Thesis: Government Contracting Process

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Government Contracting Process

The Federal Acquisition Streamlining Act (FASA) of 1994 was formulated with the intention of simplifying of the buying procedures of the government in that many competition restrictions on government purchases were removed involving purchases less than $100,000. Now, full and open competition is used in procedures that are much simpler in solicitation and evaluation of bids up to $100,000. All planned purchases of over $25,000 are under a requirement for advertisement by the government. The simpler procedures make a requirement of les sin the way of administrative details as well as lower approval levels and less in the way of documentation. All federal purchases, according to new procurement reform legislation above $2,00 but less than $100,000 are reserved for small businesses unless the contracting officer is unable to procure offers from two or more small business that are competitive on price, quality and delivery. Purchase by the government up to $2,500 in individual or multiple items not exceeding $2,500 are classified as micro=purchases and do not require competitive quotes and as well these purchases are not reserved for small business any long. Agencies are allowed to make micro-purchases through use of a Government Purchase Card.

I. GOVERNMENT CONTRACT OVERVIEW

The work of Vancketta (1999) states that contracting with the federal government "is a highly regulated process with many traps for the unsuspecting." Commercial contract is generally governed by the Uniform Commercial Code and common law while federal government contracting "is governed by a maze of statutes and regulations..." which make rules as to "what method or process and agency must use to solicit a contract, how the agency is to negotiate or award a contract, and under certain circumstances what costs the Government will reimburse and how a contractor must account for those costs." (Vancketta,

Vancketta relates that the U.S. Government "imposes host of socio-economic obligations through its contracts, including requirements related to affirmative action, drug-free work place, subcontracting, and minimum employee wages." (1999)

There are several types of contracts including:

1) Fixed Price Contract (FP) in which the contractor has the responsibility for performance cost and profit;

2) Cost Plus Award Fee (CPAF) are the general contract rule. These contracts consist of "an estimated cost and an award fee amount that is paid upon periodic, subjective evaluations of the contractor's performance. The award fee is comprised by the base fee which is fixed the contract's inception and which must not be in excess of three percent of the estimated cost and which works the same as a fixed fee. The award amount is based upon an evaluation by the government and has other subjective criteria.

3) Incentive fee contracts are those which do not meet the targets of cost of performance but instead are based on mechanisms that are formula-like which determines the amount of the fee earned. Cost, schedule and delivery and performance incentives are "based on targets that can be evaluated against actual costs, actual dates and actual performance and which give evaluators a clear sense of the contractor's performance." (Benford, 2006)

II. BASIC PROVISIONS (STATUTORY and REGULATORY)

The 'Armed Services Procurement Act' of 1947 (ASPA) "codified at 10 U.S.C. Sections 2301-2314, the Federal Property and Administrative Acts of 1949 (FPASA), codified at 40 U.S.C. Sections 471-514 and 41 U.S.C. 251-260, and the Competition in Contracting Act (CICA), codified in scattered sections of 10, 31, 40, and 41 U.S.C., are stated by Vancketta to represent "the three statutory foundations of government contract law and the federal acquisition process." (Vancketta, 1999) the ASPA provides governance of all property acquisition excepting land, construction and services by defense agencies. The FPASA provides governance of similar civilian agency acquisitions and the CICA is "applicable to both defense and civilian acquisitions, requires federal agencies to seek and obtain 'full and open competition' wherever possible in the contract aware process." (Vancketta, 1999) it is related that only seven instances exist in which a federal agency award of a contract be through use of a sole source contractor or any "other than full and open competition." (Vancketta, 1999)

The Federal Acquisition Regulation (FAR) codified at Title 48 of the Code of Federal Regulations is inclusive of the "uniform policies and procedures for acquisitions by all federal agencies." (Vancketta, 1999) the FAR is that which "implements or addresses nearly every procurement-related statue or executive policy.' (Vancketta, 1999) FAR extends throughout each and every stage within the acquisition process.

The basic methods of securing "full and open competition" which includes:

1) sealed bidding; and 2) competitive negotiation are found within the ASPA, FPASA, and CICA. (Vancketta, 1999)

Sealed bidding occurs after a federal agency has made identification of a need and made the decision to proceed with acquisition which involves the requirement of soliciting sealed bids in the case where solicitation is not time-barred and then the award is made based on price and price-related factors. There is no requirement for discussions to be conducted about the bids submitted while there is an expectation of the receipt of more than one sealed bid. [FAR 6.401 (a)]

The CO (contracting officer) is responsible for initiating a sealed bidding acquisition through issuing an 'Invitation for Bids' (IFB) which provides a description of what is required by the Government in a clear, complete and accurate manner. Both case law and the FAR strictly prohibit the use of specifications that are overly restrictive in that they would place a limitation on the number of those bidding for the contract. The IFB is published in a public place including newspaper or trade journals as well as in the federal government's Commerce Business Daily (CBD) as well as through mail of the IFB to commercial organizations or contractors on the solicitation mailing list of the agency. (FAR 14.204; FAR 14.205).

The contractors are required to submit bids by the IFB stated deadline because a late bid will not be considered except:

1) where the bid was sent to the CO by registered or certified mail at least five days before the bid receipt date;

2) the government mishandled the bid after receipt;

3) the bid was sent to the CO by Postal Service - Next day Service, two days prior to the bid receipt date; or 4) the bid was transmitted electronically and received by 5:00 P.M. one working day prior to the bid receipt date. [FAR 14.304-1(a)] (Vancketta, 1999)

Bids which are received by the proper time and at the proper place are opened publicly and the CO reads them aloud and records then on an 'Abstract of Offers' which is Standard Form 1049. They are also examined for mistakes. The CO examines the bids for mistakes and upon finding no mistakes the CO makes the contract award to the "responsible' bidder who submitted the lowest 'responsive' bid." (Vancketta, 1999) a responsive bidder is defined as "one that contains a definite, unqualified offer to meet the material terms of the IFB. [FAR 14.301 (a)] (Vancketta, 1999) the bid will be rejected if defects are found in the bid that result in the price, quantity, quality or delivery of the items are affected. Requirements of FAR for prospective contractors include the following:

1) the contractor is required to have adequate financial resources to perform the contract;

2) the contractor must be able to comply with the required or proposed delivery or performance schedule;

3) the contractor is required to have a satisfactory performance record

4) the contractor is required to have a satisfactory record of integrity and business ethics;

5) the contactor is required to have the necessary organization, experience, accounting and operating controls and technical skills;

6) the contractors is required to have the necessary production, construction and technical equipment and facilities; and 7) the contractors is required to be otherwise qualified and eligible to receive an award under applicable laws and regulations (FAR 9.104-1) (Vancketta, 1999)

Termination for Convenience of the Government is a clause that is generally contained in every government contract. This clause permits the government to terminate the contract "at any time, without cause, when in the government's best interest." (Vancketta, 1999) This right for termination without cause resulted form the need of the government in adapting needs of acquisition and therefore, the money to the taxpayers to "changes in situations and technologies." (Vancketta, 1999) a Contract which is terminated for convenience by the government required that a written notice be issued under FAR 52.249-2 (a) which must contain the following:

1) a statement informing that the contract is being terminated for the convenience of the Government;

2) the date the termination is effective;

3) the termination's extent;

4) any special instructions; and 5) the steps the contractor is to take in minimizing the impact on personnel. [FAR 49.102 (a)] (Vancketta, 1999)

The standard 'Termination for Convenience' clause requires the contractor to:

1) stop work immediately on the terminated portion of the contract;

2) terminate all subcontracts related to the terminated portion of the prime contract;

3) advise the government of any special circumstances… [END OF PREVIEW]

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