How are federal government contracts different from contracts between commercial firms?
Get Legal Help Today
Secured with SHA-256 Encryption
UPDATED: Aug 18, 2012
It’s all about you. We want to help you make the right legal decisions.
We strive to help you make confident insurance and legal decisions. Finding trusted and reliable insurance quotes and legal advice should be easy. This doesn’t influence our content. Our opinions are our own.
Editorial Guidelines: We are a free online resource for anyone interested in learning more about legal topics and insurance. Our goal is to be an objective, third-party resource for everything legal and insurance related. We update our site regularly, and all content is reviewed by experts.
Federal government contracts have many similarities to private commercial firm contracts, but there are some distinct differences, too. Namely, contracts for federal government organizations contain several highly-specialized regulations and requirements that are much stricter and more precise than any language found in a typical commercial contract. This is because, quite simply, a government group is acting not on its own behalf, but on behalf of the public (with public funds and public interest at stake), and thus its actions must be held to a high standard so that they can stand up to possible scrutiny.
There are many differences between government contracts and commercial contracts. Commercial firms, by definition, are in business to profit, and contracts between these firms can basically be dictated by whatever they want. The terms of commercial contracts, as long as they aren’t illegal or against public policy, do not need to satisfy anyone except those engaging in the contract. The federal government, on the other hand, is answering to a much larger and less personal audience, so government contracts reflect this.
The specific regulations in government contracts are not just there to create a high standard of behavior. Government contracts are also designed to create transparency, meaning they attempt to make actions–and the reasoning behind those actions–blatant and clear to anyone who is familiar with the agreed upon terms. This is to discourage suspicion of other motives and to show the public, who is funding the government’s actions, how their money is being spent.
Further, the special rules for government contracts prevent government personnel from engaging in wasteful or inefficient practices, while directing private firms to be fair in their dealings with the government.
Government contracts are complex, so if you are entering into a government contract, it’s imperative that you follow guidelines closely in order to ensure your interests are protected. As such, it’s a good idea to consult with a lawyer before signing any government contract.