How the US Government Makes Purchases (and why thats's important!) Podcast Transcript

                         [01:12] Richard C. Howard: Hey, guys, Richard here with government sales momentum podcast. Today we're going to talk about how important it is to understand how the government buys what you sell. Because depending on what you sell will target different agencies and those agencies will have preferred ways of making purchases, whether it's a product or service. Keep in mind when we're talking about the public sector, what's great about this is all the information is public. With some rare exceptions, there are classified contracts and there can be a lag in reporting. But for the most part, we can look at all the government spending. So whether you're selling software or construction services, you name it really. It could be anything. It could be a virtual reality device or a new product that you just invented that solves potentially a need. We can go and we can look at related areas and see what the government is spending. We can see who is doing the spending and we can see how they're making the purchases. And that's what this is centered around.

                         So first let's get started and I wanted to start with the area that most companies, especially small businesses or maybe some companies that are new to this focus on, and that's the RFP or the Request for proposal. So that's when you go into Sam.gov and you see a Solicitation and it says Request for Proposal or Request for quote, and they could be looking for anything. But when we see an RFP, I want everyone to understand that this is probably the most complex and lengthy way the government will make a purchase. It's typically reserved for higher value contracts. There's typically a certain amount of complexity involved with what they're purchasing, but that's not always the case. Some contracting officers only really understand the RFP process, which is Far part 15, if I have my reference correct. But that's not the only way to make purchases.

                         It's incumbent upon you as the business owner, not only understand how the government likes to make purchases, but also understand the different ways they can buy from you. Because you can educate the contracting team on the other side, you can make them aware of the way they can buy from you that they might not understand. So RFP Requests for Proposal typically you have to put the solicitation together. There's a lot of work on the government side just putting that solicitation together. Sometimes our advice and sources, so I can go before that they put the solicitation out and there's maybe a month or two where companies are putting their proposals together, government collects them, then there's boards and down selects and eventually one company, or maybe multiple companies are awarded parts of that solicitation. But that whole process could take twelve months, 18 months, depending on the value of the contract and the complexity.

                         But there are several other ways the government makes purchases. So we can look at the information, the purchasing trends over time and see, for instance, if you're targeting an office at Hanscom Airport space that makes purchases with the type of products or services you sell, we can see how they're making those. One of those things that you can discover is, hey, I'm seeing X number of million dollars being spent through that office. Maybe a couple of different offices at Hanscom, or maybe right Patty Air Force Base or another agency and they're using IDIQs. And I love IDIQs because this is indefinite delivery, indefinite quantity contract. A lot of times what an IDIQ is, there might be a competition up front amongst a bunch of companies and you down select maybe 20 that get awarded this IDIQ contract. And it has a certain length of time, maybe five years, has a certain period of performance, has a certain ceiling, maybe it's 500 million. And then the government can place delivery orders on the company that is on that contract or company’s government can also award an IDIQ just to your company. This covers a lot of different things, GWAC max, a lot of different things. I love GSA in there as well. Others might disagree with that, but we're basically talking about companies that are on these IDIQs or big contracts that have already been competed. And the government can either have additional competitions on there or just place a delivery order on you, depending on how that's written. But the point of this is, especially if the government doesn't know how much they want to buy or maybe exactly what once you're on that contract, they could say, hey, we put you on contract, we know you have services or products you want to buy, we just don't know how much the quantity or the price yet, or the exact details, but we'll tell you that later.

                         Let's get you on the IDIQ now. So that's the IDIQ, that's another big way of selling to the government. And once you know which agency you're targeting and you can see there may be selling with an IDIQ that perhaps you don't have because also keep in mind there are IDIQs that multiple agencies can use. You might be selling to just the army or just NASA, but for instance, NASA Sewp, multiple agencies can use the NASA Sewp by the IQ, by services. So understanding that is going to be fundamental to how you approach an organization. So if that Air Force office, for instance, that we saw, if they were using NASA Sewp at IDIQ to make purchases even though you don't have an IDIQ with them, your approach to that office maybe as a subcontractor with companies that are already on that contract vehicle. But now you can start to see how essential it is to understand how they make purchases because you want to make it easy for that office to put you on contract. That was one of the hardest things for me. Even if I found a company that was really good that I wanted to put on contract, I might not be able to do it. If they didn't have a vehicle, or if they didn't, they weren't stupid to a prime that I could hardly get to because the government, even though a lot of people are frustrated, I think the government just wants to take as long as possible to do stuff. I could tell you that coming from that arena, there was a program manager. I do not want to wait six months or a year to put someone on contract. If I needed someone, I want to put them on contract now. And there are a lot of ways I could do or in 30 days or 60 days. What's the fastest way I could do this legally?

                         And responsibly IDIQ is a great way to do that. And if your company is not on the IDIQ so using that NASA super example now you can find companies that are already on there and you can partner with them, finding companies that make sense as a teaming partner, or that you submit and that's a great way to approach and get your foot in the door with that agency or that office. It's a great path forward, but you need to understand that. Do your homework first and align yourself with their purchasing strategies. So now let's talk about a couple of different ways that the government can make quicker purchases. Now in fact, the majority of purchases from the government are through simplified acquisitions procedures and GPC card purchases. Now let's talk about that. That doesn't mean that most of the money is spent on those or via those vehicles, just the number of transactions. And the reason is because think about a GPC code is a government purchase card. It's a government credit card. Every unit has one.

                         What I often tell people is less than 1% of people in the government will ever be able to put you on contract because you need a warranted contracting officer to do that. In fact, most people in the government have no clue how to really put you on a large contract. They might have some surface level understanding of sand and solicitations and maybe others have worked in requirements and have a better understanding, but unless you're actually in the acquisition spiel and that's your profession within the government, they probably have no clue how to get to you. The one difference is the GPC card, because every unit I've ever been in, every office has had a government purchase card, or they've at least had somebody in charge of a government purchase card that can make purchases. Now, those are for smaller dollar purchases. So if you sell smaller products, a GPC card can be used for purchases up to $10,000. A GPC card can be used for purchases, actually more than that if the right paperwork is in place. But typically you're thinking smaller dollar items, office supplies, you might be putting something together for advertising or marketing for a unit, or doing some special graphic project. I've seen GPC cars used to purchase everything from customized mugs for the guys in unit two books, I mean, you name it, but those are the things GPC cards typically are going to be used for. So again, depending on what you sell, you may be able to have a purchase through a GPC card.

                         Simplified acquisitions procedures, I would say, is the next level on top of the GPC card. So those are purchases up to $250,000. I believe blanket purchase agreements and some other things fall under staffs and applied acquisitions, but this is still a faster way for the government to make purchases that aren't going to take as long as the traditional acquisitions process, if that makes sense. So these are just a few ways that the government can make purchases that you want to understand as a small business and there are a lot of resources for you to use to try to figure this out. You can use some of the more expensive systems out there that you can purchase. The government IQs, the monthly subscription services, govTribe is one that's actually not that expensive, where you can get a little bit of insight on, there are free ones like USAspending.gov there are other ones that you can use, of course there's Sam.Gov, which I personally think that website is not very intuitive or easy to use. So I usually recommend if you're going to do that type of research and purchase something that you and your team can use that can give you much more, I guess you could say quicker forecast or a quicker way to research past sales in the upcoming opportunity, but any of those you can use to help you get an idea of what those purchasing trends are. And the more time you spend with a tool, the better you're going to be at understanding how do they make purchases, what's the percentage? What are the exact offices that use those? You can get down to details like which offices or which services or agencies rely on different set of sites like SDB, SB, or a day. And that can help you and who you're targeting for sales.

                        But really the point of this is understanding what you know, who you're selling to, aligning your company with the way that they make purchases, and then you can recommend some of those. Like, for instance, if you pick up an IDIQ, you might be dealing with an office that or maybe you're on GSA. You might be dealing with an office that isn't used to using those. You might be dealing with an office that wants to buy what you're selling. And they're used to putting RFP out for everything, or RFQs. Well, now you can tell them, hey, I'm on this idea queue, or I'm using GSA. And these are a couple of different ways that you can get to me. Of course, relationships are really what's going to allow you to do some of that, and it's extremely important to have that relationship in place. I've talked about that and several other podcasts, but I want to give you a good overview of some of the ways they can make purchases from you. Hopefully you have found this relevant and useful. If you have any questions, don't hesitate to go to our website. Dodcontract.com, you can fill out a consultation form. We'd be happy to talk to you if you have any questions. And thanks again for listening and we'll talk to you next week.

                         [13:39] Richard C. Howard: I hope you enjoyed this episode of government sales momentum. If you did enjoy the episode, please subscribe to the podcast and leave a review. It's very much appreciated. If you're interested in selling products and services at the Department of Defense, I have something for you that you're not going to find anywhere else in the world. The team and I created a program that takes everything you need to win defense contracts and put it into one place. Up until now, only large defense companies and a small amount of people in the know have had access to how products and services are really sold to the Department of Defense. I've taken all of that information and put it in a step-by-step training module that shows you how to consistently sell to the US. Military. If you join our membership, not only do you get the model, but you get weekly sessions with former DOD acquisitions officers for training guidance to answer your questions, and a community of like minded business owners that want to partner on different opportunities to bid for subcontracting and teaming, or just to discuss general strategy on how to sell to the DOD. You'll have access to every course I've created, every coaching session I've ever recorded, and every interview with an acquisition professional that I've ever conducted. And we cover topics that range from defense sales planning and competitor analysis to SBIR and STTR foreign military sales. The list goes on. Go to Dodcontract.com if you are interested, and I would love to see you in the membership. Thanks.

If you enjoyed this episode, you can also check out Letters of Financial Capability & How to Fund your Government Contract where Matt walks through how his company finances businesses of all sizes that are selling to the federal government.