Government Contracts

Government Contracts, Acquisitions and Procurements

When the U.S. government has a need for goods or services, it often contracts with small and large businesses to fulfill its needs. The U.S. Department of Defense, for instance, may choose to do business with a manufacturer to purchase aircraft for military use. When a business works with the government, special rules and regulations apply to the transactions. These rules make up government contract law.

A number of statutes and regulations exist to govern government business contracts. These laws are generally meant to encourage competition, achieve socioeconomic goals and ensure that taxpayer money is spent appropriately. They also serve to allow the government powers to alter or terminate contracts that normal businesses may not have.

Additionally, because the government is considered a sovereign entity, laws are put in place for uniform procedures involving litigation and negotiation of contracts.

Federal Acquisition Regulation

The Federal Acquisition Regulation (FAR) governs executive agency acquisitions, mandatory contract clauses, exceptions to certain policies and competition requirements. These regulations are intended to create uniform procedures for acquisition.

The regulations within the FAR are based heavily around statutes such as the Competition in Contracting Act. Most government agencies are required to comply with the FAR. But some agencies, such as the U.S. Mint and the Federal Aviation Administration, are exempt.

Competition in Contracting Act

Passed in 1984, the Competition in Contracting Act (CICA) was meant to reduce costs and encourage competition between businesses, which would in turn allow small businesses to secure contracts with the government. Each government agency must select an advocate to review contracts, and this advocate may challenge contracts that could potentially limit competition.

Under CICA, any qualified company can submit an offer to the government as all procurements must be "full and open." Additionally, if a government agency intends to procure a service or good valued at over $25,000, it must advertise the procurement for at least 15 days first. This way, multiple companies have the chance to bid for the procurement.

Federal Acquisition Streamlining Act

The Federal Acquisition Streamlining Act, which was passed in 1994, aimed to simplify the procedures for government procurement. This law changed the strategy for government procurements, stating that the government should seek the bid with the best value. Additionally, many oversight mechanisms were eliminated.

U.S. Government Accountability Office (GAO)

Established as part of the Budget and Accounting Act of 1921, the Government Accountability Office is often referred to as the "congressional watchdog." It is tasked with monitoring the spending of taxpayer money and reporting the findings to Congress. This includes auditing agency operations, reporting on how well government programs are meeting goals and investigating allegations involving unethical activities.

The GAO also analyzes policies and rules on bid protest rulings and other decisions. The GAO even has the authority to review the Federal Reserve in its operations and functions, though it is not able to review federal monetary policy decisions.

Contract Disputes Act

Passed by Congress in 1978, the Contract Disputes Act (CDA) lays out uniform steps for litigating government contract disputes in order to ensure fairness. As part of the CDA, the government and the contractor are encouraged to deal with the dispute at the lowest level possible.

In order to file a claim, written complaints must be submitted to the government's contracting officer within six years of the incident in question. For claims by contractors that are no more than $100,000, a decision can generally be made within 60 days. Claims by contractors in excess of that amount must be submitted with multiple certifications.

A contractor that is unhappy with the decision on its claim may file an appeal within 90 days. Alternatively, it has a year to file a lawsuit in the U.S. Court of Federal Claims.

The information on this page is meant to provide a general overview of the law. The laws in your state and/or city may deviate significantly from those described here. If you have specific questions related to your situation you should speak with a local attorney.

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