Give government an unexpected role: customer

Bob McKee
Bob McKee

Bob McKee
Principal. GSA Solutions 

When you think of the Federal Government, it's probably as a regulator or payer.  But how about as a customer? The VA, Military, Indian Affairs and Federal Prisons operate nearly 300 hospitals and over 800 clinics. Since they limit most purchases to companies who are “on contract” with the government, this market is not hard to penetrate once you're on contract.

The Federal Supply System (FSS) has a confusing array of contract types. The best known are “Multiple Award Schedules (MAS),” from which any government buyer can make purchases at prearranged pricing and terms. MAS contracts are often called GSA Contracts because the General Services Administration manages most of them. But the medical contracts are administered by the VA. This causes confusion since nearly everyone thinks FSS, GSA, and VA contracts are different animals.

There are other contracts too.  The DoD has DAPA (Defense Acquisition Program Administration). The VA administers other contracts for certain imaging equipment and prosthetics.

But the MAS contracts are the big ones. They cover medical supplies, devices, services, and pharmaceuticals to the tune of about $10 billion annually.

We run into marketing and sales executives all the time who  write off government sales due to misconceptions—and truths.

1. It takes a long time to get on contract. True. Companies often take six months to prepare a proposal, then the VA takes an equal amount of time for their review. But once you have the contract, it's good for ten years.

2. You can't make money on government sales. False. The government has considerable buying power and their default position is to get the same terms as your most favored customers. But, depending on your distribution model and customer agreements, the government sometimes accepts higher pricing.

3. It's hard to do business with the government. False. Most purchases are made online and invoices are paid in 30 days.

Can you think of a bigger market for incremental sales?
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