Government Laws and Regulations

April 13, 2006

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Now let's take a closer look at the laws and regulations that will affect you when you do business with the government. Maybe the easiest way to begin is with a brief history lesson.

Before the earliest law was passed, private individuals furnished from their own resources whatever supplies and materials the government needed. (How well do you think that would work today?) But that all changed with the Purveyor of Public Affairs Act of 1795, which allowed the government to buy needed supplies and materials.

At the beginning of the Civil War, which created monumental needs for the federal government, the Civil Sundry Appropriations Act of 1861 became law, and this continued the principle of advertised procurements for the next 86 years.

When it became apparent that small companies and their labor force needed protection, the Sherman Antitrust Act of 1890 was enacted.

Finally, the Armed Services Procurement Act, signed into law in 1947, continued the sealed bid as the preferred method of procurement, with specific exceptions. It also attempted to place procurement rules in one location. The result was the Armed Services Procurement Regulation (ASPR).

In addition, there are many other laws and Executive Orders that affect how you must conduct your business if you want to contract with the federal government.

For example, the Eight-Hour Work Law of 1892 set the eight-hour workday. The Davis-Bacon Act of 1931 set the minimum wage on the construction site at the local prevailing wage. In 1933, the Buy American Act required the government to buy only American products. The Walsh-Healey Public Contracts Act of 1936, drastically changed in 1994, required a supplier to certify that it was the manufacturer or a regular dealer. This was an attempt to do away with the broker.

Later on, the Small Business Act of 1953 was passed, which established the Small Business Administration. The Truth in Negotiation Act of 1962 required both prime and subcontractors on contracts over $500,000 to certify the cost data submitted under the solicitation. Public Law 95-507, which amended the Small Business Act of 1978, formalized the Small Business Subcontracting Plan requirement in contracts over $500,000 to large businesses. At that time, this law was considered a significant change in government procurement practices.

Now we come to the recent laws. The Federal Acquisition Streamlining Act of 1994 (FASA) was revolutionary in its impact on the federal acquisition process. It repealed or substantially modified more than 225 statutes and pushed the contracting process into the 21st century.

Among other things, it simplified the federal procurement process, reduced paperwork burdens, and transformed the simplified acquisition process to electronic commerce. Before the law could be fully implemented, the Federal Acquisition Reform Act of 1996 (FARA, also known as the Clinger-Cohen Act) was passed to correct some deficiencies in the earlier legislation and to make more changes. These last two laws were significant events because of the vast changes they made in the way that the government conducts it business. The system is continuing to make adjustments to the new, more open environment.

Example

What prompted the changes in the procurement process as contained in FASA and FARA? The story goes that Motorola was contacted by the Defense Department to supply mobile communication devices to be used by our military in "Desert Storm." The company was more than willing to supply the product, and the price quoted was not an issue.

However, at that time, the law did not allow the government to contract for a basically commercial item. Motorola told the government to take the product and give them a check for the amount agreed upon. The government couldn't do that without a signed contract, an impasse. As hard as the government tried to remove the problem clauses, it couldn't do it.

An ally country, supposedly Japan, came to the rescue. They bought the product and then furnished it to the U.S. government as part of its support of Desert Storm.

After all of this, the powers in Washington finally realized that the procurement process needed some major changes to get in step with the marketplace.

For your easy reference, we have created a chart summarizing the most significant laws.