The Contracting Methods for Government Procurement Essay

The Contracting Methods for Government Procurement

The government is always in business, no matter what the economic situation in the country.  There are procedural requirements and contracts that must be complied with and are strictly enforced and this paper will present the different procedures, regulations and practices perform by federal government before doing business with the private sector.

The government is a huge and diverse market that can be divided into three major groups: the federal government market, the state government market, and the local government market, each group or level have distinct methods that determine how they contract firms for the items they needed.  In general, procurement function is clearly an inherently governmental function; the governmental function determines that government agencies present significant range in their use of contractor support for procurement functions.  However the government should be very careful when contracting for procurement functions, leaders should maintain their ability to carefully control their policy and management functions.  The system of checks and balances ensure that no government official will contact a particular firm out from contracting procedures.  Government officials who are in-charge of contract awarding should declare why the company was chosen.  Open competition is one of the bases for efficient public procurement; government agencies recruit new contractors most especially from small business sector.  According to the Kentucky Procurement Assistance Program, one of the best ways to find out if the government buys your product or service is to look at historical buying patterns, these are available through the internet to easily obtain information.  One important concept in government contracting is to understand who has the authority for purchasing.  Some government agencies have centralized contracting offices for purchasing however; some government agencies prefer to have limited contracting authorities that are assigned to field buying.  These centralized contracting offices are responsible for larger and complex contracts than the limited contracting authorities.

The contracting rules and regulations of the government will assign a dollar limit which divides government purchases into large purchases and small purchases.  When the large purchases of the government exceed the dollar limit, the government would give opportunity to public through advertising.  These opportunities given by the government are widely publicized to create competition among potential vendors.  It is important to understand the difference between large and small buys of the government agency as a key to marketing and competition.  Another important concept to consider in government contracting is the use of schedule contracts or statewide price contracts, this refer to government negotiated contracts with different firms for products and services used by government personnel.  Government agencies negotiate pre-approved prices for products and services instead of going through the usual purchasing process.  However government can also purchase products and services directly from vendors anytime even without formal contracting.  Government agencies do a lot of business by means of purchase card or procurement card, particularly for small dollar buys.  Purchase card are like credit card, the government uses purchase card to avoid paperwork required to process payment for products and services.  Government agencies have hundreds of purchase cards that have been issued to individuals to make small purchases of the items they need to do their job.  In order to get opportunity in government purchasing, getting company information in the hands of government agencies is important, since advertisement is not always necessary on these small buys.  Government agencies maintain vendor registration list, this list can be used to identify firms or companies interested in doing business with the government agency.  In some government agencies, registration of companies is compulsory before you can do business with an agency but some agencies registration is optional but recommended for notification intended for future opportunities.  Registering your company does not guarantee frequent notification from government agency but this will increase the chances of getting purchase opportunities.  The CCR (Central Contractor Registration) has been the federal government’s primary vendor registration database. Firms needed to register in the CCR before contracts can be awarded.  Registration can be done via websites or paper registration form available in various government agencies.  Government agencies have some set-aside program exclusively for small companies; large companies are not allowed to compete (Knerly, 2007).  Government agencies established amount of contracts for SDB (Small Disadvantaged Businesses).  SDB pertains to socially and economically disadvantaged individuals like Black Americans, Hispanics, US citizens from countries like Philippines, China, Japan and other minorities whose personal net worth is less than $750,000.  There is another business development program for SDB called 8 (a) programs for federal government contracts.  This program guarantees to produce and maintain set-aside contracts exclusively for 8 (a) certified firms.  These programs mentioned give preference to small business firms situated on areas with high unemployment rate also called as HUBZones or Historically Underutilized Business Zones.  The government contracts were given five percent federal government-wide goal for contract awards to women-owned businesses.  The federal government is establishing business with veteran-owned or service-disabled businesses, government agencies awarding three percent of the prime contract dollars.  The United States Department of Veterans Affairs established an online database; veteran-owned businesses are encouraged to register to get a chance for government contracts.  When deciding how much to offer for government contracts, always keep in mind the costs of material, labor, packaging, and transportation.  It is also important for the businesses to always stay updated by checking websites and newspapers regularly.

The Percentage by the Federal Government Allotted to Small Businesses as of 2006

It is also important for firms to understand the nature of competition; this would be attained through researching government agencies and potential competitors for government contracts.  Government agencies do not simply compare prices offered by different firms but rather look at the best value which includes significant factors like experience, ability to deliver products on time.  The government allows subcontracting or partnering if ever the chosen firm cannot afford to handle the contract offered.

The methods followed for procurement under a particular project are given for in the financing contract.  According to the Asian Development Bank, the procurement plan specified the particular contracts to be fund under the project, the method of procurement and most especially reliable with the financing contract.

Quality factors should be observed, all these factors will be evaluated as part of the overall package.  Past performance become important when selecting contract awardees, past performance considered as non- cost factor that government agencies believe before awarding a contract.  Management factors are significant in determining how the firm will manage its resources to achieve the desired results.  In addition to the technical aspects of a proposal, which cover how well the firm will make the goods or supply the services needed, Management factors are also significant to the agencies before contract awarding.  These factors will help agencies in determining how well the firm works, or will they can make goods or supply the services on the specified time given by the agency.  After critical evaluation the next step is to award the contract.  All agencies are very careful during decision making by following solicitation and all evaluation factors and selection method are strictly followed.  Post-award debriefing can be very useful to unsuccessful firms, where businesses can learn their mistakes for their own growth.  Controversies involved in contract awarding become substantial for government.  One bidder can file a dispute or protest; this is filed against defective or incorrect bid.  A dispute can be lodged if there is an issue or disagreement arises with the contracting officer.  There are four main forums to hear contract controversies; one is the procuring agency itself (contracting officer or agency head), second is the comptroller general as head of the General Accounting Office (GAO), then U.S. district courts and last is the Court of Federal Claims.  A protest filed before the contract will delay the awarding unless there is a reason for the government to continue the awarding, however protesters will undergo procedural issues and more work involved (Knerly,2007).  There are alternate methods to resolve a controversy; one is the Alternative Dispute Resolution (ADR) which includes conciliation, facilitation, mediation, fact-finding, mini-trials, arbitration, and the use of ombudsmen (Knerly, 2007).  The government agencies are putting their government contracting forms, instructions and regulations online in order to make transaction accessible. These online applications decreased and simplified government paperwork in any means. Although government contracting is always having long procedures and strict methods to consider, there is always a great deal of money in the government that will benefit both large and small businesses.


Knerly, V. W. (2007). Contracting with the U.S. Government: A Small Business Perspective. Journal of Contract Management, 73-93.

Asian Development Bank (April 2006). Procurement Guidelines. Retrieved January 30, 2009, from

Cabinet for Economic Development (October 2008). Guide to Government Contracting. Retrieved January 30, 2009, from

Millennium Challenge Corporation (21 July 2008). Program Procurement Guidelines. Retrieved January 30, 2009, from

Defense Acquisition University (November 2005). Contracting Out Procurement Functions: An Analysis. Retrieved January 30, 2009, from