Selling to the Feds:

Calendar Concerns

So you want to sell to federal agencies but don't know how. Where do you start? How do you find out about selling to agencies? Where can you go to learn how to market and sell to agencies?

Selling to federal agencies has in recent years become more like commercial sales, but there are still major differences. Federal agencies buy on a different annual cycle, use different contract vehicles, have different procurement rules, and have different institutional concerns than their commercial counterparts. In this and following articles, I will examine some of the differences Ñ and similarities Ñ between selling to federal agencies and commercial customers.

Before trotting down to your local agency contract shop, you first need to know how that agency operates, how it buys goods and services, and, very importantly, when the agency tends to buy things and when it's likely to put you off. A good salesperson wants to know that he will be able to close the deal and get the customer to sign on the dotted line (or in this case block 31a of Standard Form 1449). There is no sense spending lots of time and effort if you can't close the deal.

While commercial businesses buy throughout the year, sometimes affected by end-of-quarter concerns, the federal government has a distinct fiscal year buying cycle. The government's fiscal year budget runs from Oct. 1 to Sept. 30 of each year. The President and Congress duke it out every year deciding the amount of money each agency will get for the year. Actual funding, however, is often delayed for many months after the start of the fiscal year, and sometimes doesn't arrive until the spring or summer.

In keeping with this fiscal year cycle, agencies often spend the autumn and winter months planning this year's acquisitions and next year's budget request. Come the spring, the buying begins in earnest. The buying culminates in the late summer "feeding frenzy," when 60 to 70 percent of all federal procurement funds are expended.

Agencies are loathed to forgo spending their budget in full, since unused funds are returned to the treasury. What's worse, unused funds can be held against the agency's budget request for the next year, because if the agency didn't spend its funding this year, it probably needs less next year. To avoid this calamity, contracting officers have been know to work until midnight on Sept. 30 signing purchase orders and contracts to avoiding losing funding.

The government's buying cycle is one reason why it's harder to establish a federal presence than a commercial one. You can't expect to start a sales drive in November and hit it big that month. Your government customers may not have received their fiscal year funding yet, and in any event are still deciding how to spend their budget. Even with steady marketing, you may not snag sales until the spring and summer.

Likewise, you can't expect to open shop in June and score big even though the buying season is just beginning. Agencies may have already decided what to buy, and you're now too late to the dance.

The government's buying cycle is one of the many reasons why I warn my clients that it takes time to gain federal sales, more time than commercial sales. You need patience, perseverance, and timing. On the other hand, once you have established your company with agency customers, the business can be steady and long-lasting. In this way, selling to federal agencies is like a supertanker: It takes a long time to gather speed, but once you are under way it takes miles to slow down or turn around.

I don't mean to imply that a contractor won't get any business during the autumn and winter months. Once a vendor has been through the fiscal year budget and spending cycle, the contractor should have a backlog of orders awarded in the summer that aren't due for delivery until the autumn or winter, or ongoing delivery and service contracts that last throughout the year. Miscellaneous orders for upgrades, maintenance, and repair can arrive at any time in the fiscal year cycle.

It's just that a vendor needs to be cognizant of its customers' buying habits and rhythms. In the case of federal agencies, the fiscal year provides an overall procurement rhythm that a contractor shouldn't ignore.

Just as the seasons determine a farmer's schedule of planting and harvesting, the federal fiscal year imposes its own schedule on contractors. A vendor needs to use the autumn and winter to meet with agency personnel, learn about their needs, and get the vendor's goods and services included in the agency's procurement plans for this year and in its budget for next year's acquisitions. In the spring and summer, the contractor needs to concentrate on meeting with agency personnel to close the deals on the table and get orders.