General Concepts Related to Federal Contracting

The world of federal contracting can be very intimidating because of its high level of technical detail and the language that distinguishes it.

At LPMP, we are currently developing our federal contracting division, and we recognize how complex it can be to enter the federal contracting sector, especially because of the vocabulary that is commonly used. For that reason, and to encourage more Puerto Rican businesses to enter the federal space, we are presenting general definitions of concepts that are regularly used in federal contracting. These are:

• North American Industry Classification System (NAICS): six-digit codes that classify businesses based on the products or services they offer.
• Contracting Officer: a federal government employee who, when granted authority, awards, administers, or terminates a contract. Contracting officers are responsible for ensuring that all services necessary for effective contracting are completed, while also ensuring compliance with the contract terms.
• Forecast: a tool through which federal agencies provide information about anticipated contracting opportunities. It supports planning by helping contractors learn about potential contracting opportunities early in the process.
• Office of Small & Disadvantaged Business Utilization (OSDBU): advisory offices responsible for promoting the use of small and minority-owned companies in federal contracting or subcontracting.
• Prime Contractor: a company that enters into a direct contract with the federal government. Prime contractors are responsible for tracking project progress, monitoring project costs, and managing subcontractor work. To offer services as a prime contractor, the company must be registered in the System for Award Management (SAM).
• Request for Proposal (RFP): a type of solicitation in which agencies request proposals from vendors and set forth anticipated requirements, terms and conditions, application instructions, and how submitted proposals will be evaluated.
• Set-aside: solicitations reserved by the federal government that limit competition for certain contracts to certified small businesses (Woman Owned, HUBZone, Veteran Owned, among others).
• Solicitation Number: an alphanumeric identification number, usually 13 to 17 characters long, assigned to each federal government solicitation to communicate government requirements to potential contractors.
• Sources Sought (SS) or Request for Information (RFI): a type of notice issued by federal agencies to research the market and determine whether there is an adequate number of qualified vendors to meet the agency’s required service.
• Subcontractor: a company that offers specialized services to prime contractors to fulfill the government contract awarded to the prime contractor.

There are currently several organizations in Puerto Rico that provide free services to Puerto Rican entrepreneurs interested in exploring the federal contracting market. If you want specific information about those organizations or about our experience in this journey, you can contact us. If you are a contractor or recipient of federal funds looking for other organizations to collaborate with in order to temporarily increase your personnel or expertise, we are available to help.

LPMP, as an organization, has a social commitment centered on economic growth and reducing inequalities. With this purpose in mind, LPMP collaborates with small businesses and nonprofit organizations to support their growth and sustainability, including strengthening their participation in the management of federal funds.