What Is Business to Government (B2G)?
Business to government (B2G) is the sale and marketing of goods and services to federal, state, or local agencies. In modern lingo, there are three basic business models: business to consumer (B2C), business to business (B2B), and business to government (B2G).
B2G is not an insignificant chunk of business. The federal government alone spent anywhere between $18.2 billion and $42.6 billion per day in 2020-2021. Notably, a portion of its business is supposed to be spent on small business suppliers.
- B2G, or business to government, is the provision of goods and services to government agencies at the federal, state, and local levels.
- Most contracts are granted in response to a request for proposal (RFP) from an agency.
- Businesses bid for contracts by submitting responses to RFPs.
Understanding Business to Government (B2G)
B2B business can be as modest as a small business providing IT support services to a town government. Or, it can be as big as Boeing, which builds helicopters, missile defense systems, fighter jets, and surveillance aircraft, among many other products, for the U.S. Department of Defense (DoD).
At the federal level, the General Services Administration (GSA) is the government's official buying arm, developing and implementing regulations on a vast array of products and services purchased for the U.S. government.
How Businesses Get Government Contracts
Governments generally solicit services from the private sector through requests for proposal (RFPs).
The GSA website, GSAAdvantage.gov, is a shopping portal for government agencies and gives an idea of the sheer breadth of products purchased by the federal government.
Not surprisingly, given the enormous numbers and range of federal, state, and local purchasing requirements, an entire sector of the internet is devoted to matching businesses to government agencies. Some of the sites offering access to information on current government contracts include Periscope S2G (www.periscopeholdings.com), bidsync.com, thebidlab.com, and findrfp.com.
Advantages and Disadvantages of Business to Government (B2G)
Businesses that are used to interacting with other businesses or directly with consumers often encounter unexpected hurdles when working with government agencies.
Governments tend to take more time than private companies to approve and begin work on a given project. Layers of regulation can drag on the overall efficiency of the contracting process.
$18 billion and up
The estimated amount spent daily by the U.S. government.
While businesses may find that government contracts involve additional paperwork, time, and vetting, there are advantages to providing goods and services to the public sector.
Government contracts are often large and more stable than analogous private-sector work. A company with a history of successful government contracting usually finds it easier to get the next contract.
The Small Business Edge
Federal requirements often specify that certain amounts of appropriated funds must be spent on contracts with small businesses. This potentially can give smaller businesses an advantage in B2G activity, or at least offset some of the advantages that large, well-established government contractors may already enjoy.
The Small Business Administration (SBA) offers an online guide to help small businesses win federal contracts.
In order to qualify as a small business contractor, a business must be properly registered as such, demonstrating that it is independently owned and operated and makes a significant contribution to the U.S. economy, among other requirements.
In addition to small businesses, federal laws and regulations often mandate certain amounts of spending be directed toward politically favored groups in society, such as veterans, women, and racial or ethnic minorities. Small businesses owned by members of these groups may enjoy special advantages in obtaining B2G contracts.