Basics of Government Contracting

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Basics of Government Contracting

Federal Procurement Background

• The U.S. Government is the world’s largest purchaser of goods and services

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Federal Procurement Background

• The U.S. Government is the world’s largest purchaser of goods and services

• All of this procurement is highly regulated, primarily by the Federal Acquisition Regulation (FAR)

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Federal Procurement Background

• The FAR requires full and open competition for federal contracts– Naturally, there are exceptions

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Federal Procurement Background

• Exceptions to “full and open” competition– Sole Source Contracts– Statutory Requirement– Small Business Set-Asides

• The Government has a “goal” that 23% of all Federal Contract dollars will go to small businesses

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What is a small business set-aside?

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Small Business Set-Asides

• “Set-aside” – Contract opportunity limited to small business (or certain type of small business)

• Federal Agencies are encouraged, and sometimes required, to set aside a contract• Automatic set-aside if between $3K - $150K

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Small Business Set-Asides

• “Rule of Two” – Contract must be set-aside if:– Valued at over $150K;– Reasonable expectation to receive

offers from at least 2 small businesses; and

– Award will be made at fair market price.

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Small Business Set-Asides

– Types of Small Business Programs:• Small business set-aside• 8(a) business development set-asides• HUBZone set-asides• Service-disabled veteran-owned, and

veteran-owned small business set-asides (SDVOSB & VOSB)

• Women-owned small business set-asides

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How does the government procure goods and services?

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Simplified Procurement Process

– The Government announces what it needs• Fedbizopps.gov

– Interested contractors submit offers to fill those needs

– Offers are reviewed and evaluated– Contract Award The procuring agency

enters into a contract with the selected offeror

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Simplified Procurement Process

• Two Primary Procurement Methods– Sealed Bidding (FAR Part 14)– Negotiated Procurements (FAR Part 15)

• More prevalent

• GSA Schedules

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Sealed Bidding

• Government issues an Invitation for Bids (IFB)– Contains all necessary specs and

requirements• Interested contractors submit a Bid

– Must agree to all contract requirements– Really all about price

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Sealed Bidding

• All bids are opened publicly– Award made to lowest priced

responsive bid– If lowest bidder determined non-

responsive, goes to next in line

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Negotiated Procurements

• Government issues a Request for Proposals (RFP)– Agency must follow terms of the RFP

• Interested contractors submit a Proposal– Demonstrate how they can meet RFP

requirements and at what price

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Negotiated Procurements

• Agencies can make an award based on initial proposals, or enter into “discussions” with offerors

• Where there are many proposals, agencies may establish a “competitive range”

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Negotiated Procurements

• After final proposals, agency makes award decision based on process identified in RFP.– Referred to as “source selection

decision”

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Negotiated Procurements

• Debriefings – After award, unsuccessful offerors may request a post-award debriefing– Agency must provide the debriefing– Opportunity for contractor to pose

questions to agency as to why its offer was not selected

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GSA Schedules

• Allows Federal Agencies to quickly purchase commercial items and services from listed vendors– Vendors apply to GSA Schedules– GSA awards schedule contract with set

prices/rates– Contracts last up to 20 years

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Types of Government Contracts

– Firm fixed-price All risk on the contractor

– Cost Reimbursement Risk primarily on government• Also Cost plus Fee, and Cost plus Incentive

– Time and Materials• Fixed hourly rates, must have a ceiling cost

– Indefinite Delivery, Indefinite Quantity (ID/IQ)

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What are the difference between government and

private contracts?

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Government vs. Private

• Changes Clause – Contractor must do all additional work ordered by agency, as long as it’s within scope of the contract– Contractor can submit request for

equitable adjustment

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Government vs. Private

• Termination for Convenience of the Government– Government can terminate any gov’t

contract, for any reason, at any time– Contractor can recover costs

associated w/ termination• No lost profits though

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Government vs. Private

• Disputes over government contracts are highly regulated and very rarely litigated in traditional courts

• Generally three types of disputes in government contracting:– Pre-award– Post-award– Performance related

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Pre-Award Disputes

• Contractors can protest terms of solicitation– Too restrictive, ambiguous – Protest can be filed with either

Government Accountability Office (GAO) or Court of Federal Claims

• Contractors can also protest exclusion from “competitive range”

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Post-Award Disputes

• Contractors can protest the award decision– e.g., Improper evaluation

• Post-award protests can be filed in 3 forums:– Agency– GAO– Court of Federal Claims

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Post-Award Disputes

• GAO Protests– Interested parties have 10 days to

protest– Automatic Stay is available– Generally, the awardee is allowed to

intervene– Decision due within 100 days– Generally best option

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Performance Disputes

• Disputes begin with a claim for money submitted to the contracting officer– CO has 60 days to issue Final Decision

responding to claim

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Performance Disputes

• Contractors can appeal denial of claim in one of two forums:– Board of Contract Appeals – Civilian

Board, Armed Services Board– Court of Federal Claims

• Cannot appeal to both, must choose one or other

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Performance Disputes

• Appeals to Boards of Contract Appeals– Must file appeal within 90 days of Final

Decision or deemed denial• Appeals to Court of Federal Claims

– Must file within 1 year of denial• Federal Circuit hears appeals of

these decisions

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Teaming Agreementsand Subcontracts

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Teaming Agreements

– Multiple companies agree to compete as a team, usually before proposal• Teaming Agreement between Prime

Contractor and Subcontractor(s)– Generally, parties agree to negotiate

subcontract in good faith

• Joint Venture– Multiple companies agree to perform together

as the Prime Contractor

– Binding Contracts

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Subcontracts

• Defines the relationship between Prime and Subcontractor– Typically executed after award– Should include Sub’s scope of work– Provisions from prime contract can

“flow down” to subcontract

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Basics of Government Contracting

Contact Info:General Counsel, P.C.

703-556-0411

[email protected]

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