Sometimes government contracts are open to anybody who wants to bid on them. My company's client has a different arrangement. They first issue a request for companies to submit proposals to get on the list of companies that are eligible to bid on tasks. More often than not, only very large government contracting companies win this right. Because you need to have money and time and expertise to submit your proposal. And winning only gets you the right to win actual work. You don't get any money for the first level win.
Once the rights have been awarded, all work that the government agency needs done will be put up for bid by those who have won the first level. This is, in effect, creating a list of preferred vendors for the government to award work to. I imagine this is a process that ensures the only contractors doing work have the ability (and size) to complete the large tasks that need to be awarded. It also simplifies the distribution of work since there is only a fixed number of companies that even quality to perform the contractual tasks.
There are times when this system appears inefficient. I spot many oppotunities where a smaller firm or even an individual could do a better job for some tasks. But I guess the client like the ease of this setup. For those with truly exceptional skills, but do not belong to any of these companies, there is sometimes the ability to subcontract to the approved list of contractors. There are no rules that state subcontractors cannot do the work. But the tasks can only be awarded to contractors on the approved list.
It is funny how these contacting and subcontracting arrangements work. There are even times when sub contractors themselves subcontract out the work. This scenario results in a high end cost to the government. I do not think that cost is much of as issue for them though.
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