What Is Government Procurement? Here’s What You Should Know
If you run a small business or perhaps work in procurement and supply chain, you know how hard it is to tackle procurement on a low business budget. You need to find a balance between your equipment and asset needs concerning your budget, imagine the kind of stability a government requires budget deficits, and on-demand resources.
What is Government Procurement?
Government procurement is the acquisition of goods and services by different government agencies. This is also known as government purchasing. They solicit the public business sector in return for the products and services they provide.
If the government wants to bring the best product and services to their respective, federal, state, and local agencies, they certainly need government procurement specialists. The underlying objective to hire such specialists is to ensure that the said procurement is for the public’s broader interest
Important Things You Should Know
Though basic rules are the same whenever procuring any asset or equipment, government procurement is way more complicated than any private sector or small business.
Government procurement is a highly formal process, which undergoes regulatory oversights, bidding procedures, multiple evaluations, contracts, and a plethora of documentation.
Bidding is perhaps the critical step towards government procurement. Although bidding procedures differ, throughout the world, they inherently follow the same core steps:
- Government agencies issue bid proposals for different public sector projects and invite responses from vendors, small and large businesses, multinationals, etc.
- Responses are selected in a sealed envelope until the closing date. The bidding body ensures that the bids shall remain extremely confidential and only be available to competent decision-makers.
- The bidder with the lowest bid is awarded the contract. Additionally, the bidder is checked for technical competency, standard operating procedures, resources, etc. Again, the additional information and authenticated checks vary from project to project.
Other Procurement Processes
It’s not always necessary that the government uses sealed bidding; it can use different procedures such as:
1. Simplified Acquisition
The simplified acquisition process is an innovative yet convenient procurement method. It reduces the amount of work, and the government undertakes to avoid a contract.
Agencies don’t need to go through in-depth documentation, standard procedures, discussions, scoring offers, etc. The contracting officer can choose the contractor below a specific threshold value.
2. Contract Negotiation
In contract negotiation, the government negotiates with all source acquisitions and try to select the most competitive source acquisition. They aim for a consultation, which provides the best value to the government.
If the contractor obtains the GSA (General Services Administration) schedule, the negotiation is a little different. The pricing is then negotiated on time of issuance of the program. The government procurement specialist is given the green light to proceed with the pre-negotiated prices.
3. Consolidated Purchase
A government pursues consolidated purchase to reduce supply chain operations and enhance overall efficiency or procurement processes. Consolidated purchases often take place with a single supplier or group of suppliers.
4. Federal, State, and Local Procurement
Concerning government procurement, there is another significant obstacle to surpass, which is applicable jurisdiction and applicable laws. Procurement for Federal, State, and local agencies are different in terms of the scale of the project, budgetary constraints, resource mobilizations, etc. For instance, if we consider the United States, the disparity in the range of procurement is evident.
The larges states of the US, like California, New York, and Texas, have enormous budgets. Their budgets run into tens of thousands and millions compared to small countries, local cities, and county departments.
Since the local government prefers specialized products, while large states spend on mega projects, their buying patterns also differ significantly.
5. Government Procurement Contracts
Unlike the private sector, the regulations are far more stringent, and multiple procedures are involved. If you are willing to bid for a procurement contract, make sure you have enough capital to invest because every large and perhaps loaded firm tries to win a government procurement contract.
Tailor your services. This is relatively important for a government agency because a private agency may work out and be flexible with your product or services. Still, a government agency sticks to red tape and exact requirements as unfolded in the bidding proposal.
Now, if you don’t end up with a government contract, it does not matter, you have to keep trying hard. If you meet the criteria and conditions, the firm’s size doesn’t matter, and it is perhaps your commitment to the government procurement contract.
It is evident that government procurement constitutes a fair amount of effort from the vendor and is a constant source of revenue and large projects if any business is on the government`s designated schedules and lists.