Sunday, February 2, 2014

Government Contracting in the U.S.

As the government increasingly outsources its IT projects to contractors, I became interested on how companies become contractors and navigate the contracting process as well as issues in the current contracting landscape today.   The Federal Acquisition Regulation (FAR) contains many rules for government contracting in order to prevent corruption. There are also certain requirements that have been set:

-          Government purchases from $3,000 to $100,000 must be go towards small businesses
-          23 percent of all contracts must be directed to small businesses
-          Contractors must meet standards for safety and wages and keep track of their costs
-          Agencies can purchase items with a credit card if it is below a certain amount.  Above this amount, they must issue RFPs and receive competing bids.

In order to become a contractor to the federal government, companies have to do several things:

-          Figure out which and search for which agencies desire their product.  If it is a routinely purchased item, it appears in the GSA schedule.  If it is a bid worth more than $25,000, it will appear in
-          Meet “Past Performance” requirements and respond in time to bids
-          Receive a DUNs number, enroll in CCR, and be classified as a business in the NAICS – if a business is small, minority or veteren-owned, it can be to their advantage
-          Decide whether to be a subcontractor to a larger contractor, or, if you are a large company, decide how to do small business subcontracting.  In order for businesses to win contracts more than $550,000, they must include small businesses in subcontracting.
-          Gain customer and competitive intelligence in order to win contracts; network and lobby with government procurement officers and attend procurement conferences; use procurement consultants to help win bids

After learning all this information on government contracting, I wondered what were ways the process could improve and found this blog post from the Sunlight Foundation (link is below) about how IT project contracting.  Several ways to improve are recommended such as:

-          Open source software could be an alternative to proprietary software and there should be guidelines from OMB on how it can be used within government
-          Reducing the past experience requirements for contractors
-          Having ways to effectively evaluate and do analysis on bids to “to better understand where the biggest and smallest capacities lie in the government contractor sector, which solicitations are likely to get more bids and thus require more reviewing capacity, and which solicitations require more publicity to get a broad set of competitors.”  In addition, this bid analysis could identify companies whom have had a bad performance record or other violations to make it easier to sort through bids.
-          Reducing the requirement of the government to have to be legally justified in rejecting a company and the ability of a company to protest with GAO

This article was very interesting to read especially on how with more analysis and data sharing about contract bids, it could be much easier to choose contractors and create improvements.  I also wonder if small business requirements in contracting are helpful to the system.  It will be interesting to see if all the publicity from will spur changes in the future.

Sources used:

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