Federal Acquisition Process

The federal government spends more than $400 billion on supplies and services each year. This makes it the largest buyer of goods and services in the world.  Spending of this magnitude requires processes that are coordinated and integrated in order to fulfill agency needs in a timely manner and at a reasonable cost (FAR 7.102).  

  In 1979 a statute was released directing the Office of Federal Procurement Policy to issue policies and processes that would promote the development and implementation of a uniform procurement system.  At this time each agency had their own system of procurement, including their own programs, processes, databases and rules.  As a partial response to this directive, the Federal Acquisition Regulation (FAR) was implemented in 1984.  The FAR contains the principal rules of the acquisition system and established the creation of a unified acquisition planning process.

        The acquisition process is referred to as “the basic framework, or model, for obtaining supplies and services by the federal government” (Engelbeck, 2002).  More simply put it is how the government fulfills its need to purchase goods and services.  From contract formation through administration, contracting with the federal government is a highly regulated process.  The primary source of information and guidance is the FAR.  The FAR, “…implements or addresses nearly every procurement-related statute or executive policy…” and in doing so “…reaches every stage of the acquisition process” from beginning to end (Federal Government Contract Overview – Find Law).          

        The acquisition process is typically divided into six phases, although not all programs go through the same number of phases.  A typical Federal acquisition project starts with the development of strategies that will manage the acquisition lifecycle from planning, soliciting and evaluating offers, to awarding and administering contracts through closeout.  

There are two basic methods of acquisition contracting or procurements.  The first is the sealed-bid method.  Price is the most important factor in this method and all bids are kept sealed and confidential until public opening.  Using this method, there is no discussion between buyer and seller before contract award.  The second method is competitive negotiated proposals and requires negotiations between the buyer and seller.  These negotiations could include discussing deficiencies or weaknesses in the offeror’s proposal as well as the opportunity to revise the offer before the award of the contract (Engelbeck, 2002).  FAR Part 15 classifies any contract awarded using methods of procurement other than sealed bidding as a competitive negotiated contract.

Market research and acquisition planning are key elements to ensure that the Government’s needs are met in the most effective, economical and timely manner.  These key components are part of the first phase of the acquisition process, determination of requirements.  “Government needs fall into one of four general categories: (1) a need to establish a new operational capability, (2) a need to improve an existing capability, (3) a need to exploit an opportunity to reduce cost or enhance performance, and (4) a need to preserve a current capability through maintaining or replenishing inventory” (Engelbeck, 2002).

 Once the need is established, the planning phase begins with the formation of the acquisition team.  Most all planning activities incorporate efforts of the team in order to complete market research and show documentation to support the need.  The successfulness of the acquisition depends on the relationship the acquisition team has with each other as well as the cross-functionality of the team.  The FAR states that the acquisition team will “conduct business with integrity, fairness and openness”.  “ One of the acquisition team’s most important tasks is designing efficient competitive processes” (Edwards, 2003).  The team consists of “the ultimate user, contractors, suppliers, and acquisition professionals” including a CO or Contracting Officer (Engelbeck, 2002).  The CO is the only member of the team that can legally bind the government by signing a contract.  Therefore, it is imperative that the CO understand the customer’s needs and maintain a good relationship with the acquisition team.  Once the acquisition team is formed and the acquisition method is determined, requirements, costs, schedule, funding and performance are identified and defined and performance risks are assessed.  

                 Once the planning phase is complete and all required documentation is available and approved, the acquisition team develops the solicitation.  The solicitation requests bids or proposals from contractors based on the information gathered during the planning phase.  It is specific about what is to be purchased and defines the terms and conditions.  As there is more than one type of solicitation, the type will be determined based on the type of project, duration, cost and requirements all which are refined during this phase. After the solicitation is announced to the public and the pre-bid proposal conference is held, bid proposals are accepted from qualifying companies.    

The government uses three types of solicitations: Invitation for Bid (IFB), Request for Proposals (RFP), and Request for Quotation (RFQ).  An RFI or Request for Information can also be issued, however this is not a solicitation but a request to obtain information for planning purposes.  “The solicitation is one of the most revealing reflections of the procurement and technical professionalism of any agency” (Engelbeck, 2002).  If the solicitation is of high quality, it will ensure that the procurement is successful and will not give way for questions, delays, amendments or confusion regarding its intent.

The Small Business Administration (SBA) requires that Federal agencies set annual goals to award a certain percentage of procurement contracts to small businesses.  Special consideration is given to different types of businesses designated through the SBA.  Those designations include: Small Business, Women-owned, HUBZone, Veteran, and Service Disabled Veterans.  However, any company or business can compete for award as long as they are registered with the Federal Business Opportunities website.