Contracts with State and Local Governments

Entering into a contract with a government entity is very different from entering into a contract with a private entity. When the federal government negotiates and enters into contractual agreements, there are a number of different laws that impose limitations on who they may contract with, on how bids must be received and on how contracted entities may behave.  When a contract is entered into with the state, on the other hand, state and local governments are not subject to the same laws that apply to federal contracts. However, many states have adopted similar laws modeled after federal regulations, while also setting their own requirements to ensure that contracting is fair.

State and Local Contract Laws

When a state, local or federal government enters into a contract, they do so using taxpayer money. These officials have also been elected to speak for the people and represent their interests, so the contracts that are being entered into should be for the public good.

In order to ensure that this is the case, a variety of different laws and regulations govern contracts made with the government. For instance,  three examples of laws that apply to federal contracts include the Federal Property and Administrative Services Act of 1949 (imposes rules for federal government acquisition of non-land property or for construction contracts for non-military/defense use); The Armed Services Procurement Act of 1947 (is similar to the Federal Property and Administrative Services Act of 1949 except applies to defense contracts) and the Competition in Contracting Act (an Act requiring open and fair competition before a contract is awarded). 

While these laws apply to the federal government, many states have instituted similar laws and rules. For instance, California has a California Public Contract Code with multiple sections. Among the Code requirements, Section 101 requires efficiency in public contracts; Section 202 encourages competition; Section 1101 deals with public works contracts; and Section 1103 defines "responsible bidders" of government contracts. 

Other states have their own versions of the laws, which may borrow in whole or in part from federal requirements. While there are some differences among these different state law and codes, common threads include requiring a bidding process before the government contracts with a worker; requiring that anyone contracting with the government use fair and equal hiring procedures and pay at least minimum wage; and requiring that all who bid on government contracts operate a drug free workplace.

Because each state has its own rules and because there are many regulations that apply to government contracts, it is important to consult with an experienced attorney before entering into a government contract or bidding on a government project.