Some see it as a natural progression– a government is created to help the citizens with their needs; when the citizens become able enough, it’s only expected they do their part for the government.
This a simplistic view of things, but this is how government contracting, and just about any business in the world, started– there was a need.
Unfortunately, in the history of government contracting, that need was war.
The earliest recorded government contracting was all the way back in the first world war. And every war thereafter can be connected to legislation and government contracts. Even now, the DoD represents over 60% of government spending when it comes to federal contracts.
Even older writings say government contracting went as far back as the Civil War. The story goes that the Northerners, in their haste to produce clothing for their side, had contracted a textile company that aimed to maximize their profits by using poor materials on the uniforms that did not stand up to even basic parade and rain. It’s either the name of the company or what their materials were called, but that was where the term “shoddy” started.
Today, the US government is one of the biggest buyers of goods and services ever, spending over half a trillion dollars yearly. Even though a huge chunk still goes to the military, nearly every aspect of the government has ties with government contracting. Every government agency wants to buy the best product or services at the lowest market rate possible; this is why a bidding process is necessary.
➡️ There are unique requirements for every government contract
➡️ All government contracts are published
➡️ The bidding process helps assure competitive prices and maximum value
Why Does the Government Not Produce the Product or Create the Services on its Own?
✔️ Lack of Trust. As with many governments worldwide, there is a deep skepticism of the government and its processes. Americans have more trust in private industries.
✔️ Capitalism and High Competition. Competition drives innovation and creativity. If the government were to produce its own product or create its own services, the loss of competition would result in stagnant products and services that will never improve.
✔️ Employment Fluidity. One of the best things about working for the federal government as an employee is it’s very hard to get terminated unless there’s a solid reason. This would be a great problem if the government produced the product and services itself.
In contrast, if the government feels there is a problem with their government contractor, they can terminate the contract immediately.
✔️ Overall Costs. Another amazing trait of working for the federal government is the longer you work for the government, the better your benefits become; coupled with reasonable wages, it adds up to a very high amount. In the long run, the government saves from using private contractors for their needs.
✔️ Everything is Public and undergoes a Bidding Process. Because government contracts are publicly funded, it needs to be published. This ensures that everyone has an opportunity to bid. The competition benefits the government as they get better products and services and new thinking at the best possible market price.
✔️ Lower Risks. There are very strict rules and regulations concerning government contracts. The government agency can also describe in detail everything about their need, the quality, quantity, time, amount, etc. The contractor needs to be transparent with what they can do and deliver, how, when, how much, etc. The presence of a contract protects both parties from risks that may be present had the government gone through the process itself.
Government Contracting has been with us for a very long time now. There seems to be no end in sight as it creates value for both sides– the government saves on its purchases and gets the best in return, and the private sector, whether small or big businesses, gets a shot in the arm and becomes a stronger company. And, of course, the people who rely on the end-products of these contracts get the most reward as you may think your government is providing you these services and products, but they are actually from private businesses that deal with the government.
Finding your first government contract may be hard, but getting your best-fit federal contract can be harder. That’s why people like us are here. Head over to our blogs and get as much information there; it’s free! Peter Witts PCA PC deals with the most stressful part of government contracting– the accounting process. We deal with it so you don’t have to and you laser-focus your attention on the contract.