Government Procurement Contracts
Government procurement contracts are used by the US government to enter into agreements with vendors for the purchase of goods and services.3 min read
Government procurement contracts are used by the US government to enter into agreements with vendors for the purchase of goods and services. The government spends billions of dollars each year on products that range from staplers to highly sophisticated military hardware and services that include advertising, marketing, and language services. They also are used for the leasing of office buildings, warehouse facilities, and other real estate properties used by the government.
Although the same basic tenets of standard contract law are applied in government procurement contracts, because public funds are used to purchase these goods and services, additional provisions are needed to govern the way companies awarded contracts operate under them. These usually include terms and clauses that provide for greater oversight by the agencies that are making the purchases in order to meet reporting requirements through the Federal Procurement Data Systems as dictated by federal regulations.
For example, the Federal Acquisition Regulation (FAR) establishes procedures through a standardized series of regulations for any agency making a purchase from an outside contractor. This regulation covers every step from identifying a need for a product or service all the way through to the actual purchase.
FAR provides four methods for government agencies to enter into contracts. These include:
- Simple procedures that do not require Government Accountability Office (GAO) oversight.
- Sealed bidding for government contracts which must adhere to government procurement contract guidelines.
- Contracting through negotiation, which typically occurs when there is only one company that is uniquely qualified to provide the goods or services needed by the government.
- Consolidated purchasing vehicles that allow federal agencies to purchase goods that are available commercially for consumers at bulk prices, even if only one item is being purchased at a time.
The Government Procurement Contract Process
A common misconception when it comes to government contracts is that an agency must accept the lowest bid. This is not true. Provisions in FAR allow a contract to be awarded on a “best value” basis. This can take into account an agency’s history with a supplier, perceived quality difference in product based on stated criteria, and even existing treaties with countries or other geopolitical factors.
In most cases, price is only the major factor when the award is not for costly goods or supplies. In the cases when the contract is highly complex or concerns issues such as national security or military preparedness, bids for contracts receive greater scrutiny and will be awarded based on a determination of “best value.”
As stated above, one reason that government contracts contain more stringent provisions is that public funds are being spent. Thus the transaction requires a higher level of transparency than would a contract existing between two private or public companies. Any appearance of corruption, which unfortunately still exists in many countries around the globe, must be avoided at all costs in order to maintain public trust that taxes are being spent honestly.
The authorization to make a purchase begins with Congress, and Congress only. This power is necessary for the country to conduct business. The actual regulations on how that business is conducted has been established by statutes enacted throughout the country’s existence. Once Congress has provided authorization, the other branches of government may then proceed to enter into procurement contracts with vendors.
Best Practices for Obtaining Government Procurement Contracts
There are a few steps a business seeking to get a government contract can follow to avoid misunderstandings during the process and even after the contract has been awarded:
- Understand the contract. Even the simplest government RFPs can appear complex to some uninitiated in the government bidding process. It might be wise to consult an attorney experienced in government contracts if this is your first time submitting a bid.
- Give them what they want. Every provision that exists in a government RFP is in there for a good reason. Don’t get disqualified merely because you supplied the correct information in the wrong section of the proposal.
- Adhere to deadlines. Deadlines matter in government contracts. This is especially important if you find a discrepancy or have a question that you need answered before you can complete your bid. Act quickly and communicate openly.
Government contracts can be the lifeblood for many businesses and if you are interested in selling your goods or services to the government, make sure you understand the process completely. One suggestion is to reach out to your local representative for guidance.
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