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Government Purchasing Rules
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Don't Overlook the World's Largest Customer
by Charles "Chuck" Solloway
In the past decade a revolution has taken place in the Federal marketplace. In a spirit of reform, there has been an intense effort by Congress and the Executive Branch to bring Government procurement practices more in line with the private sector. In other words, regulations and laws have been changed to make Government procurement better, faster, and more cost effective. What does this mean to you? The changes have also made it simpler and less expensive for you to participate as a seller. The opportunities are vast. And, even in periods of recession, this is one customer that will always have money to spend.
For many years Federal Government procurement was rule laden in an attempt to legislate to legislate efficiency. Yet, persons following the rules managed to buy three hundred dollar hammers and thousand dollar coffee pots. It ultimately became clear that the traditional practice of making the regulations ever more restrictive would not bring the improvements needed. Instead, the Federal government is now building a more competent and better trained workforce and empowering them to make good business decisions. To make this approach workable, the rule ladened process has been streamlined to a degree that was virtually unimaginable a very short time ago.
Among the most significant changes made are these:
- A veritable Army of Government employees have been given credit cards and the authority to buy goods and services up to $2500 without going through a central procurement office. Congress changed laws on small business set-asides, "Buy American" provisions, and a number of other laws to make this possible. Now, instead of going through mountains of red tape, a Government employee can go to the corner hardware store or the local Wal-Mart to get what he or she needs to do their job. Thousands of purchases are being made this way every day and the Government is saving many millions of dollars by avoiding the high cost of processing complicated purchase requests, soliciting quotes, and awarding purchase orders. The purchases that are made by credit card include nearly every product and service you can imagine. In fact, chances are very good that, whatever you sell Uncle Sam buys it. Billions of dollars (Yes Virginia, that is a "B") a year are being spent by card wielding civil servants for millions of products and services.
- Simplified Acquisitions
- The Government now authorizes simplified acquisitions (for example, telephone solicitations and limited competition) for goods and services up to $100,000. For certain commercial products and services, the dollar threshold can go to $5,000,000. Again, the savings in paper work is staggering. Many burdensome "standard provisions" have been deleted or modified to make the resulting contracts or purchase orders less burdensome to the folks who sell to the Government. If you are in business, and have a satisfactory record of integrity, there is no reason why you cannot participate in this "simplified" system. If you are a small business, you'll have a very good chance of participating since procurements between $2500 and $100,000 are normally set-aside for small business participation only.
- Commercial Specifications and Standards
- It is now Government policy, whenever feasible, to use commercial products rather than buying to "Government Specs". This makes it easier to sell your product or service to the Government while the Government avoids the often horrendous cost of forcing sellers to comply with government unique specifications.
- Performance Based Work Statements
- Government personnel have been told to use "performance based" work statements in buying goods and services. Instead of telling a contractor how to do the job, the idea is to tell the contractor the end result expected. Thus, contractors can use their own initiative and creativity in getting the job done. Savings to the Government thus far have been exceptional.
- Electronic Commerce
- Many Government procurement offices routinely solicit quotes over the internet. This makes it easier and more cost effective for everyone involved.
- Timely Payment
- For credit card purchases, payment is made as is done with any commercial credit card. For other purchases, the Government is required to pay you within 30 days after satisfactory delivery and the submission of a proper invoice. If they do not, you must be paid interest on the monies owed. Under Fast Pay procedures for simplified acquisitions, the clock starts ticking when the contractor submits an invoice that represents that the goods have been delivered to a post office or common carrier. It is not necessary to wait for Government verification of delivery. Additionally, extensive is being made of electronic fund transfer where the money owed to you is sent quickly to your designated bank or other financial institution. These quick pay procedures can do wonders for your cash flow. And don't forget, this customer has the world's highest credit rating.
These and other "acquisition reforms" have made it easier for you to sell to the world's biggest customer, the U.S. Government. If you have not yet explored this market, now is the time to do so. If you gave up on the market in years past, it's time to take another look. A wealth of information on doing business with the Government is available from private and public sources. Check it out. The profit potential is enormous.
Charles "Chuck" Solloway is a consultant and trainer on matters relating to Government contracts. He is the CEO of Charles Solloway Associates and may be reached at ChSolloway@aol.com.
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