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MANUFACTURING FOR THE GOVERNMENT
The United States Government is the single largest purchaser of
goods in the world. Through various activities, the government
purchases billions of dollars of goods on a daily basis. To many
manufacturers entree into the government market translates into a
change in focus from their core business concerns. Additionally,
they would realize unlimited overhead costs of added sales personnel
to develop and implement a business plan designed to capture this
business. With Breen & Associates, the costs are fixed, and and
the results rapid. the expertise Breen & Associates brings allows
for rapid review of current business operations, in-depth research
into relevant upcoming and current contracts, and provides a
comprehensive competitive overview into competitive pricing and
strategies. Within this realm, there are several different
methods of procurement:
Requirement Contracts --
Requirement contracts are for a definite period of time (typically
1, 2, or five years in length), and are for products that meet a
military or federal specification (normally standard commercial
products do not meet federal specifications). This type of contract
normally is awarded on a per item basis, for all of the requirements
the government agency has for the period of the contract.
Additionally, requirement contracts typically call for delivery
to specific delivery points within the United States or abroad,
and have economic price increase clauses tied into the Producer
Price Index. With an award under this type of contract, a
manufacturer could expect to adhere to special packaging, marking,
bar coding, and reporting of shipments. Payment for products
manufactured are normally received within 10 days of invoice
submittal (Assuming the awardee has completed on-line invoice
submittal), with guaranteed payments no greater than 30 days from
receipt. Although this type of contract typically calls for a
unique product, we find that to meet federal or military
specifications, companies are required to make minor changes to
similar commercial products they manufacture.
Multiple Awards Schedule Contracts --
The General Services Administration (GSA) is by far, the largest
purchasing arm of the government. In the 1990's, government
cut-backs and force reduction forced the GSA to close a great deal
of their regional distribution centers. In its' place emerged the
multiple awards contract, a contract that calls for off the shelf
goods to be shipped directly to the purchaser from the manufacturer
or distributor. Products offered under the multiple awards contract
are for standard commercial items. The main pricing requirement the
government has is that the price afforded to them under contract has
to "be equal to or greater than the pricing afforded to the
contractors most favored customer". This type of contract is
typically five years in length with options to extend another 15
years. Price increases are tied directly into your commercial
pricing. Inasmuch, when you have a commercial price increase,
you can increase pricing accordingly to the government. Award of
this type of contract however, does not guarantee any sales. The
onus is on the awarded company to provide marketing efforts to
promote their product to government purchasers.
Once awarded under this type of contract, the typical company can
expect purchases through a variety of methods. Government buyers
will call you directly and provide you with purchase order
information and will offer payment either by invoice or through
the use of the government credit card (Visa). When payment is
through the government Credit Card, payment is normally made
directly into your bank within 48 hours. When invoiced, you are
guaranteed payment within 30 days of receipt of the invoice
(Federal Prompt Pay Act).
This contract has been highly successful for hundreds of companies
looking to increase production and distribution of standard
commercial products. With this type of contract, there are
marketing requirements that the company must provide, and marketing
activities that we have shown to be proven methods of success.
Definite Quantity Contracts --
The definite quantity contract can be for standard commercial
products, or for products that are manufactured to government
specifications. In either case, the contract is limited to a
specific quantity of product to be manufactured/delivered to the
ordering agency, within a specific time frame. This type of contract
normally does not carry any provisions for price increases, and can
carry requirements for special packaging, marking, labeling and
shipping. This type of contract allows the manufacture to deal
with real world quantities (not estimations of orders), to be
manufactured and delivered within a specific time frame. These
contracts normally carry a minimum of $25,000.00 with no maximum
purchase limit. Payement is typically based upon billing, with
terms ranging from 10 days (electronic) to 30 day terms.
Request for Quotations --
Typically for smaller purchases of commercial or specification
products. The request for quotation (RFQ) asks the company to
provide a price that will be honored for a period of time
(normally less than one year). The RFQ will outline the delivery
packaging, and labeling requirements, as well as the minimum order
size and an estimate of sales of that particular period. No sales
are guaranteed to any company submitting responding to an RFQ.
This type of contracting is normally good for those companies who
deal in the products outlined, on a daily basis.
FACNET --
Facnet is an electronic method of procurement. To those who
subscribe, Requests for Quotations (RFQ) are posted electronically,
and response to the RFQ is completed immediately through electronic
means. Under this method, the purchasing officer reviews the
electronic responses and orders directly over FACNET, with the
awardee receiving a purchase order electronically. Currently, it
is our experience that orders under this means are normally under
$100,000.00 with most being under $10,000.00. Payment is normally
through invoice with terms ranging from 10 days to 30 days. We have
found that companies can be successful when monitoring their
particular product type over a period of time. However, we have
found that success is only extended to those who bid aggressively.
The Service We Provide to Our Manufacturing Clients
The key for any manufacturer is to increase productivity while keeping
overhead costs to a minimum. The services provided by Breen &
Associates allows for manufacturers to maintain their focus on their
primary business while expanding into the government market.
When retained, we typically begin by conducting a complete review of
our clients commercial business to include products they manufacture,
distribution, pricing structure, and ability to compete in the
government market. We then conduct extensive research into like
products purchased by the government, contracts available to our
client, and provide a competitive pricing overview so that our client
can assess margin fulfillment for typical products in their particular
government sector.
From that point we develop a government marketing strategy that
encompasses some or all of the contracting methods listed above.
We target specific contracts and prepare for solicitation submittal.
When our client is the apparent low bidder or has received a contract,
we work closely with manufacturing, distribution, and administrative
personnel within our clients company to ensure complete understanding
of the contract requirements and that our client is fully prepared to
profitably deliver when the first order is received.
As part of our contract management services, we continue to represent
our client with sales calls made to large end purchasers, as well as
handling administrative needs such as price increase request, change
of venue, request for changes in specifications, quality issues,
inspections and much more.
The services provided by Breen & Associates are comprehensive and
allows for rapid growth into the government market without creating
a distraction from core business elements. Our clientele rely on our
expertise to ensure profitability and long term entree into a new market.
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