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In the city of Ottawa and the surrounding area (a.k.a. the National Capital Region or NCC), the Canadian federal government has an outsized economic presence. My current employer earns more revenue from the feds than any other client, as a consultant I did work for several departments and crown corporations, and the enterprise software company I worked for prior to that had a massive install base in the government.
The federal government can be a great client. Once the budget has been allocated and the contract is in place, there are rarely issues with payment. The standard policy is payment net 30 days. The work is varied, as opposed to the private sector, where software projects tend to be driven by financial measures of value. There is also the opportunity, albeit somewhat indirect, to have some minor influence on public policy.
The federal government can also be a terrible client. The downsides are the glacial pace of decision making, the byzantine procurement process, the thick bureaucracy surrounding even the simplest of tasks and the risk adverse nature of government management. It is a challenge to demonstrate real value to a conflicted group of buying influencers while not getting caught in a race to the bottom in a price war. Competitors are frequently seduced by the allegedly “easy” money of fat government contracts.
However, if you live in or near Ottawa, you cannot ignore this massive business development opportunity. But you must be prepared for a different type of customer. Here are some thoughts on what is required to be successful in selling and servicing the Government of Canada:
1. Know How Procurement Works – There is often a disconnect between the managers responsible for project delivery and the procurement specialists who put the contracts in place. Even if you are a subcontractor, by being better informed about how procurement works, you can avoid (or be prepared for) bad surprises, and provide advice to your government client and your commercial partners. This is valuable because most people would rather not have to deal with the procurement process. If you can offer an informed opinion, you become more valuable. It is easy to become frustrated with the seemingly arbitrary rules of government procurement, but to be successful, you must accept and embrace it like the big vendors do.
2. Heed to the Fiscal Cycle – In Ottawa, the new year begins on April 1st, not January 1st. The federal budget is tabled in parliament in late March, and the changes usually start to impact spending in the second half of the fiscal year. However, rumors and speculations can have an impact as well. The first quarter is when the spending plans take shape, and when departmental budgets are finalized. This process cannot be rushed. As the year progresses, spending accelerates, and it really takes off in September, after the summer holidays. The government has tried to stamp out March madness, the desperate rush to spend the remaining budget dollars before the end of the year. However, it is still an important factor, especially for departments that had a lot of turmoil or organizational changes earlier in the year. March is not a good month to be on vacation.
3. Get Friendly with the Big Players – In theory, government contracts are public knowledge. In practice, it takes some investigation to find out who is really active in your niche. Fortunately Ottawa can be a surprisingly small town so it doesn’t take long to find out who holds the big contacts and with which government departments. These companies hire subcontractors on a regular basis, both individual consultants or teams to do a specific part of a project. It is important to not just build relationships, but to demonstrate your expertise. Even better is to be knowledgeable about their government client. Knowledge includes not just technical prowess, but knowing the “business” and the politics of the department.
4. Do Some Public Sector Marketing – It is a myth that doing business with the government requires less marketing than in the private sector. You need to do as much, if not more, and it needs to be distinct from any private sector marketing efforts. All the large technology vendors (SAP, IBM, Oracle, CGI, Microsoft et al.) spend millions on marketing to all levels of government. Start to follow their example by searching for the vendor name and “government” or “public sector”. You will be inundated with good marketing ideas.
5. Be Sensitive to Ethical Conflicts – Perception is reality for the public service. Sometimes decision makers are hesitant to meet with vendors, take their calls or reply to emails, as it could appear that they are favoring a vendor or otherwise corrupting the procurement process. However, they still want to be informed about new technology and ideas so that they can implement the best solutions and ultimately advance their own career. Just like in the private sector, personal introductions go a long way in getting the attention of executives and managers. As a vendor, you need to build trust by offering information, advice and insight into their business; you can’t just do a sales pitch and expect to get anywhere.
Being a government supplier can be a great thing, but it requires thinking about the long term. There are no shortcuts to quick profits. Depending on the complexity and the size of the projects, subcontracting is the way to get started, but at some point, it will be worth the effort to become the prime contractor. I only have anecdotal evidence, and a lot depends on what you are offering, but it takes about three to five years to get to a position where your company can consistently win business from the government of Canada.