How government buying works — federal and state
Whether you're a government entity trying to spend public money correctly or a company trying to win government business, procurement law shapes every step of the transaction. It determines how contracts are awarded, who can bid, what process must be followed, and what happens when something goes wrong.
The rules exist for good reason: government procurement law is designed to ensure that public funds are spent fairly, competitively, and transparently. But the practical reality is that procurement law is highly fragmented — federal agencies follow one framework, each state follows its own, and local governments add another layer on top.
The most important concept in procurement law is the dollar threshold — the amount that determines how much competitive process a purchase requires.
At the federal level, there are three tiers:
States follow the same three-tier logic, but the specific dollar amounts vary significantly. Some states require formal competitive bidding above $25,000. Others don't require it until $150,000 or higher.
Sealed bidding (IFB): Used when the government knows exactly what it wants and price is the primary decision factor. Bids are submitted sealed, opened publicly, and the contract goes to the lowest responsive, responsible bidder. No negotiation. Common for straightforward goods and construction.
Competitive proposals (RFP): Used when the government needs to evaluate factors beyond price — technical approach, experience, past performance. Proposals are evaluated against stated criteria, and negotiation may occur. More common for services, IT, and complex projects.
If a government entity awards a contract improperly, qualified vendors who were passed over have the right to protest. At the federal level, the GAO resolves most bid protests within 100 days. At the state level, procedures vary but are generally available.
NASPO ValuePoint is the most significant national cooperative purchasing program. When a lead state competitively bids a master agreement, every other state, local government, and eligible public entity can purchase from that contract without running their own competitive process. For companies seeking to scale government sales, NASPO ValuePoint is often more strategically valuable than winning individual contracts.
If you're evaluating government contracting opportunities across multiple states, these dimensions matter most:
Government entities: Start with your state's central procurement office and its published manual. The NASPO state profile (naspo.org/states) links to your state's statute, manual, and procurement office.
Companies: Register in SAM.gov (federal), review NASPO ValuePoint for cooperative vehicles, register with target states, and understand the preference landscape before bidding.
Attorneys: The first questions are always — which framework applies, what method was used, was the process followed correctly, and is there a viable protest theory.
This overview is for informational purposes. Procurement law changes frequently. Always verify current requirements with the relevant procurement office before acting.