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5 Types of Purchases the Government Makes

9 Sep 2018 11:21 AM | Linda Chatmon (Administrator)

The U.S. Government is the world's largest purchaser of goods and services. And it buys from every type of business to fulfill every type of need.

But anyone who’s spent any time at all researching federal contracting knows that doing business with the government can be complex. So, let’s discuss the government’s process for finding the right companies and providers to meet the needs of its 400+ agencies.

How the US Government Purchases Goods and Services

Most every purchase of goods and services made by the federal government is made in accordance with specific policies and procedures as outlined in the Federal Acquisition Regulations (FAR). There are five ways that these purchases are handled and secured.


Micro purchases are purchases made under $3,000. They do not require the submission of competitive bids. Micro purchases can be made with an agency credit card and are generally acquired from large businesses.

Simplified procedures

Simplified procedures provide a streamlined method for making government purchases between $3,000 and $100,000. All of these purchases are made from small businesses. Any purchase over $25,000 must be listed at, and federal agencies are not required to participate in a full competitive bidding process for purchases under $100,000.

Sealed bidding

Sealed bidding uses the government-wide Invitation to Bid system wherein businesses are free to participate in competitive bidding by submitting an undisclosed or sealed offer. Sealed bidding follows specifically detailed instructions which outline what to include, how to bid, transaction conditions and specific date of submission.

Contract negotiations

Although this method is generally complicated and time-consuming, it is still the preferred method for most government agency purchases. If the purchases involve highly specialized products, government agencies can choose to negotiate and validate contract terms with specific vendors.

Consolidated purchasing programs

Government-Wide Acquisition Contracts (GWACs) are utilized when the same goods, products, and services are needed by multiple government agencies. Consolidating multiple needs into a single purchase simplifies the buying process by choosing a single vendor, or set of vendors, to provide services across multiple government agencies. This system also affords the Government Service Administration (GSA) schedules to negotiate supply contracts uniformly for all agencies.

As you prepare to compete in the government arena, don't be afraid to contact government agencies directly to get first-hand information on the products and services for which there is currently a need. Find out the best ways to go about doing business with the agencies you contact and make sure your products and services are a good fit for your target agency.

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