Article reprinted from The Wall Street Journal, September 15, 2003
SPECIAL REPORT: TECHNOLOGY
Tap Into Government Contracts
By WAILIN WONG
DOW JONES NEWSWIRES
Uncle Sam seems like the perfect consumer. He always needs computer software, office supplies, maintenance work and fighter jets. He doesn't bounce checks. And he's spending more than ever: The federal government awarded $250 billion of contracts in fiscal 2002, up from $235 billion the year before and $219 billion in 2000, according to the General Services Administration, which handles much of the government's purchasing.
But securing a piece of the government market can be a bureaucratic nightmare for companies unaccustomed to the regulations, jargon and paperwork that accompany the bidding process. Fortunately for businesses, a number of commercial Web sites, as well as the government's initiatives to streamline its own procurement sites over the past several years, are easing the onerous task of finding the right opportunities.
Don't expect too much, though. Government Web sites are free but still require a certain amount of tenacity to wade through masses of information, or prior knowledge of which agencies make the best match for your business. Commercial sites, on the other hand, provide more help matching companies with appropriate buyers, but can be pricey. And most sites of either type don't offer many resources to help novices follow through on the bidding process after the initial lead is generated.
"A lot of Web sites out there that do business-to-government are connecting the dots only so far as 'Here's a lead, do whatever you want with it,'" says Michael Sparks, president of Subcontract.com Inc., whose Web site www.subcontract.com links primary contractors with subcontractors. "You [still] have to create a name for yourself and try to establish a rapport" with your potential customers.
Getting Started
One way to get started online is to visit the Federal Business Opportunities site http://www.fedbizopps.com, a government clearinghouse for all federal contracting opportunities greater than $25,000. Companies can search the database by product or service category. So-called set-aside businesses – those owned by minorities, women or veterans, for example, for which the government sets aside a certain amount of its business -- can narrow their searches to agencies seeking contracts with just those types of companies.
Vendors can also register to receive FedBizOpps e-mail notifications of new bidding opportunities, by agency or by product or service. FedBizOpps also offers an online tutorial for its site, and links to myriad other government sites that explain parts of the federal procurement process.
Small businesses can also let the government come looking for them, by listing themselves on Pro-Net www.pro-net.sba.gov the Small Business Administration's database of more than 170,000 firms. Federal law sets aside 23% of government contracts for small businesses, so agencies that need to meet these requirements can search Pro-Net for appropriate vendors. The SBA says July's total of more than 21,000 visits to the site by agencies was typical for a month's
activity.
Companies that register with Pro-Net also are automatically included in the Central Contractor Registration, a mandatory registry for businesses that want to contract with the Department of Defense and several other agencies.
Finding Help
For businesses that want more help in finding contracts, there are a number of privately owned government-procurement sites. In addition to databases of contracts up for bid, these sites commonly offer customized e-mail notifications of new opportunities, and analysis of government agencies' spending patterns.
Fedmarket.com www.fedmarket.com is one such site. "Almost everything that we have comes from the public sector and is available to anyone, but we know how to get it, compile it and sort it," says Richard White, president of Wood River Technologies Inc., the Ketchum, Idaho, company that owns Fedmarket.com.
Winston Industries LLC, a Louisville, Ky., kitchen-equipment company, uses Fedmarket.com. Winston Vice President Michael Gibson had clicked around a maze of government-agency Web sites in search of customers, with little success. He figured military branches and embassies would be interested in the company's freezers and fryers, but the terminology on the various agency Web sites was confusing, and each page seemed to link to a host of different ones. "You spend a good two to three weeks surfing the government connections, trying to learn the government-speak, which is different than anything you experience in the commercial sector," Mr.
Gibson says.
Then he ran an Internet search for commercial services specializing in helping businesses sell to the government. Mr. Gibson says his selection of Fedmarket over other services was "highly subjective," but he did find the site to be organized and user-friendly.
Fedmarket gathers information from federal and local government bid-posting sites and organizes its listings in four separate search engines. For $200 a year, subscribers can scan Bidengine, a database for state and local bids. FebBizNow, which lists federal bids, and IT Bids, for the information-technology market, each cost $290 a year. Fedmarket's priciest offering is BidMark, which for $3,000 a year provides far more detail on information-technology opportunities, including background information on the programs soliciting bids and contact information for contracting officers and program managers.
Other Fedmarket products include CD-ROMs of industry-specific market research, and RFPadvisor.com www.rfpadvisor.com, which guides businesses through the federal Request for Proposal process, in which bidders submit paperwork detailing their offers for a particular project.
Fedmarket also offers a consulting service for companies interested in a contract known as a GSA Federal Supply Schedule. A GSA schedule establishes a company as an approved vendor of a given product at a negotiated price; government agencies can then shop freely for that product from that vendor at the agreed price, rather than take bids for a contract to fill their needs. Fedmarket consultants will help a business prepare and submit the proper paperwork. The service ranges from $10,000 to $15,000 per GSA schedule, depending on the size and complexity of the company.
Winston Industries already had a GSA schedule, but Mr. Gibson says a Fedmarket seminar he attended in Washington, titled Selling to the Government, helped him organize a selling strategy. For instance, he is now calling government buyers to tell them his company is an approved vendor.
About 10% of Winston Industries' yearly revenue of some $25 million comes from government sales. Mr. Gibson says he hopes to increase that figure to 25%, but adds that the search for a successful contract is still quite demanding. "You have to make contact with regional [General Services Administration] offices and make PowerPoint presentations about your products," he says. "I can promise you there's nothing automatic about it."
Getting Particular
Businesses can also find Web sites focusing on specific areas of government contracting. DefenseBizOpps.com www.defensebizopps.com owned by Digital Commerce Corp. of King of Prussia, Pa., compiles only bid opportunities from Department of Defense agencies. The department is the government's largest buyer, awarding $164.7 billion in contracts in fiscal 2002. Input.com, owned by Input, of Reston, Va., and FedSources.com www.fedsources.com, owned by New York-based Primedia Inc., cater to information-technology companies, selling online
databases and market research.
"It's not a cheap service, but the amount of time it saves is well worth the money," says Tom Sauer, director of federal systems for Skystream Networks, a Sunnyvale, Calif., router maker that uses Input.com. "Most of the information you can get through the Freedom of Information Act, and a lot of it is on the Web, but the problem is you're going to each individual agency -- or even worse, the actual program within an agency -- and getting the information yourself and pulling it
together, and that's pretty tedious."
Input.com www.input.com came most recommended from other people in his industry, Mr. Sauer says. Skystream buys several Input.com services, giving it access to the site's entire opportunity database, as well as specific financial information on agency budgets and previously awarded contracts. All this costs Skystream $10,000 a year.
Input says access to its database of federal contracts can be had for as little as $1,500 a year for a single user at a small company, but could cost $25,000 a year for unlimited use at a major contractor. The range for Input's database of state and local contracts is $300 to $20,000 a year, the company says.
Going Local
Like Uncle Sam, state and local governments present a rich source of contracting opportunities, but information about them is scattered across thousands of individual government Web pages. A handful of sites, including Input.com, collect the information and sell customized notification services for an annual subscription fee. However, like most of the federal-government-focused resources, these sites generally don't provide consulting services beyond the initial leads.
Onvia.com Inc., based in Seattle, scans 50,000 state and local government sites www.onvia.com for contract postings, while about 30 staffers scour local newspapers and call procurement officials across the country. The site posts 25,000 to 35,000 new bid requests every month, says Michael Pickett, Onvia's chairman and chief executive. In addition, 400 state and local governments post opportunities directly on DemandStar.com, a separate Onvia service, and some agencies make their applications available for downloading on DemandStar www.demandstar.com.
The DemandStar service, which costs $30 per user per year, is divided by county. A company looking to do business in Florida's Miami-Dade County, for example, would receive e-mailed listings from only agencies in that county that have agreed to post to DemandStar. An Onvia subscription, which covers the entire country, costs $3,500 per year for up to five users. Companies using this service receive daily e-mail digests of available opportunities matching the business profiles they provide.
Larry Brown, president and owner of Ohio Valley 2-Way Radio Inc., an Owensboro, Ky., dealer of Motorola radios, signed up for Onvia last year. So far, government contracts found through the site have generated $75,000 to $100,000 in business, Mr. Brown says, a significant boost for his company, which totals about $1.5 million in sales a year.
"Onvia finds all the little towns and the little police departments that you wouldn't even imagine have a bid opportunity out there," says Mr. Brown, who used to search individual government Web sites before he subscribed to the service. "You wouldn't think about some little town out there that needs two or three dozen radios."
The Subcontractor Route
Another way smaller businesses can tap into the world of government-related work
with less paperwork and fewer regulations is to bid for a piece of a larger company's project.
The Small Business Administration offers SUB-Net http://web.sba.gov/subnet , an online database on which primary contractors can post subcontracting opportunities. But it is limited, with only about 100 listings likely to appear on any given day.
In January, Onvia formed a partnership with Subcontract.com, which is based in Elk Grove Village, Ill. Mr. Sparks of Subcontract.com says 28,000 primary contractors post directly to his site. Businesses seeking subcontracting opportunities can subscribe to the site and receive e mailed notifications when new postings match their profiles.
- Ms. Wong is a reporter for Dow Jones Newswires in Buenos Aires.
Write to Wailin Wong at wailin.wong@wsj.com
