THE US FEDERAL GOVERNMENT: A VIABLE CUSTOMER FOR CANADIAN COMPANIES.

THE US FEDERAL GOVERNMENT A VIABLE CUSTOMER FOR CANADIAN COMPANIES US FEDERAL GOVERNMENT CONTRACTING FOR FOREIGN OR NON-US FIRMS

Presented By: JENNIFER SCHAUS, Washington, DC http://www.JenniferSchaus.com JSchaus@JenniferSchaus.com LINKEDIN: https://www.Linkedin.com/in/jenniferschaus +1–202–365–0598 REVISED: July 2015

The United States Federal Government is the largest purchaser of goods and services in the WORLD, spending over $450 Billion annually. The Federal Government buys both products and services. The products range from toothpaste to office supplies and artillery. They also need the services of various professional ranging from architects, nurses, priests, hairdressers, consultants and information technology cyber security professionals. For standard “business-to-business” companies, selling to the US Federal Government is a way to diversify the customer portfolio and mitigate risk weathering the fluctuations in the economy, particularly given the volatile European Union climate. Additionally, once you are an established US Federal contractor and have performed satisfactory within contract terms and conditions, fulfilling the governments ‘the statement of work” - increases your likelihood for steady repeat business, with increased margins (albeit slim) in multiyear contracts. Although your profit margins may not be the highest in this competitive sector, the somewhat predictable budgets and buying patterns (once you are “in”) can be a motivating factor for many businesses to establish government contracts. Another motivating factor is knowing that you are guaranteed payment from the government. Sometimes, however there may be a hurdle upon the time frames in collecting. This can usually be circumvented by ensuring that you delivered precisely on the terms and conditions and that your invoice exactly matches the Purchase Order issued by the Government. There are particular nuances that must be adhered to.

The “WHO” of the US Government The US government is comprised of multiple agencies and thousands of buyers of wide ranging products and services. Most US federal government agencies are headquartered in the Washington DC area, but also have offices across the country and the world where purchases are also made. For example, the US military has bases in many foreign countries. While you can sell to virtually anyone by utilizing technology, it is beneficial to have a physical presence in the Washington DC metropolitan area as this is where the majority of the decision makers are located.

This can be accomplished by employing a full-time sales team, retained consultant, lobbyist, a partner company or some combination thereof. Many part-time office firms have grown over the years by offering a Washington DC address, phone number, answering service and a few hours per month to use a shared conference room and cubicle. This helps alleviate concerns from the risk adverse government that you are credible and have a real presence.

There are large government offices all over the country and if you have a service or product for a niche market such as a military bases or one of the national laboratories or other specialized institution, then you can easily situate your sales team closer to the end-user.

WHEN THE GOVERNMENT BUYS: The US government fiscal year runs on an October 1 to September 30 cycle, with the peaks typically occurring at the end of the fourth quarter due to a “use it or lose it” system. If there are unallocated dollars as the year closes, there is a high probability that the buyers, including both Program Managers and Contracting Officers will purchase your items/services during these final months of July, August and September. There are other factors besides the ‘end of year dollars’ that plays a role in government’s decision to award a contract to your organization. Relationship building, as in regular business-to-business transactions and some mid to high dollar consumer-to-business transactions, is also significant and crucial part of the sales process.

Selling to the government does not happen overnight. There is a large time investment on the sales cycle, and as mentioned earlier, the government is a riskadverse client. This time span can range from 12 to 36 months – sometimes shorter or sometimes longer. You may make 10 or more phone calls before you reach the appropriate government contact. (Public data is available to secure marketing call list and names of buyers who purchase your items along with incumbent information and budget forecast.) Once you reach the right contact person, you may have many meetings with your potential client before you make it to the true decision maker who decides if and when your product/service is needed and if it will be funded.

From those meetings, presentations and demonstrations you can assess if there is a need for your product/service in that agency or department or if you are creating that need. Some salesmen and women may disagree and feel that the sales rep is responsible for creating the need, but sometimes when interfacing with the government you may be in a reactive mode and responding to request – formal or not. Both scenarios will provide some intelligence on your chances for award and estimated time frames.

If you are responding to a request formally called a Solicitation, it is important to know (or ask) where the government is in the decision making process. If there is a formal call for information or a Sources Sought (SS) or Request for Information (RFI) for products/services that you provide, then the government is conducting a search

to determine what products/services are available that meet their specific need.

They may also be interested in determining if a specific type of business can fulfill the terms and conditions, such as a small business, one located in a Historically Underutilized Business area (HUBzone), minority owned, disadvantaged, veteran owned, and/or women owned business. (More information on what qualifies as a small business can be found on the US Small Business Administration website at http://www.SBA.gov or http://www.JenniferSchaus.com Therefore, these Sources Sought or RFI’s are great opportunities to provide information about your area of expertise, highlight past performance with other government agencies, provide pricing information or estimates, and assist in helping the issuing agency determine there is a need to contract with your organization and demonstrating any valueadded components you possess. Getting in during the beginning phases of the government search -- Sources Sought or RFI -- process is highly advantageous.

If your products/services are listed on the General Services Administration (GSA) Schedule, this is a clear advantage and should be included in your response. The GSA Schedule is a “hunting license” or “ticket to the government dance” and allows the government to accelerate their purchase from you. This is a pre-vetted contractor short list of both services (hourly rates) and products. Foreign companies are able to be hold GSA Schedules however they must ensure their products are TAA (Trade Agreement Act) compliant. This TAA List changes from time to time based on US foreign relations. The federal government (and some state and local governments) can easily shop as one would on Amazon at http://www.gsaAdvantage.gov for vetted firms with pre-negotiated prices. More information about becoming a GSA Schedule holder can be found at http://www.GSA.gov or http://www.JenniferSchaus.com Formal request from the government may also come as Request for Proposals (RFP), Invitation to Bid (ITB) and Request for Quote (RFQ). These formal solicitations (or RFP’s and RFQ’s) for purchases of $25,000 are required to be published on www.FedBizOpps.gov This website allows you to search for opportunities by many criteria, including agency and also product/service. Many of these opportunities are not simply “put out to bid” without having an intended awardee. Companies that have been continually networking, attending trade shows & presenting their capabilities to the government for 6-24+ months, are most likely the key players in creating the need for their solution which brought about the RFP. These RFP’s typically began as a Sources Sought notice or an RFI. The Statement of Work (SOW) in the RFP many times are written with language tailored for a specific company, an elite group of contractors or for specially designated companies including GSA Schedule holders, small businesses, or set-aside categories within the small businesses community (ie. Veteran Owned). These solicitations are a simple reminder that relationship building is the key component to winning the business.

Because government cannot accept gifts or be taken to lunch or dinner, basic sales skills and knowing your product/service inside and out are absolutely pertinent to your success in this vertical market. Knowing the rules of the government contracting game found in the FAR, Federal Acquisition Regulation http://www.acquisition.gov is essential. An educated and determined sales force with a strong management team is important. The sales force must be relentless and creative in breaking through the government walls and finding champions for their solutions. They must be well connected at various levels – top, middle and bottom – and present their solution as a way to make things “easier” for the government, without threatening their job security.

There are a variety of sources for the sales rep to obtain contacts. Networking ‘inside the beltway’ is important and there are an abundance of venues for one to attend to, as some are industry based. Additionally, http://www.FedBizOpps.gov will publish information on Industry Days. These are “open houses” for small businesses hosted by the particular agency OSDBU, Office Of Small & Disadvantaged Business Unit. These OSDBU’s are the small business advocates. As previously mentioned, there are commercial companies who aggregate government data and sell lists – including names and contact information for buyers within government.

There are various levels of sales reps that a company may pursue. The ideal candidate and may be an individual previously employed by the government in an agency where there is a great need for your services. There are limits and laws surrounding hiring individuals in this capacity who may have the contacts to help your organization. Sometimes, depending upon the size of your organization, these individuals may sit on the Board of Directors or be your main government sales guru.

These folks typically understand government, (hopefully your product or service offering) and they have been the customer and understand the processes by which the government purchases.

Again, depending upon your company size, budget and objectives for the government market, you may want a full sales team or just want to tread lightly into this arena. There are many flavors and degrees of sales representation in Washington, DC. There are agents who will sell for you, be your US presence and ask for a high percentage commission without a monthly retainer. The most common structure in sales would structure a contract to include a monthly retainer and commission. Still others may only charge a retainer and be confined to certain areas of their expertise such as proposal writing for a designated number of hours per month. Most of the individuals will have a certain area of expertise or connections in specific agencies.

Trade shows are abundant as well and some are government specific (The General Services Administration Expo, Small Business Administration Conferences), others are industry specific (ie. FOSE and GovSec and F-Ped). These are opportune venues to meet the government buyers and spend time with them, since they are prohibited to accept gifts, lunch, dinner/golf outings, etc. They can be an expensive undertaking but there are creative ways to reduce your cost. Some of the conferences are looking for industry and subject matter experts as speakers for the breakout sessions. By becoming one of the speakers, you gain more exposure, a live audience, free press on the conference brochures and more attention and traction at your booth. With more traction, this becomes basic sales and is a numbers game.

It is a given that in the sales process roadblocks are met and it is the job of the sales team to overcome these obstacles. An effective business-to-government (B2G) sales representative will penetrate the government at a variety of levels – the end-user, the program manager(s) and the individuals who have purchasing or influential authority. Sometimes there are higher issues which could help or hamper a product/service from coming to market or perhaps escorting it out. Lobbyist and public affairs professionals within the Washington DC area can also play a role in assisting with generating funding for your solution. These professionals work at the levels in government – primarily on Capitol Hill where they can help influence bills and appropriations for specific services and products. Their fees may be higher than a seasoned government sales rep, but will also be able to deliver for you at a different (more political) level. These individuals may have previously worked for or

with senators, representatives and/or other elected officials. Most successful firms will have connections on both sides of the political landscape which keeps them strong at times when there is a change in power at any level within the government.

Although these firms can be powerful sources to leverage, they are not a silver bullet. All of these tools lobbyist, sales team, consultants, agents and proposal writers, must be used in collectively to get the most out of your ‘hunting expedition’.

The 80/20 rule applies in government contracts as well. Eighty percent of the contracts are awarded to the top 20 contractors. These prime contractors are large businesses and are well-known, such as Lockheed Martin, Northrop Grumman, Raytheon, SAIC, BAE, etc. These organizations usually maintain a small business liaison office. It can be beneficial to meet with these offices, register in their small business vendor database and provide a synopsis on your products/services. Many times, when the government is working to meet their small business set-aside contracting goals (24%) these organizations will be forced to also meet small business goals (36%). Results by agency on how they met these goals can be found on the SBA Scorecard on the SBA website or at http://www.JenniferSchaus.com This information should also play a part in your strategy when targeting agencies.

You can employ resources to determine if there is a market in the US government for your product/service. Commercial companies can be hired to do this for you and searches can be conducted to determine how much of your product/service has been bought over the fiscal years, which can be segmented by quarter and company name. It is also useful to search for competitors and understand their position in the marketplace to determine your potential share. Government budgets are not secret and this information is pertinent (and available) when focusing on your target client.

With this information, you may determine that certain agencies may be better suited and equipped to purchase your solutions than others. By narrowing your target client to the top 3 agencies best aligned for your product/service based on their budget, your budget and your contacts within the agency, you can strategically positioning yourself for success. Creating a capabilities statement and supporting literature geared toward the government, will help the buyer in understanding how your solution will assist them.

Each administration, Republican or Democrat has specific goals and focus areas.

Some of these are determined by world events (wars and economic crisis, etc.) and others are simply areas that they deem important (ie. green and environmental products). By being cognizant of these issues, reading trade journals and government specific publications, you can gain a clearer understanding of your clients’ mentality and challenges, thus being better able to provide a solution. By joining associations in Washington DC related to your industry you will benefit from a locally based advocate, a built in government relations team (usually a given in associations) working on your behalf and possible collaboration with other firms in your industry. Likewise, joining an international chamber, Canadian-American Chamber Of Commerce you may also benefit from building relationships with US based partners who are in the federal government contracting space. There are also associations dedicated solely to US Federal Government contracting from which companies can reap rewards, relationships and find teaming partners for government contracting.

For foreign companies, establishing a US presence is not absolutely necessary, but can be beneficial. Most US Government contracts have been awarded to US companies who are physically located within the DC metropolitan area. (Part of this is due to the Buy America Act, BAA). Basic sales skills tell us that business is earned and awarded to the company/individual where there is a relationship. In order to build those relationships, the sales rep and/or the consultant for your company should be located close to the decision maker and where the work is taking place, sometimes two different places. Modern day technology has allowed us to videoconference, email and communicate in ways where we do not have to physically be present. When dealing with a risk-adverse client, it is a best practice to physically be there. Additionally, foreign companies may also consider establishing a US subsidiary to have a legal entity and stronger presence in the US. Government purchases can – and are also be based on a variety of factors including price and quality. The current environment (2016) government contactors find themselves in LPTA, Lowest Price Technically Acceptable. This means contracts are awarded based on lowest price regardless of the firms past performance or experience. This allows new players into the sector who have no experience in government contracting whatsoever. Typically quality is sacrificed, sometimes contracts are cancelled due to poor performance or the firm going out of business due to not being able to sustain their business model of “buying contracts” at or below margin.

Foreign firms should secure a DUNS (Data Universal Numbering System) from Dun & Bradstreet Corporation at http://www.DnB.com From there, they should register in the System for Award Management at http://www.SAM.gov which will require input of basic company information, including your industry NAICS Codes (North American Industry Classification System) and in most cases a Tax ID Number (TIN). Foreign companies can work with a Registered Agent in the US, establish a US subsidiary or explore other alternatives for obtaining a TIN. Foreign businesses will have to pay close attention to the Trade Agreement Act and Buy American Act. The TAA focuses more on country of origin relating to manufacturing and products – how and where the end product is composed. The BAA primarily gives preference to US companies over foreign entities on contracts.

Certain exceptions apply including some construction materials, pricing and unique solutions. Other BAA exceptions relate to the US government procuring non-US goods that are not reasonably available commercially in the US. *Please consult Section 25 of the Federal Acquisition Regulation and also the General Services Administration website for current information and language regarding The Buy America Act and Trade Agreement Act for foreign companies, as these regulations are undergoing changes at the time of this publication. http://acquisition.gov/far/ In conclusion, The US Government is the world’s largest purchaser of goods and services. It is an elaborate and competitive market, but it is not impossible to be successful. Establishing your business as a government vendor and winning business is competitive and complex yet possible and very profitable for many.

Knowing those rules and identifying government savvy experts to guide you through the government puzzle - can be the differential in being another government vendor and being the successful and preferred government solution provider.

Jennifer Schaus runs a government consulting firm in Washington, DC. She is the founder and principal of Jennifer Schaus and Associates. Ms. Schaus has domestic and international clients who provide both services and products to the US Federal Government. Her expertise is in representing clients to compete for US Federal Contracts, securing Set-Aside certifications and supporting the sales process via proposal writing, marketing and business development. She is a frequent speaker at government contracting forums and associations including WIP (Women Impacting Public Policy), NCMA (National Contract Management Association), APMP (Association Of Proposal Management Professionals, NDIA/WID (National Defense Industry Association/Women In Defense), WAVE (Women As Veteran Entrepreneurs) and more. She has been featured or quoted in The Wall Street Journal, The Washington Post, The Washington Business Journal, Government Product News and more.

Ms. Schaus holds a BA from Towson University, a Leadership Accelerator Certificate from UC Berkeley and a Certificate in Executive Leadership from Cornell University.

She sits on the Board of Directors for GovLish a data aggregator of government acronyms. For more information and to contact Jennifer Schaus & Associates, please visit: www.JenniferSchaus.com or JSchaus@JenniferSchaus.com or call us + 1 - 2 0 2 – 3 6 5 – 0 5 9 8.