Small Business and Government Procurement

by Frank Drouin

4 min read

“Why is the US government buying products from me, a Canadian company, before my own government?”

If I had a nickel for every time I heard this phrase, my need to hustle would be over. I have had the opportunity to work with a number of tech startups at various stages of development, all of whom were trying to sell their solutions to government. While some had great success south of the border, results in Canada were all over the map.

Below are some observations from my experiences working with governments in Canada over the last five years:

Understand the Environment through a Government Lens

Too often I have seen businesses that think because they have the greatest product or service, governments should be buying from them. While governments do embrace innovation to a certain level, they also have to find an equilibrium between ensuring accountability to the taxpayer while mitigating the risk of failure. With these two considerations in mind, governments tend to go with the devil they know rather than the devil they don’t know. If you are looking to make your first sale, government is probably not the right place to start unless you participate in a program designed to bring products from the lab to pre- or commercialization stage (ie. the Build in Canada Innovation Program) or provide access to a large pool of funds. With that in mind, you need to minimize the risk factor and bring assurances to government officials by demonstrating your solution is risk averse.

You also need to understand where you fit in as a supplier. Government procurements often require a bundle of services/products and you may only have the capability to provide one item in the bundle. In this case, there will typically be a prime contractor with sub-contractors. In order to be successful, you should ensure that you understand the size and scope of the project to properly align your plan of attack.

Build Credibility

Start small. Set your sights on first base before attempting the home run. If you are selling to government, you are by default in it for at least one to three years. Remember, there is no such thing as a three-month government sale, especially if you are at the beginning of your journey with government.  Start with a smaller government organization (ie. a public sector agency or municipal) and continue to build on that success to aim for larger organizations or departments. Ask for early feedback on your product and focus on building relationships as those officials will become your biggest champions and will help you get to the next level. Document your successes and use them as case analysis for the next sale. Make sure it’s relevant. Your pitch needs to be about more than just saving money (because every business makes that claim). Credibility can also be built by establishing strategic partnerships with businesses that already have a foot in the door. Credibility by association: it’s not a new concept, but it works!

Understand the Process

If you understand the procurement process, it will help you manage your own expectations and save you time. If you are late in the procurement cycle, sometimes it’s better to move on to the next one rather than wasting resources on a game that is already in the ninth inning.

Understand the threshold for procurement limits. For instance, to sell goods to the federal government, the threshold limit needs to be under a contract value of $25,000. There are special rules for sole-sourcing contracts with a threshold above $25,000. This means that if you find an official with a budget and a will to buy, there is no need to go through a procurement process. This can be beneficial for the seller (builds credibility) and the buyer (less work and less time spent on procurement).

Understanding how government can buy your product before you even start to prospect is an advantage. For example, if you are planning to sell goods above the $25,000 threshold you are likely going to need a procurement vehicle or will need to go through a procurement process. The federal government usually creates procurement vehicles for commonly purchased items. Many departments want to avoid going through a procurement process as it causes delays. Those vehicles are an important step in the process as not being on one can be a major obstacle to your success. Obtaining a procurement vehicle (i.e. Standing Offer or Vendor of Record) is going to help you and the buyer facilitate the transaction.

Participate in the Process

Governments often start with a Letter of Interest (LOI) to seek input from industry. You will want to get in on this process from the beginning. Often, the government will hold an information session prior to publishing the LOI. Attend in person if you can as this will allow you to meet some of the government officials who will be involved as well as some of your potential competitors or partners. Remember, it’s all about building long-term relationships. If you can, hire someone with specific expertise to respond to any relevant requests for propoosals (RFPs). Too often, companies are disqualified because they forgt to respond to a mandatory requirement. Being disqualified on a technicality is the last thing you want after spending months or years in the process.

In short, it pays to take the time to understand your environment within a government context. It is unique and there is a learning curve. Also, it helps to manage your expectations around your timing of success. Start small and take the time to build your credibility and establish strong relationships.

Photo Copyright: RAGMA IMAGES

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