Business to Government (B2G):
What does it mean? Definition and info
The term Business to Government or B2G refers to the marketing and sale of services or goods to federal, state or local authorities. This business model is to be distinguished from Business to Business (B2B), i.e. business transactions between companies, and Business to Consumer (B2C), which describes business transactions with private end consumers.
Business to Government (B2G) after the 2016 reform
In principle, companies and self-employed persons can conduct the most diverse business with public authorities: The IT support that a small company implements for the city administration is just as much a part of this as the delivery of aircraft, weapons or large consulting services that government agencies commission.
The contracts are awarded within the framework of various award procedures, such as tenders for which the Federal Ministry for Economic Affairs and Climate Protection is responsible. Already in 2016, public procurement for contract volumes above the thresholds set by the EU was comprehensively reformed so that the procedures can be made significantly more flexible and efficient. Above all, the participation of small and medium-sized enterprises in business to government (B2G) is to be facilitated.
At the same time, the new legal framework opens up greater support for strategic objectives in the course of awarding contracts, such as the pursuit of social, innovative or ecological ambitions. Furthermore, municipalities can now provide their services of general interest in a legally secure manner, as the Act against Restraints of Competition (GWB) fundamentally regulates the exceptions to the current public procurement law.
Business to Government (B2G) with advantages and disadvantages for the economy
For companies and self-employed persons, the contracts to be awarded by the government authorities are not uncomplicated: On the one hand, such business promises maximum security in terms of non-payment and duration of cooperation.
On the other hand, the duration from contact to commissioning can take more time than in a classic B2B business. In many cases, cooperation with public authorities proves to be more protracted and time-consuming. Compared to private companies, they regularly need significantly more time for tenders and approvals, so that implementation can only take place with a time delay. Numerous regulations still play a role here, slowing down the contracting processes.