When most entrepreneurs think of selling to the government, Uncle Sam is the first prospect that generally comes to mind. But there are many other agencies to consider, says Rick Grimm, executive vice president of the National Institute of Governmental Purchasing.
According to Grimm, state and local government agencies are expected to spend $1.02 trillion in 1999; five years from now, that figure will jump to $1.31 trillion. The federal government, by comparison, spends approximately $200 billion a year.
And while city and county government contracts have generally been perceived as small potatoes, they're actually excellent training grounds for selling to the federal government, says Judith Roussel, the SBA's associate administrator for government contracting. "A lot of what the [federal] government does today is award contracts based on past performance. Because it's harder for a new company or one that hasn't had a [government] contract before, businesses should [first] look to work in the commercial market or earn smaller contracts in the same line of work so they can get a reference."
So what does it take to get that first government contract? The process is similar for federal, state and local agencies. "The first step is to find out who buys what you sell," says Roussel. Also important is understanding how the government buys. "In some cases, buying is done for the entire country, and in other instances, departments buy certain services for one area."
The federal government's General Services Administration (GSA), for example, typically buys items used by every agency and department. They also oversee all federal property purchases and management, buy all government automobiles, and set up the Federal Supply schedule for all agencies. "If anybody wanted to buy paper, for example, GSA would set up the schedule, and any business that met the qualifications could apply to get on the schedule," says Roussel. "An agency must go to at least three firms on the schedule and make the best value decision on which businesses to buy from."
According to Grimm, most states' equivalent to the GSA, as far as overall purchasing, is a local administrative services agency. Practically every state has a department of transportation, and most have a health and human services or welfare assistance program that makes big purchases. In addition to participating in overall buying, each agency and department purchases its own items and services.
In order to get your business's name circulating among these agencies, you have to get registered. At the city and state level, contact the purchasing department to find out where to register. Cities rely greatly on business registration because they typically don't have enough staff to proactively seek suppliers.
At the federal level, Roussel believes the best place to start is with the PRO-Net database. "PRO-Net is an Internet listing of 171,000 small businesses interested in doing business with the government," she explains. "Users are federal agencies and larger prime contractors, both of which have goals to do a certain percentage of their business with small firms. And it's free [for small businesses] to register."