Newsletter 9: Closing a Federal Sale
By Richard White

Outsider Perception: Federal sales are almost always announced through public bids which are open to all; federal buyers then evaluate vendors’ responses and pick the eventual winner.

Reality: Federal sales are closed (transacted) in a number of ways and the least preferable way is through a public bid.

Lesson: Learn the ways sales are closed and use the most appropriate way to your advantage.

Background:
Closing a sale in the context of this newsletter means getting the order, winning the contract or collecting the money (e.g., in the case of a credit card purchase). Closing a federal sale is where the rubber hits the road; it is the fundamental difference between the federal and commercial markets. Experienced federal contractors know how to close their sales. They also know the "closing rules" and the rules are not that mysterious once you boil the rules down to their bare essence. Outsiders mistakenly believe that federal agencies have to open an opportunity to all who want to bid. As previously discussed in this series, this is a fallacy.

As public policy dictates, federal contracting officers must strictly follow the procurement rules. When the government has a need for a product or service, the federal end user generally meets with one or more vendors to obtain information about the features and benefits of a particular product (or service) and the past performance (or experience) of the company offering it to the government. The end user then meets with the contracting officer to discuss the issues concerning the procurement.

The contracting officer will then close the deal using the quickest method allowed under the rules. This is where the process becomes complex. The contracting officer may or may not seek additional competitors depending on the amount of money involved and whether or not the companies involved have pre-approved price lists.

The following summarizes the methods in which a federal purchase can be closed or transacted:

• By a government credit card buy (the quickest and simplest method)
• By the issuance of a purchase order for amounts under $100,000; the federal purchaser must first obtain at least two quotes (relatively simple)
• By the issuance of a public bid (a long, lengthy and expensive process which is usually avoided if possible)
• Through a contract which allows the government to purchase from a select list of companies which have pre-approved price lists (e.g., a GSA Schedule contract)
• Through a subcontract with a prime contractor that already has a federal contract
• Through a subcontract with a "preferred" small business with which the government can contract quickly and with limited or no competition (e.g., a small disadvantaged business, Alaskan Native Corporation, etc.)

The manner in which a purchase is completed depends on the size of the transaction. More information about the differing sizes of transactions and purchasing procedures will be presented in upcoming newsletters.