The federal government is, by far, the largest contractor in the U.S. It mainly contracts for consumer products (e.g., toothpaste, milk), services (e.g., contractor services, consulting agencies) and military products (e.g., stealth bombers, guns). Three characteristics set government spending apart from private spending. First, federal government contracts are heavily regulated to curb misappropriation of funds and ensure uniform policies and practices across agencies. Second, the contract terms are the product of careful drafting by teams of government attorneys and have often received distinct meaning through past contract adjudications. Third, because of the government's special status, disputes under federal government contracts follow a different procedural path than those under private contracts.
Among the federal agencies, the Defense Department is the largest contractor. The federal regulations concerning government contracts are known as the Federal Acquisition Regulations. They are issued by the General Services Administration.
State agencies, municipalities and public authorities operating under state law are subject to similar government contract regulations but at the state level.
Last update: Sept. 30, 2008
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