What does business to government mean?
Business to government (B2G) is the sale and marketing of goods and services to federal, state or local agencies. In modern jargon, there are three basic business models: business to consumer (B2C), business to business (B2B), and business to government (B2G).
B2G is not a negligible part of the business. The federal government alone spends about $ 8.5 billion a day. In particular, part of its activities is supposed to be devoted to suppliers to small businesses.
Understanding business in government (B2G)
The B2B business can be as small as a small business providing IT support services to a municipal government. Or, it can be as large as Boeing, which builds helicopters, missile defense systems, B-52 bombers and Air Force One, among many other products, for the United States Department of Defense.
Key points to remember
- B2G, or government business, provides goods and services to government agencies at the federal, state and local levels.
- Most contracts are awarded in response to an agency request for proposal (RFP).
- Companies bid for contracts by submitting responses to tenders.
At the federal level, the General Services Administration (GSA) is the official purchasing arm of the government, developing and implementing regulations on a wide range of products and services purchased for the United States government.
How Businesses Get Government Contracts
Governments generally solicit private sector services through requests for proposals (RFPs).
The GSA website GSAAdvantage.gov, a shopping portal for government agencies, gives an idea of the scale of products purchased by the federal government.
The Small Business Administration (SBA) offers an online guide designed to help small businesses win federal contracts.
Unsurprisingly given the sheer number and range of federal, state, and local purchasing requirements, an entire sector of the Internet is devoted to matching businesses and government agencies. Some of the sites offering access to information on current government contracts include bgov.com, bidsync.com, thebidlab.com, rfpdb.com and findrfp.com.
Barriers to business and government
Companies used to interacting with other companies or directly with consumers often encounter unexpected obstacles when working with government agencies.
Governments tend to take longer than private companies to approve and start working on a given project. Layers of regulation can affect the overall efficiency of the procurement process.
$ 8.5 billion
The estimated amount spent daily by the United States government.
Although companies may find that public procurement involves additional red tape, time and additional checks, there are advantages to providing goods and services to the public sector. Public procurement is often large and more stable than similar work in the private sector. A company with a history of successful procurement generally finds it easier to get the next contract.
The advantage of small businesses
The federal government has a mandate to encourage small entrepreneurs.
The Small Business Administration (SBA) has an online guide for small businesses who want to win federal contracts.
To qualify as a small business entrepreneur, a business must be properly registered as such, demonstrating that it is independently owned and operated and that it makes a significant contribution to the U.S. economy, among other requirements.