The Government Procurement Process

Government procurement is big business. Now is a good time to get in on the action in the government contracting marketplace. While competition has long been recognized as a prudent business practice, there is renewed emphasis, today, on competition within the government contracting market.

There are many benefit for doing business with the government. To name a few:

• You get paid regularly from this client.
• Many Federal Government contracts have continuous contract terms for three to five years, which provides a long term steady cash flow with decent profit margins.
• These customers WILL pay their bills.
• Winning government contract can be a good advertising tool for your firm.
• Government contracting can make your business grow fast.
• Sky is the limit: the government is seeking vendors in all avenues of business. Whatever service or product your company provides, the government is buying.

The government purchases the products or services it needs by two methods: sealed bidding and negotiation.

Bidding

Sealed bidding is the main way that the government solicits for contracts.  This type of selection allows all bidders to compete on a fairly equal basis, and this is the best way for a company who has never had a contract before to secure one. The government will begin the process by publicly issuing an Invitation For Bids (IFB).  The IFB will detail the work to be done and the requirements that the bidder must meet to win the contract.  The government is required to award the contract to the lowest responsive bid.  A responsive bid is one which is consistent and meets all of the requirements sets forth in the Invitation.  The government is required to issue an IFB when:         

• There is adequate time to consider bids
• Price will be a a main determining factor for the bid
• There will be multiple bidders

Negotiating

The secondary method of obtaining government contracts is through negotiations.  The government may enter negotiations for work that does not require sealed bids.  In order for a government agency to acquire bids through negotiations they must first issue a RFP (Request for Proposal).  An RFP states the government's needs and requirements for the proposed job.  An RFP also allows the government to consider prospective contracts on factors other than price.  These factors may include the availability of resources, the reputation and previous experience of the companies considered, or other special circumstances.

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.