Ten (10) Government Contract Basics

1. How The Government Buys
The U.S. federal government most often uses simplified acquisition procedures, sealed bidding, contracting by negotiation, and consolidated purchasing vehicles when purchasing purchases products or services.  In most instances, the government uses written solicitations for purchases over $25,000, oral solicitations for purchases less than $25,000, and purchase cards to obtain micro-purchases less than $3,000.

While all agencies must advertise all planned purchases over $25,000 on Federal Business Opportunities, full and open competition is no longer the exclusive method as agencies can now use simplified procedures for bids up to $100,000.  These simplified procedures require fewer administrative details, lower approval levels, and less documentation. Further procurement legislation requires all federal purchases above $3,000 but under $100,000 to be reserved for small businesses, unless the contracting officer cannot obtain offers from two or more small businesses that are competitive on price, quality and delivery.

The government uses a sealed bidding process when the requirements of a purchase are clear, accurate and complete.  With this method, the contract is awarded by the agency to the low bidder that is determined to be responsive to the government's needs.  An Invitation For Bid (IFB) is the method used for the sealed bid process and typically includes a description of the product or service to be acquired, instructions for preparing a bid, the conditions for purchase, packaging, delivery, shipping and payment, contract clauses to be included and the deadline for submitting bids.  

The government typically issues a Request for Proposal (RFP) when the estimated value of a government contract exceeds $100,000 or when it necessitates a highly technical product or service.  Proposals in response to an RFP can be subject to negotiation after they have been submitted.  Contracts are awarded to the bidder that based evaluation criteria is determined to best fulfill the government's needs.

When the government is merely checking into the possibility of acquiring a product or service, it may issue a Request for Quotation (RFQ). A response to an RFQ by a prospective contractor is not considered an offer, and consequently, cannot be accepted by the government to form a binding contract. The order is an offer by the government to the supplier to buy certain supplies or services upon specified terms and conditions. A contract is established when a supplier accepts the offer.

Most government agencies use consolidated purchasing programs for common purchasing needs such as carpeting, furniture, office machine maintenance, petroleum products, and perishable food supplies.  This saves significant time and money amounts by centralizing the purchasing of certain types of products or services.  Most government agencies use multiple award, multi-agency, government-wide acquisition contracts (GWACs) encourage long-term vendor agreements with fewer vendors.  A GSA contract is just one example of these type of contracts.  With these contracts, agencies can competitively award several or multiple task order contracts to different companies for the same products and services. The three largest interagency consolidated purchasing programs are administered by the General Services Administration, the Defense Logistics Agency, and the Department of Veterans Affairs.

2. Central Contractor Registration (CCR)
If you are going to do business with the federal government you must be registered in the Central Contractor Registration (CCR). But if you want to do more business you have to optimize.   Write an outstanding capabilities narrative.  Select the best keywords.  Use not only all the NAICS codes you are allowed, but the right ones.  But what is an outstanding capabilities narrative?  What are the best keywords?  What are the right NAICS codes?  The one or ones that tell the government just what your company can do?  No.  The CCR entries that are outstanding, best, or right tell the government what your company can do for them.   

To register in CCR go to https://www.bpn.gov/ccr/scripts/index.html.  Registration requires a nine-digit Data Universal Numbering System (DUNS) number that is assigned and maintained by Dun and Bradstreet.  To request or retrieve your DUNS number online go to http://fedgov.dnb.com/webform.  To contact Dun & Bradstreet at 1-866-705-5711.  If you are not able to use the online process, and require assistance, please email govt@dnb.com. 

3. Federal Government Market Place Segments
Are you going to do business $3,0000.00 at a time, $25,000.00 at a time, or at amounts only over $100,000.00 at a time?  Take the time to understand the market segments and focus in on the one where you can eliminate or minimize the most competition.  It is all about winning and finding out what it takes to do just that.  Find a way to get bigger somehow.

The federal government has three (3) market segments: micro, small, and large, which can be summarized as follows.

Micro Purchase
Purchase Range: Under $3,000.00
Purchasing procedure: Sole source using a government credit card
Sales cycle: Same day
Government micro-purchases not greater than $3,000 may be made without obtaining competitive quotations if an employee of an executive agency or a member of the Armed Forces of the United States authorized to do so determines that the price for the purchase is reasonable.

Small Purchase
Purchase Range: $3,000-$24,999.99
Purchasing procedure: Three informal quotes by phone, fax, email or regular mail
Sales cycle: Same day to several weeks
Since 2000, the federal government has relaxed its procedures for making small purchases. Now purchases valued between $3,000.00 and $24,999.99 can be made with three informal quotes obtained by telephone, fax, email or regular mail. Payment is made with a credit card or purchase order, and because the quotes themselves make up the purchase documentation, buyers can act quickly and efficiently.  Buyers typically rotate the companies they contact for a quote, often the last supplier plus two new sources.  The general rule is that most small purchases are set aside for small and small disadvantaged businesses unless this type of business cannot be found to satisfy the requirement.

Large Purchase
Purchase Range: Over $25,000.00
Purchasing procedure: Public advertising and formal documentation of procurement
Sales cycle: Several weeks to more than a year
The federal government requires formal advertising Federal Business Opportunities for most purchases exceeding $25,000, though all purchases up to $100,000 are defined as small and are set aside for small businesses.  Large purchases require strict, formal documentation detailing how and why the successful vendor was selected.  An Invitation for Bid (IFB) is used for a sealed, fixed-price buy, while a formal Request for Quote (RFQ) is used for a non-sealed fixed-price buy.  A Request for Proposal (RFP) is used for negotiated procurements. Negotiated procurements are used for complex purchases where many factors besides price enter into the buying equation. This method is used when the government is seeking a solution to a problem, buying a complex product or contracting for a complex service. 

4. Federal Acquisition Regulation (FAR)
In sports and the game of monopoly a complete knowledge of the rules helps you control and thus win games.  Federal government contracting is no different.  The government buys the products and services it needs through standardized procedures outlined in the Federal Acquisition Regulation (FAR). The FAR is used by all federal agencies and provides procedures for the complete procurement process from the time a need for a product or service is discovered until the time the purchase is completed.  Simply put, in the realm of federal contracting, the FAR contains the "rules of the game."  |  http://www.arnet.gov/far/

5. Set-Asides
The federal government is actively seeking qualified businesses of all industries and sizes to supply them with the products and services they need.   This is why.

The Laws
Section 8(d) of the Small Business Act (15 USC 637(d)) and FAR 52.219-8 requires that small businesses, small disadvantaged businesses, HUBZone small businesses, woman-owned small businesses, veteran-owned small businesses, and service-disabled veteran-owned small businesses have maximum practicable opportunity to participate as subcontractors under Federal contracts, to the extent that such opportunity is consistent with efficient contract performance.

Section 211 of Public Law 95-507 requires that any “other-than-small” business that receives a Federal contract or subcontract over $550,000 (over $1,000,000 for construction of a public facility) must adopt a subcontracting plan with separate and distinct goals for each category of small business. The proposed subcontracting plan must be accepted and approved by the contracting officer before the contract can be awarded.

The Goals
The federal government's current total small business subcontracting goal is 23% of all prime contracts. The federal government also outlines the following additional small business set-aside goals:

• Small Disadvantaged Businesses 5%

• Woman-Owned Small Businesses 5%

• Hub-Zone Small Businesses 3%

• Service-Disabled Veteran-Owned Businesses 3%

• Veteran-Owned Small Businesses 3%

• 8(a) 3%

Even the federal government's large contractors are looking for qualified companies. So, make sure your strategy includes contacting companies that have already won awards for subcontractor, supplier, or teaming opportunities.

6. Office of Small and Disadvantaged Business Utilization (OSDBU)
Yes, there is true, real help is there and waiting for you.  Every federal agency with contracting authority has an office that will give you a free training course on how to do business with the agency and, if you are really serious, even become your competitive advocate. This office is called the Office of Small and Disadvantaged Business Utilization (OSDBU) and as established under FAR 19.201 (d) the director of the office is appointed by and reports directly to the agency head.    

7. Federal Business Opportunities (FBO)
For those that master it, FBO is the mother lode.  Federal Business Opportunities, FedBizOpps.gov, or more often FBO is the government's web portal for publishing all federal government procurement opportunities over $25,000. Government buyers are able to publicize their business opportunities by posting information directly to FedBizOpps via the Internet. Through this portal, commercial vendors seeking Federal markets for their products and services can search, monitor and retrieve opportunities solicited by the entire federal contracting community.
Home page: www.fbo.gov
Search page: https://www.fbo.gov/?s=opportunity&mode=list&tab=search 

8. General Services Administration (GSA)
A General Services Administration (GSA) Contract, also known as a GSA Schedule, Federal Supply Schedule (FSS) contract, or multiple award schedule, is an indefinite delivery, indefinite quantity (IDIQ) contract negotiated between the US General Services Administration (GSA) and commercial companies and available for use by federal agencies worldwide. GSA contracts make it easy for the government to purchase state-of-the-art, high-quality commercial products and services. To maintain continued sources of supplies and services, schedule contract periods are as long as five years with three five-year option periods.

The GSA is best likened to 'the government's WAL-MART' because it is the source for nearly every commercial product or service a federal agency needs. Similarly, a GSA contract approves a company's goods or services for immediate purchase by federal agencies and their employees.

A GSA contract is best described from two (2) perspectives: the government's and the vendor's.

From the government's perspective, GSA contracts save time and money. Federal buyers, like all people, do not want to wait to buy what they need -- and GSA contracts eliminate such waiting. Through GSA contracts, all government buyers can order quality supplies and services including the latest technology conveniently, and at pre-approved, 'most-favored customer' prices. In addition to shorter leads times and lower administrative costs, purchasing off a GSA contract allows ordering agencies the opportunity to meet small business goals and comply with various environmental and socioeconomic laws and regulations.

From a vendor's perspective, a GSA contract is quickest and easiest vehicle for selling products and services to the federal government because through it, companies can sell directly to government buyers with bidding or offering the lowest prices. Through a GSA contract, the vendor receives the government's blessing or stamp of approval, which means you are a responsible vendor, your prices are fair and responsible, and most importantly, your products and services are available for immediate purchase.

8. Government Web Sites
Where to go. Why. How. Sixty-Six (66) Federal Market Place Links for your favorite's folder that will help you better understand and profit in and from the federal marketplace. We have done all the searching so you don't have to. Data Sources, Business Points/Opportunities, Market Place Basics, GSA Contracting, Informational Sources, Helpful Resources. 

9. Freedom of Information Act
The Freedom of Information Act (FOIA) is a federal law that permits access to public records maintained by government agencies.  FOIA is a very powerful information gathering tool for contractors because they can use it to request valuable information such as pricing, costs, award fees, modifications, as well as the names of key decision-making personnel.
Federal Agencies' FOIA Web Sites: http://www.usdoj.gov/oip/other_age.htm