Which method allows the government to hold discussions with offerors?

The correct answer is Contracting by Negotiation because this method explicitly allows for discussions and negotiations between the government and the offerors. In this process, the government can engage with potential contractors to clarify proposals, discuss terms, and negotiate price and other aspects of the contract. This interactive dialogue is crucial to ensure that the final agreement meets the needs of both the government and the contractor while encouraging competitive and innovative solutions.

In contrast, sealed bidding is a more formalized process where bids are submitted without prior discussions, and the government must select a winner based purely on the lowest bid that meets the specifications. Similarly, two-step sealed bidding involves an initial technical phase followed by a separate price phase, but it does not permit discussions between the government and offerors until after the technical evaluation is complete. Micro-purchasing focuses on small purchases and simplifies the procurement process, but it does not involve discussions with offerors. This method is limited to straightforward purchases and does not provide the necessary engagement to discuss terms.