The following article is excerpted from West's Encyclopedia of American Law . A contract between a federal, state, or local government and a private business, which requires the business to provide goods or services to the government in exchange for money. In the United States, governments on the federal, state, and local level cannot execute all of the government's work. For example, a state highway department may not have sufficient resources and personnel to build a bridge. To accomplish such work, the governments enter into contracts with private businesses and pay the businesses for their efforts.
Government contracts are a big business in the United States.
Every day, federal, state, and local governments enter into tens of thousands of contracts with private businesses to provide goods and services to the government. The aggregate value of these contracts reaches into the hundreds of millions of dollars. Government contracts are different from contracts formed between private parties. Even though governments have the corporate powers of buying and selling, they are still governments, and they must be fair and impartial when buying goods and services from the general public. Private entities can do business with whomever they want, unless they purport to provide goods or services to the public generally, in which case they may not discriminate solely on the basis of race, religion, sex, creed, ethnic origin, or disability.