Emerging companies need to consider marketing their products to the US Federal Government. This is especially true if those products have any relevance to Homeland Security.  While marketing and selling to the Government requires a multi-layered, multi-faceted implementation plan, one of the first things to consider is a GSA schedule strategy.  Procurement reform has changed some of the rules over the past few years. It’s important to understand what the GSA Schedule program is and how your company should participate.
 
Richard Mackey, president of CapITal Reps (www.capitalreps.com), Reston, VA, has been helping companies figure out their GSA strategies for nearly a decade.  We asked him some specific questions about The Federal Supply Schedule Program.
 
VIAB: What exactly is the GSA Schedule?
RICHARD MACKEY: Under the schedules program, GSA enters into contracts with commercial firms to provide supplies and services at stated prices for given periods of time.  Orders are usually placed directly with the schedule contractor, and deliveries are made directly to the customer.
 
VIAB: How relevant is the GSA Schedule program to how the commercial market purchases products?
RM:  The Federal Supply Schedule Program mirrors commercial buying practices more than any other procurement process in the Federal Government today.  It provides customers with literally millions of state-of-the-art; high-quality commercial products and related services at volume discount pricing on a direct delivery basis.  All customers, large or small, even those in remote locations, are provided with the same services, convenience, and pricing. The Federal Supply Schedule Program also offers the benefits of shorter lead-times, lower administrative costs, and reduced inventories. 
 
VIAB: Is the program successful?
RM: Clearly the GSA program has demonstrated its popularity and federal agency preference in FY 02, as Government customers purchased about 27 percent of their IT products and services from the IT (Group 70) GSA program. To no surprise, IT services represented 58 percent of the total Group 70 sales of $13.2 billion.
 
In FY 02, we also saw a huge growth in the number of firms seeking out GSA schedules grow by nearly 20 percent, as they sought the federal market to make up for the soft commercial marketplace. While there were many new players to the GSA market in FY 02, the top fifty firms maintained a healthy 53 percent market share while the number of firms selling less than $25,000 grew to 39% (up from 30% in FY 01).
 
VIAB: How do GSA Schedules rate over other ways to sell to the Government?
RM: Contractors of all disciplines took to the GSA schedule program in FY 02, as it provides a greater validation of their stability, provide the agencies with reasonable and most-favored customer pricing, while providing them with the foundation and flexibility to implement Blanket Purchase Agreements (BPA's), Teaming Agreements and Spot Pricing.
 
VIAB: Is a GSA Schedule all a company needs to be successful selling to the Government?
RM: As CapITal Reps advises all of our GSA clients, they need to distinguish themselves from their peers - being the lowest responsive responsible bidder no longer gets the order. They need to sell solutions (not products), understand the agency mission and budget, and know the rules and regulations. They also need to spend marketing dollars so they can move up the food chain and of course, they need lots of patience.
 
VIAB: The GSA Schedule program has undergone changes recently. What are some of the pros and cons of the GSA Schedule changes?
RM: On the pro side, the synopsis requirement in the Commerce Business Daily (CBD) has been removed; contracts can be 5 years long; allows dealer agents to sell off contract; and no maximum order limitations.

VIAB: What is your advice for Israeli companies that want to sell to the Federal Government?

RM: There are a number of things companies need to do to be successful selling into this market.  First of all, honestly assess your products/services to ensure that the US Government needs them.  Draft a business plan, followed by a marketing plan with a realistic marketing budget. Pursue contracting vehicles, such as a GSA schedule, blanket purchasing agreements, and teaming agreements that make it easy for the customer to purchase your products.  Learn as much as you can about the government market, particularly the agencies that are your most likely customers and the basic rules and regulations of the market, such as the Federal Acquisition Regulations (FARs).  Most importantly, have lots of patience.

 

VIAB: What are the basic requirements for an Israeli company to receive a GSA schedule?
RM:   Register with www.ccr.gov. Complete an Open Ratings Customer Satisfaction Survey ($125 fee) and have a favorable review.  Be prepared to offer your products or services to the US government equal to or better than your most favored end-user customer(s).  Ensure that products are trade compliant (they are, if from Israel).  Prepare to establish price reasonableness by disclosing your Commercial Sales Practices.  Complete a VETS-100 Compliance Report to the Dept of Labor.

 

VIAB: Should Israeli companies set up a US office?
RM: It’s not a requirement, but a local presence is beneficial.  In large part, success is accelerated by the relationships you develop in the Federal marketing community with systems integrators, government contractors, and Government IT leaders, among others.

 

VIAB: Some companies say that getting a GSA takes too long and is too complicated, so they prefer to be a subcontractor to a company with a GSA schedule.  Is this the right approach to take?
RM: Yes, getting a GSA schedule can be complicated (involves inputs from your legal, human resources, contracts, sales and marketing and financial staff) and it generally takes 4-6 months to have an award made, which is valid for five-years plus it has three optional five-year periods (total of 20 years).  Thus, many of our clients have started out by supplying Letter of Supply documents to be added to an existing GSA reseller’s schedule (may take 30-60 days to be approved), yet they have grown tired of leaving monies on the table and eventually have opted for their own schedule.

[NOTE from VIAB Executive Director Ralph Robbins:  We are frequently asked if the Federal Government is a market that should be pursued by Israeli companies. In short, yes!  A successful Federal sales and marketing program can mean continued sales for many years (over $13 billion purchased off GSA IT schedules in FY 02).  However, from our experience, an Israeli company must have professional guidance to navigate the Federal-contracting maze.  Consultants like Richard Mackey of CapITal Reps (www.capitalreps.com) Reston, Virginia, are available for guidance in targeting the Federal market from a contract perspective.  We suggest that Israeli companies enlist the services of professional marketing and PR firms, such as DIAMOND Marketing (www.freddiamond.com), Gmethod (yair@gmethod.com) or the Merritt Group (www.merrittgrp.com) that understand the Government market and know how to conduct successful direct marketing, public relations (PR), and lead generation campaigns that attract customers.  Israeli companies interested in pursuing this market can contact me (robbins@viab.org) for a list of consultants and marketing firms who can assist.]