What Does Business To Government Mean?

Business-to-government or B2G refers to business conducted between private sector firms and governments.

Understanding Business To Government (B2G)

An example of a business-to-government service would be a small business' providing IT consulting to a local government agency. The B2G category covers contracts of all sorts – for goods, services and information – between businesses of all sizes and government at all levels (state, local and federal).

Governments generally solicit business from the private sector through requests for proposal (RFPs). Businesses used to interacting with other businesses or directly with consumers often encounter higher-than-expected hurdles when working with government agencies. In part because the profit motive is absent and in part due to bureaucratic strictures, governments may take more time than private companies to approve and begin work on a given project.

For example, a certain portion of the federal budget must go towards small businesses – the kind of constraint that benefits a certain constituency but can drag on the overall efficiency of the contracting process. These small businesses must be properly registered as such, demonstrating that they are independently owned and operated and make a significant contribution to the U.S. economy, among other requirements.

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 frequently more stable than analogous private-sector work.