How To Finance Your Government Contracts
If you are a contractor in the federal government, or you have any interest in receiving a contract from the United States Government to provide services for them, then you will need to know how to finance your government contract. This can be done through several different avenues. The first avenue is what is known as Pre-Qualification or Pre-Qualification Process that can be found in the Federal Acquisition Regulation. Moving on up, the next step will be applying for eligibility for payment of fees and performance bonds and pursuing an offer of federal services that goes through offer selection procedures just like any other acquisition process conducted by another contractor. There are many contractors that prefer to go through the pre-qualification process.
The reason is that they are able to choose the contracts they want through pre-qualification processes. They do not have to bid on a contract if they do not want to and they can also participate in multiple pre-qualification processes. Contractors that do not want to use the pre-qualification process can pursue an offer of services for individual contract awards for each offer of services.
For more information about Pre-Qualification Or Pre-Qualification Process, Please visit the website at: http://www.fbo.gov/
Contractors that are eligible to receive payments under various federal laws and regulations can expect to pay fees and performance bonds as a requirement of receiving payment under these laws and regulations. These amounts can vary depending on the length of the contract or if there are multiple contracts for the same type of service in series. Some of these fees and performance bonds include:
Known as the Pre-Qualification Fee, it is a non-refundable fee required by law for those contractors that wish to receive payment under certain statutes like the Small Business Act. This fee is also known as an "Eligibility Fee" because it allows you to be eligible for any type of federal contract other than contracts with foreign countries.
The Pre-Qualification Fee is due on the date you apply for the eligibility of government contract. You must understand that if you do not fulfill certain requirements, then the government may not process your application and then you will be disqualified for the possibility of receiving payment under this law. You must understand also, that if you are deemed unsuitable for purchase under this particular statute, then all of your applications will be denied and cannot be reassessed in any way or form. The fee cannot be waived in any form or manner. The minimum amount is $5,000 USD plus a subsequent fee as applicable to each individual contract type.
The Pre-Qualification Fee is sometimes referred to as the Contractor's Fee, the Person's Fee, Nomination Fees, or for other various names. You should know that this fee has a specific billing code and its own cost basis so that you can track these types of fees accordingly.
The Performance Bond is required when financing your government contract through Performance Bonds. This bond protects the federal government in the event a contractor defaults on their obligations under the terms of a particular contract. The amount needed to be posted as a performance bond will vary upon the length of time they have been conducting business as well as how much money they may owe through failed or defaulted contracts or debarments from previous contracts.
Conclusion