Taking the headaches out of government contracts: how companies of all sizes can successfully woo the nation's most demanding customer.

Government procurement Two words that often strike fear in even the most seasoned business owners. You've heard the horror stories. The procurement process is lengthy, burdensome, complex, expensive and unfair. All true. However, those problems haven't stopped African-American entrepreneurs from seeking government work.

The reason is clear: Uncle Sam remains an avid shopper of goods and services. The U.S. Department of Commerce estimates that in 1990 the federal government alone spent an estimated $190 billion on goods, services and research and development. Add the lure of state and municipal contracts, and the revenue potential becomes hard to resist.

To capture a bigger chunk of those dollars, more black business owners are adopting cutting-edge strategies and applying forward-thinking techniques. In the dog-eat-dog government procurement arena, they have no choice. On the following five pages, BLACK ENTERPRISE shows how you can position your firm to do business with the government

What Vendors Must Do Before Approaching A Government Agency

If you believe you're ready to grab the world of government procurement by the lapels, think again. Are you really ready? Before you even set foot in a purchasing agent's office, you should have at least a year's worth of research under your belt Start by subscribing to the Commerce Business Daily to find out which federal jobs are up for bid. A six-month subscription costs $130 if mailed first class, $104 if mailed second class. Call the Department of Commerce in Washington, D.C. (202-783-3238) for more information. For local bids, check out the Bids Wanted advertisements found in the business section of your local newspaper.

But that's only the beginning. Once you become familiar with the daily bid requests, then it's time to start cultivating contacts inside the agencies, in trade associations, and among those active in politics who can provide information about future projects that may require the services or products you provide.

"Don't walk for an open bid to come to you," says Susan J. Ross, contract compliance officer with Atlanta's Office of Contract Compliance. "Find out what projects are in the pipeline. Most cities will have comprehensive development plans for the next two years. Get to know those firms that will be involved. For instance, if you're a photographer, you might not think there's a job for you on a construction project but construction firms need photographers on their sites. We used a photographer to take pictures of the Atlanta Underground Project for instance. Minority vendors who specialize in industrial janitorial work should also pay close attention to construction plans. All companies have to clean up a site before they leave."

The vendors who do get contracts, experts agree, have obtained vital bits of information their competitors either ignored or couldn't find. If you haven't done that go back to the procurement drawing board.

Only the well-connected survive, says John W. Rickett, owner of Commercial Maintenance Services Inc. (CMS), a Houston-based industrial maintenance and custodial services company. That's why when he started CMS 10 years ago, Rickett joined several professional, civic and trade organization and got on every bid list he could. "We're certified with the city of Houston to receive solicitations and with the Houston Independent Schools District," notes Rickett, whose company grossed close to $3 million last year. "We also use the Texas information Procurement Services to assist in identifying procurement requirements. And as a member of the Houston Business Council, we're able to keep abreast of business activities throughout the area."

The point is you can't walk into a government agency office cold. Have a well-thought-out game plan. Susan Ross has three tips: Develop a sound business plan, make sure there's a need for your service and develop a strong marketing strategy.

You might also want to seek some outside help, Ross notes. "Some vendors find it useful to have an attorney help them get through the certification process," she says. "Other vendors might turn to an accountant to investigate tax laws if they're setting up a corporation. Vendors should tap into those services that are free or at a nominal cost before spending a lot of money on a business consultant."

You should also know how each government agency is structured. Lawrence Cade, president of Cade Associates, a 5-year-old Mission Viejo, Calif., distributor of electrical components, notes that if you want to do business with the Department of Defense (DoD) and you call the Pentagon, you won't get very far. "The DoD has about 10separate supply centers that buy materials and services," Cade explains. "Among the group is the Defense industrial Supply Center Philadelphia, the Defense General Supply Center in Richmond, Va., and the Defense Electronic Supply Center in Dayton, Ohio. It will be up to you to contact each of them to find out which center needs your services."

Determining The Best Opportunity For Your Business

African-American suppliers swear by this credo: Know thy government agency. Preparation is key to finding the best opportunity for your business. If you're not prepared to do round-the-clock research and networking, you're in the wrong game.

Not only do you have to know what contracts are up for bid, but you should know how many other firms are bidding for them.

Richard L Simpson, equal opportunity compliance contract specialist for Shelby County in Memphis, Tenn., has an example. "Shelby County might spend about $1.5 million a year for janitorial services," he says, "But there could be 38 minority firms bidding for the work. This wouldn't be a good area because there's too much competition. On the other hand, let's say another county spends approximately $4.7 million on janitorial services and only two minority firms are registered and eligible to bid. That would be an ideal area to go into."

Only those business owners plugged into the procurement network have that information. They get their hands on all agency fore casts to conduct an all-important needs analysis. "The trick," says Robert V. Morris, CEO of Morris Communications International Inc., a 10-year-old Des Moines, Iowa, video and film production company, "is to match what you make with what the agency buys. The first step is to go to the agency's small business office to get a statistical breakdown of what services they use. Once you find out what contracts are up for bid, go to the source and market"

Sharon Stephens, contract supervisor for the New York City Department of Probation, points out that many vendors often have preconceived nations about what specific agencies do. "It's amazing to see the reaction from vendors when I'm reaching out to them," says Stephens, "Most of them have never thought about trying to sell to my agency. They miss out on many opportunities because they disqualify themselves too early."

Vendors also need to talk to other vendors. Find a supplier who has done business with an agency you're hoping to work with. Ask about the process. What were the pros and cons? What are some of the specific challenges that you faced with a certain purchasing agent? You also have to look beyond an agency's so-called window dressing. Says Simpson: "An agency can have a special office to work with minority vendors; but what matters is their track record."

The bottom line, notes Morris, "is establishing a good rapport with the agencies and wit more than one person if possible. Not only will it help you get business, but it will help you get repeat business."

How To Get On Any Agency's "Most Wanted" List

One word sums up the difference between upper-echelon suppliers and the also-rans. Innovation. Dwight A. Blackshear knows this well. As president of Video Dimensions Inc., a 14-year-old Marina del Ray, Calif., video production company that produces training films and electronic news releases, Blackshear spends most of his time trying to outsmart competitors. "We put together a good marketing capability package and take our best video tapes to presentations," says Blackshear.

So does every other video production company vying for government work--a fact not lost on Blackshear. That's why he's taking his strategy one step further. "In January we. started carrying touch-screen technology, which essentially is our marketing package on screen," Blackshear explains. "If you want to know anything about the company, all you do is hit a button."

It's exactly this type of innovative technology that's needed to compete today. As Tracey Pinson, a procurement analyst with the DoD, bluntly puts it: "Frankly, if one company doesn't satisfy our needs, we'll just go out and find another one."

That's why it's critical for African-American vendors to make their firms stand out from the pack. The quickest way to do that experts agree, is by developing a reputation for delivering excellent and timely service. Reputations--good and bad--travel far. If you're known for providing superb performance, word will get around and agencies will come to you for top-of-the-line goods and services.

"Government agencies go with the companies that have a good track record," says Henry G. Nash, president and CEO of General Scientific Corp., an Arlington, Va., engineering company. "They take the path of least resistance and low risk. Using those companies they are secure with becomes a habit to them. We all want our customers to be in the habit of contracting our companies."

Don't be afraid to toot your own horn. If your product is head and shoulders above your competitors, say so. Put this message in your marketing package and plaster it on all ads. When shopping your company around to various government agencies, modesty doesn't win you any points--or get you contracts.

Some inventive entrepreneurs are relying increasingly on customer surveys. If the response is overwhelmingly positive, that'll only give them more ammunition in the fight for lucrative contract dollars. "Those surveys give the procurement office something to sink their teeth into," says Susan A. MacManus, author of Doing Business With Government (Paragon House, New York, $39.95).

High visibility is the industry key. "More minority business owners should appear before governing bodies of elected officials to make marketing presentations" suggests Mac-Manus. "Not only does that get the attention of the elected officials who will possibly instruct the procurement officials to be attentive, but it also gets media attention."

To make your company indispensable, keep four things in mind, suggests Susan Ross. Quality service, competitive prices, round-the-clock networking and intense preparation are the big four, says Ross. "Think of ways your company can provide services that are unique."

MacManus adds, "I've noticed that more businesses show that they are very sensitive to multicultural issues. They're stressing they can work with Hispanics, Asians and American Indians. More minorities need to realize that every government agency has different rules for getting on a vendor's |most wanted' list and everyone has different rules for staying on it."

Companies that routinely land government contracts have one thing in common. They're flexible and can react quickly to last-minute changes. They don't fall apart when project details are overhauled.

Flexibility is mandatory, not optional for small business owners, says Henry Nash of General Scientific." Our companies can't afford to have bad reputations," says Nash, who has worked with the Army and Navy for over five years. "For example, we have a $5 million hardware product to be delivered government agency by February.

We've been working on this project for two years, and it was scheduled for delivery in January. Some of our vendors, however, delivered their products late. We informed the agency that delivery would be 30 days late, but there would be no increase in cost. Thirty days is costly for us, but it wasn't the agency's fault."

Another way to make the coveted "most wanted" list is by rubbing elbows with elected officials--specially those Who are black. As Susan Ross, points out, "procurement people will assist you in getting contracts, but ultimately, your elected officials vote on your contracts. You want them to know your name."

What To Ask A Purchasing Agent At The Fist Meeting

If you're meeting a government purchasing agent for the first time, here are some key questions to ask: What are your long-range purchasing needs? Find out if the agency has made a long-term commitment to purchase the goods or services you sell. Ask how the agency's purchasing habits will change over the next five years.

Sarah A. Cross, director of the small business office for the Naval Air Systems Command in Crystal City, Va., says the Navy's five-year procurement goals are forecasted in the Long-range Acquisition Estimates, an annual listing published by the Office of Competition Advocate General. Says Cross: "Vendors don't want to invest unnecessarily if the agency is only going to use the goods or service for a limited time period."

What types of goods or services have you bought in the past? Here's your chance to play detective. Investigate that agency's track record. What type of goods has it purchased? What size companies has it done business with? Does it have a track record of contracting minority vendors? What were the average dollar value of the contracts?

Darlene Gauer, procurement analyst with the Office of Small and Disadvantaged business Utilization, a division of General Services Administration (GSA), says minority suppliers can get that type of information at the GSA's business service centers. "I've had vendors come in without doing their research, and we couldn't do anything with them," says Gauer.

Do you have any printed procurement guidelines? Get as much material about the agency's procurement needs as you can. Every agency has information that outlines how it buys goods and contracts for services. Remember, becoming fluent in "government-speak" will only improve your chances for success. Think of the government as a foreign country with its own language and culture. Before doing business in a strange land, any credible entrepreneur would become familiar with that country's customs and business practices. Federal, state and local procurement agencies are no different.

What subcontracting opportunities are available? Aggressively pursuing subcontracts from prime contractors is a lucrative option when going after government business. Ask the agency's purchasing department for a list of its prime companies and market yourself to them as a potential subcontractor.

Cutting Through The Red Tape Of Bureaucracy

Minority vendors face a Herculean challenge in doing business with the government. You've heard the complaints: The procedures are too complex. There's not enough information about the process, and there's too much paperwork. In fact, the amount of paperwork needed for a $1,000 order often matches what's required for a $1 million job.

Want to get ahead in the procurement arena? Better learn all the short cuts. Dwight A. Blackshear, president of Video Dimensions Inc., says the key is tracking down the agency official with contract-approving clout.

For example, Blackshear, whose company grossed $900,000 last year, says in 1991 he identified who he thought were two key purchasing agents at one government agency. "However, although both of them indicated they knew what contracts were going to be available and who the major sources were, they failed to inform me of some important contracts that I could have bid on," Blackshear recalls. "Unfortunately, I was talking to the wrong people. I lost out on $150,000 worth of contracts. Had I known about them, I would've put an honest bid together."

His advice? Contact the Office of Small and Disadvantaged Business Utilization first for pivotal agency contacts. Don't kid yourself, however; it won't be easy. Getting the runaround remains a high probability. But, as Blackshear notes, speaking with agency project officers often leads minority vendors to those in authority-namely the contracting officers.

The biggest challenge black business owners face is understanding the nuts and bolts of government procurement. Just knowing the basics won't cut it. Knowledge and insider information are your best weapons to combat red tape. The best way to get insider information is to network like crazy with the major players. Attend all major trade shows and go to seminars and breakfast meetings with them. "While there is no guarantee of getting a bid," notes Michael D. Shannon, special projects manager for the National Association of Minority Contractors, a Washington, D.C.-based trade group, "it's good to make yourself known to the key agency people."

Darlene Gauer recommends entrepreneurs ask if their local college or university has a small business development center that can help them better understand the procurement process. "They're a lot cheaper than high-priced consultants," she notes.

New Contract Opportunities Emerge From Outsourcing Practices

One of the emerging trends in government procurement has more agencies contracting out services that were previously done in-house. The services run the gamut and include everything from total quality management consulting to food management. Even the Dod, which has traditionally been reluctant to buy commercial products, is seeking more outside vendors.

The biggest growth area? Hard to say, but data processing and telecommunications are right at the top. "With the DoD, you're talking about an agency that very much liked to use its own computer software and hardware," says Larry E. Allen, executive director of the Coalition for Government Procurement, a Washington, D.C.-based association. "Now, increased purchasing activity the computer markets probably the single-largest open to commercial companies."

A subset of that market is systems integration. An increasing number of government agencies are creating local area networks with their systems and they're looking for companies that can make their computers "talk" to each other.

Another projected growth area for African-American suppliers is the environment. Such ecologically correct products as recyclable toner cartridges for laser printers is now in demand. "There's a big movement afoot throughout the government to buy so-called green products," says Allen. "Under the Clinton administration, I expect to see a tremendous emphasis placed on the Environmental Protection Agency (EPA). That means the EPA will buy a substantial amount of products and services from government agencies."

Weldon H. Latham, a partner with the Washington, D.C.-based law firm, Shaw, Pittman, Potts & Trowbridge, however, is not totally sold on the environmental sector. "I haven't seen a lot of black companies involved in environmental work," says Latham, who is noted small business advocate. "But with the substantial increase in the skill and technological level of our minority-owned firms, they're certainly capable of making the transition into that area."

What's on the decline? No secret here, the defense area. With more than $50 billion in proposed defense cuts over the next five years, the military sector will shrink dramatically.

Latham notes that government agencies that offer the best opportunities for African-Americans are those that are required to set aside a percentage of their contract dollars for small disadvantaged businesses. Some of those agencies include the Dod, the EPA, the Agency for International Development, National Aeronautics and Space Administration and the Department of Transportation.

Want to know one of the best ways to stay abreast of all government procurement trends? Allen says it's simple: "Keep an eye on the nation's priorities and that'll give you a good idea of what kind of goods and services government agencies are going to buy."

How You Can Handle Agencies That Are Slow To Pay

You can count on three things in this life: death, taxes and late government payments. According to a survey conducted by Susan MacManus, Government and international Affairs Department chair and professor at the University of South Florida in Tampa, slow payments ranks as one of the top disadvantages of doing business with the government. Forty-five percent of the 3,282 business owners surveyed said that late payments remained a top problem for them.

Allene Graves, president of The Answer Temps Inc., a 5-year-old Washington, D.D., temporary agency, can definitely relate three years ago, she provided clerical and support staff for the Department of Administrative Services and Material Management. It took 10 months for her to get paid $15,000. "That had a serious impact on my business. I had to use about $7,000 from my $20,000 line of credit to meet payroll and taxes," Graves recalls.

Although the government--state, local and federal--is notorious for paying late, most agencies pay between 30 and 60 days after invoice approval.

What recourse do you have? Well, there's the Prompt Payment Act of 1982 that states that if the government doesn't pay its bill in 30 calendar days, it owes you your money plus a late interest penalty. Familiarize yourself with the law to make sure you know your rights.

Unfortunately, you can't always rely on the law being stringently enforced. That's why Mollie M. Cole, women's business advocate for the Bureau of Business Development of the illinois Department of Commerce and Community Affairs in Chicago recommends that: "Small black businesses should plan not to have more than 30% of their contracts tied up with the government"

Carl A. Brown, CEO and chairman of Mandex Inc., a BLACK ENTERPRISE 100s telecommunications company in Springfield, Va., offers another solution. "Identify someone on your staff to be responsible for tracking down government payments. Hire a comptroller."

Brown notes that slow payments wreak the most havoc on business owners operating without a line of credit. "When you don't have this resource, you might have to secure the outstanding debt with personal resources," warns Brown. "You don't want to be in a position where a lien could be put on your home or assets. The best thing to do is apply for a line of credit."

Where To Go For More Information On Government Agencies

Negotiating the procurement government maze is never easy. However, being well-informed before you start is critical to successfully landing and fulfilling contracts. Below is a listing of sources that should make your journey a less arduous one.

* Coalition for Government Procurement, 1990 M St., NW, Suite 400, Washington, DC 20036; 202-331-0975. Aims to protect the interests of federal government commercial product suppliers and to monitor legislation and policies.,

* Contract Services Association of America, 1200 G St., NW, Suite 750, Washington, DC 20005,202-347-0600. Disseminates information on opportunities in government procurement.

* Federal Acquisition Regulations, Superintendent of Documents, U.S. Government Printing Office, Washington, DC 20402-9325; 202-783-3238. Primary sources of procurement regulations used by federal agencies. Details all provisions and clauses used in government contracting. Cost: $146.

* Deskstop Guide to Basic Contracting Terms, third edition, National Contract Management Association, 1912 Woodford Road, Vienna, VA 22182; 703-448-9231, provides definitions of more than 800 procurement terms. Cost: $14.95 ($9.95 for members).

* Government Contracts Directory, Government Data Publications, 1661 McDonald Ave., Brooklyn, NY 11230; 718-627-0819. An annual publication that covers firms that received prime contracts for production of goods and services from federal government agencies during the preceding 12 months. Cost. $89.50.

* Navy Small and. Disadvantaged Business Assistance Directory, Office of the Secretary of the Navy, Department of Defense, Crystal Plaza 5, Room 120, Washington, DC 20360; 703-602-2700. Biennial publication that covers Navy Department personnel and offices that can be contracted to help small and disadvantaged businesses compete for Navy contracts. Cost: Free.

* U.S. Government Purchasing and Sales Directory, Office of Procurement Assistance, Small Business Administration, 409 3rd St., SW, Washington, DC 20416; 800-827-5722. Covers major military and civilian purchasing off ices, military installations and field offices for the General Services Administration, Small Business Administration and Commerce Department. Latest edition, 1987. New edition expected in 1996. Cost: $5.50.