Public Procurement: How Much Of It Really Transpires?

81% of government business is awarded without any competitive bidding

Many people have an understanding of the basic principles of public procurement: in the U.S. it is, essentially, the process in which businesses and agencies from the private sector are allowed to bid on opportunities to produce goods and services for the public on behalf of the government. With over 85,000 local, state and federal agencies administering these agreements to private businesses there are literally thousands and thousands of opportunities available to the private sector each day.

Each year the government spends well over $7 trillion in public procurement paying for goods and services they purchase from private businesses, but surprisingly only about 2% of U.S. businesses sell to the government through the procurement process.

This leads us to the question: Why aren’t more businesses entering the government market?

Government agencies depend on and hope for vigorous competition among vendors to help drive costs down and secure the best value to procure goods and services for the public. But sometimes the “value” competition simply isn’t there, as several businesses new or inexperienced to the government market don’t take the necessary steps to research or complete winning bids, while many other businesses simply don’t know where to even begin.

Winning government business has several key ingredients, including: networking, market research, market position, and demonstrating value, just to name a few. But perhaps the most important common factor in all of these is that you remain proactive throughout the entire process, starting from before even an opportunity or an RFP exists.

Winning government business before an RFP

It’s estimated that over 81% of government business is awarded without any competitive bidding – awarded directly to private businesses before there’s even an RFP! This is in large part because businesses gain a foothold in government business by proactively seeking out potential opportunities and marketing their solution to agencies’ specific needs several during the procurement planning and strategy stages.

Market research, evaluation, and market position allow businesses to identify which industries government agencies are purchasing in. Successful businesses have also likely done their due diligence and have researched agencies’ purchasing histories, identified key decision makers or government contacts and have thoroughly researched their competition. In the early stages, successful business will also have met face to face with contract officials, program managers and essential marketed their products or services directly to the ones who will be making final decisions in awarding a contract.

With much more transparency, government agencies are much more aware about finding value in the business they award the public sector. This doesn’t mean that you simply want to under-bid your completion – on the contrary, it means you want to demonstrate your ability to complete the work while offering the best value. Using the right tools and resources, while staying completely proactive, will give you the advantage over businesses who wait around for bid announcements to show up on feeds or appear on lists provided by RFP search services.

With only about 19% of awards making it to the RFP stage, you’re literally missing out on thousands and thousands of dollars in government business that can make all the difference in your success.

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