A General Services Administration (GSA) Schedule contract isn’t part of every company’s federal success strategy. Yes, it’s a popular kind of contract. It’s essential for some companies selling certain products or services to specific buyers. But the effort to get one also takes big upfront resources of time or money, usually both.
Related: What’s A GSA Schedule Contract?
A Case In Point: Information Technology Schedule 70
In 2012, the federal government awarded $15.4 billion in business through its GSA Schedule 70 contract for information technology.
5,690 firms offered their solutions through that contract. Of those:
- The top 100 – just under 2% of awardees – won a whopping 67%, clocking in at $10.4 B.
- And 3,185 other firms – 34% of awardees – shared the remaining 35%, just $5.5 B.
Doesn’t add up, you say?Indeed it does not. Because 2,399 firms–42% of all awardees–sold $0.(And that number gets bigger every year.)
If they had just sold nothing, that would be bad enough. Here’s what these numbersdon’ttell you: how much they spent just to have the privilege of winning nothing whatsoever. Each of those nearly 3,000 companies probably spent:
- Anywhere from $5,000 to over $30,000 in consulting and legal fees or the equivalent of internal sweat equity and six months to a year of elapsed time to prepare and negotiate its offer
- Anywhere from $30,000 to $200,000 in marketing and sales staff
- Well over $50,000 in specialized marketing activities for federal government niche, from websites, trade shows, conferences, meetings, and memberships.
So if you’re going to pursue a GSA Schedule and commit serious resources, you want to be sure you’re going to get a return on your investment! Here are some things to think about before you jump in.
A GSA number is NOT a seal of approval
While the contract negotiations include a review of your past performance and your company’s financial stability, a GSA Schedule Contract is not an endorsement of your product or your company.
It does mean that GSA believes it has reviewed your track record, your financial stability, and negotiated a fair price and fair terms and conditions under which you can offer something useful to the government.
Many buyers and partners perceive GSA Schedule Contract holders more positively than those without one – not least because the federal government considers your business to have enough financial and operational viability to be a potential supplier.
Think about getting your own GSA Schedule if:
- Serious prospects are asking, “Are you on GSA?”
- Your competitors are on GSA and you’re losing to them because buyers strongly prefer to use the Schedule.
- You are willing to invest time and money to learn how it schedules work, and what marketing techniques are effective, and then hire experienced help while you learn to do it.
- You sell products or services to the commercial market, and can show a minimum of 2 years’ worth of corporate financial records, preferably audited ones, to GSA.
- The prime contractors you want to work with require it for teaming.
- After factoring in the cost of getting and administering your own GSA contract, you would end up with more profit on your GSA sales than you would earn on those same sales after the margin you surrender as a subcontractor to the primes or partners.
Don’t rush to get a Schedule if:
- Your prospects can and will use other contract vehicles – whether to you directly or via subcontract to someone else.
- You lack resources for proposal development, negotiation, administration, and marketing of your schedule contract.
- You can spare the margin to sell through a channel partner’s schedule while you build volume and credibility.
- Your usual order size for products is under $3,000. If so, buyers can use micro-purchase procedures – they don’t even need to complete the purchase! – and SmartPay (the government credit card).
- You don’t expect to win business worth at least $25,000 via this contract within 24 months of contract award. If you don’t sell at least that much, GSA can cancel your contract, or decline to renew it.
This post was an excerpt from GSA Schedules –Seven Things You Must Know. For a comprehensive guide to GSA Schedules and more help in determining if and how to get one for your business, download the full report at no cost.