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Q&A: How to get a piece of the government’s $200B IT spend

Structure your payments for success in the public sector

August 11, 2022

Q&A: How to get a piece of the government’s $200B IT spend
The government procures more than $200 billion in IT products and supporting services annually. Want a piece of it?
 
No matter how effective a solution provider is in the private sector, those sales strategies often fall flat in the public sector. The unique rules and regulations take special sales strategies, cost structuring, financing, heightened security and budget sensitivity. Although fruitful if done right, challenges of working with the government include:
 
  • Federal Acquisition Regulation (FAR)
  • Small business set-aside
  • Clearances
  • Defense Priorities and Allocations System (DPAS) rate deals
We sat down with experts in Ingram Micro’s public sector team and asked them how to sell to and win with government agencies.
 
Public sector Q&A
 
What makes selling to the public sector different than other tech sales?
With the public sector being managed and controlled by the government, there’s a very unique set of rules and regulations to abide by (as compared to the private sector, which is owned and controlled by individuals or private companies). Those in the public sector speak a whole different language and their procurement process is regulated by FAR and is done through the RFI/RFP process.
 
There must be equal opportunity provided by the government to each entity wishing to do business. Main funding comes from tax revenue, fines and tariffs—so funding is generated by the public. What this means is that public organizations must wait until the funding institution collects required revenues before they can disburse it. This is where we find it critical for our reseller partners to bring us in early to be a strategic part of their sales campaign
 
Why is Ingram Micro equipped to help solve these challenges?
In terms of handling budgetary problems and supply chain issues, we have a well-versed public sector sales team—and we match that on the financing side. We’re here to help them provide effective financing solutions to help the government overcome obstacles they may be facing. Again, it’s imperative to include financing early in the sales cycle with the public sector. In the private sector, we see customers waiting until closer to the end of the sales cycle; however, in dealing with the public sector, sales motion is different. Positioning financing in an RFI/RFP often puts you in a better position to win the deal, because your competition may not offer such a solution. That’s often a big differentiator.
 
How have the needs of the public sector changed over the years?
Cybersecurity concerns and the cloud have forever changed the focus and the way the government does business. Both are a moving target that require experienced partners.
 
What’s the best way to structure payments for the public sector?
At Ingram Micro, we’re utilizing the budgets of government agencies in terms of their current fiscal year. Then, we allow them to take the remainder of the obligation and spread it across multiple fiscal years. This helps them alleviate budget blocks and frees up capital for other critical projects. We offer payment plans anywhere from 1 to 5 years with monthly, quarterly and annual payments. Payment is collected over time, including finance charges, which are wrapped into those payments. That way, margin for the partner is received upfront. Also, and most importantly, we’re eliminating all the risk of government termination for our partners.
 
Whether the ask is for additional credit capacity to facilitate those larger government contracts, or an option-year payment plan to help overcome budget challenges, we have our federal escrow program and “option year financing,” including an “as a service” offering to help our partners deliver mission-critical outcomes. 
 
Tell us more about “option year financing” and new partnerships.
We’re really excited about our new partnerships that provide option-year financing for government entities. With all the rules and regulations required to providing finance offerings within the federal government, we needed to be strategic on who we partnered with. These financing companies are tiered to the public sector space and understand the unique nature of financing to the government. They have over 30 years’ experience with associates who are certified in government contracting. They also have a specialized asset management team who understands the stickiness of the technology; they understand “essential use” and their specialists are very savvy in billing and collecting from the government, which can be a challenging process. Think of it as an army of federal financing experts supporting our partners.
 
What’s an example of success with a public sector client?
A federal agency needed to upgrade their cybersecurity protection system for their remote users—and it was going to cost about $5 million. The agency’s budget only supported $2.5 million. Ingram Micro introduced them to our finance partner who has the expertise of financing to federal agencies; they agreed to use their current budget (funding) as a base-year payment and then acknowledged option-year payments for years 2 and 3. The reseller and Ingram Micro were funded upfront, and the federal agency was able to procure the entire solution they needed. 
 
What are some pitfalls to avoid when selling to the public sector?
Unequipped solution providers often don’t ask the right questions. Selling to the government will be challenging without a team with deep knowledge of:
 
  • The Trade Agreements Act (TAA)
  • End-user locations (to avoid sensitive products in the hands of our enemies)
  • Special tagging, cameras, USB slots disabled
  • DPAS-rated for urgent requests
  • Buy-in from C-level, engineering and everyone involved
Download Ingram Micro’s public sector quick guide.
 
Download Guide