Why Work with the Public Sector?

Posted by Administrator on January 15th, 2008

Many companies first look at public sector contracting while considering broadening their market. Whether you’re working in a highly competitive space or in a niche market, entering the public sector can open up a wealth of new client possibilities. However, contracting with the government involves a substantial investment of time and resources, from writing a government RFP response to performing the contract. Since many federal contracts are cost-reimbursement contracts, government contracting may also involve a substantial outlay of funds. These factors can make it difficult to convince a director or CEO that public sector contracting is the way to go. Here are some persuasive reasons to expand into the public sector:

Benefits to Working with the Government

Why should your company work with the U.S. government? Because it’s the largest buyer of goods & services in the world, with 2007 spending projected at $2.63 trillion. The government spends approximately 25 cents of every dollar spent in the U.S. Every year, the U.S. government purchases:

goods and services to maintain 4 million miles of highway
goods and services to maintain 1.5 million buildings across the U.S., covering 6 billion square feet of building space
goods and services for 22 million civilian government workers—one out of seven employed workers in the U.S.
more trucks and automotive fleets than any other buyer in the U.S.

When entering the public sector, a common mistake companies make is only targeting federal level contracts. After all, the thinking goes, the federal budget is bigger than any one city or state’s budget, so the contracts must be bigger too, right? The truth is, local and state agencies spend more than the federal government. For 2007, federal spending is projected at $962 billion, with local and state agencies projected to spend $1.74 trillion. Focusing all contracting efforts on federal contracts could mean missing out on a lot of potential revenue.

Ready to start contracting with the government? Onvia client Temtco Steel took their government business from 0% of total sales to an average of $50,000 - $60,000 a month using targeted government business intelligence. Read the case study here.

Sources: Department of Labor, Energy, Commerce, Highway, U.S. Census and GSA statistics