The Government Bidding Process: Identifying the Various Contracting Methods

In essence, choosing a contractor is largely based on information processing. First, the deciding government agency collects information about the participating businesses, evaluates every organization based on specified categories, and compares them based on the previous assessment to determine which is best. The theoretical process is basically the same regardless of the contracting method applied.

Here, the deciding government agency must come up with an excellently designed process that will help them get credible information about the participating organization, evaluate this information, and compare the organization options to name the best. In designing this process, the deciding agency must be able to put into consideration their main objectives of getting the best quality, schedule, and cost for the project/contract being decided on.

The Simplified Procedure

The 1994 Federal Acquisition Streamlining Act simplifies the government buying process. It has eliminated much of the restrictions on government procurements amounting to less than $100,000. The act allows federal agencies to make use of simplified procedures to canvass and evaluate bids of up to $100,000 instead of open and full competition. For all planned purchases over $25,000, government agencies are obliged to advertise in www.FedBizOpps.gov.

The current reform legislation likewise requires all government procurements under $100,000 but more than $2,500 to be secured only by small businesses, unless the contracting authority cannot get proposals from two or more small businesses that offer competitive quality, price, and delivery.

Agencies do not need to obtain competitive quotes for “micro-purchases” or procurements amounting to $2,500 in individual items or multiple item purchases whose accumulated amount is less than $2,500. Micro-purchases however are no longer reserved for small businesses, and agencies can use a government purchase card for micro-purchasing.

The Sealed Bidding Process

When the requirements are complete, clear, and accurate, the government contracts competitively with a sealing bidding process that makes use of an invitation for bid (IFB).

An invitation for bid will normally include a comprehensive description of the product or service, bid preparation instructions, purchasing and packaging details, clauses to be included in the contract, shipping and payment conditions, deadline for submission, among others.

These bids will be opened in public, read aloud, and recorded at the time designated in the invitation at the purchasing office. The agency awards the contract to the low bidder who is determined to have promptly and appropriately responded to the requirements enumerated.

FedBizOpps, which provides a direct link to these invitations, holds a regularly updated list of these government-wide IFBs. Contracting agencies browse the Central Contract Registration to search for qualified small business contractors; hence the need for small businesses to be registered here if they want to be considered to have business with the government.

The Contract Negotiation Method

In cases when a contract values more than $100,000 and requires the procurement of a specialized product or service, the government may issue a requestfor proposal (RFP) to prospective contractors who would be interested to provide solutions to the request including the price for completing the project (contract).

In other cases when the government is merely looking into the possibility of purchasing a product or availing of a service, it may send out a request for quotation (RFQ). A contractor’s response to an RFQ is not considered an offer unless the order is an offer by the government to the supplier for the purchase of particular supplies or services within specific conditions. The contract is only established with the supplier (contractor) accepting the offer.

It is worth mentioning that the government uses purchase cards for less-than-$2,500 purchases, sends written solicitations for over-$25,000 purchases, and makes verbal solicitations for purchases less than $25,000.

As opposed to the traditional government procurement process, today’s acquisition reform places increased significance on “best value,” where the government awards the contract not to the lowest bidder but to the one that relatively satisfies the requirements even at a slightly higher cost. Here, agencies will have to clearly state in their solicitation papers their complete evaluation criteria and other relevant factors that will matter most in awarding the contract.

The Consolidated Purchasing Programs

Government agencies will generally have common procurement needs, such as furniture, food supplies, lighting fixtures, computers, machine maintenance equipment, etc. By centralizing most of these purchases, the government is able to make great economical savings.

Modern-day procurement reforms have introduced multiple award contracts (new or modified acquisition vehicles) like government-wide acquisition contracts (GWACs) or multi-agency contracts that promote long-term contracts with fewer contracting agencies (vendors). These prominent vehicles enable government agencies to fill their requirements quickly by establishing orders on already-existing contracts without the need to start a new procurement process from scratch. Also, different businesses may be competitively awarded multiple tasks and contracts for the same products and services.

The Department of Veterans Affairs, the Defense Logistics Agency, and the General Services Administration are the three largest administrators of these consolidated purchasing programs.

  

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