What are Procurement Regulations?

Procurement regulations are rules that local, state, and federal governments must follow when they award contracts for services to private companies. The purpose behind procurement oversight is to ensure that governments act in a fair and cost-efficient manner in awarding these often lucrative contracts. Public procurement regulations operate to avoid the perception of any impropriety in awarding government contracts and to make certain the government is wisely spending taxpayer funds.

Different procurement regulations govern the process various government bodies must go through when they make contracts available to private companies. A separate set of procurement regulations guides federal governments in public procurement activities, and state law — in the form of a state procurement act — dictates the steps state and local governments must take to guarantee that they are awarding government contracts in a fair and evenhanded manner. Unfortunately, these procurement regulations set forth processes that can be quite complex and time-consuming for private companies to follow. Although governments have attempted to simplify these procedures, procurement regulations still tend to be fairly burdensome for private companies, especially for those companies that have never before bid on government contracts.

Competition for government contracts, predominantly at the federal and state government levels, can be quite intense. As a result, companies often limit their attempts to obtain such contracts to a certain number each year. Companies also often employ outside consultants to assist with their government contract bids; the goal is to reduce the expense of seeking these contracts and maximize their chances of receiving these contracts.

Procurement laws, particularly at the federal level, contain a number of very specific criteria for awarding government contracts to private companies. For instance, companies that qualify as small businesses must receive a certain percentage of federal government contracts, and other demographics of business owners, such as minorities and women, also are present in procurement regulations. Additionally, the federal government must award certain contracts solely to traditionally disadvantaged businesses, such as those owned by minorities or businesses in areas with high unemployment rates.

Likewise, a certain state procurement act also may require that government officials on the state or local level award contracts based on certain eligibility requirements of businesses or their owners. Each state’s procurement regulations differ according to state law, so a trait that qualifies a business for a government contract in one state may disqualify that same business for a government contract in another state. That makes it tricky for those trying to win a contract.