So, you’re trying to land an IDIQ contract or other government contract for providing services – how will that work? How are you going to get paid? Government bids and payments are typically handled in different ways from how commercial businesses or consumers pay for services.
There are five ways that the process generally works, depending on the size of the order and the type of contract involved.
If the amount of the invoice is under $3,000, an approved agent will use a bank card and pay that way, like pretty much everyone else. That might sound like small change -and it is by Federal standards- but these micro-purchases actually make up around 70% of Federal purchases!
Next on the level of scale are purchases up to $150,000. In this case, there are simplified rules in place that minimize the paperwork and approvals necessary. You’ll get your money fairly quickly.
This is one of the more common procedures, for larger contracts. The relevant agency will send out an Invitation to Bid (ITB) which works much like an RFP in the private sector. However, these bids are kept sealed until a particular date, when they are all opened at once and read into the agency’s record. This protects against insider dealing. IDIQ contracts are usually this type, particularly when they are larger efforts.
In situations where the products or services are valued at over $150,000 and are in a highly technical field where few qualified bidders exist, the government may engage in direct negotiation. They may issue an RFP (or a similar Request for Quote, RFQ) or else contact relevant companies directly. This is, however, relatively uncommon due to higher costs and the elevated chances of corrupt behavior.
In situations where the order is going to be massive and multi-departmental, such as for office supplies, CPVs are utilized to leverage economies of scale. These contracts are generally given out to several contractors at once, so purchasing and acquisition can be streamlined. An IDIQ contract may be a CPV.
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