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What is a Federal Contract Law?

Federal contracts are held to higher standards than a regular private contract. These types of contracts must abide by a three-point law that follows multiple statues and government regulation policies.

  • The first one set standards for how the tax payer’s money is put to use while hiring contractors and paying for services.
  • The second gives the government the rights to change the terms of a contract for termination or default purposes.
  • The third is the Contract Dispute Act. Due to the government’s sovereign entity status, any lawsuits against the government regarding contract issues must follow special handling and filing procedures.

Government contracts are also subject to several statutes and acquisition regulations such as:

  • The Competition in Contracting Act
  • The Federal Acquisition Streamlining Act
  • Defense Acquisition Regulation Supplement
  • Administrative Procedure Act
  • General Services Administrations
  • National Aeronautics and Space Administration

Federal Contract Law Government Procedures

The government appoints contracting agents who are authorized to make decisions about business matters.

The three main contracting agents are:

  • The Procurement Officer (PCO) – This agent is responsible for making contract agreements and for letting go any contractor who doesn’t hold up to their end of the contract.
  • The Administrative Officer (ACO) - is the one who sets the contracts into motion.
  • The Contract Termination Officer (TCO) - this is the agent that terminates contracts when the government decides it wants to back out for reasons other than contractor default.

The government is sovereign, which means there is no ruling authority they report to. Because of this, their contracting rights are a little different than that of a private contractor. Sovereignty gives the government the right to make any changes necessary within the guidelines stated in the contract.  It also means that the government can void a contract at its own discretion.

Regulations for Federal Contractors

Before 1795, private contractors were unable to get government assistance to buy materials or supplies for contracted jobs. Since then, a bill called the Purveyor of Public Affairs Act has been passed. The bill released funding so that the government could help buy anything that was needed to complete a contracted job.

Other laws also regulated contracts between civilian companies and the government. The Civil Sundry Appropriations Act of 1861 created a window for the government to advertise jobs in order to draw in private contractors. In 1890, the Sherman Antitrust Act was established to protect private companies and that their employees. And the Armed Services Procurement Act of 1947 was established to allow the government and service contractors chose the method and place in which they did contracted jobs.

Laws for Conducting Business

Some business laws address payment and hours worked. In 1892 the Eight-Hour Work Law was put into place in order to assure that contractors work a total of eight hours a day. To set a minimum pay for construction contracts, the Davis-Bacon Act of 1931 was put into effect.

Business laws also regulate what supplies may be used. The Buy American Act of 1933 was established to ensure that the government only buys American made goods. By 1936, the Walsh-Healey Public Contracts Act came about. It states that companies that supplies goods must show proof that they are an American dealer or manufacturer. The Berry Amendment of 1941 states that only natural fibers and food products may only be purchased from qualified countries.

Finally, laws were created to acknowledge small businesses and keep contractors accountable. The Small Business Act of 1953 was put into place to recognize small businesses who wanted to become government contractors. In 1962 the Truth in Negotiations Act was put into effect and requires that contractors provide proof of expenses that amounts totaled over $500,000. 

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