Outsider Perception: Federal purchases are made the same way regardless of the amount of money involved.

Reality: The rules regarding credit card purchases and quick buys make it easy to do business in the federal market for transactions of less than $100,000.

Lesson: Use the rules concerning credit card purchases and quick buys to your advantage. Federal buyers located outside of Washington's Beltway use these procedures extensively to do business with local small businesses.

Background:

The uninitiated do not realize how easy it is to do business in the under $100,000 segment of the federal market. Federal purchases of less than $100,000 are theoretically set aside for small businesses (although there is a current dispute between the Small Business Administration and GSA regarding whether this is indeed true). Think about it. Many small businesses across the country would not consider a $99,000 sale insignificant. The federal small buy market is divided into two sectors.

Credit Card Procedures for Single-Source Purchases

A federal buyer may place orders of less than $3,000 using a government credit card. Such orders can be placed without the necessity for competition and with a company of the buyer's choice. These buys are usually made by end users and can be made without the need for a contracting officer's involvement.

The following example demonstrates how a credit card purchase may transpire. Let's assume that a federal end user's hard drive crashes. He has an immediate need for a replacement so he buys a new computer by credit card from a local retailer. Under this scenario, the end user is up and running in a matter of hours. How much closer to the commercial market can you get?

If the purchase is made in support of a contingency operation (in simple terms, one that is made for military purposes during a time of war or natural disaster) or to facilitate a defense against terrorism, the credit card limits increase to $15,000 for purchases made inside the United Sates and $25,000 for buys outside the United States.

Quick Buys from $3,000 to $100,000

Small buy rules also apply to orders of between $3,000 and $100,000 but the procedures are slightly more stringent. We call such transactions "quick buys." In the federal vernacular, the procedures used for quick buys are called "simplified acquisition procedures." Quick buys can be made after obtaining quotes (by methods such as fax, e-mail or orally) from a minimum of two sources. If the purchase supports a contingency operation or is necessary to facilitate a defense against terrorism, the quick buy limit increases to $250,000 for purchases made within the United Sates and $1 million for buys outside the United States.

National Emergency Procedures

Federal purchasing rules were recently relaxed for purchases made in response to emergencies or natural disasters. The new rules allow contracting officers to limit the use of full and open competition when the President has made a declaration of emergency under the Robert T. Stafford Disaster Relief and Emergency Assistance Act.

In this scenario, contracting officers may set aside opportunities for businesses located or doing business primarily in the area affected by the disasters or emergencies. In essence, the new legislation allows contracting officers to make sole-source purchases from companies located within areas affected by disaster without Congress coming down on them for rule violations. Keep in mind that the President must make a formal declaration first.

Installment Series:

Installment 1: The Best Offense is a Good Defense
Installment 2: Make the World's Biggest Customer Your Own
Installment 3: Market Research in the Federal Sector
Installment 4: Become an Insider in the Federal Market
Installment 5: Competition and Price Sensitivity in the Federal Market
Installment 6: Are Federal Bids Wired?
Installment 7: Fundamentals of Federal Contracting
Installment 8: Making a Federal Sale
Installment 9: Closing a Federal Sale
Installment 10: Start with the Credit Card and Quick Buy Markets for Smaller Transactions
Installment 11: Consider Starting as a Subcontractor to a Prime
Installment 12: Selling Directly to Prime Contractors
Installment 13: Pre-approved Government Price Lists
Installment 14: Getting a Pre-approved Federal Price List for Your Company
Installment 15: Small Business Preference Programs
Installment 16: Distinguishing Messages Win in the Federal Market
Installment 17: Selling to Federal Agencies Located in Your Backyard
Installment 18: Getting Started in Federal Sales
Installment 19: Don't Get Caught Up in Red Tape
Installment 20: Steps to Take After Winning Your First Federal Contract 
Installment 21: Learn How to Write Federal Proposals
Installment 22: Prosper in the Federal Market

Fedmarket has been helping companies win government business since 1995. We have been featured in the Wall Street Journal, the Washington Post, and other trade publications. Our customer testimonials speak to our competence and expertise in helping customers win federal business. We have been singled out by public and private organizations -- including the Small Business Administration and federally-funded Procurement Technical Assistance Centers -- as the most comprehensive government contracting resource in the industry. Our web site's free content includes informative newsletters on GSA Schedules, Proposal Writing and Federal Business Development.

Visit Fedmarket
For inquiries, call 888 661 4094. Press 2.