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.

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.