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
There are many benefit for doing
business with the government. To name a few:
- You get paid regularly from this
- 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
- 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.
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
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.