Fiscal Cliff Averted? What’s the Real Fallout for Government Contractors?

President Obama just signed into law a bill averting the much discussed fiscal cliff.  So we can all breathe a sigh of relief and get back to work as government contractors, right?  Well, yes and no.  First, the “no” side of the equation.  Though bypassing a looming crisis, Congress postponed dealing with some of the key issues that spawned all this fiscal cliff stuff in the first place.  Our leaders deferred the $1.2 trillion in spending cuts (known as “sequestration”) for two months.  Further, they didn’t raise the debt ceiling even though the Treasury technically hit the $16.4 trillion limit Monday.  These things we’ll need to be addressed just about the time the continuing budget resolution runs out and a new budget battle will be underway.  Looks like more fireworks are in our future.

Now the “yes, we can get back to work” side of the equation.  While an environment of uncertainty such as has been created by the fiscal cliff battle can certainly have a negative impact on programs, I can assure you the federal government isn’t going away anytime soon.   It will still buy billions of dollars worth of stuff every day–hopefully some of it from you.  The main point: uncertainty is nothing new to experienced contractors.  There is always a cloud of precariousness hanging over government contractors:  funding battles, continuing resolutions, political turnover, contract expirations, bid protests, etc.  All of these serve to make government markets a bit rocky.  It’s something you deal with and navigate, meanwhile being thankful for the good characteristics like long-term contracts, and a customer that pays religiously.

So, amidst all the turmoil and uncertainty, just do what you do best.  Build relationships, solve problems, create value.  Do it well and you’ll build bridges across this and any future “cliffs” that may lie ahead.

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Government with its Head in the Cloud

Cloud computing icon

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Michael Koploy,  e-Procurement Software Analyst for Software Advice, writes a solid article on cloud computing in the public sector in his State of the Union: Public Sector and the Cloud.  He makes a good case that the key to government movement toward cloud services is, and will continue to be, cost reduction.  With huge debt and significant budget cuts, government IT managers will no doubt be drawn to cloud services as a lower cost approach to on-site management.

So why aren’t government IT managers flying full speed into the cloud?  Michael says threats to security, and a loss of ownership are key barriers.  It only takes a couple of well-publicized security breaches to make IT decision makers in the government squeamish.  Recent hacking incidents raise questions about just how safe the data is when it’s “outside the walls.”

From our perspective, we continue to be bullish on contractor cloud opportunities.  The commercial world is embracing it dramatically, and, like other trends, government will lag behind, but follow.

It goes back to one of our key principles related to selling to government buyers:  they don’t like risk.  IT contractors will need to double efforts at securing networks, data, etc. (and double efforts at convincing buyers).

Relationship Building Strategy: Leveraging Shared Values

If you’ve been in sales for any length of time, you have probably heard the rapport-building advice that upon entering a prospect’s office, you should look for ways to connect with what is important to him/her on an individual level.  Pictures of family on his desk?  Talk about your kids.  Golf trophies on her bookshelf?  Tell her about your trip to Pebble Beach.  The theory?  Practicing this method provides common ground between you and the prospect–important for laying a relationship foundation.

It’s decent advice on the surface, as honing in on prospect passions is clearly an effective method for easing initial introductions.  However, deeper relationship building requires expanding this practice beyond the initial meeting.  Salespeople should move past thinking the method is just an ice-breaking gimmick. Instead, sales pros should focus on ways to build a deeper shared value framework between you as the seller and your prospect (or strategic partner) over the long-term.

Here’s one process for doing this:

  • Observe.  Make a concerted effort to become more aware of interests and values.
  • Capture.  Make notes about the interests/values you uncover and capture these in your contact database.
  • Review.  Revisit the values you have observed regularly so you’re tuned in.
  • Collect.  Be on constant lookout for things you know will pique your prospects’ interest or tap into mutually shared values.  Simple things like news articles or pertinent websites are great.
  • Share.  Commit to passing along content that will be of interest to prospects and reinforce shared values.
  • Be Genuine.  Don’t overdo it.  Trying to “force” shared values where none really exist will backfire on you.

Leveraging shared values takes some effort, but it will help you develop deeper prospect relationships–the absolute key to “owning an RFP” and winning deals.

Becoming a Star: Listening & Value Translation Skills

In our consulting practice, we’re often asked what individual qualities best predict success in government sales and business development.  In our research (and practical experience over the years) we’ve actually identified seven personal traits that contribute to effective selling within the complex government environment.  For a discussion of all of these, feel free to request our free white paper, “Seven Key Traits of Star Government Salespeople” (see the link on the right).  For now, let’s examine the strongest predictor of success:  listening and value translation.  We’ll break this down into smaller bites in order to better understand this vital factor.

First, star salespeople are perceived to be good listeners by their prospects.  No surprises here.  Buyers want their problems and needs to be truly heard.  Of course, listening means more than hearing.  Good listeners know what questions to ask to get to the core of prospects’ stated (or unstated) needs.  They listen for clues regarding the decision-making chain, and they effectively discern non-verbal cues.

Second, star sales people are able to translate prospect problems into meaningful customer “answers”.  Hearing is one thing.  Being able to diagnose problems, align needs with company offerings, and provide real solutions (an unfortunately overused term) is another.  Being “consultative” is a part of the equation, but only a part.  Persuasion is also a valid part of the value translation process.  We often see salespeople who, in striving to be consultative, fail because they get mired in prospect “wish lists” and details they don’t know how to address.  They are unable to persuade the prospect to adopt new ways of thinking (ways that are more aligned with their company’s offerings).  Star government salespeople don’t fall into this trap.

Third, star salespeople have learned to adapt their listening and value translation skills to the structured process of government selling.  While other salespeople might be turned off by the rigid procedures involved in government procurement, star government salespeople utilize this to their advantage.  They are comfortable with the playing field (and frankly know how to work the system within bounds).

A government salesperson’s ability to listen empathetically, and then translate products or service features into clear value for the buyer is essential for long-term success.  If you’re sitting around waiting for RFPs to be released before you begin selling, you’re too late.  Commit to getting in front of the RFP, building relationships, listening effectively, then translating prospect problems into solutions your company can provide.  You’ll find yourself with “star” status before long.

President Obama Proposes Merging Agencies and Elevating SBA Head to Cabinet Position

Seal of the U.S. government's Small Business A...

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Today, President Obama proposed merging six trade and commerce agencies into a single agency, while elevating the head of the Small Business Administration to a cabinet level position.  The plans would affect the Commerce Department, the Small Business Administration, the Office of the U.S. Trade Representative, the Export-Import Bank, the Overseas Private Investment Corporation and the Trade and Development Agency, according to an article in the Wall Street Journal.

The president can’t make the change on his own, so he will ask Congress for authority to undertake the reorganization quickly.

According to the Journal article, “the president appears to be seeking to show that he is looking out for a part of the business sector that Republicans say is the main engine of job growth, and one that other Obama policies have hurt.”

At this point it is unclear whether Congress will give President Obama what he seeks. Reorganizations are tricky in Congress because they impact certain committees’ oversight structure.  At least, however, discussion and focus are being placed on Small Business–a key engine for economic growth.

Government Technology’s Five Most Important Stories of 2011

The use of technology  in government is a common interest of our readers as the topic impacts a wide variety of government contractors.  As such, we recommend you check out this linked article from Government Technology magazine.  Here, they highlight what they consider to be the five most important technology stories of 2011.  The stories cover the gamut from cloud-based services, to social media in government, to ultra high-speed broadband.  It’s well worth a read.

New Report Reveals Trends in Federal Contracting for Small Business

Despite, current procurement tracking methods at the federal level, it’s not easy to get a real picture of how small business fares within government contracting.  However, a new report, Trends in Federal Contracting for Small Businesses, published by American Express OPEN’s Victory in Procurement (VIP) program provides some unique and interesting insights.  For this study, 740 “active small business federal contractors” were polled during the months of October and November.  Here are a few key findings from the first of four publicly-released summary reports:

  • Small businesses spent more chasing federal contracts. Over the past year, the amount of time and money that active small business contractors have invested in seeking federal contracts averaged $103,827, an increase of 21 percent over previous year figures.
  • Small businesses bid less frequently on contracts. Even as the average investment has risen over the past year, bidding activity has declined by nearly half.  This includes both prime and subcontracting bidding activity. In addition, the average success rate for small business contractors (in both prime and subcontracting) has declined, indicating a more competitive environment.
  • Try, and try again. Active small business contractors reported they had to submit an average of 4.4 bids before they won their first prime federal contract. Two-thirds of active small business contractors have performed on more than one federal contract, and, on average, it took them just under a year to win their second contract.
  • Experience pays. Contractors with ten or more years experience have success rates of 53% on average.  This compares to contractors with three or less years experience who have success rates of 20% on average.

Overall, the study highlights the fact that government contracting is not an easy, short-term strategy for small business.  It takes commitment, work, and investment to succeed.  On the other hand, for small businesses who know what they’re doing and/or are willing to make the effort, it is also clear government contracting can be a smart, highly lucrative pursuit.