Contract Vehicles

A contract vehicle is a term meaning different things to different people. However, at Malyszek & Malyszek we define the term in its broadest sense; it is a method under which a company may follow and close a sale. For the sake of this discussion, contract vehicles include:

• GSA schedule contracts
• Any contract held by your business partner under which subcontracting is an option
• Any multiple award schedule contract held by you or one of your partners
• An open market, small purchase (under $25,000)
• A sole source, credit card purchase (usually under $2,500) by a government buyer
• A public procurement contract
• Any program giving preferences to a defined class including small businesses, small disadvantaged businesses, women-owned businesses, veteran-owned businesses, businesses located within a HUB zone, etc.

The best way to explain contract vehicles is to compare unlike businesses. Assume a small business has established a relationship with an end user at a nearby military base. The military base's end user needs to obtain approximately $200,000 in information technology equipment. The business, which is relatively new to federal sales, doesn’t have any contracting vehicles. The base's end user, who is convinced that the business can produce the needed equipment, has several options available to ensure that they work with the company. Those options are as follows:

• The end user can decide to have the business work as a subcontractor under the prime contractor presently working at the base.
• The end user may announce the opportunity as a public bid. In doing so, the procurement would be opened up to competition and the actual award will be delayed for months on end.
• The end user may award the contract to the company under a sole source procurement. Under the federal regulations, solicitations may be limited to one source only if the contracting officer has decided that the vendor at issue is the only source reasonably available. If only one source is solicited, the official order file must be documented to explain the absence of competition. The sole source route isn't really viable in the situation described above.

Experienced prime contractors have every vehicle known to man. If a business truly wants to thrive in the federal market, it needs to align itself with as many vehicles as possible. In lining up contract vehicles, prime contractors gain not only federal contracts (such as GSA schedule contracts), but they also build strong business relationships with small and deprived businesses. Using a small business as an outlet for federal sales is encouraged under the federal procurement regulations as long as the small business is the controlling party in the partnership. Those vehicles held by large prime contractors include:

• A GSA schedule for every line of products or services that company has to offer
• Multiple award schedule contracts
• On demand partnerships with small businesses of all types

Although the prime contractor vehicle described above is likely to be chosen as the most useful path, it has two major drawbacks as far as the company is concerned. The base's prime contractor will take a fee for managing the subcontract. The business will also be under the thumb of the prime contractor and may well be isolated from its customer. Under this scenario, a GSA schedule would have been an ultimate vehicle. However, like most small businesses new to the federal market, the company does not have a GSA schedule contract.

Prime contractors will avoid public procurements like the plague. Every prime contractor's goal is to win the business as quickly as possible and with as little competition as possible. Therefore, the primes use their other vehicles to win the business. Situations exist in which the public procurement course is the only method available.

For more information regarding contract vehicles call Malyszek & Malyszek today. With over 40 years of experience in government contract law, our attorneys can help with your case.