The federal government spends approximately $200 billion annually with contractors. On May 23, 2000, then-President Clinton signed Executive Order No. 12157, which stated a goal for federal agencies to spend at least 5% of their purchasing each year with women-owned small businesses.

The 5% goal was not a new one; it had been in effect for several years. However, while some agencies, such as the Air Force, Department of the Treasury, and the Department of Energy were and still are very proactive in using women-owned businesses, most federal agencies had not met the goal. Spending with women-owned small businesses in 1999 reached only 2.4% of the total federal contracts awarded. The Executive Order reiterated the 5% goal and implemented programs to help agencies attain the goal.

If you are interested in contracting with the federal government, you need to understand both how the government goes about finding contractors and the rules applying to contracts with the government.

It is well worth the time to research the process of becoming a federal contractor. Here are a few ways to get started:

• Federal Agency Small and Disadvantaged Business Office or Office of Small Business Development: Most federal agencies have an office dedicated to assisting small and disadvantaged businesses. What's more, acquisitions of supplies or services that are between $2,500 and $10,000 are reserved exclusively for small business concerns. The professionals in the Small and Disadvantaged Business Office work with government buyers in their respective agencies to identify opportunities for small and disadvantaged businesses. You can find most of these offices online.
  
  
• Small Business Administration (SBA): The SBA has a number of services designed to assist small and minority-owned business. One well-known program is the Small Disadvantaged Business/8a program; 8a status opens the door to special contracting opportunities with the federal government.
  
  
• Commerce Business Daily (CBD): The government publishes all contracts in excess of $25,000 that are out for award in the Commerce Business Daily, which is available online and in hard copy. It is updated daily.
  
  
• Subcontracting: Contractors with large government contracts are required to seek out small and disadvantaged businesses as subcontractors. Working as a subcontractor is a good way to enter the government contracting arena.
  
  

Contracts with the federal government are governed by the Federal Acquisition Regulation (FAR). Some agencies, such as the Department of Defense, have their own individualized version of FAR. FAR's underlying goal is to promote free and open competition. One of the ways of doing this is by having a uniform set of rules applicable to any one or any company that contracts with the federal government.

FAR serves this role well. It is a comprehensive set of rules that covers all aspects of contracting with the federal government, from pre-solicitation to contract closeout. If you are going to be a supplier of services or materials to the government, you need to have at least a rudimentary understanding of FAR. Indeed, it is expressly assumed that contractors with the federal government understand FAR.

Being required to understand FAR is not necessarily a bad thing, since FAR lays out almost all of the rules of contracting with the federal government for anyone to see. Most of the standard contract terms, which are always included in a federal government contract, are spelled out in FAR, so there are no surprises.

For the most part, FAR does not rewrite the general rules of contract, which apply to non-government contracts. However, FAR is weighted heavily toward the government. In contracting with the federal government, you will see certain terms used often:

• Request for Proposal (RFP): A formal request from the government to contractors to submit a proposal to provide government services or supplies. Theoretically, the RFP will spell out exactly what services the government desires to buy with sufficient specificity to enable contractors to respond.
  
  
• Firm-Fixed Price Contract: The government uses several different types of contracts grouped into two broad categories: fixed-price contracts and cost-reimbursement contracts. There are variations of each of these.
  
  

A Firm Fixed-Price Contract, as the name suggests, is a contract where a contractor agrees to sell a specific service or supply to the government for a set time at a firm price. This is the government's preferred method of contracting; however, the government does use other types of contracts.

• Indefinite Quantity Contract: An indefinite quantity contract calls for the contractor to deliver services within a stated limit for a fixed period. For example, you may agree to provide 100 hours of programming services during 2001. The government will request the service periodically, say 20 hours for January and 15 for February, etc.
  
  
• Indefinite Delivery Contract: An indefinite delivery contract calls for the contractor to deliver services or supplies. However, the exact amount or the precise time of delivery may be unknown. For example, you may contract to provide up to seven engineers for up to 1000 hours of service during 2001. The government will request the number of service hours and the number of engineers periodically throughout the term of the contract. The government only has to purchase the minimum number of hours of service agreed to in the contract.
  
  
• Simplified Acquisition: FAR requires government agencies to use simplified acquisition procedures for the purchases of goods and services for $100,000 or less.
  
  
• Termination for Convenience: The government can terminate any contract for any reason if it is in the best interest of the government by giving the contractor written notice. The government must pay the contractor an equitable adjustment to cover the contractor's cost in stopping the work and other related expenses. The government cannot simply terminate a contract in order to award the same contract to another contractor.
  
  

A number of organizations are committed to helping small businesses enter into government contracting. Both the Mason Enterprise Center and the Howard University Small Business Development Center offer detailed courses and advice in government contracting. If you are thinking of moving into the government contracting field, spend some time understanding the law and the process.