us public procurement markets - brazilian...

Thursday, June 30, 2011

US Public Procurement Markets

Jennifer Schaus, Jennifer Schaus & Associates (Federal Sector)Bruce Gruenewald, NSI (State and Local Sector)

This summary provides an overview of public procurement markets in the United States (US). It is divided into two sections: one section addresses procurement by the federal government and the other addresses procurement by state and local governments. In 2010, total public procurement expenditures in the US exceeded $1.1 trillion (US) and were larger than the Gross Domestic Product (GDP) of all but 13 countries.

Federal Government

Who

The US federal government is the largest purchaser of goods and services in the world. In fiscal year 2010, it spent $535 billion on contracts and an additional $500 billion on grants. Like any government, there is ample red tape to navigate, a long sales cycle, and purchasing decisions that sometimes defy explanation. Notwithstanding these challenges, a company that secures its first contract and establishes relationships with decision-makers, end-users, and contracting officers is well-positioned for additional federal government business.

There are 15 cabinet-level executive branch departments in the US federal government. Each department has its own functional responsibility ranging from Agriculture to Commerce to Health and Human Services. Organizational structure varies significantly from department to department. For example, the Department of Defense is organized into three sub-departments: one for each of the three service branches (i.e., Army, Navy, and Air Force). The Department of Commerce, on the other hand, is organized into service bureaus with different functional responsibilities. For example, the Census Bureau and National Oceanic and Atmospheric Administration (NOAA) are two service bureaus within the Department of Commerce. Departmental websites provide information about organizational structures, generally in the form of an organization chart. The departments with the largest budgets are the Department of Defense, the Department of Treasury, and the Department of Transportation.

In addition to the 15 cabinet-level departments, some budget analysts have counted as many as 300 additional agencies, commissions, and boards that are funded through the federal budget. As a federal contractor or potential federal contractor, it is not important to understand the entire structure of the federal government, but rather to focus on the agencies that have budgets and needs matched to your products and services.

What

The US federal government spends its budget dollars like any consumer by purchasing both products and services. In recent years, the largest product and service expenditure categories have included information technology (IT) and security products and services. IT products include hardware, software, and telecommunications equipment as well as related consulting services. IT products and services can be provided both in a government facility (i.e., on-site) and at a contractor’s facilities (i.e., off-site). Some

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on-site contracts require government security clearances while many do not. IT solutions can be implemented across all departments, both on an enterprise-wide and functional basis. The same can be said for many other services and products outside of the IT sector.

Where

Although the US federal government is headquartered in Washington, DC there are hundreds of government offices with sizeable contracting budgets distributed across the country and around the world. In the US, major government installations outside of Washington, DC include military bases, regional field offices of federal agencies, laboratories, processing departments, and call centers. Outside of the US, major government installations include military bases, embassies, consulate offices, and foreign trade offices. Policies and decisions on how, where, and when to spend federal money may be made in Washington, DC, but most of the actual spending takes place at the field office level. This is evidenced by the fact that 80 percent of federal government employees live outside of the Washington, DC area.

Any successful federal government contractor will have a presence in Washington, DC to maintain relationships with key decision-makers, elected officials, and other organizations and individuals that effect federal policy. This presence can include trade organizations and associations that advocate on behalf of your industry, or lobbying firms who work specifically on your behalf. Brazilian firms who are interested in the US federal market should determine what type of presence makes the most sense for their business interests.

Additionally, Brazilian companies should consider a Washington, DC-based sales or business development representative if their target market is headquarters organizations. There are many businesses and individuals in Washington, DC who can perform this function. When evaluating these types of service providers, look for firms or individuals with expertise in your sector, strong relationships with decision-makers at your target agencies, and a specialty in your product or service (e.g., John Smith is well connected at the Air Force, has an IT background, and only represents IT product firms).

When

Since 1974, the US federal government’s fiscal year has started on October 1 and ended on September 30. There are standard buying cycles and predictable patterns within the fiscal year. In recent years, the first quarter tends to start slowly due to congressional delays in enacting a federal budget. Often temporary budget measures, know as Continuing Resolutions, are used to keep the federal government operating until a final budget is approved.

The second and third quarters of a fiscal year tend to see moderate or standard purchasing levels and July and the first half of August are always very slow due to summer holidays. Contracting activity increases dramatically in mid-August and September. This is due to the “use it or lose it” federal budget regulations. Under these regulations, any money not spent by September 30 must be returned to the US Treasury. As a result, federal departments and agencies are highly incentivized to spend their full budgets. The big winners in this end-of-year contracting “Gold Rush” are those firms that have built solid relationships with agency decision-makers and shown consistent value for their product or service to government buyers.

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How

Government purchases are not vastly different from commercial purchases or individual purchases. A typical purchase is based on price, perceived value or quality, and strength of relationship. For many years, the federal government awarded competitively bid contracts primarily on the basis of price. In recent years, the federal government has moved away from lowest price toward best value (i.e., a combination of price and quality or value) as the basis for contract award. Many requests for proposals (RFPs) now list not only the criteria that will be used to evaluate offers but the weight that is assigned by the government to each criterion when a proposal is being evaluated (e.g., 40 percent past performance, 30 percent price, and 30 percent quality).

Federal contracting is a highly regulated process and all contracting activity must comply with the Federal Acquisition Regulation (FAR), the federal government’s collection of regulations that apply to procurement actions. In addition to the FAR, other regulations and statues govern how buying decision are made. The Buy America Act (BAA) and Trade Agreement Acts (TAA) are two examples of such statues. While the US government may tend to favor a US company over a foreign company if competing products or services are comparable in price and value, there are many examples of foreign (non-US) firms that routinely win sizable federal contracts.

Purchasing within the US federal government can take many forms. Sometimes the government leverages contract vehicles with pre-negotiated government rates for products or services. These types of contracts are often referred to as acquisition schedules. In addition to pre-negotiated prices, acquisition schedules serve as a pre-screening mechanism for other important areas, such as corporate experience, quality control, and past performance. The most common type of acquisition schedule is a General Services Administration (GSA) schedule. While having an acquisition schedule does not guarantee government business, it does demonstrate a serious level of commitment to the federal government market. In addition, under certain conditions federal business can be set aside exclusively for GSA schedule holders.

Sole sourcing is another mechanism by which the federal government can purchase goods or services. Under sole source procurement, the government has determined that only one company is capable of providing the required product or service and it directs the award to that firm without having to solicit proposals under normal competitive conditions. Sole source procurements tend to occur in the IT arena where the government is buying a patented or trade-marked item. For example, DUNS numbers and data sets can only be purchased from Dun & Bradstreet.

The federal government typically buys goods and services through competitive bidding procedures. There are several different types of competitive bidding procedures: Requests for Proposals (RFP), Requests for Quotes (RFQ), Requests for Information (RFI), Sources Sought (SS), and Invitations to Bid (ITB). Competitively bid solicitations generally include evaluation factors and the weighted percentages that the government will apply to them when they evaluate a proposal. Competitive bidding procedures are also used for contract set asides and only those firms that fall within the set-aside class (e.g., small businesses) may bid on the work. Using small business set asides to enter the federal market is an excellent business development strategy. Brazilian firms that qualify for contract set asides will find themselves competing against smaller, less-established firms rather than large industry players.

One of the ways the federal government ensures transparency in the procurement process is to require that all solicitations over $25,000 be disclosed to the public in a conspicuous location. To this end, the

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federal government created Federal Business Opportunities, a free public website on which all solicitations above the $25,000 threshold are posted (https://www.fbo.gov/). Referred to in the contracting industry as “FedBizOpps”, this site allows a user to perform both basic and advanced searches to locate currently open opportunities and conduct historical research. Keep in mind that an opportunity announcement is posted on FedBizOpps near the end of the procurement cycle. Waiting for an announcement to appear on FedBizOpps is not going to be a successful business development strategy as some other firm has already spent months or years positioning itself for the work. Building relationships with buyers during the procurement process while the scope of work and evaluation criteria for the solicitation are being developed will greatly increase your chances of success.

Paths to the Federal Market for Brazilian Firms

Direct

Brazilian firms interested in selling their solutions to the US federal government have several options. For example, they can pursue direct contracts with the government. Selling directly to the US government typically requires a presence in the US in order to participate in trade shows, conferences, and one-on-one meetings with end-users and decision-makers.

Indirect

Another option is for an Brazilian firm to partner with a US firm that has established relationships within the federal government. A US partner should have complementary product or service offerings and have contracts and relationships with an Brazilian firm’s target agencies.

Brazilian firms that do not have a large US presence will be attractive to large businesses as potential small business partners. Large business contractors who do not meet small business size standards (based on NAICS – the North American Industry Classification System) are required to have a small business subcontracting plan to meet their small business subcontracting requirements. Most of these large firms have a small business liaison officer coupled with a small business vendor registration web-site to recruit small business partners.

US-based system integrators (SI) are a good fit for Brazilian IT firms wishing to penetrate the federal market as they usually purchase products and services through their small business vendor registration web-site portals. Large system integrators typically have multiple agencies as clients and can be a productive distribution channel to sell technology across several federal agencies.

Local Resources

US companies focused on federal sales and business development can be found throughout Washington, DC. These companies typically specialize in a particular agency or industry and may have former government employees (both political appointees and end-users) on staff or serving on their boards of directors. There are also many sole practitioners in this sector. These firms and individuals can be helpful because of their specialized knowledge and contacts. They are particularly useful in a match-making role where they can be of enormous assistance in finding good partners with complementary product and service offerings.

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Sales and Marketing

Market Research and the Freedom of Information Act (FOIA)

Market research is an important first step in determining whether a particular federal government vertical is worth a company’s time and effort. Understanding which federal departments and agencies buy your product or service is the foundation on which a successful Business-to-Government (B2G) sales strategy is based. In addition, a competitive analysis of the firms that have already won business with these departments or agencies will provide you with a sense of the competitive landscape and how your firm can be positioned relative to its competitors. The federal government provides most of the data you will need to conduct market research on publically available (i.e., no-cost) websites.

The federal government provides access to solicitation data and contracting information on the Federal Business Opportunities website (www.fbo.gov) and the Federal Procurement Data System website (www.fpds.gov), respectively. Even relatively simple searches on these systems can yield powerful insights into agency purchasing trends and contract award patterns. Information about GSA schedule holders, including their product and service offerings and pricing, can be found on the GSA’s website.

The bias in the United States is toward full disclosure of government information. This bias toward release also applies to federal government contracts and grants. As previously discussed, contract awards, government budget data, and agency expenditure patterns are all publicly available. Companies can use authority provided by the Freedom of Information Act (FOIA) to request information that is not already in the public domain. This mechanism is particularly useful for requesting contract documents.

Events

Sales to the federal government are no different than any other sector; they are based on relationships and trust. Establishing relationships with customers in the federal government can be challenging as the market is extremely competitive and there are often incumbent contractors that may have long-standing relationships with potential clients. Nevertheless, the market is large and there are trade shows, associations, and industry-related networking events throughout the year where industry can meet with government decision-makers. Many of these events tend to be industry-specific while others are geared toward government contractors in general. Government funded PTAC, Procurement Technical Assistance Centers (www.aptac-us.org) are a starting point for both education and networking. GovEvents (www.GovEvents.com) is a national firm providing a comprehensive list of both educational seminars and networking events for contractors.

Social Media

Social media plays an increasingly important role in both business and personal life. Marketing through social media is an effective way to target and reach specific audiences and the federal government uses these media to promote awareness of their programs and successes. Most major departments and agencies have established a Facebook page and these pages provide another avenue for Brazilian companies to connect with government agencies and begin the sales process. In addition, there are LinkedIn groups focused on federal contracting as well as social media sites designed around government and government-related business, including GovWin.com, TFCN.us, and GovLoop.com. Maintaining a strong presence on these sites can lead to partnering opportunities and direct sales leads.

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http://www.GovEvents.com/

http://www.aptac-us.org/


Considerations for Brazilian Firms

Brazilian firms entering the US market (federal or commercial) for the first time need to consider various logistical, financial, and legal issues as part of their market entry strategy. Some of these issues may make or break the case for pursuing business in the United States.

Buy America Act (BAA) and the Trade Agreements Act (TAA)

The Buy America Act (BAA) and the Trade Agreements Act (TAA) play a significant role in federal contracting and Brazilian firms need to be mindful of what policy concerns these statutes are intended to address. The BAA requires that federal purchasing favor US-made products and services. There are certain waivers and exceptions to this preference, including unfavorable rates for domestic products or services, a lack of available domestic products or services, and public interest. The TAA is intended to ensure that products and services procured under federal contracts are compliant with international trade agreements where the US is a signatory and that products are manufactured in a TAA approved or compliant country. There are limited exceptions to this requirement, including waivers for small business, ammunitions, and national security.

Foreign Corrupt Practices Act (FCPA)

The Foreign Corrupt Practices Act (FCPA) is especially important for non-US firms conducting business in the US and with any other government. The FCPA applies to US persons and foreign firms and is intended to prevent bribery of government officials to win contracts. The second part of the FCPA focuses on accounting controls and financial transparency for firms with securities listed in the US. FCPA has proven to be a major force world-wide in ongoing efforts to reduce financial corruption and increase transparency. FCPA should be taken seriously, as fines have been as high as $450 million.

US Incorporation/Subsidiary

Many non-US firms doing business in the US begin by establishing a US office. This can be as informal as a temporary or virtual office with a street address and phone number equipped with messaging services. Eventually, business may grow to the point where a newly incorporated US firm or a US subsidiary is warranted. An indirect benefit of US incorporation is that a non-US firm is placed on a level playing field with US firms insofar as Buy American Act requirements are concerned.

GSA Schedules

GSA schedules are the most widely used federal government contracting vehicles and many state and local governments use GSA schedules, particularly for IT services. A GSA schedule holder has pre-approved government pricing as well as accounting and other procedures in place to comply with government accounting and reporting requirements. While a GSA schedule does not guarantee government sales, it indicates a strong commitment to the federal market. A GSA schedule proposal can be drafted, negotiated, and put in place in as little as six months. There are dozens of schedules covering everything for IT products to management consulting services.

State and Local Government

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State and Local Government is Highly Fragmented

According to the 2007 quinquennial Census of Governments conducted by the US Census Bureau, there are 89,527 governmental units in the United States.

Governmental Units by Type of Government

Type of Government Number of UnitsFederal (US) 1State 50Local 89,476TOTAL 89,527

The US follows a federal model of government wherein sovereignty is constitutionally divided between a national government and constituent political units. The 50 states comprise the constituent political units in the US federal relationship.

The 89,476 local governments include both political subdivisions of states, such as cities or counties, and special purpose authorities: independent governmental units with a separate existence and substantial administrative and fiscal independence from a municipal government. These authorities provide specific services not typically provided by municipal governments, such as electric power, water, and sewage treatment.

As illustrated below, the majority of local governments (56 percent) are school districts or special purpose authorities (e.g., water or electric utilities) as opposed to political subdivisions of states (44 percent).

Local Governments by Government Type

Type of Local Government Number of Units PercentageCounty 3033 3.4%Municipality (city, town, village) 19,492 21.8%Township 16,519 18.5%School District 13,051 14.6%Special Purpose (water, utility, police and fire) 37,381 41.8%TOTAL 89476 100%

This fact has important implications for Brazilian companies as in many cases the client for their product or service may be an independent authority rather than a government entity.

State and Local Governments Play a Significant Role in Federal Policy Implementation

In the US, many federal programs are actually implemented by state and local governments. Two federal energy efficiency programs that have been in existence since the 1970’s illustrate this point. Under the Weatherization Assistance Program (WAP), municipal governments use federal monies to install energy efficiency measures, such as insulation and storm windows, in homes owned by low-income residents.

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States use federal monies awarded under the State Energy Program (SEP) to develop and fund programs that address state energy priorities, such as reducing energy use in state facilities.

Federal monies are distributed to state and local governments through federal assistance agreements. The two types of federal assistance agreements are grants and cooperative agreements. Both involve the transfer of money from the federal government to state and local governments; the key distinction is the level of federal involvement and oversight.

Grant : With a grant, there is very little involvement between the grant recipient and the federal government regarding the use of funds and federal oversight is limited to awarding funds and ensuring regulatory compliance.

Cooperative Agreement : A cooperative agreement is more like a contract. The federal government is substantially involved in the use of funds and federal oversight may also include the authority to stop work, specify the scope of work, and limit the recipient’s discretion regarding the use of funds.

Grants are more commonly used than cooperative agreements to transfer money from the federal government to state and local governments. Grant monies generally lead to contracting activity at the state or local level. By “following the money” from the federal level to the state and local level, it is possible to determine where future contracting opportunities may arise.

State and Local Procurement is Equal to or Greater Than Federal Procurement

According to the 2010 US Gross Domestic Product (GDP) forecast prepared by the US Bureau of Economic Analysis, expenditures on consumption and investment by all levels of government in the US were $3.02 trillion. Federal consumption and investment expenditures were forecast to account for $1.23 trillion or 41 percent of the total, while state and local government consumption and investment expenditures were forecast to account for $1.79 trillion or 59 percent of the total. The value of federal procurement was approximately $535 billion and the Department of Defense accounted for almost 70 percent of the total.

Determining the value of state and local procurement as a share of the $1.79 trillion in state and local government consumption and investment expenditures is not straightforward. Unlike the federal government, which has several points of collection for procurement data, there is no central point of collection for procurement data from the over 89,000 state and local government entities. In addition, apportioning state and local consumption and investment expenditures based on the federal procurement share is not valid due to the distortions resulting from the high proportion of Department of Defense purchases. Based on an examination of federal assistance agreements, NSI conservatively estimates state and local procurement for 2010 of between $607 billion and $891 billion.

Major Market Segments

Construction Services and Buildings ($111.4 billion in 2010)

The Construction Services and Buildings sector includes products and services used to design and construct buildings, facilities, and structures for state and local governments. The US Census Bureau projected annualized procurement spending in the Construction Services and Building sector of $111.4 billion in 2010. The sector is dominated by Educational Buildings, which accounted for over 60 percent

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of sector expenditures in 2010. Most Educational Buildings are primary and secondary public schools and the procuring entities are local independent school districts or school boards.

Energy Generation and Transmission ($10 billion in 2010)

The Energy Generation and Transmission sector includes products and services used to design and construct buildings, facilities, and structures that generate, distribute, and transmit power for state and municipal government entities. Publicly-owned electric utilities are non-profit government entities that are organized at either the local or state level. There are 2,009 publicly-owned electric utilities in the United States. The US Census Bureau projected annualized procurement spending in the Energy Generation and Transmission sector of $10 billion in 2010.

IT/Telecommunications ($53 billion in 2010)

IT/Telecommunications sector products and services are ubiquitous throughout government and are purchased by virtually every state and local government entity. State or local government Chief Information Officers (CIOs) and individual agency CIOs are the principal procuring entities for major IT and telecommunications systems.

According to INPUT, an information services company that specializes in government IT contracting, state and local governments spent roughly $53 billion on IT/Telecommunications sector products and services in FY 2010 (July 2009 through June 2010). Software and Services accounted for $27.3 billion of this amount or over one-half of total IT/Telecommunications expenditures. The second largest expenditure category was Telecommunications and Wireless with $19.7 billion or 37 percent of total expenditures.

Transportation Infrastructure ($91.5 billion in 2006)

The Transportation Infrastructure sector includes products and services used in the construction of infrastructure for transportation, such as bridges and tunnels, as well as vehicles and rolling stock purchased by state and local governments for use in transporting people and goods.

At the state level, the principal procuring entity for transportation infrastructure is the state department of transportation. Many states operate toll roads and turnpikes, and the procuring entity for these systems is a toll road or turnpike authority. The highway and bridge program procuring entity at the local government level is the city, county, or township department of public works. Procuring entities for transit programs are generally special purpose authorities that were specifically created to operate transit systems, airports, and ports. Special purpose authorities that were created to operate ports and airports are referred to as port authorities and airport authorities, respectively.

According to the US Department of Transportation’s 2006 Conditions and Performance Report, capital expenditures on highway and transit programs were $91.5 billion. Of this amount, $78.7 billion or 86 percent was spent on highway and bridge programs, while $12.8 billion or 14 percent was spent on transit programs.

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State and Local Government Sales Best Practices

Procurement at the state and local government level is fundamentally different than procurement at the federal level and Brazilian companies need to keep these differences in mind in order to be successful in the state and local government market. For example, state and local governments conduct far less long-term procurement planning than the federal government. As a result, contracting opportunities are fluid and wide-ranging in size and type.

The state and local market is more political than the federal market, and elected officials and their senior staff have significant input into procurement decisions. Brazilian companies will need multiple points of entry into the executive and legislative branches of government in order to be successful. Potential points of entry into the executive branch include elected officials, key staff members of elected leadership, agency leadership, and agency staff. Within the legislative branch, potential points of entry include leadership, leadership staff, and committee members and staff relevant to your industry or product/service.

The following state and local government sales best practices are intended to start you on the road to success in the state and local government market.

o Identify Your Customer Through Market Research

As previously discussed, the US state and local government market is highly fragmented and narrowing your focus to only those state and local customers who have a potential need for your product or service is the key to minimizing effort and waste in your business development process. For example, if your company sells into the highway construction market in the transportation sector, then state departments of transportation, toll road and turnpike authorities, and local government departments of public works are your best sales targets.

Once target agencies have been identified, you will need to define the criteria for what makes a good sales target for your company. This will help further refine the sales target list. Potential criteria could include type of project (e.g., bridge rehabilitation), geographic area (e.g., the northeastern United States), project size (e.g., more than $1 million), and size of market (e.g., population greater than 500,000). Given the vast size of the US state and local market, you may end up with more target markets than you can realistically pursue, even after applying your company’s sales target criteria. You will need to select a manageable number of markets from your list for further research.

o Learn About Your Potential Customers’ Procurement Needs

When your prioritized target list has been created, it’s time to determine which of your sales targets has a potential need for your product or service. This process begins with research and information gathering. Industry news sources and local media are good places to start to get a feel for state, regional, and local issues in your market. This research can also help you determine which elected officials have a strong interest in these issues.

In addition to conducting research on state, regional, and local issues in your sector, you will need to identify potential points of market entry in the executive and legislative branches of government in your target markets. Government websites are an ideal place to conduct this research. Legislative websites will provide information on legislative committee membership and often include contact information for

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committee staff. Executive branch websites will provide information about elected officials and agency websites will include agency leadership and agency staff often in the form of an organization chart.

Brazilian companies will need to develop relationships with appropriate decision-makers in the executive and legislative branches to learn about their customers’ potential needs. An important consideration for meeting with executive branch officials will be the best approach to start your discussions. If your product or service addresses an indentified government policy priority, it may be best to take a top-down approach and meet with agency heads first. They’ll be receptive to your message because it addresses an identified government policy priority. If your product or service provides an administrative benefit but does not necessarily align with an identified government policy priority, it may be best to take a bottom-up approach and meet first with agency staff and build momentum for your product or service as you ascend the organizational hierarchy.

o Find Your Niche

After you’ve found out about a potential customer’s needs, you will need to determine how you will approach the market. An important consideration will be whether to pursue the opportunity as a prime contractor or subcontractor. In many cases, this decision may be dictated by the government’s procurement strategy. For example, if the government wishes to contract with a systems integrator who will bundle a prescribed set of solutions into a single system and you are not a systems integrator but provide a solution that is part of the larger system, then you will play a subcontracting role on another company’s team.

When contemplating a subcontracting role on another company’s team, partnering with the right firm is crucial to your success. Use your meetings with decision-makers to learn about an incumbent contractor’s performance and what decision-makers think about the field of potential competitors. If you can’t get on the right team, pass on the opportunity and focus your resources on another market.

If you are able to pursue a bid as a prime contractor, there may still be a number of important issues to address. For example, do you need to assemble a team of subcontracting partners to pursue the work? If so, you will want to get a sense from the client whether they prefer certain vendors in the areas where you need assistance with your bid and pursue relationships with these firms. In some cases, adding a local partner, even if you can perform the work without their assistance, may increase your chances of winning the work. Bear in mind that the best approach for you to take on a bid may not necessarily be the easiest.

o Validate Your Product Or Solution With The Buyer

In general, governments are risk averse and do not like to buy a product or service that has not already been purchased by another public sector client, preferably at the same level of government. You should have case studies and references to substantiate your acceptance in the market and share these with the buyer. You will also need to differentiate your product or service from your potential competitors. If this differentiator has not already been established, use the insights gained through your meetings with decision-makers to evaluate the client’s pain points and tailor your differentiators to them.

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o Develop Good Marketing Materials Tailored To Government

Government clients and commercial clients do not speak the same language. Using commercial marketing collateral in a government setting may not work. Your marketing collateral should be tailored to government clients. Refer to solicitation announcements and contracts that have already been awarded for your product or service to get a better sense of the language state and local governments use to describe the problem you are trying to address and its solution.

Government marketing material should be concise and free of technical jargon (save this for appendices). At a minimum, the materials should: 1) identify your product or service; 2) describe the problem that it solves; 3) describe where and how it can be used; and, 4) provide some advantages that are not immediately obvious to the reader. Concise materials that are customized for each buyer have a particularly powerful impact. If you are meeting with an elected official in the legislative or executive branch, limit your materials to a single page. Longer materials tend not to be read.

o Prepare Thoroughly For Your Initial Meetings With Decision-Makers

First impressions are important and you should be well-prepared for your initial meetings with decision-makers. Biographies are generally available for elected officials and senior executive branch leaders on government websites and you should consult them prior to your meetings so that you become familiar with decision-makers’ backgrounds.

In addition to educating a decision-maker about your product or service, you need to convey a tangible benefit that will accrue to the government as a result of buying your product or service. A partial list of potential benefits includes: reducing the cost of a government service, reducing the time it takes to perform a government service, reducing the administrative burden on citizens, and helping the government to comply with new regulatory or statutory requirements. Where possible, you should attempt to quantify the potential benefit that will accrue to the government.

o Develop a Strategic Plan

Your business development activities in the state and local market should be guided by a strategic plan that lays out a roadmap of your target agencies and the decision-makers with whom you will be building relationships to shape future procurement activities to your advantage. The planning process is more important than the plan itself. You should expect to modify and refine the plan as you meet with decision-makers and gain a better understanding of their needs and requirements.

o Talk To The Right People At The Right Time

Your goal is to establish relationships and educate key decision-makers about your product or service before the government releases a solicitation so that you can shape the scope of work and the evaluation criteria to your advantage. If a solicitation has already been released, a competitor has likely been involved in the process and has shaped the solicitation to their advantage.

Another reason for establishing relationships with decision-makers prior to the release of a solicitation is that virtually all state and local government procurement regulations limit the communication that can occur between the government and an offeror after the solicitation has been released. One-on-one meetings with a single offeror may be banned and any information shared with one potential offeror

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must be shared with all potential offerors. State and local governments take these regulations very seriously. Companies have become increasingly aggressive about filing bid protests when they believe that the rules that ensure a fair competition have not been followed.

o Follow Proper Procurement Procedures

Procurement procedures apply to both the preparation and submission of proposals. These procedures are derived from procurement regulations and full compliance is mandatory. Failure to follow seemingly trivial requirements, such as page length or font size, can result in a proposal being rejected for non-compliance.

There are several different types of procurement authority (e.g., sole source) and the procedures may differ depending on the type of authority being used. If a company is pursuing business in a new market or lacks state and local government contracting experience, retaining a proposal expert or teaming with an experienced firm on a bid are two ways of ensuring that procurement procedures are being properly followed.

o Leverage Purchasing Preferences Where Applicable

Legislators have established purchasing preferences that affect how state and local governments buy goods and services. Virtually every state and local government has disadvantaged business preferences. In some cases, work is set aside for disadvantaged businesses, such as minority- or woman-owned businesses, and bidders are limited to businesses from these disadvantaged classes. In other cases, prime contractors are required to subcontract a percentage of the work to disadvantaged businesses.

Purchasing preferences may also apply to in-state businesses (i.e., businesses with a major economic presence in a state) and certain raw materials produced in state. While it is unlikely that any of these preferences affect Brazilian companies directly, they may have an impact on a company’s proposal to provide a product or perform a service. Brazilian companies should be aware of the existence of these preferences and leverage them where applicable to strengthen their bid, particularly those pertaining to subcontracting requirements for disadvantaged businesses.

o Conduct Due Diligence on Potential Partners

While the overwhelming majority of individuals and firms in the US that seek to do business with Brazilian companies will be ethical and professional, there are unscrupulous firms in the government contracting and lobbying industries and money spent on due diligence should be considered an investment rather than an expense. One-way interactions with prime contractors where all of the work appears to be done on your end and lobbyists who are paid a retainer but fail to deliver results in a timely manner are not productive relationships for a company trying to establish a beachhead in a new market. Before entering into a relationship with a consultant or another firm, Brazilian companies should request references and conduct reference checks. In addition, Brazilian firms should quantify the total investment that will need to be made in order to win their first piece of US public sector business and perform a back-of the envelope return on investment (ROI) calculation to set realistic business development objectives and timelines.

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Conclusion

The public procurement markets in the United States present enormous opportunities and unique challenges. Regardless of whether you pursue business in the federal or state and local market, solid market research is an absolute necessity. An appreciation of the differences between the two sectors will help you prepare an appropriate strategic plan and build the relationships with decision-makers necessary to create the conditions that will lead to your success.

Corporate SummariesEnterprise Ireland Public Procurement Summary

Jennifer Schaus & Associates

Jennifer Schaus & Associates is a boutique government consulting firm based in Washington, DC. The organization advises companies interested in selling products or services to the US Federal Government. Primary services include assistance with federal contract vehicles (i.e., GSA Schedules) and sales strategies. Clients range from small businesses to Fortune 500 companies, and cover both domestic and foreign-based firms.

NSI

NSI provides the experience to impact each client’s business, bottom line, brand and overall standing with stakeholders by serving as valued partners and advisors. We offer an integrated suite of services focused in government market sales, government relations, strategic communications, public affairs and business consulting.

In government market sales, we leverage our network of 2000 state and local consultants to win business for our clients by establishing relationships with decision-makers and shaping government solicitations to our clients’ advantage. Since 1996, NSI has generated close to $8 billion in new revenue for our clients. We leverage this same network in our government relations work to drive legislative and regulatory policy changes to open up new markets for our clients’ products and services. We use public affairs tools to create your brand, develop strategic communications, and deliver your message to your targeted stakeholders.

Executing as partners, clients can leverage services across NSI’s platform to achieve their strategic business objectives. NSI is headquartered in Washington, D.C. and has offices in Florida, New York, Georgia, Missouri, California and Brussels. Learn more at www.nationalstrategies.com.

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http://www.nationalstrategies.com/

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