Ten Critical Supplier Selection Factors for Government Buyers

Overview

This is the time of year when fiscal government buyers are completing their end-of-year spending requirements.  September 30 marks the end of the federal government's 2022 fiscal year buying season and it is critical that government purchase card holders have access to trusted sources of supply throughout the year, but particularly in the closing weeks of the fiscal year.  This article discusses ten critical selection factors that the GoVets team firmly believes procurement managers and government purchase card holders should take into consideration. 

Critical Selection Factors:

1 - Trusted Sources of Supply

2 - Compliant Sources of Supply

3 - Government Pricing, Quantity Discounts & Tax-Free Purchases

4 - Payment Methods

5 - Product Selection

6 - Search & Market Research Capabilities

7 - Customer Service (Communication, WhiteGlove, Concierge)

8 - Supplier Diversity & Set-Asides

9 - Made in USA & TAA Compliance

10 - Supplier Policies (Return Policy, Shipping Policy, Terms, etc)

Critical Selection Factor 1 - Trusted Sources of Supply

Procurement managers always have a list of "go-to" suppliers that they establish trust, process and experience with throughout the years.  A procurement manager may have several sources of supply for various reasons, such as having: 

• A list of suppliers based on product (or service) categories,
• Trusted business relationships with one or more individuals within an organization,
• Trust in the supplier's policies and procedures, etc. 

There may be other non-subjective reasons for using a supplier. For example, there may be organization-wide policies to purchase materials from a specific supplier, the supplier happens to be a monopoly (hopefully not), or the only known source of supply for a given supply source. 

Critical Selection Factor 2 - Compliant Sources of Supply

Supplier compliance is an important factor for purchase card holders.  Suppliers often must be authorized suppliers in Government agency systems, particularly for larger procurements.  Suppliers must often submit a compliant quote response to a request for proposal from a government buyer, contracting officer, open market purchases and/or  micro-purchases above certain thresholds (e.g. below $10,000).  According to the National Law Review (NatLawReview.com), the 2022 Small Business Set-Aside Thresholds worth noting are:  

• FAR 19.502-2(a) - Acquisitions Up to $10,000 > Micro-Purchase Threshold) - Procurements set-aside for small businesses if "Rule of Two" is met. This is an exclusive Set-Aside for Small Businesses. 
• FAR 19.502-2(b) - Acquisitions from $10,000 to $250,000 (Simplified Acquisition Threshold) - This is NOT an exclusive Set-Aside for Small Business but may the Contracting Officer (CO) may consider a Small Business for such a larger procurement.  

Other compliance factors that Government Buyers should take in consideration include the supplier's registration in the System for Award Management (SAM.gov) , if they have a DUNS , Cage Code, Unique Identifier (UEI) and if the supplier is compliant with the National Defense Authorization Act (NDAA) section 889.   

Critical Selection Factor 3 - Government Pricing, Quantity Discounts & Tax-Free Purchases

Many suppliers offer government pricing to Government Agencies.  Government pricing can be agency-specific or government-wide.  Government pricing may only be available upon request but ideally, the supplier should make it easy for Government buyers to understand what their pricing is throughout the entire shopping experience.  An easy shopping experience includes up-front pricing, free shipping (whenever possible), and tax-free purchases.  Government buyers usually purchase items in large quantities, so knowing up front what type of discount they can receive for large quantities of a given item is also helpful.  Government Buyers MUST provide their Tax Exempt certificate to suppliers so they can qualify for Tax-exempt purchases.  Once setup, the purchase cardholder should not have to worry about paying taxes to the supplier.

Critical Selection Factor 4 - Payment Methods & Payment Terms

Understanding the payment options offered by a supplier is very important.  Not all government buyers purchase items using Purchase Cards (P-Cards), so it's important to understand the supplier's payment method options or accepted forms of payment to determine if there's alignment with the buyer's needs.  Not having the required or desired payment option may create additional friction which may prevent, limit or slow down any type of acquisition, particularly towards the end of the fiscal year.  Common forms of payment include Credit Card (VISA, MC, AMEX), Check, ACH, Wire, and PayPal, but there are more options that Government Buyers will often like to see from a supplier, including registration in one or more Payment Processing Systems, such as Invoice Processing Platform (IPP.gov), Tungsten Network, Transcepta, Exostar etc.   Another important factor is the ability for suppliers to accept Payment Terms.  Government Buyers often require Net30 Payment terms for items upon delivery.  This means that the supplier must be capable of submitting an invoice after successfully delivering the customer's product and be willing to wait 30 days to receive payment from the Government Agency.   When suppliers allow Net30 Terms, Trade Credit or similar, they often require the buyer to fill out a basic application with references to make sure that they can support the requested purchase or trade credit limit.  

Critical Selection Factor 5 - Product Assortment, Availability & Updated Government Pricing

As the fiscal year-end approaches, having access to suppliers that can satisfy multiple sourcing requirements is critical.  Some suppliers and manufacturers may only specialize in a few partial product or category areas while others have access to millions of products across a wide range of categories.   Another critical aspect in the selection process is to understand the stock availability and expected delivery timeline for the given product(s).   Only a limited number of suppliers have the ability to provide real-time availability of our products for any given zip code across the country.   Government buyers may be confused by systems such as GSA EBUY, where there may be millions of items, but availability is questionable, particularly due to current supply chain shortages.  Another critical aspect somewhat related to availability is updated pricing.  Many systems and suppliers with millions of products are not able to keep up with real-time updates of products and often must cancel orders, attempt to negotiate updated pricing or incorporate updated (expensive) freight costs into their final quotes, causing even more friction, back-and-forth communication between the supplier and the purchase agent, and slowing down the entire acquisition process.  Government Buyers must alway take these real-time availability and pricing factors in consideration, particularly when dealing with suppliers or wholesalers that are selling millions of items but do not have the sophistication to set the right expectations on their websites, which is not much different than selling snake oil to their customers! 

Critical Selection Factor 6 - Web Product Search & Market Research Capabilities

Government buyers want quick access to the data they need to quickly make procurement decisions.  Supplier portals must be extremely responsive to search requests, page load speeds must be quick (e.g. < 1 second) on desktop, mobile, and tablets.  Government buyers should be able to search by product MPN, Brand, UPC/GTIN, or any relevant product details.  Results must be easily filterable, and should be quickly sortable in such as way that allows the customer to quickly find the results they need based on the original search intent.  Ideally, users should be able to filter results by Category, Sub-Category, Manufacturer/Brand, Stock Availability, Country of Origin, Price Ranges, and attribute relevant to the products being searched, like color, size, etc.  Government Buyers should easily be able to add their products to a "Favorites" or "Shopping" List for quick access when they return to the supplier's site.  They may also have a recurring shopping list that they need to make purchased on a regular basis so saving products to a Favorites list is convenient and critical when selecting a supplier.  Product comparison tools also give the government buyer the ability to compare two (2) or more product attributes side-by-side so they can determine which product better suits their acquisition requirements.   Finally, having the ability to save items in their Shopping Cart or their Quote Cart so they can checkout in the future or submit a Quote Request when they are ready to move to the next steps in the acquisition process!

Critical Selection Factor 7 - Customer Service (Communication, WhiteGlove, Concierge)

Customer service should be on every government buyer's mind when evaluating sources of supply.  Many organizations offer millions of products but have limited customer support capabilities.   Customer support allows the government buyer to get additional help to enhance many other factors in this list.  Customer support should be able to provide the following benefits to government buyers:

• Help with detailed availability timelines,
• Provide custom quotes that may include better prices or alternatives not included in the broader product catalog,
• Help government buyers conduct market research.
• Help buyers with payment options, review/update quotes and/or acquisition contracts
• Provide Concierge or WhiteGlove level updates on the status of the Government Buyer's order and delivery schedule.
• Provide Government buyers documentation needed to quickly update any procurement documentation, compliance checklist items, or similar,
• Follow-up after when the acquisition is complete to make sure the Government buyer or their end-user is satisfied with the procurement and if there is any feedback.

A few useful ways to quickly determine if a supplier has the ability to quickly and effectively satisfy a government buyer's needs are: 

• Review the supplier's Past Performance Rating within Government Procurement Systems (e.g. CPARS - Contract Performance Assessment Reporting System)
• Review the supplier's online reputation by visiting sites such as TrustPilot, ResellerRatings, Google My Business (i.e. Google Busines Profile), BBB - Suppliers should be proud of their achievements and capabilities - One of the best ways to accomplish this is to allow their customers to do the talking on their behalf!  
• Review the supplier's Help Page - Make sure that the Supplier has a Chat Capability, an Automated Virtual Agent that can provide quick updates on orders and product availability, a 1-800 phone number as well as a VIP/Concierge number, and a quick Ticket Submission system that allows customers to ask questions relevant to their particular issue.
• Review the supplier's FAQ Page - Make sure that the supplier has a detailed list of Frequently Asked Questions that customers can quickly review and search for answers to their important questions.
• Determine if the supplier has other convenient and useful resources, such as a knowledgebase, product reviews, information about the company, company leadership, an up-to-date blog with relevant content, NAICS codes, etc. 
• Determine if the supplier is actively engaged in social media (e.g. Facebook, Twitter, LinkedIn, Instagram, etc) with customers, partners, and their community.  A supplier's engagement on all of these channels is often a good indicator of their attention to detail, reputation, and overall customer satisfaction.

Critical Selection Factor 8 - Supplier Diversity & Set-Asides

As described above, it is important for government buyers to understand if their supplier is a small or large business and if the supplier fits into any one of the following categories: 

• Historically Underutilized Business Zone Small Businesses (HUBZone)
• Minority-Owned Business
• Service-Disabled Veteran-Owned Small Business (SDVOSB)
• Small Disadvantaged Businesses and 8(a) Small Businesses
• Veteran-Owned Business (VOSB)
• Women-Owned Small Businesses (WOSB)

The government buyer often requires small businesses to submit their "Reps and Certs" - Additional details can be found by going through the Federal Acquisition Regulations but there are standard forms and templates available that small businesses must fill out, submit and certify on a regular basis (e.g. For GSA acquisitions, see form: GSA3518A.PDF).  According to the SBA, the federal government prefers to contract with small businesses whenever possible. Contracting officials can use set-aside and sole-source contracts to help their agencies meet their small business contracting goals.  Understanding the size of a government buyer's procurement and if it fits within the boundaries of a Micro-Purchase Threshold ($10K) or the Simplified Acquisition Threshold ($250K) can actually be a good way for sources of supply to provide competitive pricing (to remaining within one of these thresholds) or a procurement approach to ensure that purchases are made to align with the appropriate FAR guidelines and that the "Rule-of-Two" is met, when applicable.

Critical Selection Factor 9 - Made in USA & TAA Compliance

Government Acquisitions require items to be purchased from Trade Agreements Act (TAA) compliant countries. According to GSA.FedShed.com, GSA Schedule Contracts are subject to the Trade Agreements Act (TAA), meaning all products listed on the GSA Schedule Contract must be manufactured or “substantially transformed” in the United States or a TAA “designated country”.  The list of TAA Compliant Countries is available in 52.225-5 Trade Agreements and DFARS 225-7001 Buy American and Balance of Payments Program.  TAA designated countries include those that the United States has trade agreements in place and regard those designated countries as reliable or acceptable procurement sources.  Here is the list of designated TAA compliant countires, followed by the list of non-compliant countries.

List of 126 TAA Designated Countries

List of 10 Non TAA Compliant Countries**

Suppliers must be compliant with NDAA section 889 and provide Government buyers with a signed form allowing them to make micro-purchases from the supplier.  The supplier must essentially represent that it will not provide covered telecommunications equipment or services to the Government in the performance of any contract, subcontract or other contractual instrument.  Also, after conducting a reasonable inquiry, the supplier must represents that it does not use covered telecommunications equipment or services, or use any equipment, system, or service that uses covered telecommunications equipment or services.  

Finding TAA Compliant and Made-in-USA Products

Supplier portals should make it easy to provide Government buyers the Country of information within the product details and ideally as a filterable option - that is, customers should have the ability to filter on TAA compliant and Made-in-USA products.  These transparency features minimize friction in the procurement process and should be a sought-after and even required feature for all government contractors and suppliers.

Critical Selection Factor 10 - Supplier Policies (Return Policy, Shipping Policy, Terms and Conditions)

Government Buyers should make sure suppliers have business processes maturity and processes in place that will ensure that the acquisition is processed and completed as advertised and expected.  Make sure to review supplier policies, including the suppliers Return Policies, Terms and Conditions, Shipping Policy and other relevant policies and procedures relevant to the acquisiton.  In some cases, the government buyer will include contract clauses as part of an acquisition contract that takes precendence over these policies. However, micro-purchases are typically purchased directly on the supplier's ecommerce platform, and government buyers must agree to the supplier's terms during the checkout process.   If your acquisition has special requirements, make sure to take a close look at the supplier's policies to ensure there are no potential conflicts.