Government Contracts Overview
Government Contracts Resources
Government contracts are agreements made by the federal government, as well as individual state governments, for the provision of all necessary services, products and supplies. Government contracts are negotiated for a wide variety of purposes, including the acquisition of consulting services, military provisions and consumer goods. Because the federal government must contract for every type of product and service that it needs, the federal government is by far the largest contractor in the United States.
Regulation of Federal Government Contracts
While commercial contracts may take a number of different forms, government contracts must adhere to a complex set of standards and regulations. Several key statutes form the foundation of federal government contract law. These statutes include the Armed Services Procurement Act of 1947 (ASPA), which governs the acquisition by defense agencies of all property, construction and services; the Federal Property and Administrative Services Act of 1949 (FPASA), which governs similar acquisitions by civilian agencies; and the Competition in Contracting Act (CICA), which encourages and facilitates competition in awarding government contracts. The Department of Defense, the U.S. General Services Administration and the National Aeronautics and Space Administration promulgate the Federal Acquisition Regulations (FAR), which govern the acquisition process and set forth detailed procedures for every stage of contract acquisition.
Awarding Federal Government Contracts
A government representative, known as a Contracting Officer, acquires and negotiates all government contracts. The Contracting Officer has statutory authority to enter into the contract on behalf of the federal government. The Contracting Officer must, however, ensure that the contract complies with all statutory rules and procedures. Under the ASPA, FPASA and CICA, government contracts are acquired by either a process of sealed bidding or competitive negotiation. The government engages in sealed bidding when the government's requirements are clear and complete, making further negotiation unnecessary. The Contracting Officer typically issues an Invitation For Bid (IFB), which sets forth the goods or services sought by the government, as well as the proposed terms of the contract. The government will then award the contract to the lowest bidder who is willing to comply with all the contract terms. The government uses competitive negotiation, on the other hand, when the value of the contract exceeds $100,000 or when the nature of the goods or services sought is highly technical. During competitive negotiation, the Contracting Officer issues a Request for Proposals (RFP), which states the general requirements of the contract. Interested parties submit proposals which are reviewed and evaluated by the Contracting Officer. The Contracting Officer may then negotiate with a supplier before committing to the terms of the contract.
Contract Quotas
The government may only contract with suppliers who meet specific qualifications. By law, federal agencies are required to negotiate a certain percentage of contracts with small businesses, women-owned businesses, firms located in certain areas and disabled veteran-owned businesses.
State Government Contracts
Individual states have their own rules and regulations regarding the acquisition and negotiation of government contracts. Regulations in most states, however, mirror those of the federal government.