Because the U.S. government purchases more goods and services than any other entity in the country, obtaining a federal government contract can be a key component to the success of a business enterprise. The process of securing a federal government contract, though, is complex. Here are the important things you need to know when considering doing business with the federal government.
The Unique Characteristics of Government Spending
Because of concerns about management of taxpayer dollars, federal government contracts are heavily regulated to minimize the risk of misuse or misappropriation of funds, and to ensure that policies and practices are uniformly applied across different federal agencies. The guidelines for federal contracts are set forth in the Federal Acquisition Regulations, issued by the General Services Administration. As a result, all potential government contracts go through an extensive screening/due diligence process, with specific measures in place to address:
- Integrity in any dealings with federal employees—making certain there are no bribes, illegal gratuities or other favors extended to federal employees
- Fairness in competition—ensuring that there are no conflicts of interest, and that the procurement process offers equal access to all qualified participants
- Truthful exchanges of information—verifying that all parties make honest statements about all aspects of the contract
- Potential problems with third-party relationships—preventing wrongful conduct, such as bid rigging, kickbacks, collusion or contingent fees
Because of the many concerns involved in federal government contracting, the specific terms of an agreement will customarily be drafted by teams of government attorneys. Private parties need to be particularly careful reviewing these contracts, as government lawyers will use specific terms that have acquired distinct meaning from use in prior government contracts.
You also need to understand that, should there be a dispute about the performance of a government contract, it will typically be resolved through an administrative, rather than a judicial process.
State agencies, municipalities and public authorities operating under state law are subject to similar government contract regulations, governed by state laws.