Federal Government Contracting Guide

Are you ready to explore federal contracts? For business owners who want to deliver products or services to the government, understanding how federal government contracting works is crucial. This guide explains the key things you need to know about federal government contracting including how to find and win more contracts.

In This Article:

• What Defines the U.S. Federal Government?
• What are the Executive Agencies and Departments of the Federal Government?
• What is a Federal Contractor?
• The Basics of Federal Government Contracting
• Who Puts Out Federal Contract Bids?
• Types of Federal Government Contracts
• How Can I Find and Win Federal Government Contracts?
• How Does Deltek Help Federal Government Contractors?

The federal government of the United States (U.S. federal government) is the national government of the United States, a federal republic in North America, composed of 50 states, a federal district, five major self-governing territories and several island possessions.

Executive departments are government units under the direct supervision of the President. The President's Cabinet includes the Vice President, heads of the 15 executive branch agencies below and the Attorney General. There are hundreds of federal agencies and commissions within each department with various responsibilities.

The 15 executive agencies include:

1. Department of Agriculture
2. Department of Commerce
3. Department of Defense
4. Department of Education
5. Department of Energy
6. Department of Health and Human Services
7. Department of Homeland Security
8. Department of Housing and Urban Development
9. Department of the Interior
10. Department of Justice
11. Department of Labor
12. Department of State
13. Department of Transportation
14. Department of the Treasury
15. Department of Veteran Affairs

The United States federal government – the executive departments, government agencies and commissions within each – is constantly seeking private-sector organizations, referred to as federal contractors, to support various federal government initiatives or improvements for such things as building roadways, migrating to the cloud and enhancing United States defense systems.

Government organizations and agencies issue requests for proposals (RFPs) to solicit private-sector contractors to bid on the work that needs to get done in a specific time period, in the form of a proposal. The winning proposal then gets awarded with the contract.

Government contracting, also referred to as “acquisitions” or “public procurement,” is the act of obtaining goods and services from a business (i.e., the contractor) on behalf of a public authority such as a government agency. Government procurement generally accounts for approximately 10 to 15 percent of gross domestic product (GDP) in developed countries, making up a substantial part of the global economy.

Federal government contracting in the U.S. is governed by the Federal Acquisition Regulation (FAR), the principal set of rules related to government procurement in the United States. (The FAR technically applies only to executive branch agencies, so some agencies, such as the Postal Service, are not required to follow this regulation.) Defense organizations are also subject to the Defense Federal Acquisition Regulation Supplement (DFAR), which is specifically geared towards Department of Defense contracts and can be used in addition to the FAR.

Specifically, federal contracting includes goods or services purchased by the executive, legislative or judicial branch of the federal government – although the executive branch does the majority of federal spending.

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Contractors can find United States federal contract bids from any of the previously mentioned executive departments, as well as from the hundreds of smaller agencies beneath them. Specifically, a contracting officer is the person within the government to work with - the contracting officer is the person who can legally bind the United States to a contract. Different agencies have different contracting officers.

Each of these federal agencies uses several methods of advertising their intent to spend money, including socioeconomic set-aside programs and government websites such as SAM.gov. Sometimes, agencies also offer a preview of upcoming contracting opportunities and solicitations by hosting industry days. And many contracts can be found by getting on the GSA Schedules program. Federal bids can be found in all of these places and in market intelligence tools such as GovWin IQ from Deltek, where contractors can find federal contracting opportunities in one comprehensive platform.

U.S. federal government contracts belong to two general categories: fixed price and cost reimbursement.

Fixed-price contracts

All federal agencies offer fixed-price contract opportunities and generally provide a firm price for the work completed or items supplied. However, an adjustable price level is sometimes used for a ceiling price, a target price (including the target cost), or both.

Cost-reimbursement contracts

Also called cost-plus contracts, these are types of contracts where a contractor is paid for all of its allowed expenses up to a set limit, plus additional payment to allow the company to make a profit. Cost-reimbursement contracts carry additional obligations for the contractor in accounting for the costs they seek for reimbursement.

Additional Types of Federal Contracts

There are several other contracting methods and vehicles that the federal government commonly uses. Some methods will be a better fit for some businesses depending on the types of products or services that they offer. Three of the most commonly used methods include:

• Indefinite Delivery/Indefinite Quantity (IDIQ) contracts: IDIQ contracts are often used to provide the government with flexibility in procurements where the exact time period or parameters of need are not yet known.
• GSA Schedules: These long-term government contract vehicles (sometimes called Multiple Award Schedules or Federal Supply Schedules) are intended to facilitate the purchase of commercially available products and services in a more simplified manner.
• Time and Materials Contracts: Time-and-materials (T&M) contracts allow government purchasing officials to buy supplies or services based on actual material costs and direct labor hours at specified fixed hourly rates.

Federal Prime Contracts

A prime contract is a type of contract award given to a prime contractor directly by a government agency. These contracts have specific evaluation criteria that help directly reward a federal contractor with a two-way agreement to provide specific goods or services.

Federal Subcontracts

Prime contractors can seek out other contractors to serve as subcontractors to provide some of the goods or services included in a government agreement. These federal subcontracts are good ways for small business owners to get their companies started in public sector sales. There are various business development programs and useful guides that can help small businesses get started on the federal contracting process and win contracts from federal agencies like the Department of Defense.

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Government contracts can be found on government websites and market intelligence platforms that provide comprehensive information on the government contracting market. You need to understand the bidding process, work with the right contracting officer and know how to find opportunities to grow your public sector sales.

To find federal government contracts that fit your business, you will need to identify your target market and search for government contracts that map to your industry and core competencies – giving you the best chance to win more government business.

Deltek has been providing federal government contractors with solutions that support their business endeavors for over 30 years. With GovWin IQ, a market intelligence solution and Costpoint, an ERP solution for government contractors, Deltek helps businesses find, win and deliver on more U.S. federal government contracts.