Do you wonder what the U.S. Government Buys? Commercial business leaders often struggle to understand the value of their product or service within the government arena. Yet, those companies that do sell to the U.S. Federal Government are awarded millions in contracts.
This article will help you understand why you should sell to the government and what they buy. (Note: This article was updated with 2019 Information)
1. Largest U.S. Customer
The US Government is by far the largest customer available to any U.S.-based business and industry. It is made up of different Agencies with thousands of Departments each with its own independent buyers [known as contracting officers] with their own BUYING POWER. That is a lot of potential customers. [hint]
In fact, each contracting officer can authorize contract awards up to the simplified acquisition threshold (SAT) without being subject to review. This recently increased from $150,000 to $250,000 by way of Class Deviation 2018-O0013 in April 2018 and opened lots of doors for other businesses.
Plus the government policy* REQUIRES them to:
“use simplified acquisition procedures to the maximum extent practicable for all purchases of supplies or services not exceeding the simplified acquisition threshold (including purchases at or below the micro-purchase threshold).”
Did you just do mental math? I did!
The number of contracts needed to hit $1 Millon in government contracts went from six (6) to four (4). That’s right! You could potentially hit $1 Million in government sales with only FOUR (4) contracts.
2. Fast payment
U.S. Government is required to promptly pay within 30 days of receipt of a correct invoice. If not – you’ll get interested. Plus if you are a small business; you have options available to invoice more frequently (twice per month) to help offset out-of-pocket costs.
Not surprisingly, many of our Clients have heard horror stories about the government not paying their customers. When we look into these situations, we often find the reason for declined/rejected invoices is from our client not billing the government correctly or in the format required. The invoice instructions are clearly outlined in the contract, yet many companies do not follow directions… Our GovAward stage helps clients to align their requirements before the first invoice.
3. Trillion Dollar Budget?
In FY 2019 the U.S. Federal Government spent TRILLIONS of dollars across the entire federal government. For contract awards, which come from discretionary spending, it is normally upwards of $600 Billion or more. For example, in Government Fiscal Year 2019, the government awarded $382 Billion in contracts for Department of Defense (DOD) efforts, $32 Billion for the Department of Energy (DOE), just over $27 Billion for Veteran Affairs contracts, and many more.
For this article, we’ve included a small list of the Federal Agencies with government contract awards totaling over $100 Million.
4. The Government buys… Just about everything!
What does the government buy? This is the most asked question from new business clients who struggle with launching into the government arena
The answer: JUST ABOUT EVERYTHING!
As we said at the beginning of this article, business leaders sometimes struggle to see the true value of their product or service. It is the primary reason we developed the GovStrategy phase of our GovSuccess program. People in general, don’t know what they do not know. Given this, we tell them based on their unique business dynamic.
You will see from the download, the products and services needed by the government are quite substantial. Rule of thumb – if you can sell your product or service to another person or business you can probably sell it to the government too! Like we said —- just about everything!
We hope this article helps you understand why you should sell to the U.S. Federal Government. To summarize, they are the largest U.S. customer with a trillion-dollar budget who buys just about everything and pays fast. Those are the four (4) reasons any business should sell to the U.S. Federal Government.
Now for the in-depth list, click the link below for a list of the items the U.S. Government buys.
*[Ref FAR 13.003]