Profit Sector

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As the biggest "business" in the country, the United States government is a good customer for thousands of companies across the nation, working in virtually every industry imaginable. When the economy is weak, the government is a good bet, as it must continue investing in new programs and infrastructures. And, when times are good, it-like any other organization-is able to spend even more.

"The government is the largest customer in the world," said Phillip Reyes, vice president of government sales and business development at SPL Integrated Solutions in Columbia, MD. "As long as a company is willing to commit its resources to developing a government division, it's definitely worth the investment. There are many opportunities to provide products and services."

Because the government is funded with taxpayers' money, the process through which products and services are acquired is more regulated than it is in the private sector. Before even being considered by the government, private sector companies must get into the system-usually by registering with the General Services Administration (GSA), which handles approximately $66 billion of the government's spending. It's through the GSA that businesses can market their products and services to the hundreds of government agencies that rely on it as their principle resource.

Tom Corzine, director of federal sales at Audiovisual Innovations in Tampa, FL, observes that the government is, in many ways, like any other market-in order to service it properly, you need to have the right people in place. "The number one thing in doing business with the government is to find the right people who can enter that market for your company and put together a plan for going into that space," he said. "It's just a different vertical market with a different language and a different culture, but the actual business plan you put together is really no different than it is for any other segment."

Something to consider when preparing to enter the government market are the unusual quirks that will be encountered on projects. For instance, take insurance. Bid, performance, and payment bonds serve as insurance, and, according to David Goldenberg, president of ACE Communications in Garden City, NY, are usually required for local and state contracts, but are not always mandatory at the federal level. Averaging about two to three percent of the cost of the project, these bonds insure the government if the contractor defaults on the contract or fails to pay its subcontractors.

Another form of insurance that the government requests is for its subcontractors to possess bonding capacity, which requires the company's principles to provide personal guarantees, as well as detailed financial statements. "This can prohibit some companies from going after government work, because if you need to be bonded and you can only be bonded for a $100,000 job, and you are going after a $1 million job, it becomes a problem," Goldenberg explained. "We are bondable up to $10 million for any one project, and we have worked very hard to get that."

Most government bid proposals are divided into two books, one dedicated solely to price, and the other, the technical elements of the project and the company's expertise in this area. One of the more tricky components for first-time government contractors is the "references" section, where companies are required to list at least one government reference. "It's a Catch 22. If you have never done work for the government, it's hard to show that you have a government reference," Goldenberg admitted. The best way to overcome this is to become a subcontractor on a government project, which can then be used as a reference.

While the availability of government work can depend on your geographical location, contractors declare that a great deal of projects exist-it's just a matter of seeking them out. "There seems to be more government work out there than I have ever seen in the past in the audiovisual market," Goldenberg said. "There seems to be a ton of new government buildings going up, or a move toward implementing simple AV systems, like digital signage."

Corzine notes that federal contracts are becoming increasingly available at the state level, decreasing some of the red tape involved in the bidding process. "Certain federal GSA contracts are now available at the state level, so you don't have to create an administrative section at the local level to manage a contract; you can just use the federal contract," he said. "We are seeing more and more of that."

The convergence of AV with IT is also paving the way to more projects for systems contractors. "Most agencies have budgets for information technology," Corzine said. "Now we are brought into that budget process, so money is being invested every year to not only maintain the existing equipment, but in many cases, to look at the future and how to add the type of equipment that we sell and the services that we provide into a budget. This makes it a little easier to forecast."

ACE Communications... www.aceav.com
Audio Visual Innovations... www.aviinc.com
SPL Integrated Solutions... www.splis.com

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