How To Sell IT To the Feds

It’s not the easiest time to be a reseller to the federal government. Developments on both the procurement and technology fronts mean you must watch margins carefully, stay closer than ever to both your federal customers and technology suppliers, and make sure all of your contracting vehicles can work for you.

Here are six recent developments that will drive channel decision-making in the federal IT market:

1. New rules for using GWACs and GSA multiple-award schedules. These rules increase competition under the vehicles by implementing Section 863 of the 2009 Defense Authorization Bill. Basically the rules combine fair notice and fair opportunity procedures and extend them to all potentially qualified bidders on the vehicle. Takeaway: Beware of the potential for channel conflict and longer procurement cycles.

2. Consolidation of “commodity” IT budget authority with departmental CIOs. A recent Office of Management and Budget memo outlining this change reinforces CIO roles at the expense of agency or bureau level CIOs and program managers. Commodities are broadly defined to include not only predictable products like PCs and other hardware, but also services that OMB thinks should be shared. Takeaway: This development increases the importance of governmentwide acquisition vehicles (GWACs).

Moreover, while the federal government is still embarking on large, consolidated commodity hardware buys, more of them are going to manufacturers directly, or to the largest resellers or integrators.

3. Acceleration of the cloud computing initiative. Cloud computing and shared services are included in the CIO memo. Agencies are already moving e-mail to the cloud, and the next wave is likely to sweep in virtualized server environments as well as applications such as office productivity and collaboration and records management. Takeaway: Resellers of hardware, applications and utilities such as network management and monitoring tools will find their prospect and customer base realigning.

4. New procurement rules. The Small Business Jobs Act of 2010 might have been aimed at increasing small business participation, but it also includes 19 procurement provisions. New bundling notifications, subcontractor payment reporting, and stronger set-aside rules are of most interest to resellers. Takeaway: Reseller bids will have to take into account these provisions and how they affect your choice of partners and vehicles.

5. The vendor-channel relationship has also grown more difficult. More channel partners are reporting to us that they’re seeing more certification requirements imposed by manufacturers, even multiple layers of certifications. Obtaining and maintaining manufacturers’ certifications can become a financial and resource burden as those steps become more detailed and prescriptive.

6. Finally, manufacturers are constantly changing incentive and rebate programs. While they get more generous, they require more record-keeping, and the cost of tracking incentive requirements can become prohibitive. Small resellers may not be able to track all various incentive and rebates or afford the cost of a person whose sole job is to track all of the incentives.

With so much budget and program uncertainty headed into fiscal 2012, it’s hard enough to plan your marketing and sales strategy. But resellers, given the developments outlined above, have a special interest in tracking who their customers actually will be in an age of cloud computing and shared services. And they will have to work hard to avoid competing directly with their manufacturers as well as other partners when working multiple award and GWAC solicitations.

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