With the right preparation, U. S. manufacturers can win government contracts and sell their products to federal agencies, while proposed legislation may help U.S. manufacturers get their products into the hands of government buyers, GovPro.com's Michael Keating writes in this Expert's Corner.
A recent IMT article, Cutting Through Red Tape in Government Procurement, prompted Ken Koldan, new business development manager at Spencer, Mass.-based FLEXcon to tell IMT: "Selling to the government is definitely doable." FLEXcon is a manufacturer in the adhesive coating, laminating and finishing of durable materials industry. The firm's products are used in graphics applications, electronics and new products.
"All too often government red tape is blamed when businesses make uninformed decisions about government [contracts]," Koldan added. "Businesses need to understand the vernacular of the U.S. government purchasing process to avoid the sea of red tape that results in simple mistakes and misunderstandings."
Knowing the rules is key. "The issue is that there are rules, and those rules are not widely known or acknowledged, which can cause problems for uniformed manufacturers," Koldan explained. "Manufacturers need to fully review and understand all rules and regulations before a project to avoid red tape issues down the road."
One regulation that should protect United States manufacturers who seek government contracts is the Buy American Act of 1933. It requires the federal government to buy American-made iron, steel and manufactured goods whenever possible. A product is defined as U.S.-made if at least 50 percent of its constituent parts and/or materials originated in the U.S.
However, the Buy American Act, according to Representative Chris Murphy (D-Connecticut), "has some loopholes and exceptions that allow billions of dollars to flow out of the country each year. Two of the biggest loopholes allow for waivers for any product that is to be used overseas, or for products that the Defense Department finds that there are no domestic suppliers."
Colonial Bronze in Torrington, Conn., learned this the hard way when the U.S. Air Force asked for a waiver, claiming that it could not find a product that it needed manufactured in the U.S., when, in fact, that product was produced domestically.
"Instead of looking at my company to supply the products that the Air Force needs, they issued a waiver, saying that these products were only made in China," Jamie Gregg, president of Colonial Bronze, said. "Careless investigations into American-made product availability like these are not only hurting my company and the families we employ, they are destroying U.S. manufacturing."
Rep. Murphy, who is chair of the bipartisan Buy American Caucus, has worked to reform the Buy American Act in ways that will benefit U.S. manufacturers. He has introduced the American Jobs Matter Act (HR 1354) in Congress, and the bill is now in the House Oversight and Government Reform committee, but has yet to be passed. The bill directs federal government agencies to gather information on whether a federal contract will create U.S. jobs, and allows the government to use that information in making decisions.
Selling to the government is different from selling to the private sector, Andy Howard, a partner in the Los Angeles office of the Atlanta-based law firm Alston & Bird, explained. Howard leads the firm's government contracts practice. He told IMT that "the absolute first thing any business should do before it tries to secure a government contract is to spend the time, spend the money and exert the effort to understand that doing business with the government is everything but doing business as usual. At the federal level, for example, there are unique contractor registration and contractor reporting and disclosure requirements."
"In many instances, there are a host of socio-economic and contract administration obligations that are unique to government contracting, such as - in some cases - adopting anti-discrimination and affirmative action programs and policies, or divulging cost, profit and other pricing information to the government that usually is closely guarded information usually not shared with commercial customers," Howard noted.
Howard suggests that after a prospective vendor gathers information on the government market, it "should explore what kinds of contracting opportunities are available to it. Federal contracting opportunities are advertised on the Federal Business Opportunities website, and many states maintain similar online resources."
Businesses can also look to the Manufacturing Extension Partnership (MEP) for help. MEP is part of the Department of Commerce's National Institute of Standards and Technology, and while it does not provide training specific to winning government contracts, it does connect U.S. manufacturers with business opportunities, including those from federal agencies. MEP does this through its supplier scouting efforts.
Using its national network of MEP centers, the agency has been able to build on its supplier scouting work to help several federal agencies meet Buy American provisions. Check HERE for more information about MEP's supplier scouting.
Initial research is key, government marketing expert Mark Amtower, advised. "Understand HOW the government buys what you sell. If you are a commodity manufacturer (furniture, equipment, etc.), you really need to look at the GSA Schedule - but consider partnering with resellers that sell what you sell. The better ones have their networks in place and might be able to 'hit the ground running.' Negotiating a contract for yourself, then setting up a government sales program, is a long-term, expensive process."
Manufacturers of high-end products should look into becoming subcontractors to firms that hold federal prime contracts, Amtower advised. The FBO site can be a resource in this area. Amtower is co-developer of a Government Market Master certificate program that includes training on the GSA Schedules program. The program has six sessions scheduled for November and four more for December.
The Atlanta-based Government Contractors Association (GCA) offers a program that helps manufacturers and other businesses get up to speed. "We have a coaching program that will 'hand hold' a company through the government contracting process," Abraham Xiong, GCA president, said.
"On average, it takes the typical company 36 months to break into the government market. Our coaching program is designed to reduce the 36 months down to six to 12 months," Xiong added. The program is a step-by-step process and software is included.
Michael Keating is senior editor for Government Product News and a contributing editor for American City and County, both published by Penton Media Inc. His 2012 government budget forecast is available at GovPro.com; as well as the mid-year 2012 forecast and his 2013 government spending forecast. Go here for his IMT 2012 look at state competitiveness rankings. Keating has written about do-it-yourself market research for manufacturers for IMT. Keating has written articles on the government market for more than 100 publications, including USA Today, Sanitary Maintenance, IndustryWeek and the Costco Connection. Michael can be reached through his website, MikeKeat.net.