Federal Contracting Basics

By Lawrence J. Fedewa - - Wednesday, September 16, 2015

When you are discussing your offerings with a potential government customer, the government manager is likely, at some point, to ask, “And, how can I get to you?” What the government customer means is this: “If I decide that I would like to buy what you are selling, what contractual process would I use?”

There are several possibilities: The government might have to participate in an “open market, open competition” to find a supplier for the product or service you want to provide. There are two problems with this procedure from your point of view. First, it might take a year or more to close the deal; second, the winner might not be you, but someone else entirely.

As a matter of law or of regulation, there are certain procurements which must be fulfilled using this process. Such a requirement can derive from the dollar value of the procurement or from the nature of the tasks to be performed. And these standards will vary from agency to agency. In general, if you are talking about a very large government procurement, for example, providing long distance telephone service for a Cabinet Department (e.g. Department of Defense), or a new weapon system, you can expect competitive bidding, with all the requisite announcements, bidders’ meetings, evaluation panels, negotiations, etc., that are mandatory before award. These procedures must be followed very strictly, in case there is a challenge — and these days it is very likely that any such award will be challenged. Also, “very large” procurements are relative. Some small agencies consider procurements “very large” that larger agencies consider routine. We recently won a competitive procurement from a small agency for about $3 million, and at the same time were awarded about the same amount in contracts from a much larger agency using a MOBIS award (see below). The difference in bidding procedures was dictated by the size of the procurements the two agencies were used to.

Aside from the full-blown competitively bid contract, there are several contracting possibilities which are much easier and faster for the agency. These alternatives are absolutely necessary, because, if the government had to follow the full competitive process for everything it bought, the government could not function. The process is too cumbersome, too labor-intensive, too slow, and too expensive to allow the bureaucracy to accomplish anything in a timely manner. It would be like declaring war today, and not being prepared to initiate hostilities until two years from now. Or, ordering new security procedures at airports and replacement of contractor airport security personnel by federally employed and trained personnel tomorrow. Can’t be done.

So government managers have devised short cuts. These short cuts are frequently accused of fostering corruption. But the alternative, relying on the long version of competitive procurements, would also would also risk corruption. In order to function at all, government managers would have to find some way to obtain the goods and services they need in a timely fashion. Most likely, they would follow the precedent of the Defense Department on major weapons procurements, namely, huge procurements lasting many years if not decades, designed to provide any and all requirements for an infinitely complex and expensive project. We are familiar with the charges of delay, cost overruns, project failure, and conflicts of interest which accompany these programs on an almost daily basis. So, the alternatives available to the government can all be abused. In my personal opinion, the necessary reliance on a single huge contractor to conduct a major government service is more likely to impinge on the prerogatives of democracy and the power of the people to control their government through their elected representatives than the practices now used by the government to conduct its business.

What are those practices? The principal tool the government has devised to allow it to make its procurements in a timely fashion and in manageable quantities is the “multi-award schedule”. A “multi-award schedule” (MAS) is a list of contractors each of whom has been investigated by the sponsoring agency for some level of legitimacy (varies by agency and program) as to its competence and financial stability, and with whom a price list has been negotiated and is thereafter certified by that agency as being a “fair” or “best” price to the government.

The multi-award contract has been awarded in a competition and thus meets the Federal Acquisition Regulations’ (FAR) requirements that all government procurements be made after at least some consideration of the competitive marketplace. The goal of these regulations is to provide the government with the best products and services at the best prices available. In most cases, this multi-award contract can be used throughout the government, although the terms and conditions of the programs vary widely from agency to agency. Variations of the MAS are the Blanket Purchase Agreement (BPA) and the “indefinite delivery, indefinite quantity” (IDIQ).

The most commonly and easily used MAS programs are those of the General Services Administration (GSA), which recently has proclaimed itself the Contracting Office for the entire Government. GSA has a number of increasingly popular MAS programs, the most widely used probably being what are abbreviated as “Schedule 70” which can be used by agencies to purchase computer hardware and related services, and the Management, Business and Organizational Improvement Services (MOBIS) schedule for services aimed at improving agencies’ management. There are now an increasing number of more specialized MAS programs which in effect subdivide the general MOBIS classifications.

An MAS contract does not provide for any particular work to be done. What it does do is establish the contractor’s qualifications to do certain kinds of work or supply certain products, as well as the terms, conditions, and prices under which any work procured by an agency will in fact be done. So, an MAS does a lot of the “pre-contract” work that must be done to execute a federal procurement.

GSA’s MAS programs are notable for their simplicity and therefore their usefulness to Government buyers. The agency in question uses its own funds, its own contracting office, and its own direct relationships with the contractor. By using an MAS contractor, the agency’s own contracting office can short-circuit the time required for producing a contract, since much of the work necessary to produce a competitive bid has already been done by GSA.

Another category of contractual short cuts is the preferential contracting schedules designed to foster minority and women-owned business growth. The special qualifications required of firms to participate in these programs are even more complicated than MAS schedules..

If you want to do business with the government quickly, the easiest path is to become a subcontractor to an established MAS prime contractor. We recommend this route if you are not sure at this time whether your company can show sufficient commerciality, compliance, and capability to qualify as a prime contractor directly. However, if you are staffed with the expertise to deal with the whole proposal process and can wait a year to finish the pre-award submission and negotiation process, you should consider becoming a schedule holder. But whichever way you go, the most efficient path leads through an MAS.

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