What is Government Contracting?

Government Contracting is doing business with the single largest buyer of goods and services in the world'
The Federal Government of the United States.

President Donald J. Trump signed a $1.3 trillion spending bill on March 23, 2018 that includes a $160 billion Increase in defense spending over two years, reversing years of decline and unpredictable funding.

In Fiscal Year 2019, total US government spending for defense (including military defense, veterans affairs, and foreign policy) is budgeted to be $951.5 billion.
Military spending is budgeted at $688.6 billion.
Veterans spending is budgeted at $199.6 billion.
Foreign policy and foreign aid spending is budgeted at $63.3 billion.

Three major characteristics distinguish Government acquisitions from private sector contracts.

Government contracts are subject to myriad statutes, regulations, and policies which encourage competition to the maximum extent practicable to ensure proper spending of taxpayer money, and advance socioeconomic goals.

Government contracts contain mandatory clauses which afford the Government special contractual rights, including the right to unilaterally change contract terms and conditions or terminate the contract.
The most important clauses are the “Changes” clause, the “Termination for Convenience” clause, and the “Default” clause.
Foremost among these is the Federal Acquisition Regulation (FAR), which are codified in Parts 1 through 53 of Title 48, Chapter 1 of the Code of Federal Regulations.

Due to the Government’s special status as a sovereign entity, claims and litigation follow the unique procedures of the Contract Disputes Act

Government Contracting represent a tremendous revenue opportunity.

The U.S. Government is the world’s largest customer
It buys all types of products and services in both large and small quantities
It is required by law to provide opportunities to everybody.

The Government’s Contracting Objectives

As you might expect, the government is very particular about how it purchases products and services. The general aims of the rules and regulations governing federal contracts are to ensure that:

Competition is fair and open.
The process of requesting proposals, evaluating bids, and making awards should take place on a level playing field with full visibility.
Any business that is qualified to bid should be considered.
Products and services are competitively priced.
The government seeks pricing that is commensurate with its formidable buying power.
The government gets what it pays for.
The government protects itself by carefully defining requirements, terms and conditions for all purchases.
Contractors must document that they have fulfilled all requirements and met all terms in order to be paid.

Both the government and contractors comply with the law.
Different rules and regulations apply to different types of purchases.
The Federal Acquisition Regulation (FAR) or Defense Acquisition Regulation Supplement (DFARS) apply to most federal agencies.
Individual organizations often have their own rules as well.


There are two broad categories of government contractors.

Prime Contractors.
They bid on and win contracts directly from government agencies.
After award, the prime contractor company is the entity that is legally responsible for all aspects of fulfilling the contract, such as interacting with the government customer, recruiting staff, organizing and managing teams of subcontractors, and meeting all delivery requirements.

They join prime contractors’ teams, usually to provide a specific capability or product.
Subcontracting is an excellent way to enter the government contracting market and to participate in larger-scale opportunities.
The advantage of being a “sub,” is that you’ll be responsible only for your area of expertise, not managing the entire contract.
You can gain valuable experience (called “past performance”) that will qualify you for future contracts.
But note that you’ll be serving two customers:
Your prime contractor will determine what percentage of the work (called “workshare”) and which assignments (called “tasks”) you will receive.
You may or may not work directly with the government, at the discretion of your prime.

To serve as either a prime or a sub, you’ll need to qualify and register as a government contractor.
Then you can begin to seek both prime contractors and federal agencies as customers

These general concepts percolate through all aspects of becoming and operating as a government contractor.

Find out if government contracting is right for your business
Learn what you need to do to get started as a federal contractor
Learn how to find government contract opportunities and customers


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