Strategies for marketers as the federal fiscal year winds down
Editor’s note: Jennifer Schaus has contributed often to Government Product News’ Use It or Lose It series of E-newsletters as the end of the federal fiscal year approaches on Sept. 30. About federal fiscal year 2014, Schaus told GPN: “With sequestration and budget issues which plagued the federal government earlier this year, there is more money than ever left for the agencies to spend. The federal fiscal year is more than half over, and the dollars that remain indicate a potential record-setting spending frenzy.” Schaus operates Washington-based Jennifer Schaus & Associates, a consulting firm. The company provides expertise in government contracting.
Here are Schaus’ thoughts as the end of federal fiscal year 2014 approaches.
The federal fiscal year saw many roadblocks and speed humps, which caused government contractors to reevaluate their strategies in the market. It has also caused government buyers to rethink their purchases with shrinking budgets. The government sector has become even more saturated with vendors due to the lack of recovery in the economy. This abundance of contractors has led to various trends on both sides. Government buyers are moving toward the lowest price technically acceptable source selection process, which drives the contractors to lower their rates and at times leads to buying the contract. With little or no margin (or even losses), contractors are hoping to implement higher rates in year two or three of the contract.
The fourth quarter of the federal fiscal year is traditionally the time that sees the highest spike in purchases. During this quarter, we expect that a fierce battle will play out. The government buyers do not want to lose their budgets, so they will buy as much as they can with every penny and do so in an expeditious manner. Contractors who understand this cycle and the needs of their customers can capitalize on this. Every pass the government throws will be a touchdown, and every last penny will be spent, but there will be more than enough receivers fighting tooth and nail for the contract. How does one win? There are various strategies, particularly for small businesses.
Government is risk-averse, so by teaming with the prime contractors and leveraging past performance to give the buyers more confidence, contractors will have a leg up. Additionally, the clock is ticking loud and fast. Time is of the essence. The easier it is for the contracting officers to execute the order, the more likely they are to do business with your firm. Various marketing tools exist as well as contract vehicles that facilitate the purchase and assist the agency in meeting their small business goals. These solutions range from GSA Schedules (a contract vehicle which eliminates much paperwork and time for the buyers), to the 8a small business designation, and the SDVO (service disabled veteran owned business) designation.
The biggest error we have seen is that small businesses tend to lead with these certifications or contract vehicles and leave their value proposition at the doorstep. We recommend leading with your core capabilities and highlighting any designations. For companies who do not have a GSA Schedule or other designation, we suggest finding complementary and strategic teaming partners.
Do not wait until Q4 to find the opportunities or partners. The government sector is a unique industry in that so much data – from past purchases to budget forecast – are publically available. We also suggest using this data to create your Business To Government business plan. By reviewing data at the Federal Procurement Data System and other sites, small businesses can learn which companies capitalized on Q4 purchases during the last fiscal year. Putting these companies on your target partner list would be wise.
The fourth quarter in the federal fiscal year can make or break companies that play in the federal government sector. After going through this extremely bumpy year, we recommend diversification into other sectors, including but not limited to state and local government. Understanding the government culture, coupled with past successes, can be parlayed into selling success with these other divisions of government. With separate budgets, fiscal years and leadership, you are not tied to the federal sector ups and downs. Weathering budget woes, sequestration, shut-downs and more can be alleviated through expansion of the customer base into different yet related sectors.
All in all, we project that Q4 will be a healthy one with much of the spending trending towards IT, services, security and healthcare. Major winners will be the usual suspects in the prime contractor category with small business subcontractors also winning as a secondary player. Small businesses, if they play wisely, will have more of an opportunity this year to capitalize on the year-end dollars. Many large contracts have been broken down and parsed out into smaller pieces, thus allowing the smaller firms to provide their core capabilities.
Businesses that have a small, minority, woman- or veteran-owned business designation have an additional advantage in their favor. Contracting officers who select those firms will be that much closer to reaching their targeted procurement goals.
Clients of Jennifer Schaus & Associates include Fortune 500 firms, publically traded companies as well as small, mid-size and emerging market companies. The firm’s clients are in a variety of sectors from management consulting, cyber-security to marketing and financial services as well as maritime and airport security.