- Michael Young
By Michael Young, Principal Consultant, Transformed Pty Ltd
In Canberra a large proportion of business is done with either the ACT or Federal Government. Many players in the private sector become increasingly frustrated dealing with Government, and in particular, those from inter-state who have had minimal Government exposure.
Whilst we have all heard it before and most of us realise it, selling to Government is different. But why is it different and what do we need to know about how government buys?
Government is bound by the Commonwealth Procurement Guidelines, which specifies that way in which agencies must purchase property (goods) or services. It is not the Government department being painful or your point of contact being risk adverse, it is the compliance with the CPGs that drives their behaviour.
Value for money is the core principle underpinning Australian Government procurement. It is be achieved through:
- encouraging competition
- promoting the efficient, effective and ethical use of resources
- accountability and transparency.
The practical aspects of procurement, the method of procurement, are driven by the total lifecycle cost of the property or services purchased. The methods vary dependant upon the value.
For procurment of property or services an open tender (published on the Australian Government Tender website) is required when the value is over $80000, or $9Millon for construction.
Whilst it would be nice to be able to negotiate a direct source deal and reap the rewards of our good salesmanship, this strategy, in most cases, will not result in a value for money outcome, meaning it won’t fly with Government.
There has been a more recent push toward coordinated procurement across Government agencies, meaning that one Department can ‘piggy back’ on another’s contract.
To make the process a little easier to understand, the Department of Finance and Deregulation have published a guide on selling to Government, which can be found here.
Next time you approach a potential Government client, think about and take into account how the Commonwealth Procurement Guidelines might apply and adjust your sales strategy or approach accordingly. If you fail to do so, you may have difficultly making the same, or at worst, be expecting a quick sale, only to find out afterwards that the department will be going to open tender to fill their requirement.
After all the Government is spending our hard earned tax dollars!
Canberra Small Business Blog 
Michael – I agree that it is sometimes frustrating for businesses waiting for the wheels to turn with Government but if we can’t rely on them to be open and above board who can we rely on.
I do think though that we should remember that the people we are dealing with are human (sometimes it doesn’t seem that way though) and that relationships are just as important here as in any other kind of organisation. This comes into play most when there is some kind of discretion or judgement to be made. If they know you and trust you, you are more likely to be treated favourably. That’s my experience anyway.
There are some who say that if you get in good with the right people – they will arrange a tender so that you are the top competitor. I don’t really believe this – it’s a bit of a boys club way to look at it.
The good thing is that Government agencies now tend to look at quality and return on investment rather than just price which is really good but too often it’s just the cheapest (and nastiest) quote that wins.
Good article.
Jean Mc