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Contracting with the federal has always been a highly regulated process right from formation through administration with traps along the way for the unsuspecting. Federal government contracting is not like commercial contracting that is generally governed by the Uniform Commercial Code and the common law, this process is governed by a number of statutes and regulations. These statutes and regulations dictate for instance, what process or method a party should use for soliciting a contract, how to negotiate or award a contract and in some instances determine what costs the government can reimburse and how the costs will be accounted for by a contractor. On top of this, the government contractor should always be aware that it is subject to the sovereign’s policy dictates. There are many obligations that the US government imposes through these contracts although in recent times the congress has tried to streamline the process to reduce the burdens on contractors. This is not enough and therefore any entity wishing to enter into government contract should tread carefully. This article will try to go through the federal contracting process (USA, 2010).
There are many statutes and regulations that the government uses in the contracting process. These include: the Federal Property and Administrative Services Act of 1949 (FPASA), The Armed Services Procurement Act (ASPA) of 1947, and the Competing in Contracting Act (CICA). These are the three statutory foundations of the federal acquisition process and the government contract law. The acquisition of all property with the exception of land, construction, and defense agencies’ services, are governed by the ASPA. Similar civilian acquisitions are governed by the FPASA, while the CICA which applies to both civilian and defense acquisitions, require that federal agencies seek and obtain open and full competition where it is possible in the process of contract awarding. A contract may be awarded by a federal agency using a sole source contractor other than full and open competition only in seven circumstances. The uniform policies and procedures for all federal agencies’ acquisitions are contained in the Federal Acquisition Regulation (FAR) that is codified at Title 48 of the Code of Federal Regulations. It addresses or implements almost every statute or executive policy related to procurement. In this way, the FAR makes sure that every stage in the acquisition process is reached (Vacketta, 2010).
The three statutory foundations, the ASPA, FPASA, and CICA put in place two methods of obtaining full and open competition. These are sealed bidding and competitive negotiation. Sealed bidding is characterized by a strict observance of formal procedures. The procedures aim at helping bidders get an opportunity to compete on an equal footing for the contracts. In this type of acquisition, the agency must award a contract to the responsible bidder, one that submits the lowest responsive bid. Contrastingly, competitive negotiation process is more flexible enabling an agency to carry out discussions, asses orders and award contracts basing on price and other important factors (Vacketta, 2010).
As soon as a need is identified by the federal agency, and a decision to go ahead with an acquisition made, the agency must then solicit the sealed bids if time permits for the solicitation, submission, and evaluation of the sealed bids, if the award will be made basing on price and other factors related to price, if conducting discussions with the offerors of bids is not necessary, and if there an expectation reasonable enough, of receiving more than just one sealed bid. After these, the contracting officer of the agency then initiates a sealed bidding acquisition by issuing Invitations for Bids (IFB). These must clearly, accurately and completely describe the government’s requirements. At this stage, the FAR and the case law do not allow for the use of unnecessary restrictive specifications which may limit the number of those bidding. The IFB are then publicized through public displays, newspaper and journal announcements, federal government’s Commerce Business Daily publications, and by mailing them to the contractors and other commercial organizations on the agency’s solicitation list. When this is done, it now becomes the contractors obligation to submit the bids on time as the IFB states, because late bids may not be considered for award unless 1. The bid delayed in the process of mailing, this should be at least five days before the receipt date of the bid, 2. The bid was mishandled by the government after receipt, 3. The bid was sent to the contracting officer by Postal Next Day Service two days prior to the date of receipt of the bid, or 4. The bid was electronically transmitted and received 5.00 p.m one day prior to the receipt date of the bid. All those bids that are received at the required time and place set for their opening are opened and read publicly aloud by the contracting officer. They are then recorded on the Abstract of Offers (Standard Form 1049) and then carefully examined for any mistakes. If no mistake is detected and all administrative measures have been taken, the contracting officer awards the contract to the responsible bidder, one who submitted the lowest responsive bid. This bidder must also meet the following conditions: have enough financial resources to perform the contract; be in a position to comply with the delivery and performance schedule that is proposed; should have a performance record that is satisfactory; a satisfactory record of business ethics and integrity; and many other factors that come with contract performance (Stanberry, 2008).
If one does not meet the conditions of sealed bidding, then the contracting officer may award the bid using the competitive negotiation method. This allows for flexibility in contract awarding. Here the contracting officer is allowed to engage in discussions with offerors and also during evaluation he may consider factors not related to cost. The process starts with the issuance of a Request for Proposals (RFP) by the contracting officer. If the procurement exceeds $25,000, then the Contracting officer synopsizes a notice of the action of the proposed contract in the CBD just as in sealed bidding. RFB should at least state the need of the agency, anticipated conditions and terms of the contract, information that should be included in the proposal, and all the factors that the agency may consider in the evaluation of the proposal and awarding of the contract. After these, all the parties interested submit their proposals. Evaluation involves assessing the proposal’s relative qualities basing on the factors that the solicitation specified. In essence the contracting officer evaluates the cost or price proposal of the offeror, his or her past performance in previous commercial or government contracts, the technical approach, and any other factor that can be identified for award. Ambiguous proposals are also clarified at this stage. The contracting officer may then award a negotiated contract without any additional negotiations, what are famously called “discussions.” But if the contracting officer wishes to go ahead with discussions, then he or she can identify those offerors falling within the competitive range to have discussions with and notify those who will not have qualified about it. This is necessary according to FAR to maximize the ability of the agency to get best value as required by the evaluation. Here care is taken by the contracting officer not to show favourism, reveal the technical solution and price of an offeror without permission, disclose names of those providing information about an offeror, or furnish information from sensitive sources. After discussions some more offerors may be eliminated and the remaining ones asked to revise their proposals to make clarifications and submit a final proposal. Following the procedures set by the RFP; the contracting officer analyzes the final offers and selects the qualified offeror, one that is advantageous to the government. The contracting officer has the discretion to award or not to award if he or she sees that the decision is in the government’s best interest (O’Connor & Wangemann, 2009).
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Government contracts mostly have many standard terms and conditions that are commonly called clauses. On many occasions these clauses are by regulation non negotiable. Three of these common clauses unique to government contracts are: the termination for convenience clause; the changes clause; and the default clause.