Benefits of the Federal Government Market

Business and managers are sometimes apprehensive about entering the government market. True, it carries a certain risks and can take time to develop, but for companies with the long view it can also be one of the most rewarding and sustainable. Here are a few benefits the federal market offers.

Diversification
Commercial and government markets are both cyclical, but these cycles are often independent of one and other. This has been especially evident in recent years when extended economic downturns coincided with increased federal government spending brought about though events such as the post 9/11 events and the 2009 American Recovery and Reinvestment Act. While the macroeconomic benefits of increased government spending and “stimulus” type projects can be debated, their impact on properly positioned government contractors has been much clearer. Many companies have survived and even thrived during economic downturns in the commercial sector due to government business.

Proving Ground
Many of the products you use in your everyday life were developed or brought to market through government programs or agencies. You’re likely familiar with some of the technologies that famously originated though the space program, but there are other less visible examples in which the government customer as early adapter developed new markets for new products. In addition to dedicated research activities such as the National Laboratories, and the Defense Advanced Research Projects Agency, most agencies sponsor programs in their operational budget that test, evaluate, and make recommendations on new commercial technologies. An example is GSA’s Green Proving Ground program (GPG), which selects new commercial building technologies for installation and testing within federal office buildings. By taking advantage of these programs, today’s federal government contract may be tomorrow’s marketplace game changer.

Profit
There is much more to government sales than the lowest bid. Yes, government procurement regulations encourage reasonable competition, but many lucrative contracts are awarded on a “best value” criterion, which place greater emphasis on technical expertise, lifecycle costs, delivery terms, or past performance than on price. Companies that offer and deliver comprehensive value based on the customer’s mission and resources are more successful than low bidders. The government may also prove to be one of your fastest paying accounts. Properly submitted invoices are payable in 30 days or less, and government contracts can be collateralized for commercial financing. Not surprisingly, some of the most profitable U.S. companies such as IBM, General Electric, and Google are also some of the nation’s largest government contractors.