CanadExport - Article

The U.S. federal government, the world’s biggest customer, uses a special procurement system to pre-negotiate the purchase of products and services so that it doesn’t need to go through a complex process each time it wants to purchase things like pens, chairs or office furniture.

Doing business with the U.S. government, the biggest customer in the world, can be great for business.

The system, known as General Services Administration Schedule Contracts (or GSA schedules), is an indefinite-delivery, indefinite-quantity agreement. The U.S. federal government centrally negotiates the pricing and other conditions under which vendors offer government buyers over 53 different kinds of products and services that they already supply to the commercial market. Many American government buyers prefer these GSA schedules among the kinds of contracts they can use to purchase high-volume, common-use items.

Canadian businesses have been doing well using GSA schedules. Last year, 103 of the 707 Canadian companies who won U.S. government contracts sold over $62 million through GSA schedule contracts.

Canadian successes

Office furniture manufacturers led the way with over $20 million in sales. Top vendor Krug Furniture of Kitchener, Ontario, is among 25 Canadian furniture companies with GSA schedule contracts.

A total of 57 Canadian IT providers with combined GSA sales came a close second, with just over $19 million. David Martin, Co-CEO of leading vendor SMART Technologies of Calgary, Alberta, learned early on about GSA schedules. “When we began to pursue U.S. government buyers, prospects kept asking us if we were on a GSA. So we realized that this was important,” says Martin.

Selling to the U.S. government could be right for you if your company is:

performing strongly in Canada and selling to U.S. commercial customers;
already doing business with the Canadian government;
gaining interest and winning some initial sales from U.S. government buyers; and
able to invest two to three years of business development efforts.

“At the initial stages, we got experts to help us prepare our proposal for GSA. After all, just because you read the solicitation doesn’t mean you have all the knowledge you need to navigate your way through the complex terms and conditions.”

A GSA schedule doesn’t guarantee any sales. The proposal and negotiation process costs every company a unique combination of time and money, and takes special marketing expertise and careful relationship-building. The top companies have taken 10 or 15 years to build that level of sales, from signing a GSA schedule contract and seeing the first dollars flow, to making a consistent profit.

“In addition to understanding how federal procurement works, relationships are of critical importance, both with GSA contract administrators and federal agency customers,” says Mike Boehmer, Director of GSA Sales for Krug. His team managed to turn early difficulties into an advantage.

“GSA believed there were deficiencies in testing data for one of our product lines,” he said. “But even though we didn’t win that contract, we gained a lot of credibility and respect by being honest and graceful in the way we did things.”

Krug went on to foster very good long-term relationships with key senior GSA personnel. “Our GSA business has grown double digits every year since 1995,” said Boehmer, whose efforts landed over $10 million in U.S. government contracts last year.

Use GSA in your marketing

Washington D.C.-based consultant Judy Bradt, a former Canadian trade commissioner and now principal of Summit Insight, points out that a specially-designed marketing campaign to drive GSA sales is key. “You can adapt a marketing campaign from your commercial market with modest expense. Government buyers notice when you tailor your online and print materials to them—and when you don’t,” she says.

Colin Hung, senior director of business development with Performancesoft in Toronto, agrees. His team produces brochures focused on government buyers’ needs. “The U.S. government has issues that are unique and do not translate from the commercial world,” says Hung, whose company made $500,000 in U.S. government sales last year.

Many Canadian companies also test the market by subcontracting to American partners with GSA contracts. But Bradt has some reservations about this approach. “Businesses sacrifice margin to a partner who handles much of the cost, work proposal, negotiation and contract administration, but companies must still do their own marketing.”

According to Bradt, it’s important to look at the bigger picture. “GSA contracts are only one option. In fact, GSA schedules account for only 5% of Canada’s over $1 billion in total U.S. federal contracts in 2005. Those numbers tell the real story; the U.S. government has many ways to buy, and smart vendors learn them all. The next edition of CanadExport will take a look at some of the other ways exporters can sell to the U.S. government.

For more information, go to:
www.gsa.gov
https://fsstraining.gsa.gov
www.international.gc.ca/sell2usgov
www.summitinsight.com


Last Updated: 2006-03-01	Top of Page	Important Notices