The Perfect Customer

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Looking for a customer that's always in the market for your products, buys in large quantities, is not effected by the national economy, and has perfect credit? Yes, Virginia, there is such a customer. You know him very well - in fact he takes a big chunk of your paycheck every month. That customer is Uncle Sam – the United States Government. Uncle Sam is the world's largest buyer of just about anything, including plenty of telecom services and equipment. In fiscal 2003, the federal government plans to spend over $60 billion for telecommunications and IT products and services.

The U.S. government is comprised of the executive, legislative, and judicial branches plus independent establishments, boards, commissions, committees, and other quasi-official agencies. That's over 140 separate entities, with 2.9 million civilian employees and an annual budget of more than of $2 trillion.

If it sounds massive, bureaucratic, and complicated, it is. And that's why a lot of vendors have shied away from selling to the federal government. But those that have made the investments and stuck with it have been handsomely rewarded.

The federal government's primary civilian purchasing arm is the General Services Administration (GSA). Telecommunications services are contracted by the GSA's Federal Technology Service. FTS 2001 is the largest FTS contract and is reported to be the largest nonmilitary contact the government has ever awarded. Valued at $5 billion over eight years, FTS 2001 covers a host of national and international voice and data services. Sprint and MCI/Worldcom were awarded the contract. Other major telecom service contracts are WITS (Washington Interagency Telecommunications System) to provide local telecommunications services to federal users in the National Capital Region, and the 28 Metropolitan Acquisition Area Acquisition (MAA) contracts for local telecommunications services in major metro areas.

"Connections" is an even larger government telecom opportunity. On December 16, 2001 the FTS issued an RFP for voice, video, and data communications equipment and support services. Valued at up to $35 billion over five years, Connections contracts seek to consolidate five separate contracts, all due to expire in 2001 or 2002. Proposals for national equipment and services were due March 12, 2002. Global proposals are due September 17th and state proposals are due over a time period from November 19, 2002 to February 25, 2003.

The Federal Supply Service (FSS) of the General Services Administration is the primary purchasing agency for computers and related products. Given convergence between data and voice processing, it is sometimes unclear which GSA division, FTS or FSS, has responsibility for some products. Turf disputes are not uncommon.

FTS is getting some not-too-welcome competition for telecom services from an upstart in the Interior Department's Minerals Management Service. "GovWorks" sold $60 million worth of telecommunications services to agencies through individual contracts last year and is preparing to offer a broad telecommunication contract government-wide. Other agencies are also lining up to compete with GSA, largely because they are not happy with the fees charged by FTS. These fees can be as much as 25 percent of the cost of a phone line.

While military branches can and do buy off GSA schedules, the Defense Information Systems Agency (DISA) is the primary combat support agency responsible for planning, developing, fielding, operating, and supporting command, control, communications, and information systems. DISA serves the needs of the President, Vice President, the Secretary of Defense, the Joint Chiefs of Staff, the Combatant Commanders, and the other Department of Defense (DOD) Components.

DISA and GSA are set up to leverage the purchasing power of the federal government to get the best products and prices for its agency clients. They deal primarily with commodity-like goods and services, purchased in large quantities. For specialized telecom and IT solutions it is often best to approach the target agencies directly.

If you want to sell to the federal government and your company is not already doing so, you need a plan. Decide what you have to sell that the federal government needs, which agencies should be targeted, what is your value proposition, and how much time and money you are willing to invest. Because of the budgeting cycle, it could easily be a year or more before you see an order. Don't be deterred if your company is small. There are special programs to support small, small disadvantaged, woman-owned, Veteran and service -disabled Veteran owned businesses, and others. Another option is to partner with a firm that already has a contract. It is often easier to add a product to an existing contract than negotiate an original contract.

Prices must be the lowest for a similar class of customer. If the price you can get is lower than for private sector customers, there are offsets. There are no credit risks - though don't expect payment in 30 days. Also, service costs are often lower, as federal agencies typically have in-house experts or have access to experts from the Federal Technology Service.

When preparing the federal marketing plan, it is essential to understand the pertinent legislation and regulations. The federal bureaucracy is rules-driven. You won encounter many mavericks willing to go to bat for a new vendor than does not understand the system. At a minimum, become familiar with the Clinger-Cohen Act, the Government Performance and Results Act, and The Federal Acquisition Regulations (FAR).

Finding out what the government needs is not too difficult. You can go to www.fedbizopps.gov where commercial vendors seeking federal markets can search, monitor and retrieve opportunities solicited by the entire Federal contracting community. Vendors can even get e-mail alerts of business opportunities. However, the likelihood of winning an RFP if your company is not already in the loop is extremely slim. Successful vendors are never surprised by an RFP. Another good way to find out what agencies need is to examine their strategic plans. Everything is on the web.

Like commercial customers, government buyers need to be cultivated. They buy for the same reasons; to save money, increase productivity, and solve specific problems in their organizations. Of special concern to government agencies are finding ways to comply with Section 508 of the Telecommunications Act (to respond to the needs of disabled employees and citizens) and coping with the looming retirement crisis that will drain the bureaucracy of many of its most skilled and experienced employees. Customer service is also very important. Agencies are required to periodically report on their success in meeting objectives. Improving customer service is always on the list. The Social Security Administration and Internal Revenue Service, for example, have thousands of call center agents. "Hot" technologies are speech recognition, call center software, video conferencing, e-government and anything that strengthens data security and improves information sharing between agencies.

Now that times are tough in the private sector, launching a government sales program may be just the medicine for getting business back on track.