The federal market is not a uniform homogenous market where all buying occurs the same way. In order for a federal buyer to make a purchase they need a FAR compliant way to conduct the transaction. This often makes it hard for firms new to the federal market to navigate this process as in many cases they are not setup for easy transactions with federal buyers. This week I am going to explore what your firm looks like to a federal buyer as if they were in the private sector.

Registration in = We Only take Money Orders

Simply registering your firm in and going out and looking for federal business is like telling your private sector customers “Sorry we only take Money Orders, please conform to our preferred method of payment.” If you have a completely novel product that people are in love with people will go through the hassle of obtaining a Money Order and using it as the form of payment. Imagine what you would likely do if another vendor took a more convenient form of payment.

SBA/VA Certification = We now take Checks

SBA Certifications are designed to cut out a lot of the red-tape out of the federal buying process. In doing so the certifications gives agencies the ability to award set-aside and sole source contracts. Because these contracts are setup more or less on a one on one basis it is very similar to a business having its customers “Pay by Check”

As you can see by the results, Small businesses in the federal marketplace average $366K in annual sales.

Category Annual Federal Sales # of Firms Average Sales
Small Business 132,900,000,000 363,000 366,116

8(a), HUBZone and SDVOSB outperform small businesses as a whole by many fold. The WOSB Certification due to the small size of many of its participants does not do as well as small businesses at large.

Category Annual Federal Sales # of Firms Average Sales
SDVOSB 22,000,000,000 26,297 836,597
WOSB 26,000,000,000 96,488 269,464
8a 51,600,000,000 6,598 7,820,552
HUBZone 11,400,000,000 7,774 1,466,427

GSA Schedule = We now take Credit Cards

The GSA Schedule in fact gets your firm setup to take the federal buyers Credit Cards. A GSA Schedule provides a widely used contract vehicle that can be used by all agencies within the federal government.

GSA Schedule holder generally have higher sales levels than non-schedule holders. And SBA/VA Certification holder generally benefit by the synergy of having both a Certification and a GSA Schedule.

The sales figures are GSA Schedule Sales only. But as you can see the sales that occur for small businesses that have a GSA Schedule are 3x what they are for only registered businesses. We also see that firms with SBA/VA Certifications all benefit by over $1MM by having the use of their schedule.

Category GSA Annual Federal Sales # of Firms Average Sales
SDVOSB 2,398,200,000 1,449 1,655,072
WOSB 3,673,900,000 3,401 1,080,241
8a 2,464,000,000 1,635 1,507,034
HUBZone 1,150,000,000 885 1,299,435
Small Business 13,766,700,000 11,956 1,151,447

Having a GSA Schedule is not the only thing leading to the success of these firms. However imagine only allowing your customers to pay via Money Orders for a week and imagine the difficulty of that sales process.