All Federal Sales Are Scalable

I recently discussed the issue of scalability with a contact who is considering entering the federal market, but is unsure if he can leverage his efforts enough to make a major impact. His major concern is that the federal market is too dispersed and diverse to be able to build on past sales to create a sustainable advantage.

The reality is that all federal sales strategies can be scalable due to the government’s strong reliance on past performance when selecting contractors. Contractors with past performance are simply more likely to receive contract awards. The good thing about this, of course, is that as soon as you have your first sale, you have past performance.

Many contractors fail to articulate their past performance in a way that allows it to be used in the government’s best value determination. This can be done formally or informally.

Contracts above $100,000 in value are generally required to be evaluated in the Past Performance Information Retrieval System (PPIRS), the Government’s centralized system for tracking contractor past performance. You should monitor this system to ensure that all information kept on your company is accurate and timely.

Less formally, you should provide buyers with information about your federal past performance either through either your website, product literature, e-mails or conversations.

As long as federal contracts incorporate past performance as one of the award criteria, you can leverage that to make your federal sales program a truly scalable effort.

At Rozycki Associates, we can help you ensure that your federal past performance gets communicated to your customers in the best possible way.

Competition and New Entrants to the Federal Market in a Recessionary Environment

As the U.S. economy continues to be roiled by cutbacks in both consumer and corporate spending, I’m seeing an increased number of companies turning to the federal government market.

Entering the federal market in difficult economic times is nothing new. A similar wave of newcomers arrived in the aftermath of the 2001 dot-com crash. Some of these companies went on to become successful contractors, while others floundered for a few years before returning to their roots in the commercial marketplace.

Both new entrants to the market and established contractors need to be aware of the impact of these changes to the competitive landscape.

If you’re a new entrant to the market, you’ll quickly find that the competition in your strategic group may be completely different than you’re used to. In the federal market, you will encounter rivals you've never before heard of, and your biggest competitors may be nowhere in sight.

Established contractors also need to be aware of the quickly changing competitive landscape. New firms may enter the federal market with blazing speed, and they have the potential to disrupt established relationships with your customers. They may literally be fighting for their corporate lives, and may aggressively price their products or services to establish a presence in this new market.

While not every company in the federal market has a GSA Schedule, they are the contract vehicles toward which commercial companies tend to first gravitate, and GSA Schedule activity often provides the first indications of a company’s actions in the federal market. Therefore, the best places to monitor the changing composition of your strategic group remain GSA Advantage and the GSA Schedules E-Library.

Please contact us at Rozycki Associates to learn more about our competitive intelligence services.

“I got a ‘rated’ purchase order under my GSA Schedule? What does that mean?”

A client recently asked what it meant when a military Contracting Officer issued them a high-priority “rated” purchase order. Although the company had held a GSA Schedule for years, they had never seen a rated order, and weren’t sure what their obligations were.

GSA Schedule holders may receive orders that require the contractor to give preferential treatment to that order under a set of procedures called the Defense Priority and Allocations System (DPAS).

These orders can be rated either “DX” or “DO”, and these classifications establish the priority level of the order. DO rated orders take preference over non-rated (commercial) orders. DX rated orders take preference over DO rated orders and non-rated (commercial) orders. Each rated order must also contain a required delivery date.

Your obligation under a rated order is usually simple: you must modify your production or delivery schedules to ensure that rated orders are delivered by the required date, prioritizing them over non-rated (commercial) orders or lower rated orders, even if this means disrupting or delaying orders to other customers.

Under the DPAS system, you may also flow these ratings down to your suppliers, requiring them to modify their production and delivery schedules to ensure that you receive your component or raw materials at a higher priority than other customers.

There are some complex situations that arise regarding rated orders. For example, if you receive 2 rated orders simultaneously, you may need to determine the correct way to prioritize one over the other. You may also receive an order that combines rated and non-rated products.

You may even receive an improperly rated order – an order from an agency which is not authorized to place a rated order or for products which by law cannot be placed on a rated order.

In order to resolve these situations, you may need to seek guidance from the original Defense Production Act of 1950, or in more recent implementing regulations such as the FAR and DFARS.

While not a common occurrence, understanding the basics of DPAS priority rated orders will allow you fulfill them as quickly as possible with minimal disruption to your commercial customers.

Who’s Selling Your Products on GSA Advantage? You’d Better Keep Tabs…

A client of mine recently faced a problem. A company had added my client’s products to its GSA Schedule contract and put them up on GSA Advantage, GSA’s e-commerce site.

However, not only did this company not get my client’s permission to do so, my client had never even heard of this company!

One initial reaction might be, "So what? This just provides more feet on the street and more possible sales through the channel." Unfortunately, it is not that simple.

A Group 70 IT GSA Schedule contractor that acts as a dealer needs to obtain a "Letter of Supply" from the manufacturer. This letter guarantees a source of supply and, among other things, provides certifications about the country of origin, Trade Agreements Act, etc.

Somehow, this "rogue reseller" was able to add my client’s products to a GSA Schedule without this letter, most likely due to lax oversight by the GSA Contracting Officer.

From my client’s perspective, this was a very bad situation. The reseller had never been trained on the products, had no ability to provide pre-sale technical support, and did not have any access to warranty and repair services. If a sale by this "rogue reseller" went sour, my client's brand name would be unfairly tarnished.

The reseller was even listing products my client no longer manufactured! If the reseller received an order for these products, there was no way it could be fulfilled.

My client realized the damage that could be done, and sent the unauthorized reseller a certified letter demanding the immediate removal of the products. The reseller complied, and the problem was fixed…for now.

However, I’m beginning to see this as a persistent problem.

Manufacturers must monitor GSA Advantage and look for unauthorized resellers if they want to maintain control of their federal sales channel, maintain pricing integrity and minimize the risk to their brand equity.

Take a few minutes and check GSA Advantage. You might be shocked at what you see.

Data Mining and the Schedule Sales Query System

The GSA Schedule Sales Query, located at ssq.gsa.gov, is an underutilized resource that can provide tremendously valuable market intelligence when used the right way.

It provides a wide array of "snapshot" reports, such as contractor sales totals or total spending under certain types of contracts (such as the Group 70 IT Schedule), all for a specific fiscal year.

Combining these reports allows you to get to the heart of data mining: manipulating large amounts of data into meaningful information you can use to increase sales.

If you run and combine the right reports you can:

• see the Schedule contract sales for all companies in your industry over the past 7 years,
• determine which companies have ascended or descended, and
• see how the percentage of GSA Schedule dollars spent with your industry has changed over time.

When this information is combined with a knowledge of your industry and competition, it can yield powerful results showing the long-term market behavior of your competition and the Government. It can even help you decide whether the GSA Schedule is the right contract vehicle for you to use.

Here's a screenshot showing what reports you can run (click on the picture for a larger version):
The information is there and free for the taking. I encourage you to explore it and use it to help understand the competitive landscape.