Government purchasing and acquisition entails the procurement activities that are carried out using the fiscal funds by various governmental institutions. Procurement, in this regards, entails those activities that are conducted using a contract to facilitate the acquisition of goods and services. Presently, government procurement processes have turned out to be competitive. The process now carried out in broad daylight to make it fully incorporated into the market economy. As a result, that has turned the entire process to be open and fair hence adhering to the international norms. Nonetheless, the government procurement procedures of most countries are still uncompetitive in various aspects. Cases of local governments paying exceedingly during the procurement process compared to the market are typical of some nations. The United States, for instance, is one of the few nations that have a sound government purchasing and acquisition processes.
The United States experiences little corruption during the procurement process. It has a well-developed legal and managerial arms that regulate and oversee the government purchasing and acquisition process. This includes the Federal Acquisition Regulation acts (FAR), Small Business Acts (SB), Contract Dispute Act (CD) , the Federal Property and the Administrative Services Act (FPAS). These acts are well understood for purposes of streamlining the procurement processes. Importantly, the laws encourage competition, openness, equality, fairness and the obligatory bid is needed during the purchasing process. Notably, the U.S government purchasing and acquisition procedures were picked owing to the superiority, stability, and viability of the system. Hence, the content of this paper will, therefore, be informative to other nations that are striving to have a robust government procurement system. Therefore, this article will focus on the advanced government procurement procedures that are used in the United States.
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State Purchasing and Small Businesses
Small businesses can maintain and improve their performance by working together with the local as well as the federal government. Like other companies, small businesses can also offer competitive bids. Notably, the procurement processes in public and private firms show significant differences (Gordon, 2009). In most cases, private enterprises are seen to have processes that are more streamlined when it comes to awarding contracts to external bidders. In facts, some private companies may not even bother about conducting a competitive bidding process. This is the case where the company is satisfied with a particular contractor.
Public companies, on the other hand, need to follow the rules and regulations that are formed by a federal body. This is necessary because the body serves to ensure that the revenues the government collects from taxpayers are used wisely. Also, the body aims at ensuring that contracts are issued legitimately. More importantly, the agent works to ensure that all businesses or rather companies have an equal opportunity to place their bids on government-oriented contracts. Since the government is required to spend taxpayers’ money cautiously, their purchases are usually screened thoroughly. Thus, the government in most cases embraces openness and fairness to avoid instances of favoritism.
The process of submitting bids to be issued public contracts is a frustrating experience for some businesses. This is because the process is very cumbersome and in some instances, bureaucracy is apparent (Davison & Sebastian, 2009). Besides, all public contracts are very exposed and liable to public scrutiny compared to the private firms. Nevertheless, business analysts suggest that the merits that come as a result of securing a government contract surpass the demerits. This is true as many government arms form the primary consumer base in the country. Government procurement is the avenue for small businesses to realize organizational prosperity.
Importantly, many government arms have recognized that fact. By acknowledging that essence of federal contracts on small business, the U.S. public procurement laws stipulate that a particular percentage of the contracts ought to be set aside for companies that are deemed small businesses. These objectives are reached at via combining the contributions of Small Business Administration and certain private agencies. Both these arms categorize the bidding companies based on size and the type of ownership. The ownership, in this case, refers to either being minority or women-owned companies among others. Government purchasing agents will, therefore, use such information to ensure that the federal contracts are awarded appropriately.
The Purchasing Process
The Federal Acquisition Regulation (FAR) chiefly controls the process of acquisition in the United Stated (Manuel et al., 2012). For instance, no one can be offered with a competitive procurement contract unless he/she goes through the FAR. FAR in this regards acts explicitly based on the regulations that have been established by the U.S Federal Government agencies to regulate the purchasing and acquisition process. As aforementioned, the acquisition process refers to the process in which the government purchases goods and services. Typically, this process entails three stages. The first phase involves need assessment and subsequent planning on how the need is going to be addressed. The second phase includes contract development while the third stage usually entails contract administration. Nevertheless, this ought not to be misunderstood to imply that FAR regulates the partaking of the government employees during the purchasing process. It should be known that FAR achieves that purpose by ensuring that the government incorporates these rules into the proposal and contractual acts (Engelbeck, 2001).
Notably, FAR is established under Title 48 of the Code of Federal Regulations Act of the U.S. FAR exists simultaneously with the Federal Procurement Policy Act of 1974. This was protected by Title 41 of the U.S. Code (Thai & Drabkin, 2007). This is an implication that, the U.S Federal Courts respect the rulings and the agreements made by FAR, as they have the muscles to influence the law. It is on this basis that the federal agencies are supposed to agree to the rules and regulations set by FAR (Manuel et al., 2012). However, some organizations have been freed from this obligation. These include providers of postal services in the U.S., Power Administration in Bonneville, Tennessee Valley Authority, as well as the Federal Aviation Authority. All these agencies have been granted the freedom to develop their own purchasing rules.
Creating a Competitive Environment during Government Purchasing
Various administrators from four agencies have been mandated the power to maintain and impose FAR policies. These are the Defense Secretary, Administrator of National Space, Administrator of Aeronautics, and the Administrator of General Service. Therefore, one ought to have an insight on the Federal laws that FAR dictates in order to develop a competitive acquisition contract. Various acquisition methods have been devised to enable one to achieve this purpose. Three agencies namely ASPA, FPSA and CICA, established two principles that made the process of procurement to be fully competitive (Thai & Drabkin, 2007). The two principles they formulated were sealed bidding and competitive negotiations. Typically, the sealed bidding is inflexible while the contentious negotiations are flexible.
Sealed Bidding
Under the sealed bidding, the federal agency first identifies a need. Once a need has been identified, discussions proceed to ascertain whether or not the procurement process ought to be initiated or if the agency must seek sealed bids (Abdelrahman, Zayed & Elyamany, 2008). Importantly, the process of request soliciting is vital when time is sufficient. If that is the case, it will be possible to submit and conduct an assessment to establish the most appropriate bid. Besides, it will provide the agencies with time to ponder on whether the proposal will be issued based on pricing. Notably, sealed bids are usually considered where there is a likelihood that the agency will get more than one sealed bid. The same is true where the companies carry out discussions to inquire about the offers that come along with their bids.
The IFB, in this regards, describes and analyses the government’s needs accurately and comprehensively. Afterward, the agency will use various forms of public display (journals and newspapers just to enumerate a few), to publicize the progress it has made with the IFB. Essentially, the contractors are obligated to provide their bids in the time since late bids will automatically be rejected. However, certain conditions would lead to a purportedly late bid to be accepted. The first requirement states that a bid will be considered if it was sent via a certified mail five days before the receipting date. Secondly, a bid will be accepted if it is justified that there was mishandling from the government side. Third, if the bid was sent via the Postal Service Next Day, two days prior to the receipting date. Finally, it would be reconsidered if it was sent electronically and delivered one working day prior to the receipting date of the bid (Scott, 2006).
After the bids have been received, they are read out loudly and publicly by the agency. After that, the bids will be examined for errors once they have been registered in the abstract of offers form. Upon realization that there are no mistakes, the administrative processes will follow. That will culminate with the bidder with the lowest bid being offered the contract. In the case of any defects or irregularities, such as variations in quality, quantity or even price of the acquired item, the bid will be rejected. Additionally, according to the FAR policy 14.408-2, it is imperative for the lowest bidder to be monitored for accountability prior to awarding the contract (Thai & Drabkin, 2007). In that respect, for the lowest bidder needs to demonstrate competence when carrying out the contract to qualify for this status. Concisely, FAR requires the contractor to have specific attributes in order to be awarded the contract.
First, the contractor ought to have abundant financial resources that would be integral in managing the contract being offered. Second, the contractor needs to be competent enough to adhere to the required performance and delivery programs. Third, the contractor is required to demonstrate experience or rather good track of performance in the same capacity. Fourth, it is imperative for the contractor to have outstanding business ethics, norms, and integrity. Fifth, there is the need for the contractor to possess appropriate skills like accounting, organizational and technical expertise. Sixth, the contractor, needs to demonstrate the level of qualification that is stipulated under the rules and regulations of FAR 9.104-1.
The FAR 14.201-8 and 14.408-1 policies provide additional requirements other than the virtue of responsibility (Thai & Drabkin, 2007). Notably, these policies provide extra information about price related factors during bid evaluation. These include changes in taxation and transportation that the bidder makes in relation to the IFB provision. Once the price and non-price related factors have been evaluated, the agency will award the bidder who proves to be more responsible. Basically, this will be the bidder who happened to be favoring the government. The FAR policy caption 14.408-1 indicates that that decision is reached at by considering the bidder that offers goods and services at lower prices. A bidder who becomes successful is then awarded a document to show that a contract has been secured.
Competitive Negotiations
In instances where the sealed bidding is not present, the competitive negotiations become the best option. Notably, this form of procedure is flexible during the awarding of contracts. Unlike the sealed bidding, the competitive negotiations allow the agency to discuss with the contractors. Furthermore, non-price related factors are often integrated when scrutinizing the proposals. These may include management experience, technical expertise, and history of performance. This process begins with the agency receiving the proposal requests. This request is also known as RFP. Typically, when the procurement is above $25,000, a notice is usually synopsized (Thai & Drabkin, 2007). Apparently, the proposal request is supposed to reflect the need that is particular for the agency. Also, the terms and conditions, as well as more information from the contractor, need to be included in the proposal request. Other information that would be important to include is the relevant factors that will be integral in scrutinizing the request proposal for winning the contract. After complying with this aspect, the interested parties will be free to submit their request proposals for scrutiny.
The evaluation process involves establishing the quality of the proposals. Therefore, the proposals will be checked in relation to both price and non-price related factors. In the former case, the price that the contractor offers will be evaluated for affordability. In the later case, the proposals will be examined to find out how the contractor has been fairing on in the market at the same capacity. Technical expertise and other factors that are stipulated in FAR 15.305 will also be evaluated. FAR 15.306 also requires that the agency in charge of evaluating the proposals to explicitly clarify on some ambiguous areas (Thai & Drabkin, 2007). On the other hand, the agency can defend a negotiated contract without necessarily conducting further discussions. However, when there is the need to carry out further haggling, the agency ought to identify a contractor who proves to be competitive. The proposals from such contractors are often ranked highly compared to others that were submitted.
In most instances, the agencies will hold minimal haggling with the contractors in order to establish a competitive limit. After that, a competitive limit will be set a platform to pick contractors who will be involved in negotiations. The main gist of doing that is to ensure that the agents secure a contract with a contractor who has ideal values. Importantly, the agency will inform contractors the shortcomings of their proposals. According to the FAR 15.306, the agencies are not supposed to indulge in certain acts (Thai & Drabkin, 2007). First, they are not supposed to take sides in any activity. Second, they are not supposed to provide the contractor with any technical solutions whatsoever. Third, information regarding the contractor’s price, past experiences, or any sensitive information should not be shared. The agency will then erase the names of the contractors who did not make it to the competitive range.
The contractors who managed to fall within the competitive range are then given time to adjust their proposals. They will be required to incorporate the agreement that had been reached at during the negotiations. Upon submission of the revised proposals, the agency will conduct a final evaluation of the proposals. After that, the contractor whose proposal appears to be profitable to the government will be awarded the contract. The evaluation that was done from the beginning until the contract is awarded will also conduct a session to demonstrate why the winning proposal was regarded as profitable to the government (Hasnain & Mail, 2016). If the designated contractor happens to be unsuccessful in one way or another, the agency will conduct a post-award meeting. The meeting will seek to explain the criteria that were used to disqualify the contractor
Terms and Conditions during Government Purchasing
It is, therefore, apparent that familiarizing oneself with the process of acquisition is not enough. Understanding the terms and conditions that are used when giving the contract is what matters. Nevertheless, the terms and conditions are government specific. Different governments have different terms and conditions that are used during the process of acquisition. Some governments have fixed terms and conditions. That implies that it is not possible for a contractor to negotiate with its agents. In such instances, the conditions are usually referred to as clauses. In the same line, the federal procurement laws require that the necessary policies involved during the purchasing process are explicitly spelled in the contract. This is irrespective of whether the government omitted it or not. Most contracts involving the government usually comprise 50-70% clauses from the FAR policies. Notably, they are often without their commercial counterparts. The three clauses that need to be taken into consideration include clauses that advocate for changes, termination for convenience as well as the default.
Termination for Convenience Clause
The clause for termination for convenience provides the government the power to terminate a contract in its favor without hesitation. This was formulated to facilitate technological changes as well as an abundance of financial resources. Despite the fact that this clause is included in the FAR’s policies, the government has not opted to use it for selfish reasons.
Changes Clause
The clause that advocates for changes empowers that government with a chance to come up with unilateral changes in spite of the contract still being operational. Nonetheless, the changes need to be confined within the contract’s scope. According to caption 52.243-1 of the FAR policies, a government can opt to change a number of things (Thai & Drabkin, 2007). First, the change may involve variations in the specifications of the item being constructed for a government. Second, it may include a variation in the packaging style or third change in the mode of transportation. However, this ought not to mean that the contractor will be operating at a loss. Notably, most of the changes being stipulated in that clause happen where there was limited formal directive of additional work. The government can also find out that some of its previous specifications were defective hence the need for change. In addition, instances may exist where the contract was misinterpreted hence calling for additional work to be done.
Standard Default Clause
This clause permits the government to extricate a contract in case the contractor fails to honor the agreement. Dishonoring the contract may involve many things. First, the contractor may fail to deliver goods and services that were explicitly spelled in the contract. Second, the performance of the contractor may be very poor. Third, the contractor may also fail to be accountable. Fourth, the contractor may not provide enough material provision as it was spelled in the contract. Captions 52.249-8 of the FAR policies clearly spell all these provisions (Thai & Drabkin, 2007).
Ethical Laws
As mentioned earlier, FAR is an integral body when it comes to government purchases. It ensures that there is a robust and an elaborate acquisition prevails by promoting ethical responsibilities. For instance, post 1980 procurement incident like the Operation Wind, the Congress in conjunction with the executive branch felt the need for imposing ethical responsibilities in the procurement programs. In that respect, it is upon all contractors to ensure that their employees abide by the ethical laws or else they will be subject to the law. The ethical laws also form an important aspect of the government purchasing processes.
In the first place, the ethical laws aim at curbing bribery and malpractices that hamper openness and fairness during the procurement process. This may include any form of activity that may see contractors delivering goods and services to government employees for their personal gains. These restrictions are elaborated under the Office of Government Ethics. According to this body, contractors are prohibited from issuing loans, discounts, entertainment, gifts or any form of activity that may help them to win favors from federal employees. For instance, it is an offense for a contractor to take a federal employee out for dinner. Nevertheless, the laws are flexible enough to create some space for gratitude. For instance, refreshments, favorable discounts, pleasantries and other complimentary materials can be offered legitimately to a federal employee. However, extremities have been put to bay by placing a clear-cut parameter. For example, a federal employee is prohibited from receiving cash that is above £50from the contractors. Furthermore, the non-cash gifts ought not to exceed £20. Therefore, this has called for the need of the employees to be regularly trained so that they can have a clear understanding of the matter.
Another ethical issue is making false claims and statements. Basically, this involves all issues related to fraud and unsubstantiated statements (Rendon & Rendon, 2015). The federal agency has prohibited such behaviors. In that respect, if the contracted company displays misinterpretation of the government contract, it is taken to be a sign of failure to honor the agreement. As a result, the government will subject the contracted company to the law. Additionally, if a contractor makes a false statement to the government, he becomes a criminal. Caption USC. 287 state that if a contractor provides the government with false or incorrect information, the law will be required to consider all the invoices as false.
In order to address the threats that are caused by conflicting interests, FAR restricts contractors from conversing with federal workers over matters dealing with employment. Additionally, the federal agencies restrict the employees from acquiring some services once they exit from the government. Contractors, therefore, are not expected in any circumstance whatsoever to discuss with the federal employees about employment issues. They should also ensure that an employee who was initially employed by the federal government, but presently employed with them, is working legally. This serves to cease instances of conflict of interest.
The ethical laws also prohibit the issuance and acceptance of kickbacks purposely to get pleasantries that relates to federal contracts. In this case, the kickbacks can take various forms such as money, flexing deadlines, or any form of compensations. Furthermore, the agency has established lobbying constraints to prevent government contractors from giving out resources that would influence the awarding of contracts. Notably, the appropriated funds include the increases that are generated by the government contract less the profit. Clause 3.8 of FAR and Caption 31USC1352 serves to guarantee that these provisions are implemented. As a result, the contractor spending is closely monitored with the help of the accounting systems to ensure that no more expenses are incurred due to lobbyist’s activities.
Essentially, the procurement integrity act was established to prevent government contractors from gaining access to the information in the proposal prior to issuance of the federal contract. Therefore, the Federal Acquisition Regulation Act 3.104-4.5 vividly elaborates on matters pertaining to the proposal information. The act explains issues relating to operations, the pricing information as well as the indirect costs. Notably, the contract selection details are also treated as sensitive as they contain vital information pertaining to the proposed prices, price evaluation, and federal plans.
Conclusion
FAR has streamlined government procurement procedures. This agency has turned the process of purchasing goods and services in the Unites States to be very competitive. That has been made possible by ensuring transparency and fairness during the process of awarding contracts. Importantly, massive gains have been realized not only in the procurement sector but also in mergers and vast acquisition processes. This is due to the robust legal and ethical measures that have been adopted by the government.
References
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