Partnering With the Government

1. Introduce Yourself

Of course, all relationships start with an introduction. For VARs breaking into this market, that typically means getting on a "schedule" or "contract" with a state or federal agency. A contract in government parlance is different from that in the corporate world. Often, it is not about securing an agreement to provide a set number of goods and/or services for a specific price. Instead, it is more like being granted a fishing license. Contracts specify how many fish can be caught,not how many will be caught. By issuing several such licenses, agencies make sure that vendors continue to compete and, thus, provide the highest value. The system is the result of the Federal Acquisition Streamlining Act of 1994. Since then, states have adopted similar procurement procedures. For technology providers, that means a significant courtship before consummating a government deal.

Four years ago, ICP, a systems integrator in New York, made a strategic decision to expand business by developing a state government practice. "We had to go through a pretty thorough application process to demonstrate our capabilities and credibility to be included on the contract," says Pieter Ruiter, ICP's vice president of sales and services. "You don't just sign up and get your name on the list. You have to go through screening to prove that you can do what you claim and have done it successfully."

After a nine-month review process, ICP became an approved vendor on New York's Office of General Services (OGS) contract. With that, it could pursue many listings for opportunities throughout the state.

"We started trying to respond to every OGS RFP. There could be as many as 20 a week," Ruiter says. "We were making ourselves dizzy churning out paper, and we weren't being successful. So we started to regroup, look at what we could do best and not try to be everything to everybody."

Since then, ICP has landed multimillion-dollar contracts providing systems and software to various agencies and projects, including the state's Department of Health and the school privatization program, the Edison Project. Although the government group only accounts for 5 percent of the company's $138 million in revenue, it shows strong and steady growth compared with the uncertainty in the commercial market.

2. The Feds: The Final Frontier

Getting into federal work,particularly defense-related,may take an even longer courtship.

"You don't do it overnight. You build into it. You win contracts; you get proper security clearances for classified work. It's long-term. You can't just say, 'I think I'll jump into DoD,'" says Roger Gurner, senior vice president of business development at Anteon, a Fairfax, Va.-based solution provider with 2001 revenue topping $715 million. Gurner says those looking to break into the business have two options.

One is to build the infrastructure. "You have to have a legal staff, contract staff, financial people, billing people. That's not cheap to do," Gurner says. "Another is to partner with an established company and get your feet wet."

He estimates that several hundred small businesses subcontract with Anteon. For some, the partnership becomes a long-term relationship. Others use it as a springboard. "At some point, the company may say, 'I'd like to do this myself,' so they start investing in the necessary infrastructure," he says.

Once in the door, a major challenge is making sense of RFPs. "At best, an RFP will only give you a minimal understanding of what the client's really looking for," says Jim Weaver, president of Tier Technologies, Walnut Creek, Calif., which develops systems, including managing child-support collection and administering county pension plans, in nondiscriminatory areas for agencies in 31 states.

"Usually, you'll get a sketchy description of the functional requirements," Weaver says. "Areas not clearly defined often have lots of risk. We'll often say in our response that we reserve the right to be sure we have a common understanding of what the client wants and suggest that be in the contract. If you are forthright with the client about uncertainty and ambiguity, you're making an opportunity to sit down with client and negotiate those items."

Keith Grabel, president of Westwood Computing, a Springfield, N.J.-based VAR long established in the government marketplace, says that VARs often assume risks to meet federal specifications. Westwood recently won a $20 million contract to provide Lexmark printers to Air Force bases worldwide. One key element in bidding for the deal? Underwriting a nonstandard warranty giving worldwide uniformity in repair service. "To the Air Force, whether the end user is in the Pentagon, Germany or Japan, they all have to get the same service," Grabel says. "Our job is to make that happen seamlessly. Sometimes you take a gamble, you make a calculation. How often do they break? What does it cost to overnight a replacement? This is typical of work with federal government."

3. Get Past the Misconceptions

For Terry Anderson, CEO of OmniTech, a Pawaukee, Wis.-based VAR, the biggest breakthrough in developing his company's public-sector practice was getting past preconceptions about doing government work. "When people think about government, they think about a staid entity,rigid and nonpersonal," he says. "We learned that we're not dealing with the government,we're dealing with people." So, the focus turned to building relationships. The best way to have winning replies to RFPs? Help spec-out the RFP. Getting in on the inside track means consulting with potential clients with no deal in hand.

"Where a lot of people make a mistake is they try to win a bid and go after the government," Anderson says. "We do the opposite. We go after developing relationships with the government. Then, they invite us to come in. They help us write the bid."