Part I: Basic Contracting Principles

Before looking at the regulations in detail, you should be aware of four basic principles underlying Department of the Treasury and federal agencies' contracting process.

First, to ensure reasonable prices, contracts are awarded competitively whenever possible. This practice reflects the theory that full and open competition results in fair and reasonable prices and that such competition avoids favoritism by assuring that all qualified suppliers have the opportunity to sell to the government.

Second, contracts are awarded only to contractors found to be "responsive" and "responsible." Regardless of the procurement method used, the regulations require that, before the contract is awarded, the contracting officer must assure that a prospective contractor is "responsive" and "responsible."

To be considered responsive, the contractor must submit a sealed bid or proposal in accordance with the terms and conditions of the quotation or solicitation. For example, the bid or proposal must be submitted in a timely manner to the location stated in the Government’s requirements.

To be considered responsible, the contractor must meet the following conditions:

  • Have, or be able to obtain, adequate financial resources.
  • Be able to comply with the delivery requirements.
  • Have a satisfactory record of performance.
  • Have a satisfactory record of integrity and business ethics.
  • Have, or be able to obtain, the necessary organization, experience, accounting and operational controls, and technical skills.
  • Have, or be able to obtain, the necessary production, construction, and technical equipment and facilities.
  • Be otherwise qualified and eligible to receive an award under applicable laws and regulations.

These determinations are generally based on the contracting officer's evaluation of contractor's data and records of prior performance.

In the case of small business, special rules apply. If a contracting officer finds that the small business that offered the lowest price is not responsible, the case must be referred to the Small Business Administration (SBA). The SBA then notifies the small business of the contracting officer's finding and offers it an opportunity to apply for a Certificate of Competency (COC). If the small business applies for a COC, the SBA reviews the findings and makes its own determination as to whether the small business is responsible. If it finds the small business responsible, the SBA issues a COC to the contracting officer. Except in some unusual circumstances, the contracting officer must then abide by the SBA's decision and award the contract to the small business firm.

Third, the type of contract issued must be appropriate for the particular procurement. The regulations authorize the use of several different types of contracts and describe the circumstances appropriate for the use of each. The type of contract used in each procurement should be determined by the circumstances of the procurement and the degree of risk associated with performance of the contract.

Fourth, the Department of the Treasury procurement program is used to help implement various national social and economic policies. Some of those policies are implemented by mandatory contract provisions, such as those requiring that minimum standards for wages, hours, and working conditions be met in producing supplies or performing services under a Department of the Treasury contract. Other policies are furthered by laws requiring contracts to be awarded to certain contractors or prohibiting their award to others. For example, certain items must be purchased from Federal Prison Industries, Inc., and contracting with a company convicted of violating air pollution standards is prohibited. A third method of implementing national policies is the use of special procurement techniques, such as set-asides for small businesses, HUBZone set-asides, women-owned small businesses, service disabled veteran owned small businesses, and 8(a) procurements. Although there is no direct set-asides for small disadvantaged businesses, a goal exist for this category.