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SBA procurement assistance — how the government buys

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The U.S. Small Business Administration (SBA) and its partners help millions of existing and prospective small business owners start, grow, and succeed. They help with SBA loans, counseling, training and contracts. SBA also helps businesses and families recover from disasters with loans, and is a voice for small business, helping reduce regulatory impact. Each month, this section provides information to start, expand and manage small business.

The government buys many products and services from suppliers that meet certain qualifications. It applies standardized procedures to purchase goods and services, but it doesn’t purchase like individual households might.

Instead, the government must conform to the Federal Acquisition Regulation (FAR). The FAR is a set of standardized regulations that federal agencies use in purchasing. It provides procedures for every step in procurement, from start to finish. The FAR can be accessed electronically at www.arnet.gov/far. All solicitations over $25,000 are posted on Federal Business Opportunities (www.FedBizOpps.gov), to communicate buying requirements to potential suppliers. The following describes a variety of federal contracting methods.

Contracting methods

Simplified Procedures: The Federal Acquisition Streamlining Act (FASA) simplified federal buying procedures. It reduced simplified procedures and competition restrictions on purchases under $100,000. Agencies still must advertise planned purchases over $25,000 in www.FedBizOpps.gov.

Simplified procedures require less detail, documentation and approval levels. Purchases from $2,500 to $100,000 are reserved for small businesses, unless offers cannot be obtained from two or more small firms that are competitive on price, quality and delivery. Purchases under $2,500 don’t need competition, but are not reserved for small firms.

Sealed Bidding: Competitive government contracts can use sealed bids when requirements are clear, accurate and complete, typically using Invitations For Bid (IFB).

IFBs include product or service descriptions, bid instructions, conditions for purchase, packaging, delivery, shipping and payment, contract clauses and bid deadline. Sealed bids are opened in public at the purchasing office at time certain. All bids are read aloud and recorded. A contract is then awarded to the low responsive bidder.

Government-wide IFBs are available daily at www.FedBizOpps.gov, which also links to solicitations. Contract officials search Dynamic Small Business Search to identify qualified contractors. Register at http://dsbs.sba.gov/dsbs/dsp_dsbs.cfm.

Contract Negotiation: When contracts exceed $100,000 and necessitate highly technical products or services, the government may issue a Request for Proposal (RFP). RFPs request products or services, and solicit proposals on the how firms will carry out that request, and at what price.

RFP responses are subject to negotiation. Federal agencies checking possibilities of acquiring a product or service may issue a Request for Quotation (RFQ). RFQ responses are not considered offers nor contracts. An order is an offer to buy on specified terms and conditions. A contract is established when a supplier accepts the offer. Government-wide RFPs and RFQs are available daily at www.FedBizOpps.gov.

Agencies typically use oral solicitations up to $25,000, written solicitations over $25,000, and purchase cards under $2,500. “Best value” means agencies can award for satisfying needs at slightly higher prices. Solicitations for best value must include intent and description of evaluation criteria and other award factors. Register on Dynamic Small Business Search where purchasers look to identify qualified small firms.

Small business success

Louis Ortiz is living the American Dream, turning his childhood passion for aquariums into a business.

Ortiz started his first business, Santa Fe Aquariums, in 1983 at age 16. Over the next few years, Ortiz started and sold several businesses, including West Coast Aquarium Industries San Diego in 1990. Since then, he has purchased five businesses to help expand WCAI. The first three were in aquarium service, giving WCAI the San Diego aquarium service market lead. Next was a small acrylic shop, which he retooled to manufacture aquariums.

In 2001, Ortiz purchased Living Waters, an Ohio aquarium manufacturer providing WCAI an industrial-size thermal-forming oven to bend and mold acrylics. He was assisted by the Small Business and International Trade Center (SBDITC), Southwestern College, Chula Vista. SBDITC provided guidance in the manufacturing process, business plan development and marketing.

With consultant and industry expert help, Ortiz co ntinues to expand on his business plan, improving internal operations, manufacturing and aggressive marketing strategies. He plans to increase growth, develop name recognition, improve market share and to grow annual sales to $10 million. In five years, he plans to triple manufacturing by purchasing a building, and improving internal operations and job costing.

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