What is a prime contract?

A prime contract refers specifically to an agreement in which a government entity contracts directly with a contractor to procure supplies, services, or construction. The primary focus of a prime contract is on fulfilling the government's needs with contractual obligations set between the two parties.

This type of contract is crucial in the context of government procurement because it establishes the foundational terms and responsibilities that guide the execution of the project or service being sourced. Prime contractors often have the responsibility to manage their subcontractors and ensure compliance with government regulations and standards.

In contrast, the other options are less relevant to the definition of a prime contract. A contract between two private entities does not necessarily involve government procurement and could represent a vast range of commercial agreements. A secondary agreement suggests a subcontract arrangement, where an existing contract forms the basis for new obligations, which does not define a prime contract. Lastly, the notion of a contract that does not require Federal oversight conflicts with the principle of government procurement, where oversight is essential to maintain transparency and compliance with federal laws and regulations.