What Is Government Contracting?


Government contracting is when a civilian business product or service provider supplies the requested needs of the United States government, which can be a federal, state, or local agency. In the commercial world, when a business needs a product or service to provide for public demand, that business invites requests for any company’s supply proposal. A capable company then submits a proposal to meet that business need adequately and affordably. The same economic exchange takes place in the government arena, where civilian companies are vendors to the US government agencies’ business needs for various products and services. The largest customer in the world is the US government.

Fundamentals Of Government Contracting

· Fair competition, where the government agencies’ request for proposals are open to all public contractors.

· The proposal assessments and bidding awards are fair and transparent to all competing vendors.

· Fair pricing is sought from all potential vendors.

· Pricing is according to the goods and services requested.

· Full product compliance is necessary according to the government agencies’ strict requirements.

· Full lawful compliance from both the government agencies and the contractors according to the many Federal Acquisition Regulations (FAR) or the Defense Federal Acquisition Regulations Supplement (DFARS). Individual companies might also have their own regulations.

Government Contracting Examples

Fixed-Price Contracts

Fixed-Priced Contracts require the contractors to bid with predetermined pricing, and very little cost adjustment is expected but some may be included in the original contract. This type is the most common with state and local government agencies.


Cost-Reimbursement and Cost-Plus Contracts are types of contracts where contractors estimate the cost beforehand to establish an agreed-upon ceiling of reimbursement for contingencies. These types of contracts are used when uncertainties cannot be foreseen. These would be used by the Department of Defense where the cost of a war cannot be predicted, or the National Weather Service where storm monitoring cannot be predicted.

Time And Materials Contracts

Time and Materials Contracts are like the others and makes the government bear most of the risk of a contract. This type is used because it is not possible to accurately predict the cost of a project. The government agency basically pays the contractor an hourly wage.

Indefinite Delivery/ Indefinite Quality (IDIQ)

Indefinite Delivery/ Indefinite Quality (IDIQ) Contracts are often used for supplemental or amendment reasons to other contracts. These allow flexibility about supplies or other aspects of a project. The IDIQ type is a main contract that permits the government agency to select various sub-tasks under the umbrella IDIQ contract that will be awarded to the same group of bid-winners in the future. This type allows the streamlining of awarding contracts in the event of a national emergency.

Government Contracting Benefits

The main benefits of government contracting are that they help the small businesses by providing commercial opportunities for them rather than only large businesses. They ensure the discovery of new ideas that small businesses usually birth. They promote the economic growth and new job opportunities that small businesses foster. They encourage the employment of the disadvantaged social classes.


The US government is the largest customer in the world and has generous buying power for successful contract winners. Contracting with a government agency, whether at the federal, state, or local levels, can be the key for growth and enrichment for both small businesses and enterprises alike. A strong and compliant proposal for a government agency bid can be ensured by using the Content Analytics Platform (CAP), the software application that was developed by Scion Analytics, specifically for ensuring confidential document data management and contract winning.

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