Government Contracting – Learn How the Federal Government Buys from Small Businesses

Government Contracting – Learn How the Federal Government Buys from Small Businesses


Government Contracting – Learn How the Federal
Government Buys from Small Businesses Are you thinking of breaking into the federal
government contracting marketplace in 2017? This lucrative market is worth nearly $100
billion in sales to small businesses each year, but selling to the government is quite
different than selling to the commercial sector. For example, the government applies standardized
procedures to buy products and services it needs from suppliers that meet certain qualifications. But how agencies across the government actually
make those purchases (or “contracts” them) can vary enormously. Purchases can sometimes be made quickly using
a simple credit card; other times, sealed bids, negotiations or consolidated purchasing
programs are used. To help small business owners navigate this
unfamiliar territory, SBA offers free online training – the Government Contracting Classroom
– a soup-to-nuts overview of the process. “How the Government Buys” is one of three
self-paced courses that can help you understand contracting methods the government uses to
buy goods and services. If you are new to this market, check out this
training. In the meantime, below are some key learning
points about how the government buys! Primary Buying Methods the Government Uses
In the private sector, business customers purchase products and services in a number
of ways – some use credit card purchasing authority while others issue formal requests
for proposals (RFPs). It’s not too dissimilar in federal contracting;
however, contracting officials who oversee the procurement process must follow the procedures
outlined in the Federal Acquisition Regulation, commonly known as the FAR, to guide government
purchases. Here’s an overview of the different rules
and procedures that control how the federal government makes its purchasing decisions
and how these may favor small businesses: Micro-purchases with credit cards – Government
purchases of individual items under $3,000 are generally considered to be micro-purchases. They don’t require competitive bids or quotes
and agencies can simply pay using a Government Purchase Card or credit card, without involving
a procurement officer. Seventy percent of all government purchases
are for micro-purchases under $3,000; in 2010, this represented more than $19 billion. Simplified acquisition procedures – Purchases
under $150,000 can use simplified purchasing procedures that involve less paperwork and
fewer approval levels. The good news for small business is that purchases
above $3,000, but under $350,000 are also reserved or “set aside” exclusively for
small businesses. Sealed bids – This method is used when the
government buys competitively and has very specific requirements. Agencies will issue an “Invitation for Bid”
(IFB), much like an RFP in the commercial sector. Businesses will then submit sealed bids that
are opened by a contracting officer in a public setting, read aloud and recorded. Contracts are awarded to the lowest bidder
who is determined to be fully responsive to the needs of the government. Contracting by negotiations – This is a
more complex and time-consuming process. In certain cases, when the value of a government
contract exceeds $150,000 and when it necessitates a highly technical product or service, the
government may issue an RFP. Typically, the government will request a product
or service it needs and solicit proposals from prospective contractors on how they intend
to carry out that request and at what price. Proposals in response to an RFP can be subject
to negotiation after they have been submitted. If the government is merely checking into
the possibility of buying, 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. Consolidated purchasing vehicles – Many
agencies have common purchasing needs such as software or offices supplies. To achieve economies of scale, purchases of
certain types of products or services are centralized. In  this “consolidated purchasing,” acquisition
vehicles are typically used, the most common being GSA Schedules or Government Wide Acquisition
Contracts, called G-WACs. These centralized buying vehicles are negotiated
by the government with awards to many vendors and used by multiple agencies. Contracting and contracts can seem like interchangeable
terms in this business. But now that you know the buying methods used
by the government, it’s important to understand how the government navigates pricing and what
form the actual contracts or agreements take once you’ve won the business. From fixed-price contracts to blanket purchase
agreements, these contracts and agreements take multiple forms – too many to list here. Check out the links below the video for a detailed overview

2 comments

  1. Yes u India Gujarat name Mahesh Patel import export development government world class my WhatsApp number 756 720 9892 MBBS government

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