Government Contracts: Everything You Need to Know
Government contracts are any formal agreements made between businesses and government agencies that summarize business arrangements.3 min read
Government contracts are any formal agreements made between businesses and government agencies that summarize business arrangements.
An Overview of Government Contract Law
The government of the United States buys more products and services than any other entity worldwide. The United States Department of Defense (DOD) makes up a large portion of the country's purchases.
There are three main differences between government purchases and those of the private consumer:
- Government contracts are highly regulated to ensure the most competition, guarantee proper use of government funds, and promote a healthy economy.
- Government contracts include clauses, like the "changes" or "default" clauses, that allow the government to enact special rights within the contract like being able to change the terms of the contract or even end it.
- Government contracts follow the procedures laid out in the Contract Disputes Act should there be any claims or legal action, because the government is a sovereign entity.
The Competition in Contracting Act and Federal Acquisition Streamlining Act are both important laws that regulate government contracts.
The Federal Acquisition Regulation (FAR) controls any acquisitions performed by the United States Executive Branch, and it is outlined in title 48 of chapter one in the Code of Federal Regulations parts 1 through 53.
Agencies like the DOD, NASA, and the General Services Administration (GSA) can create supplements to the Federal Acquisition Regulation. Those three specific agencies actually amended the FAR in pursuit of the Administrative Procedure Act.
The United States Government can only be contract-bound by an authorized contracting officer who has been issued a warrant by the executive agency. These contract warrants (or certificates of appointment) can be held to a specific amount or allowed an unlimited amount of money.
A contract officer is authorized to grant, manage, or terminate a government contract.
The Contract Disputes Act will rule over any legal issues regarding a government contract once they are submitted to a contract officer.
Once the contract officer makes a decision regarding the legal claim, either entity represented in the contract can appeal the decision with the United States Court of Federal Claims (CFC) or a board of contract appeals.
The claim can then move on to be appealed before the Court of Appeals of the United States for the Federal Circuit, and even eventually to the Supreme Court.
When the Government is Your Customer or Client
The United States Government spends anywhere from $350 billion and $500 billion annually through government contracts.
Like any business entity, the government needs products and services to be able to function.
The government needs big items, like vehicles and weapons for the military, as well as pens and paper clips for government offices. Services like marketing consultation, transportation, and janitorial duties are also regularly purchased by the government.
Any company that sells its products or services to other business entities or nonprofits could probably also sell to the government.
The United States Government can make a great customer or client because of the following:
- Government needs are easy to see through publications like Commerce Business Daily.
- Rules and regulations ensure fair trading practices.
- Government purchases are usually large and long term, providing a reliable income for the business.
- Contracts are set aside for businesses owned by minorities and women, as well as small businesses.
- Government business will give your company a good reputation as it means that your products or services meet high standards.
Conducting business with the government can also be difficult as it can be tough to find the right channels for marketing your company with so many employees throughout different branches.
The paperwork involved and regulations for government business contracts can also be a bit overwhelming as a business owner. Thankfully, there are lots of options for assistance.
Visit the website for the Small Business Administration (SBA) for help making the government your customer.
If you're interested in working with a particular federal government agency, like the Postal Service or the DOD, you can contact that particular agency and get your business on their mailing list.
The federal government isn't the only option, state agencies and local entities, like school districts, also make great customers.
Smaller, non-federal agencies have more opportunities for trading and, even though they are smaller, they can offer just as much potential for growing your company as working with the federal government would.
If you need help with government contracts, you can post your legal need on UpCounsel's marketplace. UpCounsel accepts only the top 5 percent of lawyers to its site. Lawyers on UpCounsel come from law schools such as Harvard Law and Yale Law and average 14 years of legal experience, including work with or on behalf of companies like Google, Menlo Ventures, and Airbnb.