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NC Procurement Technical Assistance Center

Selling to the Federal Government

The United States Government spends over $300 billion dollars annually on various goods and services. The federal government is the largest buyer in the world and it is ready to do business on a competitive basis with qualified companies. Each year, thousands of contracts totaling billions of dollars bypass businesses that do not know about or understand government procurement processes. Patience and perseverance are necessary to sell your product or service to the government. Practically speaking, there is no one single government buying entity. There are many departments, agencies, bureaus and commissions that comprise the federal government. Within these components there are literally thousands of buyers - that represent your potential customer base.

Marketing to the government involves several steps.

Getting Ready

Companies interested in selling to the federal government must take the initiative to learn how the government conducts business. Begin by identifying your North American Industry Classification System (NAICS) code, Standard Industrial Classification (SIC) code and determine the small business size standard for your code. The government sets small business size standards for each industry based on the corresponding NAICS code. Each solicitation usually contains specific NAICS and size standards for that particular procurement. There is no formal certification as a "small business - it is a matter of self-certification based on your business' NAICS code and the corresponding size standard. The US Small Business Administration (SBA) is responsible for setting the small business size standards. The links above provide both NAICS/SIC codes and SBA size standards.

Your business must also have a Social Security Number (Sole Proprietor only) or a Federal Tax ID number provided by the Internal Revenue Service and a Dun & Bradstreet number for government contracting purposes, which can be obtained at no cost by calling 1-866-705-5711, or by clicking on the link above.

Now you are ready to register with Central Contractor Registration (CCR) in order to become a government contractor. CCR is the primary vendor database for the federal government that maintains electronic payment information. CCR is a mandatory requirement for vendors to be awarded a contract by the government. You must renew your CCR registration each year. If you are identified as a small business, your company will also be listed in the database used by government purchasing officials and prime contractors, who are looking for subcontractors.

Recent changes now require businesses to complete an Online Representations and Certifications Application (ORCA) instead of doing so for individual solicitations. As with CCR, it must be updated annually.

Soliciting and Contracting

Regulations concerning aspects of Federal procurement made with appropriated funds are published in the Federal Acquisition Regulation (FAR). The FAR is designed to unify all procurement practices, forms, and requirements for the federal government. It also allows each major agency to issue supplements containing regulations unique to that agency (i.e.: DoD, NASA, EPA, etc.). For assistance in developing a working knowledge of the FAR contact your supporting NC PTAC Counselor.

Micro Purchases are defined as any purchase of $2,500 and below and can be made without obtaining competitive quotations. Purchases in this category are open to small and large businesses. More and more of the smaller dollar requirements are being purchased via a credit card or Government Procurement Card (GPC). If you accept Visa or MasterCard, please let your government customers know. If you want to accept these cards, you may want to investigate this option with your bank. Almost 97 percent of the purchases under $2500 are now made with the GPC.

Simplified Acquisition Procedures (SAP) apply to acquisitions between $2,500 and $100,000. The majority of these purchases are set-aside for small businesses but there are exceptions. The business submitting the successful quotation under these procedures is issued a purchase order and performance of the order constitutes contract acceptance.

Purchases over $100,000 are considered large purchases that require a sealed bid process. Sealed bidding begins with an IFB (invitation for bids) that contains the information needed in order to prepare and submit a bid. All bids are submitted on a standard form that must be received by a certain time and date. The bids are opened in public and the contract will be awarded to the responsive and responsible bidder that offers the best value to the government.

As used above, the term "responsive" means that you must quote in accordance with the terms of the solicitation, with no exceptions. If you offer something different from what is required or if you forget to provide requested information, you may be found non-responsive. The term "responsible" refers to the determination of your responsibility to perform in connection with a particular solicitation when you are the apparent low bidder. To be found responsible, you must be able to demonstrate (1) adequate financial resources; (2) compliance with the delivery requirements; (3) prior satisfactory performance; (4) a satisfactory record of integrity and business ethics; (5) adequate management and technical skills; (6) adequate facilities; and (7) eligibility to otherwise receive an award.

The basic principles of commercial business also apply when selling to the government. It is especially important to establish and maintain a good working relationship with the procurement office and/or individual buyer. Learn both the needs and the buying practices of your potential customer. Follow all leads where there is an opportunity for your product or service. Most importantly, ask yourself "What distinguishes my company from the competition? What value do I bring to the table?"

Additional Resources

There are resources to help determine what agencies need your product or service. From accessing information via electronic commerce to reviewing the government's daily publication of procurement opportunities, small businesses can obtain current information on the needs of the federal government.

Federal Business Opportunities, also known as FedBizOpps, is the single government point-of-entry for Federal government procurement opportunities over $25,000. Government buyers publicize their business opportunities by posting information directly to FedBizOpps via the Internet. Through this portal, commercial vendors seeking Federal markets for their products and services can search, monitor and retrieve opportunities solicited by the entire Federal contracting community.

Small Business Specialists can provide helpful information on how to market your product/service within their activity. They may also be able to provide other information that may be available and helpful to you such as lists of the GPC holders, organizational charts, and other general information about their activities. You can find a list of Department of Defense Small Business Specialists by clicking on the link and looking under "DoD Small Business Specialists." Your NC PTAC Counselor can provide you with a list that includes contact information for Small Business Specialists at federal contracting offices in North Carolina.

The major purchasing agencies for the federal government are the Defense Logistics Agency (DLA), General Services Administration (GSA), and the Veterans Administration (VA). Other agencies also purchase a variety of goods and services from vendors throughout the country.

Defense Logistics Agency buys millions of different items for the Department of Defense (DOD) activities through supply centers that manage day-to-day procurement and logistic operations. These supply centers forecast demands, process requisitions, award contracts, and monitor inventory levels. More information can be found at the link above under "Business Opportunities."

DoD spends a large portion of all federal contracting dollars to buy and support sophisticated military hardware systems. All military installations can purchase goods and services directly from vendors as needed for day-to-day operations. Click on the link for more information about Military Installations in North Carolina.

The DoD is moving towards electronic invoicing to reduce interest penalties due to lost or misplaced documents. Wide Area WorkFlow (WAWF) is a secure web-based system for electronic invoicing, receipt and acceptance. WAWF creates a virtual folder that combines the three documents required to pay a vendor - the contract, the invoice, and the receiving report. Contact your NC PTAC Counselor for more information on this subject.

If you have retail items (such as those found in your average large department or hardware store) that you are interested in selling for resale to Department of Defense, then the Army and Air Force Exchange Service (AAFES), Navy Exchange (NEX), Marine Corps Community Services and the US Coast Guard Exchange are possibilities.

Department of Defense Morale, Welfare and Recreation (MWR) activities are responsible for providing quality of life services and programs (recreation, sports & physical fitness activities, child development & youth programs, hospitality and retail shopping opportunities) to federal, active reserve, and retired personnel and their dependents. .

General Services Administration (GSA) contracts for a large volume of goods and services on a worldwide basis for numerous federal entities. Products and services purchased by GSA include office supplies, paints, construction, training services, and computer-related supplies and equipment. The Federal Supply Schedules Program closely mirrors commercial buying practices. It provides ordering activities with millions of state-of-the-art; high-quality commercial products and services at volume discount pricing on a direct delivery basis. Under the Multiple Awards Schedule (MAS) program, GSA awards contracts to multiple companies supplying comparable products and services at varying prices. In this program, GSA enters into government-wide contracts with commercial firms to provide over four million commercial off-the-shelf products and services, at stated prices, for given periods of time. Ordering, shipping, billing and payment relationships are between the ordering activity and contractors. This is an extremely popular program with both federal purchasing activities and vendors. The dollar value of GSA Schedule orders is increasing by approximately one billion dollars annually. While a schedule holder is not guaranteed any orders, the fact that many of the contracting procedures and hurdles have been addressed is an attractive feature for agencies seeking to purchase a commercial item or service. The contractor pays GSA an Industrial Funding Fee of .75 percent of the total sales for that quarter under their schedule. Additional GSA Schedule information can be found at their E-Library web page.

The Department of Veterans Affairs (VA) operates a nationwide system of hospitals, clinics, regional offices, data processing centers and national cemeteries that require a broad spectrum of goods and services. These are purchased on a national, regional and local level. Examples of goods and services purchased include medical, pharmaceutical, and laboratory supplies and equipment, laundry services, and building maintenance and repair. Opportunities can also be found at the VA's Office of Small and Disadvantaged Business Utilization.

Non-military activities of the federal government are called civilian agencies. They include such organizations as the Department of Justice, Environmental Protection Agency, National Aeronautics and Space Administration, Department of Energy, etc. These agencies and others, contract for an assortment of products and services. Their solicitations in amounts exceeding $25,000 can be found at FedBizOpps. Solicitations for lower dollar value items may be advertised on the agency's web site. The Federal Acquisition Jumpstation provides direct links to federal acquisitions on the Internet.

Regardless of your product or service, it is important that you do not neglect the multi-billion dollar secondary market of subcontracting. You should investigate potential opportunities with prime contractors. Many of the federal government's requirements may be beyond the scope of a single small business and prime contractors are encouraged to subcontract and team with small business concerns. Prime contractors can be found at DoD and SBA's subcontracting websites. Many federal agencies hold small business trade fairs/conferences that emphasize how to do business with the government and provide information regarding their procurement activities. Some have the added feature of making on-the-spot purchases from small business attendees. The NC PTAC co-sponsors statewide government procurement conferences including "Marketplace" and "Opportunities," that allow small businesses to network directly with government purchasing agents. For a listing of upcoming government procurement events see the SBTDC Events website.

After you have identified your customers, researched their requirements, and familiarized yourself with the procurement regulations and strategies, it is time to market your product or service directly. Present your capabilities clearly to the various activities and prime contractors to whom you are marketing. Realize that their time is valuable and if a match is to be a good one, you will need to provide them with a cost-effective, quality solution to meet their needs.

NC Procurement Technical Assistance Center (PTAC)

The core of the NC PTAC program is confidential, one-on-one, "no-fee" counseling. The NC PTAC Counselors located throughout North Carolina can assist you in: