FedReady

Government contracting glossary

Plain-English definitions of 40 federal contracting terms, from sources sought notices to the rule of two. Each one links to the guides and tools that put it to work. For more terms on one page, see the government contracting glossary guide.

0–9

  • 8(a) program: The 8(a) program is SBA's nine-year business development program for small businesses owned by socially and economically disadvantaged U.S. citizens.

B

  • BPA (blanket purchase agreement): A blanket purchase agreement (BPA) lets an agency fill repeat needs by setting up "charge accounts" with qualified suppliers, then ordering as needed.

C

  • CAGE code: A CAGE code is a five-character ID the Defense Logistics Agency (DLA) assigns to a business location that registers to bid on federal contracts.
  • Capability statement: A capability statement is a one-page summary of your business for agencies and prime contractors: what you do, what sets you apart and your past work.
  • Contracting officer: A contracting officer is the government official with authority to enter into, manage and end contracts. Only a contracting officer can bind the agency.
  • CPARS: CPARS (Contractor Performance Assessment Reporting System) is the government's system for contractor report cards, used to judge past performance.

F

G

  • GSA Schedule: The GSA Schedule (Multiple Award Schedule, or MAS) is a long-term governmentwide contract agencies use to buy commercial products and services.

H

  • HUBZone: A HUBZone is a Historically Underutilized Business Zone. SBA's HUBZone program helps small businesses based in these areas win federal contracts.

I

  • IDIQ contract: An IDIQ (indefinite delivery, indefinite quantity) contract sets a minimum and maximum, and the government places orders as needs arise in a set period.
  • IFB (invitation for bids): An invitation for bids (IFB) is the solicitation used in sealed bidding. Bids are opened at a set time and judged on price and price-related factors.
  • Incumbent: The incumbent is the company doing the work under the current contract. When the agency competes the work again, the incumbent usually bids to keep it.

L

  • Limitations on subcontracting: The limitations on subcontracting rule caps how much of a set-aside contract a small business can pay other firms to perform. On services, the cap is 50%.

M

  • Micro-purchase threshold: The micro-purchase threshold is $15,000. Agencies can make most buys at or below it without competing quotes, often with a government purchase card.

N

  • NAICS code: A NAICS code is a six-digit industry code, such as 561720 for janitorial services. Each solicitation generally carries one, and it sets the size standard.

O

  • Option year: An option year is an extra year of work the government can add to a contract at its choice. Many service contracts have a base year plus option years.
  • OSDBU (Office of Small and Disadvantaged Business Utilization): An OSDBU (Office of Small and Disadvantaged Business Utilization) is a federal agency's small business office, and a good first contact at any agency.

P

  • Past performance: Past performance is your record on previous contracts. Agencies use it to judge how likely you are to do a new job well.
  • Period of performance: The period of performance is the time during which a contractor must do the work under a contract, often a base period plus option periods.
  • Prime contractor: A prime contractor is the business that holds a contract directly with the government. It's responsible for all the work, including any it subcontracts.
  • PSC code (product and service code): A PSC (product and service code) is a four-character code for what the government is buying, such as S201 for custodial and janitorial services.

R

  • Recompete: A recompete is a new competition for work already under contract, held as the current contract ends. It's your chance to take work from the incumbent.
  • RFI (request for information): A request for information (RFI) is a notice an agency uses to gather market information, like prices and capabilities, to plan a purchase. It isn't a bid.
  • RFP (request for proposals): A request for proposals (RFP) is the solicitation for a negotiated contract, where the agency can weigh price against your approach and past performance.
  • RFQ (request for quotations): A request for quotations (RFQ) is a solicitation asking businesses for price quotes. It's common on smaller and simpler federal purchases.
  • Rule of two: The rule of two requires a set-aside for small businesses when at least two responsible small businesses are expected to offer at fair market prices.

S

  • SAM.gov: SAM.gov is the free official government website where businesses register to work with the federal government and agencies post contract opportunities.
  • SDVOSB (service-disabled veteran-owned small business): An SDVOSB (service-disabled veteran-owned small business) is a small business at least 51% owned and controlled by service-disabled veterans.
  • Set-aside: A set-aside is a contract reserved for small businesses, or for one type of small business such as HUBZone or women-owned firms. Others can't bid.
  • Simplified acquisition threshold (SAT): The simplified acquisition threshold (SAT) is $350,000. Federal purchases at or below it can use simpler, faster buying procedures.
  • Small business size standard: A size standard is SBA's cutoff for counting as a small business in an industry. SBA sets one per NAICS code, in average annual receipts or employees.
  • Sole-source contract: A sole-source contract is awarded to one company without competition, which is allowed only in specific cases.
  • Solicitation: A solicitation is an agency's official request for bids, quotes or proposals. It describes the work, the terms, how to respond and how offers are judged.
  • Sources sought notice: A sources sought notice is market research: an agency asks which businesses can do a job before it decides how to buy. Answering it isn't a bid.
  • Subcontracting plan: A subcontracting plan is a large prime contractor's written commitment to goals for using small businesses as subcontractors on a federal contract.
  • Subcontractor: A subcontractor is a business hired by a prime contractor to do part of a government contract. Your customer is the prime, not the agency.

T

  • Task order: A task order is an order for services placed under an existing contract, usually an IDIQ. An order for supplies is called a delivery order.

U

  • UEI (Unique Entity ID): A UEI (Unique Entity ID) is the 12-character ID SAM.gov assigns to your business. It replaced the DUNS number on April 4, 2022.

W

  • Wage determination: A wage determination is a Department of Labor schedule of minimum wages and fringe benefits for workers on a federal construction or service contract.
  • WOSB (women-owned small business): A WOSB is a small business at least 51% owned and controlled by women who are U.S. citizens, with women managing daily operations.