Government Purchasing Laws


More complicated than entering into a contract with a private entity (ie another company), according to Carl Vacketta from the website FindLaw.com, "federal government contracting is governed by a maze of statutes and regulations."

For example, the "U.S. Government imposes a host of socio-economic obligations through its contracts, including requirements related to affirmative action, drug-free work place, subcontracting, and minimum employee wages."

Businesses that work with the government often must comply with certain laws that would not pertain to private sector contracts. One simplistic example of this required compliance are the steps one must take to register with the federal government. Before even contractors can bid they must first supply the government with company information, a DUNS number, as well as information about employees and past work. This pre-bid vetting process, so typical when working on public contracts, is often not necessary when dealing in the private sector.

Bidding Process Laws

Governments must put contract opportunities (over a certain amount, varies by entity) through a competitive bidding process. There are two methods governments may follow: sealed bidding or competitive negotiations. The more typical method is sealed bidding, which generally includes publicly posting bid notices, collecting proposals and choosing a vendor to award the contract to. The primary factors evaluated when awarded the contract are "the offeror's cost or price proposal, the offeror's past performance on government and commercial contracts, the offeror's technical approach and any other identified factors for award."

If sealed bidding is not an option, purchasing agents may choose to begin competitive negotiations. These negotiations, also called "discussions," help the evaluator determine the contractor that is best suited to provide the good/service.

Standard Terms for Government Contracts

Before outlining some of the basic terms found in government terms and conditions, we will define some terminology. These documents are broken into different "clauses," each of which explain certain non negotiable requirements. There are usually between 50 and 75 separate clauses in any government contract. Each clause should be read carefully and understood before a contractor agrees to the terms. Below are three of the more typical clauses:

Termination for Convenience of the Government.

The clause allows the government to end a contract, at any time, without cause if it is in the best interest of the government. A couple reasons a government may terminate a contract is if they no longer need the good or service provided, and would be wasting taxpayer's money if they continued the unnecessary project. Or if there have been significant changes in situations or technology, which effect the project at hand, the government may terminate the contract.

" Changes" Clause