The Pros and Cons of Government Contracting

The US Federal Government is a massive buyer of goods and services of every type. They also promote special programs to support specifically identified socio-economic groups, thus giving an advantage to certain suppliers.
The government, however, is not your everyday client or customer. It requires that business is conducted in a fair and equitable manner and is subject to a great complex of laws, rules, regulations, policies, and other pronouncements that affect the way your tax dollars are spent.
I offer to you here a “first step” cautionary tale in determining whether you should or should not want to do business with the government.

The Pros

1. Range The government buys everything – we mean literally everything. If you sell it, they buy it, not just airplanes and rockets. They need pens, pencils, paper, printers, computers, and lamps. They need desks, chairs, conference tables, AV equipment, and lightbulbs. They want construction, architectural, engineering, custodial, and temporary labor services. The government wants their tanks cleaned and porta-potties delivered and serviced. They want newspapers, electronic subscriptions, cafeteria food and services, prosthetics, drugs, condoms, landscaping, and even shoe shine services. The government buys prosthetics, drugs, and condoms. In other words, look no further for a market: it's waiting for you right here.
2. SizeThe government buys everything and typically tons of everything. Visit any government-run hospital and see how many medicines are dispensed; now multiply by every VA hospital or government-operated institution. The volume is staggering. In essence, the government will buy as much as you can produce. And, based on your geography, your business might already be the best game in town. For example, If you provide printer repair services, there might not be much competition in your area for some services need urgently.
3. StabilityThe government buys no matter the economic weather. When the economy is good, the government buys; when it's bad, they still buy. Here's why: because Congress controls the money, they've put into place a number of constraints on the expenditure of funds. Namely, all appropriated funds from Congress must go through an apportionment process within the Office of Management and Budget. While not exact, this process essentially doles out ¼ of the appropriated amount to each agency every three months. The idea is to even out the spending and prevents the entire budget from drying up too early in the year. As a result, government spending tends to stay consistent, whether it's for removing snow in winter or cutting grass in summer.
And Much More...

 

The Cons

1. Legal ComplexityAn entirely different set of laws governs business transactions with the government than in usual commerce. That's because the government follows the federal common law for contract formation, execution, and administration. It's vastly different from the law you find under the Uniform Commercial Code as implemented in your state. As such, anyone delving into this world must have sophisticated employees or contractors onboard—people familiar with these rules and requirements. In usual commerce under the UCC, correction of simple errors is easy and the parties move on with their business. With the government, those same errors could be a “false claim” against the government that leads to severe penalties. Depending on the nature of the “mistake,” this could mean delayed payments, denied payments, disqualification from doing business with the government, fines, or even prison. In short: if you're caught off guard, you'll face a steep price.
2. Confusing ActorsThe government has many rules on who has the authority to do what, and these rules are very different than you find in commercial transactions. When a VP of a customer signs a purchase order, you can rely on the fact that the person with such a title has the authority to enter into the agreement. This is known as the doctrine of apparent authority. With the government, only a warranted contracting officer (that is, one who holds an official piece of paper that says they have the authority) may sign a contract or give contract direction that affects price, delivery, or scope. In fact, it's possible that payment might never be made for the work unless the contracting officer has directed you. Simply put, the doctrine of apparent authority does not apply to the government. You'll have to be very careful about taking directions from the only contracting officer. If you follow anyone else, you might just eat the cost of the work.
3. DelaysThe government lives on its own timeline. Often, they'll change their schedule on a dime. As a result, it's very common for procurement to slip into the future or be canceled altogether. If you were planning on that business or saving your best people to work on it, they may have to wait a long time to get to work. In addition, you might lose those contractors to a competitor, or you might assign them other work only to have the government demand you place them on the newly awarded, very late contract as promised in your proposal. Managing your team can become exceedingly complicated due to these changes in award dates by the government. To ride it out, you'll have to expect the unexpected.
And Much More...