Procurement Law Overview, Part One Solicitation Elements

The federal government's basic procurement or acquisition process involves an agency identifying the goods and services it needs also known as the agency's requirements, determining the most appropriate method for purchasing these items, and carrying out the acquisition. Although this process is simple in theory, any given procurement can be complex, involving a multitude of decisions and actions (Halchin, 2006).

One process that is involved is that of solicitation. In the basic federal procurement process, acquisition personnel determine what goods and services they need and then post a solicitation on the Federal Business Opportunities website. Interested companies prepare their offers in response to the solicitation, and, in accordance with applicable provisions of the Federal Acquisition Regulation (FAR), agency personnel evaluate the offers. Another type of procurement opportunity for a company is to serve as a subcontractor for a government contractor. To be eligible to compete for government contracts, a company must get a Data Universal Numbering System (DUNS) number, register with the Central Contractor Registry (CCR), and complete an Online Representations and Certifications Application (ORCA). Several agencies, such as the General Services Administration (GSA), provide assistance and services to existing and potential government contractors. Research and development (R&D) procurement opportunities may involve traditional contracting methods, such as solicitations and contracts, as well as non-traditional methods, which include agency-sponsored contests and venture capital funds (Overview of the Federal Procurement Process and Resources, n.d.).

In a negotiated procurement, a contracting agency has broad discretion in deciding whether to cancel a solicitation, and need only establish a reasonable basis for doing so. A reasonable basis to cancel exists when, for example, an agency determines that a solicitation does not accurately reflect its needs, or where the agency determines that it no longer has a requirement for the item solicited. Moreover, an agency may cancel a solicitation no matter when the information precipitating the cancellation first arises, even if it is not until proposals have been submitted and evaluated (FAR 15.206 (e): Cancellation of solicitation, n.d.).

Contract Formulation Elements

Contracting is accomplished by two basic methods-formal advertising and negotiation for acquiring services and products from the private sector for the Government. Formal advertising is the preferred method by statute. However the law provides exceptions that permit negotiation in those situations where formal advertising is not appropriate. Formal advertising is used when all the following conditions exist: definitive specifications are used, adequate competition is expected to be available, selection can be made on the basis of the low responsive, responsible bidder and sufficient time exists to solicit, receive and evaluate bids, and determine the responsibility and responsiveness of the low bidder (Position Classification Standard for Contracting Series, GS-1102, 1983).

Procedural steps in formal advertising involve: preparing an invitation for bid which includes a complete technical description of the item or construction desired, delivery and other terms and conditions, and the mandatory or optional provisions and clauses of the proposed contract, publicizing the requirements, issuing the solicitation document, receiving the bids and publicly opening and recording sealed bids, reviewing the bids for responsiveness to the solicitation, determining financial responsibility and performance capability of the low bidder and awarding the contract to the responsible bidder with the lowest priced responsive bids (Position Classification Standard for Contracting Series, GS-1102, 1983).

A variation is two-step formal advertising, a procedure which is used when the specifications are not sufficiently complete, requiring technical proposals to be submitted and evaluated prior to submission of priced bids. Only those bidders whose proposals are technically acceptable may then submit price bids on their respective technical proposals in step two, which proceeds as does straight formal advertising. Negotiation is used when formal advertising is not appropriate and there is justification under one or more of the statutory exceptions to formal advertising. The negotiation method provides for the Government to discuss and explore with one or more offerors the soundness or reasonableness of their offer. Competition is obtained on every solicitation unless it is impracticable and sole source procurement is justified in writing (Position Classification Standard for Contracting Series, GS-1102, 1983).

Socioeconomic Considerations

A defining characteristic of public procurement is the requirement for purchasing professionals to comply with applicable socioeconomic laws and regulations that do not apply to the private sector. While these socioeconomic procurement programs for public agencies require additional considerations in the procurement process, they also allow agencies to benefit from the contributions that small businesses bring to an organization and the economy. Reforms of public procurement policy that are intended to streamline procurement...

As a result, the impact of these reforms on small business participation is a matter of debate in the procurement community (Reed, Luna & Pike, n.d.).
The U.S. Government has a primary legal requirement to buy supplies and services on a competitive, efficient basis. However, the U.S. Government has also implemented through the acquisition process certain policies to foster socioeconomic objectives. Programs have been created to provide increased contracting opportunities to small, small-disadvantaged, women-owned small, HUB Zone small, veteran-owned small, and service-disabled veteran-owned small businesses. Contractors must also comply with ancillary requirements arising under various laws and Executive Orders. The largest socioeconomic programs consist of those that have been established for small businesses. The most noteworthy of small business groups singled out for preferences are small business concerns and small business concerns owned by/controlled by socially and economically disadvantaged individuals. Both types of firms have been given special status in U.S. Government contracting under the Small Business Act (14 FAH-2 H-240 Socioeconomic Considerations, 2011).

Federal agencies have been directed to take appropriate action to facilitate, preserve and strengthen women's and veteran's business enterprises and to ensure full participation by women and veterans. There are no specific set-aside programs for women-owned small or veteran-owned small businesses however; the programs for small and small disadvantaged businesses under the Small Business Act are applicable to women-owned small and veteran-owned small businesses (14 FAH-2 H-240 Socioeconomic Considerations, 2011).

Payment and Financing Elements

Voucher processing is just as significant as any other facet of contract administration. Payment to the contractor for the supplies and services delivered is the government's responsibility under the contract. The government supposes the contractor to meet all contract necessities for superiority, amount and appropriateness. The contractor anticipates no less of the government in meeting its responsibility to appropriate, precise payment for supplies and services expected. A plan or process for rapidly and professionally meeting this obligation is as necessary as the COTR's oversight monitoring plan. Consequently, it is current upon program, procurement, and finance officials to appreciate undoubtedly their roles and responsibilities related to evaluating and doling out vouchers. This will make sure that payment is only made to contractors who execute in agreement with contract terms and conditions. It is essential that these responsibilities are talked about with the contractor and COTR throughout the post award orientation conference. A significant feature of voucher appraisal, endorsement, and processing is good communique between the COTR, contracting officer, and finance administrator to make sure that payment is made on time (A Guide to Best Practices for Contract Administration Office of Federal Procurement Policy (OFPP), 1994).

Contract closeout starts when the contract has been actually completed and all services have been executed and products delivered. Closeout is finished when all administrative measures have been completed, all disagreements settled, and final payments have been made. The procedure can be simple or complex depending on the contract kind for cost-reimbursement contracts. "This process requires close coordination between the contracting office, the finance office, the program office, and the contractor. Contract closeout is an important aspect of contract administration" (A Guide to Best Practices for Contract Administration Office of Federal Procurement Policy (OFPP), 1994).

The contract audit procedure also affects contract closeout on cost compensation contracts. Contract audits are necessary to settle on the reasonableness, allowability, and allocability of costs sustained under cost reimbursement contracts. Even though there is a pre-award audit of the contractor's application, there is a cost acquired audit of the contractor's assertion of incurred costs and a close out audit to settle the contractor's final claim under the contract to acquired costs formerly audited. When there is an obstruction in completing the cost acquired and closeout audits, contracting administrators frequently cannot complete the closeout process for a lot of cost reimbursement contracts. Even though the FAR does permit agencies to use quick closeout procedures to close some cost reimbursement contracts devoid of a closeout audit, discrepancies have been noted in the use of the procedures. It is significant that contracting officials have a good working association with the agency's auditors and the cognizant audit agency to achieve contract closeout under cost-reimbursement contracts (A Guide to Best Practices for Contract Administration Office of Federal Procurement Policy (OFPP), 1994).

The Government's Intellectual Property Rights Policy

Managing ones intellectual property under a federal government contract can be hard. The government normally respects a contractor's need to protect its intellectual property. Since 1980, the Bayh-Dole Act has streamlined how the government deals with private intellectual property and make…