The words of government contracting, in plain English

The buyer's formal agreement that the delivered work meets the contract. Payment terms usually run from acceptance, not delivery.

See also: Prompt Payment Act, Deliverable

The federal government's word for procurement. It covers everything from defining the need through contract award, performance and closeout.

See also: Procurement, FAR (Federal Acquisition Regulation)

The word many state and local buyers use for an amendment to a bid package. Acknowledge each addendum as instructed.

See also: Amendment

When another company controls yours or shares common ownership or management, SBA can add its revenue or employees to yours when deciding if you are small.

See also: Size standard

A change to a solicitation before the deadline, such as new answers to questions, revised specifications or a new due date. You usually must acknowledge every amendment in your bid, or it can be rejected.

See also: Addendum, Solicitation

The legal process for directing government contract payments to a bank or finance company. Without a proper assignment, the government keeps paying you, not the lender.

See also: Factoring

The buyer's decision and signed document making your company the contractor. Do not start work or spend money until you have the signed award or order.

See also: Notice to proceed (NTP), Debriefing

Awarding to the offer that gives the buyer the most overall benefit, which is not always the lowest price. Under a trade-off, a higher-rated but more expensive proposal can win.

See also: LPTA (Lowest Price Technically Acceptable), Evaluation factors

A surety's guarantee, submitted with a bid, that you will sign the contract and provide the required bonds if you win. On federal construction it is usually at least 20% of the bid price, up to $3 million. (FAR 28.101-2)

See also: Performance bond, Payment bond

The public event where sealed bids are opened and prices are read aloud or posted. Late bids are generally rejected.

See also: Sealed bidding

A formal challenge to a solicitation or award you believe broke the rules, filed with the agency, the GAO or the Court of Federal Claims (federal) or the state's protest office. Strict, short deadlines apply.

See also: Debriefing

A simplified arrangement for repeat purchases from a supplier at agreed prices. Each purchase is a separate call or order.

See also: Task order / delivery order, GSA Schedule (MAS)

Commercial and Government Entity code: a five-character ID assigned during SAM registration that identifies your business location to federal buyers, especially the Defense Department.

See also: SAM (System for Award Management)

A one- or two-page marketing sheet listing what you do, your experience, what sets you apart, your codes (NAICS, PSC), UEI and CAGE, certifications and contact details. Send it with sources-sought responses and to buyers you meet.

See also: Sources sought notice, NAICS code, UEI (Unique Entity ID)

A document from your insurer proving your coverage types and limits. Buyers and primes often require one before award or before you can work on site.

See also: Responsible

A written order changing the work within the general scope, common in construction. It should also adjust price and schedule if the change affects them.

See also: Modification (mod), Scope

A standard section of contract language, often cited by number (for example FAR 52.212-4). Clauses incorporated by reference apply in full even though the text is not printed in the contract.

See also: Flow-down clause, FAR (Federal Acquisition Regulation)

A checklist you build that maps every requirement and instruction in the solicitation to where your proposal answers it. It is the simplest way to avoid missing something.

See also: Proposal, Section L and Section M

A legally binding agreement in which the seller promises to deliver something and the buyer promises to pay. Government contracts include standard clauses that set rules for payment, inspection, changes and termination.

See also: Purchase order (PO), Clause

The only government official with authority to sign, change or end a contract. Instructions from anyone else, including the program office, do not change the contract unless the contracting officer puts them in writing.

See also: Contracting officer's representative (COR), Modification (mod)

A government employee who monitors your day-to-day performance and accepts deliverables for the contracting officer. A COR cannot change price, scope or schedule.

See also: Contracting officer (CO or KO)

A contract one government or purchasing cooperative awards that other public agencies may also use, so they can buy without running their own competition.

See also: BPA (Blanket Purchase Agreement)

A contract that pays your allowable costs plus a fee, up to a ceiling. It requires an accounting system that can track costs by contract.

See also: Firm-fixed-price (FFP)

Contractor Performance Assessment Reporting System: where federal buyers record report cards on contractors. Other agencies read them when evaluating your future proposals.

See also: Past performance

A written warning that you are failing to perform, giving you a set time (often 10 days) to fix the problem before the buyer can terminate for default.

See also: Termination for default, Show-cause notice

Exclusion from receiving government contracts, for a set period (debarment) or while an investigation is pending (suspension). Excluded companies are listed in SAM.

See also: SAM (System for Award Management)

A meeting or letter in which the buyer explains how your proposal was rated and why you won or lost. Ask for one; it is free coaching for your next bid.

See also: Award, Bid protest

A specific item, report or result the contract requires you to hand over, usually by a due date.

See also: Acceptance

Defense Federal Acquisition Regulation Supplement: Defense Department rules that add to the FAR, including cybersecurity and specialty-metals requirements.

See also: FAR (Federal Acquisition Regulation)

Payment straight to your bank account. Federal contracts pay by EFT to the account in your SAM registration, so keep it current.

See also: SAM (System for Award Management)

The criteria the buyer will use to compare offers, such as technical approach, past performance and price, and their relative importance.

See also: Best value, LPTA (Lowest Price Technically Acceptable)

Selling your unpaid invoices to a finance company (a factor) for immediate cash, minus a fee. On federal contracts, assigning payment to a factor requires following the Assignment of Claims Act, including notice to the contracting officer.

See also: Assignment of claims, Invoice

The main rulebook for federal purchasing, found at acquisition.gov. It is being rewritten under the "Revolutionary FAR Overhaul": agencies are using model text through their own class deviations, and proposed rules were published in June and September 2026, but as of October 2026 no final rewritten FAR has been codified.

See also: DFARS, Clause

A contract where the price is set and does not change with your actual costs. You keep savings and absorb overruns, so price carefully.

See also: Cost-reimbursement contract, Time-and-materials (T&M)

A clause the prime contractor must pass down into its subcontracts, so the subcontractor follows the same rules (for example labor standards or cybersecurity).

See also: Subcontractor, Clause

Shipping terms that say where ownership and risk pass from seller to buyer and who pays freight. FOB destination: the seller delivers to the buyer's location and bears freight cost and risk of loss until then. FOB origin: the buyer takes the risk and pays freight once the goods are loaded at the seller's location. (FAR 2.101)

See also: Quote, Acceptance

GSA's Multiple Award Schedule: long-term contracts with pre-negotiated prices that agencies can order from directly. Getting on schedule is optional and is a contract, not a certification.

See also: BPA (Blanket Purchase Agreement), GWAC (Government-Wide Acquisition Contract)

A large IDIQ, usually for IT, that any federal agency can order from. Holders are chosen through a separate competition.

See also: IDIQ (Indefinite Delivery, Indefinite Quantity)

A contract that sets terms and prices up front but leaves exact quantities and timing open. Work is issued later through task orders (services) or delivery orders (products), and only the stated minimum is guaranteed.

See also: Task order / delivery order, GWAC (Government-Wide Acquisition Contract)

A sealed-bid solicitation. Bids are opened publicly at a set time, and the award goes to the lowest-priced bid that meets every requirement. No discussions are held.

See also: Sealed bidding, Responsive, Responsible

The company currently performing the contract. When the contract is recompeted, the incumbent usually bids again.

See also: Recompete

Your bill to the buyer. A proper invoice includes everything the contract requires (contract and order numbers, line items, quantities, prices, remit-to and banking details); an incomplete one restarts the payment clock.

See also: Prompt Payment Act, Wide Area WorkFlow (WAWF)

Two or more companies forming a combined entity, usually for a single contract or a limited set of contracts. Small-business JVs must follow SBA rules to keep set-aside eligibility.

See also: Teaming agreement, Mentor-Protégé Program

A short notice some buyers and grant programs require before the full submission, telling them you plan to apply. The LOI deadline comes first, and missing it can bar you from submitting at all.

See also: Solicitation

Rules limiting how much of a small-business set-aside contract the prime may pay to companies that are not similarly situated small businesses: at most 50% of the amount paid for services, 50% for supplies (materials excluded), 85% for general construction and 75% for specialty trade construction (materials excluded). (13 CFR 125.6)

See also: Set-aside, Subcontractor

An evaluation method where every proposal is graded pass/fail on technical requirements, and the lowest price among those that pass wins. Extra quality earns no credit.

See also: Best value

What the buyer does before soliciting: checking what is available, who can supply it, typical prices and whether small businesses can compete.

See also: RFI (Request for Information), Sources sought notice

SBA program in which an experienced company helps a small business grow. A mentor and protégé can form a joint venture that bids on small-business set-asides.

See also: Joint venture (JV), Set-aside

The dollar level under which a federal buyer can purchase without competing quotes, often with a purchase card: $15,000 in general ($2,000 for construction under Davis-Bacon, $2,500 for services under the Service Contract Act). (FAR 2.101)

See also: Simplified acquisition threshold (SAT), Purchase card

The federal law requiring performance and payment bonds on federal construction contracts over $150,000, with other payment protections required from $35,000 to $150,000. Many states have similar "Little Miller Acts". (FAR 28.102-1)

See also: Performance bond, Payment bond

A written change to a signed contract, such as added funds, new scope, a new deadline or an exercised option. Only the contracting officer can issue one.

See also: Change order, Contracting officer (CO or KO)

North American Industry Classification System: six-digit codes describing what a business does. Each solicitation lists one, which sets the size standard; list all codes you can perform in SAM.

See also: Size standard, PSC (Product Service Code)

Payment terms meaning the full amount is due 30 days after the invoice date (or acceptance, if the contract says so). Net 15 and Net 45 work the same way.

See also: Prompt Payment Act, Invoice

A commodity code many state and local governments use to categorize purchases and send bid alerts. Pick yours carefully when registering on a state portal.

See also: NAICS code

Lets a small business that does not make a product still win a small-business supply contract, if it has fewer than 500 employees, normally sells that kind of item, takes ownership or possession of it, and supplies a U.S.-made product from a small manufacturer, unless SBA has granted a waiver. (13 CFR 121.406)

See also: Set-aside

Written permission to start work, common in construction. The performance clock usually starts on the NTP date.

See also: Award

An extra period the buyer may choose (but is not required) to add to the contract on the same terms, commonly up to four option years after a base year.

See also: Period of performance

Your record on similar work, often scored in proposals. New firms can cite commercial work, subcontracts or key staff's experience where the solicitation allows.

See also: CPARS

A surety's guarantee that you will pay your subcontractors and suppliers.

See also: Performance bond, Miller Act

A surety's guarantee that you will complete the contract. If you default, the surety pays to finish the work.

See also: Payment bond, Miller Act

The dates during which work must be done under the contract, often a base period plus option periods.

See also: Option year

A meeting or site visit before bids are due where the buyer explains the requirement and bidders can ask questions. Some are mandatory; skipping a mandatory one disqualifies you.

See also: Amendment

Labor laws requiring minimum wages and fringe benefits set by the Department of Labor. Davis-Bacon covers federal construction contracts over $2,000; the Service Contract Act wage clauses are required on service contracts over $2,500. The contract includes a wage determination listing the rates you must pay.

See also: Flow-down clause

The company that holds the contract directly with the government buyer and is responsible for all of the work, including what its subcontractors do.

See also: Subcontractor, Teaming agreement

The whole process a buyer uses to get goods, services or construction: planning, finding sellers, soliciting offers, awarding a contract, receiving the work and paying for it. In government, procurement follows written rules so spending is fair and traceable.

See also: Acquisition, Solicitation

A list agencies publish of contracts they expect to buy in the coming year, often with estimated value and timing. Use it to plan bids early.

See also: Recompete, Market research

The federal law that sets when agencies must pay: generally 30 days after a proper invoice is received or the work is accepted, whichever is later (14 days for construction progress payments). Late payments earn interest automatically, at 4.75% for July to December 2026. (FAR 32.904)

See also: Net 30, Invoice

Your formal response to an RFP. Follow the solicitation's instructions on format, page limits and volumes exactly; non-compliant proposals can be thrown out unread.

See also: RFP (Request for Proposal), Compliance matrix

A four-character federal code describing what is being bought (the product or service), as opposed to NAICS, which describes the seller's industry.

See also: NAICS code

A government credit card that employees use for small purchases, usually under the micro-purchase threshold. Accepting cards makes it easy for buyers to purchase from you.

See also: Micro-purchase threshold

A buyer's written order to buy specific goods or services at a stated price. Once you accept it (by signing or by delivering), it is a contract.

See also: Invoice, RFQ (Request for Quotation)

Your price response to an RFQ. Keep it clear about what is included: unit price, quantity, freight, delivery time and how long the price is good for.

See also: RFQ (Request for Quotation), FOB (Free on Board)

A new competition for work that is already being done under an expiring contract. Agency forecasts list upcoming recompetes.

See also: Incumbent, Procurement forecast

A judgment that your company can actually perform: enough money, capacity, integrity, licenses and a satisfactory record. Buyers must find you responsible before awarding.

See also: Responsive, Past performance

A bid that meets all the material requirements of the solicitation as written. A non-responsive bid is rejected no matter how low its price.

See also: Responsible, IFB (Invitation for Bid)

A percentage of each payment the buyer holds back, common in construction, until the work is finished and accepted. Plan your cash flow for it.

See also: Invoice

A market-research notice. The buyer asks industry for information or feedback before deciding how to buy. Responding is not a bid, but it puts your company on the buyer's radar and can shape the final requirement.

See also: Sources sought notice, Market research

A request for a full proposal: your technical approach, management plan, past performance and price. Used when the buyer will weigh quality and price together, and discussions with offerors are allowed.

See also: Proposal, Best value, Evaluation factors

A request for prices, usually for simpler or smaller purchases. A quote is not an offer the buyer can accept outright; the buyer typically issues an order based on it. Often decided mainly on price and delivery.

See also: Quote, Purchase order (PO), Simplified acquisition threshold (SAT)

SAM.gov, the free federal website where businesses register to do business with the U.S. government. Registration assigns your UEI, records your banking, codes and certifications, and must be reviewed and renewed every year.

See also: UEI (Unique Entity ID), CAGE code

The boundaries of the work you are contracted to do. Work outside the scope needs a written modification before you do it, or you may not be paid.

See also: Modification (mod), Change order

A method where bids are submitted privately, opened all at once and awarded on price to a responsive, responsible bidder. Common for construction and state and local purchases.

See also: IFB (Invitation for Bid), Bid opening

In a federal solicitation, Section L tells you how to prepare your proposal and Section M tells you how it will be scored. Read them together before writing.

See also: Evaluation factors, Compliance matrix

A contract reserved for a category of businesses, such as small businesses, 8(a), WOSB, HUBZone or SDVOSB firms. Only eligible companies may compete.

See also: Sole-source award, Size standard

A notice asking you to explain why the contract should not be terminated for default. Answer it promptly and in writing.

See also: Cure notice, Termination for default

The federal dollar level, $350,000 in general, under which buyers may use simpler, faster procedures such as RFQs, and above which more formal rules apply. Purchases between the micro-purchase threshold and the SAT are generally reserved for small businesses when two or more can compete. (FAR 2.101)

See also: Micro-purchase threshold, RFQ (Request for Quotation)

SBA's limit, set per NAICS code as average annual revenue or number of employees, that decides whether your company counts as small for a contract. The solicitation's NAICS code sets the standard that applies.

See also: NAICS code, Affiliation

A contract awarded without competition, allowed only in specific situations, such as certain 8(a), HUBZone, SDVOSB or WOSB awards under dollar limits, or when only one source can do the work.

See also: Set-aside

The buyer's formal request for offers. It contains the requirement, the terms, the instructions for responding, the evaluation method and the deadline. RFQs, RFPs and IFBs are all solicitations.

See also: RFQ (Request for Quotation), RFP (Request for Proposal), IFB (Invitation for Bid)

A notice asking which companies could do the work, often used to decide whether to set the contract aside for small businesses. A short capability response can lead to a set-aside you can win.

See also: RFI (Request for Information), Set-aside, Capability statement

The part of the contract that describes the work. A SOW tends to say how to do it; a PWS says what results are required and lets you choose how.

See also: Scope, Deliverable

A company hired by the prime contractor to do part of the work. The subcontractor's contract is with the prime, not with the government, and it gets paid by the prime.

See also: Prime contractor, Flow-down clause

An order placed under an existing IDIQ or schedule contract for specific services (task order) or products (delivery order).

See also: IDIQ (Indefinite Delivery, Indefinite Quantity), BPA (Blanket Purchase Agreement)

An agreement between companies to pursue a contract together, usually one as prime and one or more as subcontractors. It sets each party's role and work share if they win.

See also: Joint venture (JV), Prime contractor

The government's right to end a contract when it no longer needs the work. You are generally paid for work done and reasonable settlement costs, but not lost profit on the unfinished work.

See also: Termination for default

Ending a contract because the contractor failed to perform. It can make you pay the buyer's extra cost to finish the work and will hurt your past-performance record.

See also: Cure notice, Termination for convenience

A contract that pays fixed hourly rates for labor plus the cost of materials, up to a ceiling price.

See also: Firm-fixed-price (FFP)

The 12-character ID the federal government assigns your business in SAM.gov. It replaced the DUNS number for federal awards in April 2022.

See also: SAM (System for Award Management)

IRS form giving your legal name, tax classification and taxpayer ID to a customer that will pay you. Primes and state agencies ask for it before the first payment.

See also: EFT (Electronic Funds Transfer)

The Defense Department's invoicing system, part of PIEE. DoD contracts usually require invoices to be submitted there.

See also: Invoice