Should Distributors Apply for Government Aid?
Nominations are open for big rewards in government printing.
If there's a distributor out there who hasn't been negatively impacted by the recent downturn in the economy, raise your hand.
The fact is, there aren't too many of you. Perhaps, then, it's time to give that much-maligned market—the government printing market—a second look.
Though many distributors will disregard the government market when they're living high on the hog, those same distributors often run back to Uncle Sam to look for extra work when times get tough.
Why? Because government printing purchasers buy everything under the sun in large quantities, and they pay well and on time.
"With government agencies there's so much work available," said Stanley Newman, CEO, BidNet, Albany, N.Y. "They use so many different products; it's just gravy added on to whatever you were doing before."
The first thing to know about government agencies, he noted, is that they bid out all of their work. Whether it's printing work or scientific equipment, the bid system is how local, state and federal entities procure their goods and services.
In some states, in order to bid on jobs, prequalification is required. Fortunately, many states will accept certification granted by another state as an adequate credential. After a distributor has been certified, the state will include them on its bid list and notify the distributor of any upcoming jobs.
"Once you're certified you can work for any level of government within that state," said Sharon Beseke, president of American Minority Business Forms, Glenwood, Minn.
States that don't require prequalification usually publish their bid lists in a local public register.
After a distributorship determines the geographic area it can handle and locates all the agencies in that area, the next step is to acquire the bid specifications, or spec sheets, of recent jobs from those agencies. By reading over old spec sheets, distributors can familiarize themselves with the products and bid prices of the local market.
Many distributors say learning how to read and prepare work according to spec sheets is the most crucial element of being successful in the government printing trade. Failing to read a spec sheet closely, they say, can lead to losing a bid or even winning one at a bad price.
Nevertheless, Kevin Smith, president of PPI Graphics, Canton, Ohio, said he loves government work, but warned, "Distributors need to do their homework before submitting a bid."
Government agencies, he ad-ded, often ask for quotes to include the price of delivery, or they will specify that over- or under-runs will not be accepted. Sometimes they require that a bid bond or a double-performance bond—a bond equal to the cost of the job—be posted. Companies that fail to meet these requirements can find themselves on the losing end of a bid award, Smith said.
"Distributors need to go in and find out how each city buys its printing," said Smith. "Government work is more labor-intensive than the average account, and if distributors are not careful they can get caught."
Though government work may be more labor-intensive than traditional accounts, Newman said it is a myth that it is difficult to obtain or is financially unrewarding. "There's no reason to shy away from government work," he said. "If a distributor knows he or she can comply with the terms of the bid, then there's no reason to be concerned."
For Beseke, the size of the orders is what makes government work attractive. "The government market is very competitive and it can be difficult," she said, "but it's absolutely worthwhile because of the size of the orders."
They pay quickly too, added Smith. Because the funds for government purchases have to be allocated prior to the purchase, governmental agencies tend to pay their suppliers on a 30-day cycle. By the same token, though, Smith said rush orders that have not been approved can cause big head-aches for distributors down the line.
"Distributors cannot produce a job before the auditor certifies that there is enough money to pay," said Smith. "If that rule is broken, the council has to ap-prove payments and that can take months."
Finally, some distributors might be leery of entering the lowest bid out of 75 companies and wonder if everyone is comparing apples to apples. One way to ensure an objective consideration is to arrange a meeting with the government agents who will award the contract.
By providing some basic education, the agents who decide will not only be better equipped to judge various bids, but they will also become more familiar with the distributors they meet.
Still, at the end of the day, a governmental agency is just like any other business, said Smith. "To me it's no more difficult than dealing with a large corporation. You just have to do your homework first," he concluded.
By Allan Martin Kemler
- Places:
- Albany, N.Y.