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Selling to the Government

$120 billion is up for grabs as the federal fiscal year winds down

By MICHAEL KEATING

The federal government buys a lot of products and services. Total government purchases of goods and services in the U.S. (also called government consumption and gross investment) will reach $3.06 trillion in the fourth quarter of 2011 versus $3.03 trillion in 2010, according to St. Louis-based consultants Macroeconomic Advisers. Of that total, federal purchases will exceed $1.2 trillion.

On the topic of federal purchases, the federal government's fiscal year ends Sept. 30, and that often means accelerated purchasing activity at federal agencies as the curtain comes down on FY 2011. During federal buying season (the weeks and months prior to Sept. 30), there are plenty of selling opportunities for savvy government marketers.

As the federal fiscal year-end approaches, Congress’ last-minute tinkering with the budget will accelerate federal purchases, believes Lourdes Martin-Rosa, an advisor on government contracting at New York-based American Express OPEN. Due to the late passage of the fiscal 2011 budget, the race to exhaust the remaining funds — estimated at $120 billion — will be more intense this fourth quarter than last year’s.

“With Congress holding up funding until April 2011, the continuing resolution debate will definitely increase fourth-quarter spending,” said Martin-Rosa. “Most of the contract dollars are now flowing down to the agencies, and they are definitely motivated to spend the money before it’s taken away.”

Diane Denholm, who spent 10 years working at a federal agency as a contracting officer and technical representative, also predicts increased federal buying through Sept. 30.  “With all the continuing resolutions, I think that federal contracting spend is really pent-up, and so I think everyone is expecting on the vendor side, a big uptick in the amount of purchases and acquisitions.” Denholm, who is a vice president at Atlanta-based consultants, North Highland, has seen more activity on federal contracting sites such as fedbizopps and e-buy.

For vendors who want to sell to federal agencies, Denholm advises: “Make it easy for the government to make the award to your firm. The contracting offices are super-busy. If you put together a proposal that is not well organized, that is not clear, concise and to the point, and doesn’t provide the requested information, you are making it very easy for them to award the contract to somebody else. Just get to the point of what they’ve asked for. Make it nice and easy to read and well-organized.”

Mark Amtower, a government-marketing expert at Amtower & Co., sees federal agencies’ boosting their spending in several technology areas in the remainder of fiscal year 2011. “Cloud computing and IT (cyber) security are in the lead. Products should have a ‘green’ stamp of approval.”

Amtower tells federal government contractors: “The best way to improve sales is to sell where they know you, in federal agencies and departments where you have established relationships. Maximize the value of these customers before you try to migrate to new customers.”

Vendor sales reps, says Amtower, should “know the mission, understand the agency culture, and be aware of the budgeting issues – they will add value each time they make a sales call and will make more sales as a result.”

One last tip from Amtower: “If your firm sells direct to the government and you are a product vendor, make certain you are processing your credit card orders at Level 3. This gives the buyer more comfort (there is more security) and it reduces your processing fee. Make it clear on your order page and elsewhere that you process credit card orders at Level 3.”

Amtower is author of the recently released book “Selling to the Government: What It Takes to Compete and Win in the World’s Largest Market.”

Michael Keating is senior editor for Government Product News and a contributing editor for American City and County, both published by Penton Media. His second-half 2011 government budget forecast is available at GovPro.com. Keating has written articles on the government market for more than 100 publications, including USA Today, Sanitary Maintenance, IndustryWeek and the Costco Connection. Mike can be reached through his website, MikeKeat.net.