Why Does the Government Keep Selecting These Contractors?
You may have noticed that local, state, and federal governments tend to return to the same contractors to complete building and renovation jobs. These entities are known as government contractors—but how did they get that title anyway? Let’s define what a government contractor is, and then investigate why the government keeps returning to them for work.
What is a Government Contractor?
The term ‘government contractor’ is a little bit misleading, because these companies actually are not sponsored by the federal government. In fact, on a broad level, government contractors are simply companies that produce goods and services for the public, governmental agencies, and institutions.
In terms of construction, a government contractor is a building company that renovates, builds, or rebuilds governmental property. The process to becoming a governmental contractor varies from state to state, but once labeled as a registered vendor, governmental contractors acquire the right to bid on government-sponsored building projects.
Why Does the Government Select Certain Contractors?
Because government building projects are paid for by the American taxpayer, U.S law states that the government must award a building contract based on the lowest cost. That means that after all bids have been acquired, a governmental construction project is lawfully required to be completed by the company which bids the lowest amount.
For purchases over $25,000, the government publicly publishes what they intend to purchase for a construction job. From there, registered government contractors are able to bid on that project in hopes of scoring the job as the lowest bidder.
Large building companies will seek out government contracts that range into tens and millions of dollars. Smaller companies, on the other hand, might go after public contracts that are smaller and more specialized.
No matter the scenario, the government will choose the lowest bidder. In many cases, especially with larger jobs, companies will be selected again and again because they have the resources to provide the lowest bid. The government isn’t giving preferential treatment to these companies; they are simply selecting the contract based on what is required by U.S law.
This process isn’t necessarily a good thing for small businesses. Smaller building companies tend to hinge their services on attention to detail, building relationships, and high-quality work. However, because large companies are built to scale and can provide resources at a much lower cost, they are usually more inclined to win the contract. Therefore, large companies will also go after smaller contracts as a means of making a quick buck.
Want More Information?
If you’re curious to learn more about this process and how it affects businesses and the building economy as a whole, feel free to reach out to us here at Carlton Building Services. We pride ourselves on being a resource for people in Virginia to learn more about building projects that might affect their community. As a building services company ourselves, we have the expertise to keep you informed!
Reach out with your questions today!
