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Government Parastatals Strategies Essay

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Updated: May 30th, 2020


Government parastatals use three strategies to win contracts. These strategies include basic acquisitions, dialogue, or using bids, which the parties must sealed. Simplified acquisition provides the easiest way for both the government and the small entities enter into a bargain. This method streamlines the procurement process for smaller enterprises. The federal acquisition procedures (FAR) engineered the move to reserve the simplified acquisition procedure (SAP) to small businesses. The procedure reduces administrative costs and serves to improve the opportunities for the small enterprises (Ronald & Straight, 2004). Opportunities for small businesses, allow them to grow and expand into big enterprises. The commonest SAP techniques include blanket purchasing agreement, micro-purchases, and purchase orders.

Purchase order SAP

Purchase order SAP designates an order that parastatal issue to acquire goods or services. This order defines the terms to which the parastatal is willing to comply, including the time, price and condition of the delivery. This method specifies quantity, scope and time a parastatal wishes to acquire the purchase. Qualified enterprises can reply to establish a contract, and be bound by the agreement.


Micro-purchase, on the other hand, denotes contracts that are associated with price limits. For instance, price for the services goes for $2500, while for products may go for $3000. It has several rules for which construction projects in the Davis-Bacon act should not exceed $2000. The government employs micro-purchases via its own commercial purchase credit card.

The Agreement of Blanket Purchase

This is, essentially, a SAP that parastatal make to simplify the cyclic need for purchase requirements of the parastatal. The benefit of charge accounts goes to the contracting administrator with qualified suppliers for variety of services or supplies for which they anticipate the repetitive purchases. It is a contract and, therefore, excludes the capacity of supply and the state is unaccountable for making the purchases. It eliminates the requirement to give purchase orders each time the same service is incurred. It is active for a specific time and eligible for renewal upon expiry.


I would prefer the blanket purchase agreement, because it is suitable for repetitive contracts. Once an organization acquires the contract, it will be renewed automatically upon expiry provided it had provided good service.

Problematic Parts of Uniform Contract Part

Uniform contract parts specify that the parties, who contract, must quote the price, and if not then the bid will be rejected. This case may raised a challenge due to the fluctuating prices of items (Uniform Contract Format [UCF], 2012). This translates to flunctuation in sales, since price is a the mainn fdactor that determines the amount of commodities that consumers buy, and the rates of consumption.

Sealed Bidding

Sealed bidding is a competitive buying method that the federal system uses to buy specific items. It uses the “invitation for bid” (IFB) method. The bidder, who has the lowest bid, but is fully responsive, earns the contract (Tozendemir, 1997)

Negotiated procurement

It is more complicated and takes much more time than the sealed bidding. It largely relates to bids that that are beyond $150000 and, which requires high skill. The government agency chooses the bid with the best service.

I would prefer the negotiated procurement, because it seems to concur with the nature of the contract as opposed to the sealed bidding. The nature of the job for example requires high skilled labor that sealed bid do not provide. In sealed bids, the lowest bidder is selected and; hence, an organization risks losing the contract even if it provides higher quality services.

Reference List

Ronald L. & Straight, P. (2004). Simplified Acquisition Procedures for Federal Purchases. Howard: Howard University.

Tozendemir, S. (1997). Analysis of First Price Sealed Bidding (FPSB) using game theory. Carlifornia: Monterey, California: Naval Postgraduate School.

Uniform Contract Format (UCF). (2012). Web.

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