condition, style, design, thread count, stitch quality, and warranty will come into play. If this chair will be placed in the municipality’s main lobby for daily use, the $800 chair that’s well-made and comes with a 3-year ‘wear-and-tear’ warranty would be a better value. If it’s to be used in a temporary office, spending anything more than $300 would likely be a waste. What’s Your Value? With that in mind—before you implement your GovSales strategy—you should ask yourself what makes your product or service especially valuable. Ask yourself, “Why am I different? Why am I better?” Jot it down. Make a list, if you have more than one answer. Then, incorporate it into your business’s website and/or social media accounts. Make it your key selling point. You’ll need to communicate your strength(s) when responding to a contract—especially if you offer a service, rather than a product. Why should agencies do business with you? If an RFP, RFQ or other solicitation asks for an “experienced landscaper” to help design the exterior of the new public library, try to include details about your previous projects when you respond. If they ask for five years’ experience and you have 25, say so. If you’ve designed landscaping for a brand new building before, make sure they know it! Ensuring that the agency believes you’re the most qualified for the job is essential to winning the bid in a BVP situation. When it comes to products, include: Any available warrantySpecial features, design elements or colorsIf it’s hand-made or uses special materialsAnything that makes your product unique Don’t assume that your price will speak for itself. Think of it this way: if an agency buyer sees your offer and thinks, “Wow, I get ALL OF THAT for THAT price?” you have a much greater chance of winning their business. At the end of the day, they need to feel comfortable explaining their decision to their supervisor. Otherwise, they may go with another vendor—one who made the effort to ‘stand out’ and prove their worth. The Price Must Be Right We should also mention that you still need to price competitively. Remember, value = quality + price. An agency may still go with another supplier if your price is disproportionate to your product, no matter what amazing qualities you bring to the table. Few agencies will feel comfortable spending $2,000 on a chair… unless its legs start walking them across town. If you need help perfecting your pricing strategy, GovSpend can help. Our software gives you access to years of historical purchasing records and competitor data—so you can price competitively and evaluate what makes your business stand out.

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