This paper provides a structured overview of key elements in U.S. federal procurement law. It examines the solicitation process and the role of the Federal Acquisition Regulation (FAR), the two basic methods of contract formulation — formal advertising and negotiation — and the socioeconomic considerations that shape government contracting, including small business set-aside programs. The paper also addresses payment and financing elements such as voucher processing and contract closeout procedures, and concludes with an analysis of the government's intellectual property rights policy under the Bayh-Dole Act. Together, these sections illustrate the complexity and regulatory depth of the federal acquisition system.
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). The following sections examine the key elements of this process: solicitation, contract formulation, socioeconomic considerations, payment and financing, and intellectual property rights policy.
One important process in federal procurement 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 those 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 obtain 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 regardless of 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.).
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 situations where formal advertising is not appropriate. Formal advertising is used when all of the following conditions exist: definitive specifications are used, adequate competition is expected to be available, selection can be made on the basis of the lowest responsive and responsible bidder, and sufficient time exists to solicit, receive, and evaluate bids, and to 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 the financial responsibility and performance capability of the low bidder; and awarding the contract to the responsible bidder with the lowest-priced responsive bid (Position Classification Standard for Contracting Series, GS-1102, 1983).
A variation is two-step formal advertising, a procedure used when the specifications are not sufficiently complete, requiring technical proposals to be submitted and evaluated prior to the 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 standard 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 allows 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).
"Small business and disadvantaged group programs"
"Voucher processing, closeout, and cost audits"
"Bayh-Dole Act and contractor IP protections"
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