Government IT Contracts - Should You Pursue Them?
By Dan Radak
When people talk or write about government contracts and government procurement, we usually think of defense contracts or construction projects that the government pays for when their existing employees do not have the expertise, the resources or the budget to handle. In reality, however, governments around the world are setting up tenders for all kinds of projects and services.
In the last two decades, one area that has seen the most proliferation when it comes to government contracts is the IT industry. In other words, governments (on all levels) are in dire need of outside professionals who could handle various jobs.
Many IT companies think that such contracts are not worth the time or out of their reach, but this is simply not the case.
Government agencies on different levels are always looking for IT companies that can help them with innumerable problems that the rapidly advancing technologies put in front of them. For example, the state government of Texas might announce a tender for overhauling the computer systems in the libraries run by the state. An Italian city might want to upgrade the web design of various city agencies and organizations. The German state of Lower Saxony might need to upgrade the accounting software that their tax collection services use.
Of course, there are also huge federal contracts that IT companies can pursue and which are usually much bigger in both the amount of work that is required and the fees that are paid out to winning companies.
The point is that government IT contracts are definitely out there, especially if you count in all the various levels of government.
How it Works
When a government agency has an IT-related job that they need doing by an outside company, they put out a contract with a deadline before which interested companies need to inquire about it. Depending on the type of the contract and its size, the agency will then issue a Request for Proposal or an Invitation for Bid where interested companies have to provide additional information on how they would handle the contract.
Once the agency receives the bids, they then have to compare them and choose the company that seems the best suited for the job at hand. From there on, the contract is signed and the IT company can start providing the services they guaranteed they would provide.
Why Government Contracts are Good for an IT Company
There are a number of reasons why your IT company should pursue government contracts. For one, it is a very stable source of income since you agree to a payment that is guaranteed as long as your company delivers on the promises it gave during bidding. You do not have to worry about the economy or competition. You won the contract, you do the job and you get paid. And you get paid handsomely in most cases. This provides the stability to your IT company that you can find almost nowhere, allowing you to plan for the future and expand without worrying for the future.
Having a government contract under your belt is also a fantastic reference for any future projects you might be pursuing. Your company will set itself apart from the competition by proving it can handle the most demanding projects for an employer as important as the government.
It should also be pointed out that winning your company's first government project will put you ahead in any future contract tenders, giving you the opportunity to perhaps niche your company where you work almost exclusively with government agencies.
One thing to keep in mind, however, is that bidding for government IT contracts and winning them is often quite complicated, for a few reasons.
The first reason is that the bidding processes are usually very complex. Namely, governments have to make sure they are spending taxpayers' money smartly and that is why there are so many ways in which they have to check the IT companies they do business with and why they spend so much time comparing various bids. This will require IT companies to get all of their paperwork in order and even to obtain additional assurances they will be able to handle the contracts, like performance bonds in the US, for example.
Some companies also find out that it can be difficult to break into the business-to-government sector due to the fact that most government decision-makers want to avoid any risks and they go with larger companies they had already done business with.
That being said, things are changing on this front and it is becoming easier for smaller IT companies to get in on the action thanks to certain initiatives that the governments around the world are adopting, aimed at helping just such smaller potentially contractors. Also, it is often possible to find organizations that help smaller companies with the paperwork and the application process for government contracts.
Regardless of their size or where they are located, IT companies should definitely consider pursuing government contracts. They can be quite lucrative and provide an unprecedented safety net for the company. There are certain obstacles that can be discouraging, but there are also ways in which an IT company can overcome those obstacles.