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What is Federal Procurement?

By Brenda Scott
Updated May 16, 2024
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Federal procurement is the process used by national governments to purchase or lease goods and services. Specific procedures may differ between countries, yet the goals for procurement policies are very similar. These goals are to increase competition by offering fair access to prospective bidders, maximizing the value received through the expenditure of public funds, and promoting the responsible use of resources.

In the United States, federal procurement policies are determined by legislative action and by recommendations from the Office of Federal Procurement Policy, a subdivision of the Office of Management and Budget, established in 1974. Those policies are published in the Federal Acquisition Regulation (FAR), which is issued jointly by the Department of Defense (DoD), the General Services Administration (GSA) and the National Aeronautics and Space Administration (NASA). The FAR applies not only to direct purchases made by the government, but also to purchases made by federal grant recipients. Periodic audits called contractor procurement system reviews are conducted at federal contractors and grant recipients to ensure federal regulatory compliance.

Federal procurement generally requires competitive bidding on contracts which exceed a certain monetary threshold. In these instances, a request for proposal (RFP) is issued with specific guidelines, and bids are submitted for review. The contract is generally given to the bidder which can meet all of the required specifications at the lowest price. Exemptions to this policy can occur in cases where only one source of supply exists, or when one supplier has proven to be far superior in performance to the others.

In Canada, the governmental body primarily responsible for federal procurement is the Public Works Government Services Canada (PWGSC). A law passed in 2005 created a list of preapproved suppliers to be used for standing orders, which covers the procurement of several of the most commonly purchased assets including automobiles, fuel, office supplies and professional services. If the purchase exceeds monetary values set for different categories, then the PWGSC opens the procurement up to the bidding process and advertises it on the Government Electronic Tendering Service. This step can only be bypassed in cases where a life threatening situation exists, national security could be compromised, there is only one source available for the product, or for items which fall below the monetary limits.

Most European countries have similar federal procurement requirements and processes. Members of the European Community (EC), however, must also implement procurement regulations which comply with EC procurement policies. These policies include non-discrimination between member countries in the procurement process, and requirements that vendors meet certain environmental sustainability standards. Contracts which involve defense or national security are not subject to EC regulations.

In Australia, the Finance Minister issues Commonwealth Procurement Guidelines (CPG's) which outline Australian federal procurement requirements. Like Canada, Australia has developed lists of approved suppliers, called common use arrangements (CUA), for the purchase of a wide variety of goods ranging from stationary and supplies to temporary labor. In most regions, governmental agencies are required to use a CUA if it exists for the products being purchased. Larger contracts which require an open bid process are advertised on an electronic system called AusTender.

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