Benefits of doing business with government

What are the benefits of doing business with the government? The main benefit is clear: to make a profit.

Besides simply making a profit, there are a number of other benefits of doing business with the government (for example, selling to government or becoming a supplier for government procurement needs). Benefits range from increasing your market and the range of goods and services that you could sell to enhancing your status which, in turn, could help you get more contracts.

Although you may find the benefits attractive, you will need to take into account a demanding bidding process and the regulations that apply to public procurement. You should also be aware that you are competing with equally motivated businesses.

There are many venues through which governments buy goods and services, for example through online tendering (bidding), registered supplier databases and business directories. There are also many types of business arrangements depending on factors, such as the size of the procurement need (dollar value), the complexity of the order or job, and the level of urgency and secrecy involved.

All in all, whichever government you choose to do business with, you'll tend to encounter similar benefits and similar needs for planning, many of which are described below in greater detail. You will find a glossary of terms used in the government procurement process at the end of this document.

What are the benefits of doing business with government?

Fair Business Practices

Even if your business is new or small, you still have a chance of winning a contract with a government body, because government purchases are subject to laws, regulations, policies, and must meet trade obligations. The bid or proposal that you submit will be evaluated and scored based on predetermined criteria and compared to the scores of your competitors.

Different governments may have different policies; for example, the Government of Canada must procure goods and services in a way that:

• enhances access and competition;
• treats industry fairly;
• gets the best value for Canadians.

Large Market

The Government of Canada alone spends about twenty billion dollars a year on goods and services. Add to that, the amount spent by each and every municipal, provincial and territorial government with whom you could be doing business - now that is quite a large market! You can even extend your business overseas and export your goods and services to foreign governments.

With the government being such a large potential market, why then don't all businesses target it? It is most likely because of the regulations and activities that surround the procurement process, such as:

• registering in specific vendor databases;
• watching for "call to tenders" or "request for proposals";
• bidding on jobs or preparing detailed proposals;
• providing detailed updates or progress reports on large jobs.

It will be up to you to decide if doing business with the government is a good fit for your business.

Wide Range of Opportunities

Governments buy a wide range of products and services. Such procurement needs range from buying office supplies to contracting for the construction of hydro-electric power stations. Therefore, there is a good chance that your company's line of business matches up with a government procurement need.

Trusted Status

Apart from the financial benefits, your business will gain status and recognition as a supplier to a government body. Being a supplier to government tends to carry some weight with regard to credibility and competency when dealing with other local, national and international markets. It can be time-consuming to deal with the complex regulatory nature of fulfilling government contracts. However, your business' reputation will benefit from proving that you can meet requirements, deadlines, and terms and conditions of delivery.

Increased Marketplace Knowledge

Other benefits that may emerge from government contract experience include:

• a better appreciation of market trends (standards, requirements, and so on);
• the possibility of identifying and rating your competition;
• the possibility of identifying mid-term and long-term strategic opportunities.

Participation in public markets can generate these and other key marketplace information that can help your business.

What planning is required for selling to government?

Make an informed choice

When seeking to enter the government market, and indeed all types of markets, you should do your homework and be well prepared. To win a contract, you must understand your target market; the same applies when targeting the government. In some provinces, government organizations may also include government boards, councils, committees, commissions and publicly-funded academic, health and social service organizations.

Assess your business

You must carefully assess your business' resources and your strategic and competitive positioning. Ask yourself what is your production capacity, what is your position vis-à-vis the competition, and what are your short-, mid- and long-term plans. Take a good look at your human, physical and technical resources. Evaluate your research and development activities. Analyse your supply and production capabilities in terms of distribution, delivery and after-sales service. The answers to these questions will help you determine if you can tackle public markets and fulfill government contracts.

Study various procurement routes

It can be demanding to fully understand government procurement and to properly target potential niches. In large cities alone - such as Montréal, Toronto and Vancouver - there are several hundred public organizations that function differently for their procurement. Learn to recognize the different approaches to procurement and decide whether or not to participate in them. Types of procurement approaches include direct procurement, the use of supplier files, grouping of purchases, publicly advertised tender calls or limited tendering, and standing offers.

The plan of attack for government contracts will vary from your business to the next: some companies will concentrate their efforts on accessing and searching national publicly advertised tender calls; others will initially approach government contracts via the local procurement route (below a certain dollar value and via registration in vendor files). Others will monitor government procurement for strategic purposes only, that is, without seeking to win contracts, but simply to identify and keep track of the competition.

Get help to monitor opportunities

Depending on your situation, you could assign someone in your business to monitor these business opportunities with government or you could hire an outside market intelligence service. The upside to hiring an intelligence service is that they can often provide help in a number of areas. They could help you:

• understand the regulations surrounding government contracts;
• find information on government purchasing requirements;
• find information relating to trade treaties and agreements;
• deal with the purchasing body;
• develop personalized strategic tools;
• settle contract disputes;
• get training on advanced subjects relating to government procurement.

Find business opportunities

When a government body needs goods or services valued over a certain dollar amount, the body (purchaser) must publicly advertise a request for proposals. You can find these advertisements in a number of places, one being electronic bulletin boards such as MERX or SE@O (in Quebec). Other places to look for such advertisements are on the websites of the procuring body and in specialized and general newspapers.

For procurement activities of an estimated value below a certain dollar amount, practices may vary from one government body to the next. Many organizations keep a list of possible suppliers (vendor files) whom they contact for either bids or sole source services that are of low dollar value. You will have to contact the organization directly to make your business known to the government purchasing agent or register as a supplier in specialized databases.

Here are some additional sources of information that will give you a good start on understanding and searching for business opportunities with governments.

• Selling to the federal government
  Find out about selling to the government of Canada including registering as a supplier, finding opportunities and responding to bids.
• Selling to Specific Provincial and Territorial Governments
  Find information on selling to specific provincial and territorial governments.
• Selling to foreign governments
  Expand your market by selling your goods and services to the United States, Mexico and other foreign governments.
• MERX – The Government Electronic Tendering Service
  
  http://www.canadabusiness.ca/eng/summary/1040/
  Applies to: All of Canada
  Find opportunities to sell your products or services to governments and other organizations using the MERX system.

Glossary of Terms for Selling to Government

You may come across unfamiliar terms when looking for information pertaining to selling to a specific government body. As mentioned earlier, each body or organization can have different procurement policies and use different terminology. This glossary, specific to the context of this article, should help you with your research.

Bid: An indication of willingness to buy or sell goods or services or to undertake a task, at a specific price and within a specific timeframe.

Call for tenders: see Request for proposals

Contracts: Contracts describe a pre-defined requirement or scope of work, and set the terms and conditions of the work or deliverables including pre-determined quantities, prices or pricing basis, and delivery date.

Invitation to bid: see Request for proposals

Proposal: A submission by one party to supply certain goods or services to another. Unlike an offer, a proposal is not a promise or commitment but, if accepted by the other party, its proposer is expected to follow through and negotiate for the creation of a binding contract. If submitted in response to a request for proposals (RFP), it normally constitutes a bid.

Request for proposals (RFP): Depending on factors such as the type of work to be done and the value of the goods to be delivered, different terms are used to basically ask you to show your interest in a specific business opportunity. Some of the most common invitations or advertisements are: call for tenders, invitation to bid, request for proposals (RFP), request for tenders, and request for quotations.

Request for tenders: see Request for proposals

Request for quotations: see Request for proposals

Tender: A sealed bid submitted in response to a request for tenders and containing detailed information on requirements and terms associated with a potential contract.