All governments must secure the goods and services essential to meeting their responsibilities. The acquisition process is commonly known as government procurement. Every government entity procures goods and services, from large federal government agencies right down to the smallest township.
In general, businesses should take a close look at government opportunities. Business to government (B2G) is a much larger part of the U.S. economy than it was in the past.
For instance, in 2015, total government spending was 35.4% of the gross domestic product (GDP). In 2022, it was estimated at 40.2% of GDP — an increase of 13.6% year over year.
What is Procurement?
To procure something is simply to obtain or get it.
Procurement is the process of buying goods and services from other businesses and organizations. This includes purchasing items such as office supplies, equipment, software, and furniture. It also includes purchasing services such as consulting, legal advice, engineering, accounting, marketing, advertising, and training.
What is Government Procurement?
Government procurement is the process by which governments acquire goods and services from commercial bidders. It is also called public procurement.
Often, the process is heavily regulated. Statutes, rules, and regulations exist to promote the proper use of taxpayer dollars. Transparency in government procurement limits corruption.
U.S. Government Procurement Process
The federal government procurement process secures goods and services needed by federal agencies.
Titles 10 and 41 of the United States Code govern federal procurement. Two post-WWII Congressional acts are the basis for federal procurement. They are the Armed Services Procurement Act of 1947 and the Federal Property and Administrative Services Act of 1949.
In 1979, Congress provided a simpler, more direct path for government purchasing. It passed the Office of Federal Procurement Policy Act Amendments.
The Federal Acquisition Regulation (FAR) followed. FAR became the authoritative source for those seeking government contracts. The Competition in Contracting Act (CICA) launched the competitive government contract bidding process. Congress passed CICA in 1984.
Since then, various proactive efforts have expanded opportunities for smaller businesses.
The Small Business Administration (SBA) empowers small businesses seeking government contracts. The SBA’s 8(A) Program helps disadvantaged small businesses. The Minority Business Development Agency (MBDA) is another resource for minority-qualified enterprises.
RFP, RFQ & Invitation to Tender
B2G is a highly formal process compared to consumer and business marketing. In the procurement process, it is important to distinguish between a Request for Proposal (RFP), a Request for Quotation (RFQ), and an Invitation to Tender, which are all contractually binding.
- An Invitation to Tender is common in large public sector projects. Project details are pre-established, and bidders are pre-qualified.
- By contrast, a Request for Quote is often smaller in scope. An RFQ features specific requirements for goods or services. Price is usually a key consideration.
- A Request for Proposal is less rigid. It publicly informs prospective suppliers of government procurement opportunities. There's a focus on bidders determining solutions to stated needs. Research and development are often integral to the RFP bidding process, helping contractors win government contracts.
Businesses must meet various standards designed to verify their legitimacy and viability. They must demonstrate a capacity to deliver quality goods or services in a timely way. A contract between a business and the government states negotiated prices. They also include a variety of predetermined terms and conditions, including quantities, delivery dates, and more.
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How the Government Procures Goods and Services
Agencies typically solicit bids on one or more websites. Prospective contractors maximize opportunities to find government contracts by registering on all applicable platforms.
Look to these sites for leads and opportunities:
- General Services Administration (GSA) for government structures and real estate
- Dynamic Small Business Search (DSBS) for small business contractors
- FedBizOpps (FBO) for federal projects valued at $25,000+
Pro Tip: Contractors should note that FedBizOpps (FBO) officially transitioned to SAM.GOV at the beginning of November 2019. This move was part of a broader effort by the General Services Administration (GSA) to consolidate federal contracting information into a single platform. - NYS Contract Reporter for contractors in New York state
- Global Tenders and Tenders Info for projects in various countries
- GovWin IQ for comprehensive market intelligence for U.S. federal, state and local as well as Canadian government contracts.
APEX Accelerators are designed to expand access to government contract opportunities. Their services are free to access and are especially helpful for Small Business and new GovCon Market entrants.
Formerly known as the Procurement Technical Assistance Program (PTAP), or Procurement Technical Assistance Centers (PTACs), Apex Accelerators were authorized by Congress in 1985 to expand the number of businesses capable of participating in government contracts.
The National Defense Authorization Act (NDAA) for FY 2020 ordered the PTAP to move to Under Secretary of Defense for Acquisition and Sustainment OUSD (A&S); and the DoD Office of Small Business Programs (OSBP) began to manage and operate PTAP with a new name, APEX Accelerators, effective FY 2023.
The APEX Accelerators program focuses on building strong, sustainable, and resilient U.S. supply chains by assisting a wide range of businesses that pursue and perform under contracts with the Department of Defense (DOD), other federal agencies, state and local governments, and government prime contractors.
Federal Government Procurement
Federal government procurement is often a complex process, often taking months or years. Many federal projects are in the construction and defense sectors.
For example, the Department of Defense (DOD) secures military equipment required for national security. Multi-year contracts for fighter jets, submarines, and tanks often run into tens of billions of dollars. Smaller businesses learn about DOD bidding through its Office of Small Business Programs.
The Department of Transportation (DOT) also procures materials and services for the nation's transportation infrastructure. This includes highways and rail lines. It also includes aviation and maritime infrastructure.
Federal Government Procurement Process
There are various stages in the procurement process. Although the process varies across federal government applications, these stages are common.
Procurement Planning Stage
Procurement begins with setting the number of goods and services needed now and in the future. The longer and more stable the history of usage, the easier your analysis becomes.
Market Research Stage
Once you know what you need, it's time to find out who offers the quality and quantity you require. If the need is for supplies, there might be a Request for Quotation. Here, a procurement manager requests initial pricing from suppliers. Sourcing specialists may help the procurement manager identify new ways to sell to the federal government.
Solicitation Stage
The government agency solicits bids on one or more websites. Solicitations must be consistent with applicable statutes and regulations. The procurement authority has wide statutory discretion to make its business decisions. Although price often drives the process, agencies also ask these questions.
Does the bidder have:
- Legal eligibility?
- Proper resources, staffing, and knowledge?
- The ability to meet production and delivery demands?
- A history of proper performance?
- Access to appropriate equipment and facilities?
Contracting Stage
The contracting officer is the only person who can legally bind the government. They enter into various kinds of contracts on behalf of the government. These include fixed-price and incentive contracts. They also include cost-reimbursement, time-and-materials, and task-order contracts.
The contractor's procurement manager tracks all invoices, receipts, and other documents. Specialized procurement software is often employed for this purpose. Also, this data will make future market research that much more efficient.
Federal Bid Protests
Contractors have a right to protest the terms of a solicitation or the awarding of a federal contract.
The Government Accountability Office (GAO) resolves disputes. It is set up as an objective, impartial, and independent forum.
Bid protests are formally adjudicated by the GAO's Procurement Law Division. Bid protests have become increasingly successful over time. This further incentivizes contractors to file protests in the future.
What is the Federal Procurement Data System (FPDS)?
The Federal Procurement Data System (FPDS) is the single source for federal procurement data. A new and improved FPDS is re-engineered as a real-time enterprise information system.
Once businesses learn how to do business with the federal government, working with local and state agencies is much easier.
State and Local Government Procurement
States and local governments also use taxpayer dollars to procure goods, services, and information systems.
For example, State departments of transportation (DOTs) solicit bids from contractors to build, upgrade, and maintain state highways and other state transportation infrastructure.
Local governments also procure the materials and services required to build and maintain roads. They do the same for public buildings, parks, and water/sewer systems. Municipalities solicit bids for everything from office supplies to sand and salt for slippery roads.
State Government Procurement Process
State government procurement bears similarities to federal procurement. For example, the Georgia Procurement Manual lists seven stages of procurement:
- Need identification
- Pre-solicitation process
- Preparing the solicitation
- Soliciting bids
- Evaluating the proposals
- Awarding the contract
- Completing a legal contract
However, there can be differences from state to state.
Canadian Government Procurement
Public sector procurement spending in Canada is estimated at least $200 billion Canadian Dollars (CAD) annually, or approximately $150 billion U.S. Dollars (USD) at current exchange rates.
However, this figure includes the cost of social benefits and fixed capital, two significant areas of spending that do not fall under procurement methods traditionally open to U.S. suppliers. As such, the market value of Canadian government contracts available to U.S. vendors is more realistically estimated between $65 and $70 billion CAD ($49 to $53 billion USD).
The Public Works and Government Services Canada (PWGSC) buys most goods and services. Agencies and other government entities submit requisitions to PWGSC. In the Canadian procurement process, contracting officers handle the bids. They work at regional offices and at PWGSC headquarters.
PWGSC procurement must adhere to a complex legal framework. There are statutes, regulations, agreements, policies, and guidelines to follow. There is also a challenge process. This provides recourse when there is an objection to a contract award. Competitive bidding seeks the optimum value for Canadians.
The Government of Canada awards most contracts on a competitive basis. However, a non-competitive procurement process occurs in certain special circumstances. Various Canadian laws and regulations are written to deliver access, competition, and fairness. CanadaBuys is the official source for Government of Canada tender and award notices.
