Terms Aspiring Government Contractors Should Know
As you break into government contracting, it’s essential to learn how to speak the government’s language. Familiarizing yourself with common government acronyms and terms can help you build relationships and win contracts. Whether you’re interested in local, state, or federal opportunities, here are some of the top terms you need to know as you navigate the world of government contracting.
ITB vs. RFQ
When pursuing local government contracts, you may encounter two types of bid procurements: a request for quote (RFQ) or an invitation to bid (ITB). An ITB calls on contractors to submit their proposals for a service or project. Contractors can perform the same job or provide the same service; what sets them apart is how much it costs to complete the job. Government contracts that require an ITB are blindly awarded to the lowest bid and aren’t influenced by one’s level of expertise or reputation.
With an RFQ, the government agency is in the early stages of exploring its options for a service or product, or is collecting information on pricing, delivery, or other details that can influence its decision-making. Like ITB, RFQs are generally awarded to the lowest bidder and consider delivery time and quality for services or products.
RFI vs. LOI
A request for information (RFI) allows government agencies to gather information from various contractors. The information collected is used in the market research phase to help the agency identify and evaluate market practices and build a database to support future contracting opportunities.
A letter of intent (LOI) states a contractor’s intention to work with a particular agency before signing a binding agreement. These short, non-binding contracts typically include a timeline, due diligence, exclusivity, and a transaction overview and structure.
Opening Date vs. Closing Date
The bid opening date is when a contract opportunity opens up for submissions from contractors, while the closing date is the specific date and time that a bid closes to the public. Only the bids submitted prior to the closing date and time are eligible. Establishing an opening and closing date gives contractors an equal opportunity to submit their proposals.
A blanket purchasing agreement (BPA) is an acquisition method used by government agencies to fulfill recurring needs for a product or service. Since the product or service is procured on a repetitive basis, BPAs enable agencies to streamline frequent purchases by using the same trusted vendors. For example, a government agency could have a BPA with a business that provides office supplies.
Indefinite delivery, indefinite quality (IDIQ) contracts apply to an indefinite quantity of services or supplies to be provided. These contracts help to accelerate delivery and streamline the procurement process. These types of contracts are popular among agencies when needs are immense, but it’s hard to nail down an exact quantity and performance period. To establish an IDIQ, a contracting officer just needs to establish a minimum quantity, a reasonable maximum quantity, a fixed time period (2-5 years, for example), and a statement of work. IDIQ contracts were probably useful during the early weeks of the pandemic when government agencies weren’t sure how long the threat would exist, making it hard to estimate how much PPE, hand sanitizer, or special cleaning supplies and services would be needed.
The Federal Supply Schedule is a long-term contract between a commercial vendor and a government agency. It provides government buyers access to over 10 million commercial services and products at volume discount pricing. Because an agency agrees to regularly purchase products or services from one vendor, the vendor is able to supply the agency with a large discount, making the arrangement beneficial to both parties.
Economic price adjustment (EPA) is a fixed-price contract that enables increases and decreases to the agreed-upon contract price based on certain contingencies. Under these contracts, price adjustments can be made if changes in market conditions are beyond the vendor’s control. This includes inflation, natural disasters, and more. Whether upward or downward changes are made, a price floor and ceiling are specified in the contract. With the price of consumer goods being so unpredictable today in the wake of lumber and computer chip shortages and production slow-downs related to COVID, these types of contracts may be more common.
Speaking the government’s language and fulfilling contracting regulations and requirements is difficult. Vendorship will translate for you and walk you through the government contracting process to make sure there’s nothing lost in translation. Contact us to position your business to become a government contractor.