How Does Federal Government Contracting Work?

What's in this chapter?

* The big picture

* Top buyers

* Future of federal contracting

* Can you sell to the federal government?

* Should you sell to the federal government?

Federal contracting is big business. By any measure, the U.S. government (a.k.a. Uncle Sam) is by far the largest consumer in the world. No other nation, or corporation for that matter, can begin to match its purchasing power.

Generally we hear only about government purchases for multimillion-dollar aircraft or those infamous $1,000 toilet seats and $500 hammers. But are you aware that there are currently over 350,000 government contractors receiving more than $500 billion worth of contracts each year — $100 billion of which goes to small businesses?

The federal government enters into contracts with American citizens like you to acquire the supplies and services needed to run its operations or fulfill its mission requirements. It uses a specific process designed to give business concerns the maximum practical opportunities to participate in federal contracting. Each year (actually, fiscal year, which begins on October 1 and ends on September 30), the federal government spends billions of dollars buying from nonfederal sources, or commercial contractors.

The government initiates or modifies more than 9 million contracts each year, two-thirds of which it grants to contractors outside the Washington, D.C., area. The key to getting a piece of the pie is to understand how the federal government does business and to position your company accordingly.

Ready? Set? Let's go win some government business! This chapter provides an overview of what federal contracting is all about.

THE BIG PICTURE

Look at it this way: Every 20 seconds of every working day, the federal government awards a contract, with an average value of $495,000. And Uncle Sam must tell us what, from where, and from whom it buys.

The government purchases a mind-boggling array of products and services, ranging from high-technology items like homeland security programs,