IT companies looking to expand their business should consider the federal government. Lucrative is a word that is often used to describe the federal market — particularly the federal IT market, and with good reason. The federal government spent over $74 billion on IT related equipment and services in fiscal year 2012 alone. While federal sales are not for every company, the sheer volume of purchases made by the federal government in the IT space at least warrants further research.
Here are 5 steps to evaluate if the federal market is right for your business.
1) Know Your NAICS Codes
In order to research the demand for your offering, as well as potential contract opportunities, it is important to know the North American Industry Classification System (NAICS) code(s) that your products and services fall under. There are a number of NAICS codes for IT-related products and services, below are a few:
- 517110: Wired Telecommunications Carriers
- 517911: Telecommunications Resellers
- 518210 Data Processing, Hosting, and Related Services
- 541511: Custom Computer Programming Services
- 541512: Computer Systems Design Services
- 541519: Other Computer Related Services
2) Scope Out Your Competition
Every business should have a strong grasp of the competition. However, which of these competitors, if any, are marketing in the federal space? You may find a different competitive landscape when you cross the threshold from the commercial to public sector. When you identify your competition, use resources such as USASpending.gov to analyze what contracts they hold and who their top customers are.
3) Identify your Target Buyer
The federal government consists of a myriad of agencies and departments. While they all follow set procurement regulations, each agency will also have additional guidelines, preferred procurement methods, and unique purchasing patterns. Instead of researching every agency or using a ‘one size fits all’ approach, identify 1-3 agencies that have the highest demand for your offering.
4) Research your Target Buyer
Once you’ve identified your target buyers, get to know them. Begin with preliminary research on the agency’s history, mission, and organizational structure. Review strategic plans and budgets to identify growth areas. Many agencies will have a section of their website that provides information on how to do business with them. Dig deeper to collect information on how the agency procures goods and services. Who are their contracting officers? Where do they post open bids? Analyze awarded contracts to see if they tend to utilize a certain contract vehicle. For example, while some agencies may frequently award contracts on the open market, others may favor government-wide acquisition contracts (GWACs) such as NASA SEWP or GSA Schedules.
5) Find Opportunities
To find potential contract opportunities, start off by searching FedBizOpps (www.fbo.gov). Agencies use the FedBizOpps website to post contract opportunities that are over $25,000. You should also refer to the “doing business” section of the agency’s website. At the very least this can provide direction regarding specific contracts the agency buys through; you may even find links to open contract opportunities.
As with any new business venture, a move into the federal IT space begins with market research. While there are additional factors to consider prior to setting the wheels in motion, the steps detailed above will help provide you with a solid foundation for evaluating whether your company should invest time, money, and resources to compete in the federal IT space.
The process of securing a placement on widely used government contract vehicles such as the GSA Schedule 70 can be overwhelming. If your company is capable of handling more projects and contracts, but staffing is limited to help with market research and the contract proposal process, a GSA Schedule Consultant can guide your company through the process.
This article was contributed by Heather Rattmann, Marketing Coordinator at Federal Schedules, Inc., The Authority in Government Contracts since 1986.