There Are Five Major Categories of Government Procurement, Explained Here

According to the U.S. Government Accountability Office (GAO), federal procurement spending in 2022 was over $6.8 trillion. This represents approximately 40% of the entire U.S. GDP. Government procurement is a significant part of the U.S. economy and has a major impact on businesses, large and small.

That is an incredible figure, almost impossible to wrap your mind around. Almost seven trillion dollars in 2022. But for all of this money, how exactly does the process work? And more to the point, what are the different types of government procurement?

We’ll discuss the five different categories of government procurement, how they work, and what they mean. Let’s go!

What is Government Procurement?

But first, we need to cover the basics of government procurement. 

Government procurement is the process by which governments purchase goods and services from private vendors. It is a complex process that involves a host of stakeholders, including government agencies, contractors, and the public. The government procurement process typically involves the following phases:

• Pre-procurement phase: This phase includes planning and developing the procurement strategy.
• Procurement phase: This phase includes issuing the solicitation, evaluating bids, and awarding the contract.
• Post-procurement phase: This phase includes contract administration and closeout.
  There are a number of different types of government contracts, including fixed-price contracts, cost-reimbursement contracts, time and materials contracts, incentive contracts, and indefinite delivery and quantity contracts. 

The government uses different types of contracts depending on the specific needs of the procurement. Key objectives of government procurement are to ensure transparency, cost-efficiency, fair competition, and social and economic goals. Government procurement can and usually significantly impacts the economy, businesses, and the public. 

Take a look around Army towns like Kileen, Savanah, Junction City, Tacoma, and so on, and tell me that the local Army Post isn’t the main economic driver of the community. You can’t. 

Government Procurement-The Government’s Perspective

According to the Congressional Research Service, the procurement process is as follows:

In the standard federal procurement process, acquisition personnel identify their agencies’ needs and publish solicitations on the SAM.gov website. Companies interested in bidding on these contracts prepare their proposals, which are evaluated by agency personnel following the Federal Acquisition Regulation (FAR) guidelines. 

Another way for a company to engage in government procurement is by serving as a subcontractor for a prime contractor. To participate in government contracts, a company must first obtain a Unique Entity ID (UEI) number and register with the federal government’s System for Award Management (SAM). 

Various agencies like the General Services Administration (GSA) offer support and resources to existing and prospective government contractors. Research and development (R&D) procurement opportunities may utilize conventional methods such as solicitations and contracts or unconventional approaches like agency-sponsored competitions and venture capital funds.

The Five Categories of Government Procurement

Alright, on to the five categories of government procurement. 

Contract Management

Contract management is the process of overseeing and managing contracts that have been awarded to a vendor for either goods or services. 

This is not the first step in the procurement process but is further into the process. After selecting a vendor, a contract manager is assigned to the project. 

Some of the key responsibilities of a contract manager include:

• Managing the contract process from start to finish
• Ensuring that all contractual terms are met
• Monitoring and reporting on contract performance
• Resolving contract disputes
• Managing the financial aspects of the contract

Supply Management

Supply management is a process of acquiring, storing, and distributing goods and services to a government agency. 

Greenwood Aerospace is an expert in this space. When a federal procurement purchasing agent needs to secure parts, they need to partner with the experts in this space, and that is us. We have been doing this for over 40 years and have the resources to procure and secure the necessary parts. 

To the point of supply management, Greenwood Aerospace also provides warehousing and inventory management of procured parts, and we are your MIL-SPEC shipping specialists. 

Purchasing

Purchasing is conducted by designated purchasing agents appointed by the requesting agency. It is the process of obtaining goods or services from vendors, typically through a competitive bidding process. This is an important distinction; federal procurement representatives are held to high standards of fairness because there is significant public scrutiny over government purchasing. 

Impropriety is dealt with severely, and the procurement process must be above reproach. The public has every right to know where funds are going, sp generally speaking, bidding for goods and services is conducted through a competitive bidding process. 

Contracting

Contracting is the process of entering into a legally binding agreement with the agency that posted the bid. The bid can be for goods or services, and from the perspective of the government contracting official, it doesn’t really matter which one it is. They are only concerned with ensuring the contract terms are met, and the services are rendered correctly. 

Those conditions must be met if the contract is to maintain grass height between 6” and 12” at an Army Airfield. If the vendor cannot maintain the agreed-upon expectation, they will lose the contract, which will be awarded to another vendor. 

And this is a huge market. According to the GSA, the Multiple Award Schedule is valued at more than $39 billion annually, so if you are a part or maintenance vendor, especially for aircraft or ground support equipment used in DoD fleets, you do not want to miss out on this. 

Here is just one of many examples of DoD aviation support listings on SAM.gov. 

Grant and Contract Administration

A significant portion of the government procurement process is to continuously monitor and manage contracts once they are awarded and fulfilled. 

The specific responsibilities of grant and contract administrators vary depending on the agency that is awarding the grants or contracts. However, some common responsibilities include:

• Reviewing and approving grant applications
• Monitoring and evaluating grantees' performance
• Negotiating contracts
• Monitoring and enforcing contract terms
• Ensuring that government funds are used effectively and in accordance with the law

Grant and contract administration is complex and takes a lot of time. But it is one of the most important parts of the process because it helps ensure that the government procurement process is fair, efficient, and transparent. 

Grant and contract administration officers and administrators are vital in ensuring government funding is used appropriately. They are essentially the first line of defense against government fraud. 

Final Thoughts

Government procurement is a highly complex process tasked with doling hundreds of billions of dollars annually. It is also one of the most heavily scrutinized parts of government, so ensuring contracts are bid fairly and transparently is paramount. The five different layers of the government procurement process are there to ensure that contracts for goods or services are executed fairly.

Greenwood Aerospace has been procuring business contracts, parts, and services for over forty years. If you need help cracking the tough nut of winning government contracts, give us a call! We’d love to talk to you about our process and services.