GovCon Basics: Common Procurement Methods and Terminology

The acronyms and terminology used in federal government contracting can be a labyrinth–one sadly devoid of David Bowie. In this post, I’ll clarify some of the common methods used for government procurements, the regulations defining them, and the terminology associated with them.

While methods of procurement can get complicated (see the Contracting Cone created by Defense Acquisition University), I’ll outline four of the primary procurement methods governed by the Federal Acquisition Regulations (the FAR). These are the most common ways the government buys goods and services. Because they have somewhat different rules it’s helpful to be able to tell them apart. I’ve highlighted key terms in italics

1. Sealed Bidding

Sealed bidding falls under FAR part 14 and contains five basic steps.

First, an agency prepares an “Invitation for Bids” or IFB. The IFB is required to “describe the requirements of the Government clearly, accurately, and completely” without being “[u]necessarily restrictive”; it shouldn’t keep capable contractors from submitting a bid.

Next, an agency must publicize the IFB to prospective bidders. Doing so, the agency is required to provide enough time to enable contractors to prepare and submit bids for the work the government needs.

From there, contractors (in this case bidders) will submit “sealed bids.” Sealed means the government will not open or review until the deadline provided in the IFB. After the deadline, the agency will review the bids and evaluate them without discussions with bidders.

Finally, the agency will award the work to the “responsible bidder” whose evaluation appears to make its proposed performance the “most advantageous to the Government.”

In summary, when the government uses sealed bidding, a bidder will submit a bid responding to a government IFB.

2. Negotiated Procurements

Negotiated procurements are governed by FAR part 15.

Negotiated procurements can be broken down into two parts–sole source acquisitions and competitive acquisitions. In short, the government can procure certain things by opening up the competition to any eligible offeror or limit competition to certain offerors.

The government creates a Request for Proposals, or RFP, which includes descriptions of what it needs and, importantly, information about which contractors are eligible to submit responsive proposals. A contractor which submits a proposal is referred to as an offeror.

As the name would imply, negotiated procurements allow the agency to negotiate with offerors in order to make an award. This process is more flexible than traditional sealed bidding, but also subject to a lot more requirements I won’t cover here (but I and my colleagues have discussed in other posts).

In summary, when the government uses a negotiated procurement, an eligible offeror will submit a proposal responding to a government’s RFP--then the negotiation (fun?) begins.

3. Simplified Acquisitions

Simplified Acquisitions are governed by FAR Part 13.

Though the name would make you think “simplified acquisitions” were less complex than other procurement methods, that’s not always true. While competing for award under a simplified acquisition may be more informal, it can be just as tricky.

Importantly, the government can only use the simplified acquisition method when the potential award will fall under the “simplified acquisition threshold” (which is discussed here). The current threshold is $250,000. However, for certain acquisitions of commercial items, the contract value can go up to $7 million (and even up to $13 million in rare situations such as a contingency operation, emergency or major disaster).

Using this method, the government will publicize a Request for Quotations, or RFQ, containing the government’s needs. Eligible contractors, or vendors, will submit quotations to compete for the work.

4. Federal Supply Schedules

Federal Supply Schedules (or FSS) are governed by FAR Part 8.4.

Also known as Multiple Award Schedules (MAS), Federal Supply Schedules are broad, long-term contracts which can be awarded to a number of different contractors.

Federal Supply Schedules are fundamentally created by only one agency: the General Services Administration (or GSA). However, any other agency may order supplies or schedules off of a Federal Supply Schedule.

First, vendors must get onto a schedule–which can be a complex process. From there, when an agency needs to order something off of a federal supply schedule, it will create an RFQ outlining its needs (as it does with simplified acquisitions). Then, contractors on the schedule that can meet those needs, or vendors, will submit quotations in hope of award.

Awards may be made as task orders (for services), delivery orders (for goods), or blanket purchase agreements (used for services or goods required on a recurring basis).

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A word of caution about this post: it contains very condensed information about the procurement methods used by the federal government. In the real world, procurement can get MUCH more complicated. Koprince Law is here to help. Give us a call if you get lost in the procurement maze!