Persuading the Feds to Buy More Than Ideas
By Jeffrey H. Birnbaum
Monday, May 17, 2004; Page E01
Lobbyists have to be master salesmen. Their primary product, legislation, is complex, obscure and has to be accepted hundreds of times by individual members of Congress before it can be said to have been sold.
But lately, many lobbyists are also selling something else. With the size of government mushrooming, lobbying firms have begun to sell actual things -- their clients' goods and services, not just their policy proposals.
Fleishman-Hillard Inc. just opened a marketing department after years of assisting clients sell their products on an ad hoc basis. Cassidy & Associates Inc. has also beefed up what amounts to a sales force in the District. And lobbying powerhouse Patton Boggs LLP increasingly is applying its expertise to sell its clients' products directly to -- or with the help of -- Uncle Sam.
"We never sat down and added up all the numbers," said Mark D. Cowan, business development partner at Patton Boggs. "But it's definitely a growing practice area."
The main reason is simple: The U.S. government is a marketplace too rich to ignore. For the past few years, federal discretionary spending has grown by more than 10 percent a year and doesn't show any sign of slowing down.
In particular, security spending has taken off. For makers of security equipment, data-mining software and all manner of surveillance products, the global war on terrorism has been a boon.
The way Congress spends money has also changed in a way that makes lobbying skills essential. Some appropriations bills are now routinely packed with thousands of specific projects and a lobbying sub-industry has sprung up to shoehorn into those "earmarks."
Yet selling to the feds is never easy. "It's sometimes hard to sell them on a new supplier," said Lee Ramseur, a senior vice president of Cassidy & Associates Inc. "And the [procurement] cycle in the federal government is a lot longer than other places."
What's needed, insiders say, is a dollop of who-to-know and several helpings of good ol' hard sell. Enter lobbyists with buckets of both.
One of the most experienced companies in the field is Jefferson Consulting Group LLC. Its chief executive, Julia T. Susman, has been finding federal buyers for her clients' products for years. The key, she says, is to match their goods with the government's needs of the moment.
Only half in jest, Susman calls this service "yenta" consulting, after the busybody matchmaker in Yiddish lore.
Five years ago she brokered a marriage of convenience between the Veterans Affairs Department and a client, Health Net Federal Services Inc. The department knew that it was overpaying community hospitals for their care of veterans but it didn't have enough money to better monitor them. Health Net had the expertise to scrutinize the department's billion-dollar-a-year expenditures to the hospitals, and was willing to do so for a percentage of the savings it found. Susman helped put the two together.
The result was a win for both the government and Health Net. Health Net has saved the government $50 million in recovered overpayments, Susman said. In exchange, Health Net, which is based in Woodland Hills, Calif., kept for its trouble a "small double-digit percentage" of those savings and made a business out of a government problem.
More recently, Susman came up with a twist on the theme. She connected her client Flex Products Inc., which has a fancy, color-shifting technology, to the legislative movement to re-import U.S.-made prescription drugs from Canada. The Santa Rosa, Calif.-based firm makes a patented product that changes color when people look at it from different angles. A version of the technology is used in $10, $20, $50 and $100 bills to make them more difficult to counterfeit.
Susman's brainstorm was to use the patented substance called Optically Variable Pigment, or OVP, to wrap the lids on prescription-drug bottles. The use fit the interests of re-import advocates because it provided a foolproof answer to the complaint that drugs could be tampered with before they come back across the border. If the bottles are opened before they are re-imported, consumers would know immediately because the seal wouldn't change color -- say, from gold to purple -- as the original packaging did.
The connection, of course, also suits Flex Products. Jefferson Consulting helped persuade the House of Representatives to mandate OVP wrapping on prescription-drug packaging. If the Senate goes along with the provision, sales of Flex Products' technology, as the new industry standard, could grow by millions of dollars a year.
Another lobbying firm, Van Scoyoc Associates Inc., does similar selling to the feds. It has a sister consulting company called Implementation Group Inc., which specializes in helping clients compete for federal money. H. Stewart Van Scoyoc, the lobbying firm's president, knows one of those federal programs extremely well. As a lobbyist years ago he helped prod Congress to expand the Experimental Program to Stimulate Competitive Research from $8 million a year in one federal agency to more than $300 million across seven agencies.
The program provides money to schools in rural states to help them build science resources. Having led the coalition that helped expand the program into what it is today, Van Scoyoc knows better than most what a school must do to win one of its highly competitive grants. Schools in West Virginia, Nebraska and Hawaii, among other places, have received multimillion-dollar grants over the years thanks to Implementation Group's coaching.
Clearly, though, selling to Uncle Sam is an arduous business. And even in some obvious places it isn't yet burgeoning. For a year, lobbying shops have tried to steer clients through the federal contracting maze in Iraq with mixed results. The bureaucratic reshuffling that created the Homeland Security Department initially didn't result in a lot of new procurement money. So far, that's made the market for homeland security gizmos "the biggest dry hole in town," Van Scoyoc complains.
But lobbyists are trying anyway. "Only time will tell whether it's a good business," said Gregg L. Hartley, Cassidy & Associates' chief operating officer. "You venture into these things and you experiment. We'll see what the market is."
He guesses that direct-sales efforts will yield Cassidy about $1.5 million in fees this year, which isn't bad for government work.
Jeffrey Birnbaum writes about the intersection of government and business every other Monday. His e-mail address is email@example.com.
© 2004 The Washington Post Company