Anyone selling products to the government -- federal, state, local -- has to follow the government rules.Size makes a difference: a $100 purchase is usually free of paperwork. A $10,000 contract may get by with nothing but a couple of quotes from vendors. A million-dollar purchase is tied around with procedures. With hundreds of different government bodies around the country, there's a lot of variation in government purchasing process..
Federal micro-purchases -- $2,000 or $3,000, say -- are simple. A staffer can use a government credit card -- no bidding, no contracts, just shopping for what's needed. The employee has to respect the limit -- cutting a $4,000 purchase into four $1,000 buys still wouldn't make it a micro-purchase. The exact cut-off point varies with types of purchases and between different agencies. State and local governments have their own credit cards and their own cut-off points. New York City, for example, treats purchases as large as $20,000 as "micro."
The federal government defines simplified acquisitions as purchases above the micro level but under $150,000. Instead of asking for formal bids, an employee calls businesses, gets several quotes and goes with the best one. The employee can complete the purchase with a credit card, cash or a detailed purchase order. Another simple approach is to write up a blanket agreement with a vendor. This authorizes repeated purchases of the same item over a period of time, rather than tackling each purchase separately. Other government bodies follow different rules. In Georgia, for example, purchases have to be under $25,000 to avoid competitive bids.
All levels of government accept sealed bids for certain purchases. This usually happens when the government or agency has specific requirements the purchase has to meet and wants to get the best price. First, the government issues a request for bids stating the requirements and setting a deadline. The bids are sent in, then opened and compared. If the bids aren't responsive -- they don't fit the requirements -- the government may reject them and start over.
Request for Proposals
Governments use RFPs -- requests for proposals -- for really expensive or complex purchases. Rather than just ask for bids, the government advertises what it wants -- a better computer network, a new bridge -- and invites contractors to submit proposals on how they'd handle the project. If none of the proposals look satisfying, or affordable, the government can issue a new RFP or negotiate terms with the most promising vendor.
- Department of Defense: Government Purchase Card (GPC) Frequently Asked Questions (FAQs)
- Onvia: The Basics of Simplified Acquisitions
- Small Business Administration: Government Contracting – Learn How the Federal Government Buys from Small Businesses
- City of New York: Micropurchases
- State of Georgia: Georgia Procurement Manual
- Photo Credit CocoZhang/iStock/Getty Images
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