Government procurement is a huge business market in the United States. This is because the government operates using resources, goods, and services from the public, such as real estate, construction, office supplies, health care equipment, and many others. Many businesses find it economically beneficial to enter this industry because they know that the government will buy what it needs from commercial organizations. Here’s what you need to know about the multifaceted industry that is government procurement.
Government Procurement Defined
Government procurement is the process by which the government acquires the goods and services it needs by purchasing from commercial businesses. Since agencies of the government use taxpayer money, there are a number of regulations on how to use it properly and responsibly. Therefore, they must draw up legal contracts with suppliers in order to proceed. Prices must be pre-negotiated and fair, based on a predetermined set of terms and conditions. Businesses that have products and services that the government wants to line up to bid on and receive work contracts, and must prove their viability and legitimacy in order to earn and keep them.
Federal government purchasing goes through the General Services Administration. Once a business is connected through this agency, it will find the process of selling to smaller entities, like state and local government agencies, much easier. Procurement can be for any level or office of government, which is one reason why it’s such a big industry, estimated at $7 trillion, 10-15 percent of the annual US Gross Domestic Product (GDP).
Background of Government Procurement
The foundation of today’s government procurement system is based on two laws, the Armed Services Procurement Act of 1947 and the Federal Property and Administrative Services Act of 1949. These two laws combined and clarified many other regulations that had been appearing. In 1979, the Office of Federal Procurement Policy Act Amendments were passed, which called for a simplified, more direct path for government purchasing. This led to the Federal Acquisition Regulation (FAR), the official guidebook for anyone wanting to pursue government contracts, and the Competition in Contracting Act (CICA) of 1984, which launched the official competitive government contract bidding process.
Since then, the government has taken steps to include both large and small businesses in purchasing opportunities, and the Small Business Administration (SBA) works on behalf of the interests of small businesses to make this possible. Opportunities like the SBA’s 8(A) Program work to help disadvantaged small businesses reach their government selling goals.
The Bidding Process
Bidding through the GSA is a complicated and long-term process. Getting approved for a GSA Contract like a Multiple Award Schedule/Federal Supply Schedule takes a lot of effort and experience, and some businesses have to start small and work up to that. The contract opportunities website SAM Beta (formerly known as FedBizOpps) can help with this. No matter where a business tries to find contracting opportunities, though, the process is generally the same. The business must submit a work proposal, and the government will examine its competency in areas such as:
- Adequacy of resources, knowledge, staff, and operational ability
- Ability to comply with production and delivery schedules
- Good performance record and reputation
- Access to proper equipment and facilities
- Legal eligibility
Historically, this has been a “lowest-bid” system: the business that offers the best/lowest price gets the contract. However, recent trends indicate that a shift is occurring in government buying strategies, wherein more detailed analysis is being done to determine not the lowest possible price, but the best price for the quality and quantity of supplies and services being offered (a much fairer metric in the eyes of many).
“In certain cases, when the value of a government contract exceeds $100,000 and when it necessitates a highly technical product or service, the government may issue a Request for Proposal (RFP). In a typical RFP, 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.
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.” – (Governmentbids.com)
Government-wide RFPs and RFQs are available daily for review at the website SAM Beta (formerly known as FedBizOpps)
How has the covid pandemic impacted government procurement
During the course of this last year, as the pandemic has unfolded, there have been some important changes to procurement policy from the new presidential administration. The first few weeks of the Biden administration were marked by rapid regulatory changes and executive orders. On Janurary 25th, 2021, one of these executive orders was to refocus federal procurement to American made products and solutions. The executive order declares that “the future will be made in America.” Buying American-made and American-sourced goods for government use has received a great deal of bipartisan support recently, especially as the COVID-19 pandemic has threatened the financial stability of smaller businesses and the American economy as a whole.
Here’s what this mean for governemnt procurement and how the Biden administration will aim to shape procurement policy:
- Tightened definitions of “American-made” products
- Restrictions on the abilities of businesses to outsource production overseas (including reducing outsourcing waiver approvals and closing loopholes in the system)
- Incentivizing the government procurement industry to look within American borders for their products and services
- Shoring up and strengthening the industries and economy of the United States
- Growing the number of quality, union-protected jobs for American workers
- Creating a new senior leadership position in the Office of Management and Budget to oversee Biden’s changes
- Giving small businesses more contracting opportunities
How GMP Can Help
As government procurement experts, GMP already has the experience and reputation needed to win government contracts. In fact, we already have several that we can leverage to your business’s advantage. With our capabilities and an over 20-year history of success, we can endorse your business’s products and services to the government. As a veteran-owned and -operated small business that has long since caught the government’s eye, we know how to do bidding and can do all of the legwork for you. With us, there’s no need to get a contract yourself, as we already own contracts. We will simply market what your business has to offer to the government, making your chances of successfully selling to them much higher. For more information on government procurement and what we do, contact us today!
Updated on: 2/12/2021
