...2012 The biggest customer in the world: The U.S. Government. The federal government spends more than $400 billion on supplies and services each year. It actually spends $465,000 on average, every 20 seconds of every business day, for a contract (Stanberry, 2009, preface). In order for a business to become part of selling to that enormous market it must first understand the laws, rules, and regulations that govern acquisitions and procurement for the federal government. Discuss the importance of fixed price contract in creating effective, efficient, and accountable acquisition planning: Under a Fixed price Contract. FAR 16.201, the government agrees to pay a specific price (which includes the contractor’s profit) for completed work and delivered products. The fixed price contract is used for the procurement of commercial items as well as services when: * There is adequate price competition; * There is reasonable price comparisons with past purchases of the same or similar products or services made on a competitive basis are available; * Available cost or pricing information permits realistic estimates of the probable performance cost * Performance uncertainties can be identified, and reasonable estimates of their cost impact can be made. The government prefers a fixed price contract because the liability of performing the contract is held by the contractor. And any cost overage or risk concerning the contract will be absorbed by the contractor. There are no...
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...Procurement Law Overview, Part One Procurement and Contract Law Procurement Law Overview, Part One The purpose of this paper is to provide an overview of procurement law. There are three different branches of Government: Legislative, Executive, and Judicial. In the United States, the Office of Federal Procurement Policy (OFPP), the Defense Acquisitions Regulations (DAR) Council, and the Civilian Agency Acquisition (CAA) Council determine federal procurement policies by its legislative action and recommendations. Those are then published in the Federal Acquisition Regulation (FAR). The FAR is issued jointly by the Department of Defense (DOD), the General Services Administration (GSA) and the National Aeronautics and Space Administration (NASA). It applies not only to direct purchases made by the government, but also to purchases made by federal grant recipients (Feldman, 2010). The government procurement team is made up of the Contracting Officer (CO), Administrative Contracting Officer (ACO), and Termination Contracting Officer (TCO). The government planning process consists of market research and an internal source search before they proceed with full and open competition which allows all responsible sources to submit either a sealed bid or competitive proposal on the procurement. The market research consists of availability and quantities of items, and reasonable prices. Internal sources include existing inventory, excess from other agencies, and federal prisons (Feldman...
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...Reasonable Price And Government Contracts Amy Berdine-Roberts Cost and Price Analysis Professor Rafi January 10, 2008 When you first think about fair and reasonable price, you think about the goods that you buy or the services that you use. When shopping for anything, you do not want to feel buyer’s remorse because you are unhappy with the product or service so research is the key. You would shop around to ensure that you are not paying too much. You compare prices and look at the quality and quantity that you will receive. When looking at specific brands and agencies, you see what others say about their product or service. Without this type of research, you could not only pay too much but you may receive sub par services. Especially with contracts you want to make sure the work the contractor does is not only quality work but will also be completed on time and will not cost more than the original agreed upon price. When it comes to government, they also need to shop around and receive fair and reasonable prices for the products they buy and the services they receive. However, it goes beyond that. They not only need to ensure they are getting a fair and reasonable price, but are also using the correct type of contract for the service that is being done. There are numerous types of government contracts; fixed-price, cost reimbursement, incentive, indefinite delivery, time and materials, labor hour and letter contracts. Fixed price contracts are just as they sound...
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...Professor: Daniel Goldsmith, DBA Email: Daniel.Goldsmith@strayer.edu Phone: 202-744-3467 COURSE DESCRIPTION This course provides an introduction and overview of government contracting and its unique nature, demonstrating the differences between commercial and government contracting, with a concentration on the federal system. Based on online resources, students cover the organization of the Federal Acquisition Regulation and how to interpret relevant subject coverage. Current reforms in the acquisition field will be incorporated into the course and emerging controversies will be highlighted to provide students with an up-to-date view of the profession. INSTRUCTIONAL MATERIALS Required Resources Compton, P. B. (2010). Federal acquisition: Key issues and guidance. Vienna, VA: Management Concepts, Inc. Feldman, S. W., & Keyes, W. N. (2011). Government contracts in a nutshell (5th ed.). St. Paul, MN: Thomson Reuters. Supplemental Resources Brown, T. L., Potoski, M., & Van Slyke, D. M. (2009). The challenge of contracting for large complex projects: A case study of the coast guard’s Deepwater program. IBM Center for the Business of Government. Retrieved from http://www.businessofgovernment.org/sites/default/files/deepwater_magazine_0.pdf Rendon, R. G. Critical success factors in government contract management. Retrieved from http://www.ippa.org/IPPC4/Proceedings/19Others/Paper19-2.pdf Schwartz, M. (2009). Defense Acquisitions: How DOD Acquires Weapon Systems...
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...LESSON 2 – Contract Delays determine if a delay is excusable. determine if a delay is compensable. Homework Assignment 1 1. What clauses excuse the contractor’s failure to perform on time due to an act of God or the public enemy? 52.249-8(c) Except for defaults of subcontractors at any tier, the Contractor shall not be liable for any excess costs if the failure to perform the contract arises from causes beyond the control and without the fault or negligence of the Contractor. Examples of such causes include (1) acts of God or of the public enemy, (2) acts of the Government in either its sovereign or contractual capacity, (3) fires, (4) floods, (5) epidemics, (6) quarantine restrictions, (7) strikes, (8) freight embargoes, and (9) unusually severe weather. In each instance the failure to perform must be beyond the control and without the fault or negligence of the Contractor. 2. What events stated in these clauses, other than acts of God or the public enemy, would excuse a contractor’s failure to perform on time? 2, 3, 6, 7 and 8 3. Do any of the clauses in #1 entitle the contractor to an adjustment in the terms of the contract? If so what type of adjustment? ?? 4. What clauses can the Government use to order a suspension of work or a work stoppage? 52.242-14 and 52.242-15 5. For what types of contracts would each of the clauses in your answer to #4 be used? fixed-price construction or architect-engineer contract is contemplated: As prescribed...
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...Contract Design Decisions: An Empirical Analysis of Federal Contract Characteristics by Craig R. Smith Assistant Professor School of Public Administration & Policy Eller College of Management University of Arizona Tucson, AZ & Deanna Malatesta Assistant Professor School of Public and Environmental Affairs IUPUI Indianapolis, IN As American government expanded from its relatively humble origins, public administrators and managers had to seek out and employ additional methods to meet citizen demands. As a result, in recent decades contracting out services to nongovernmental organizations has emerged as the primary alternative to direct provision by public employees and become an indispensible tool of governance. Moreover, the private, for-profit and nonprofit sectors have been progressively more active in public service delivery to enable governments to meet the changing demands of their constituencies while facing the external challenges imposed by politicians, federal regulations, and reform movements (Milward and Provan 2000). In fact, the term governance is often used to evoke a broad, multi-dimensional approach to service delivery, which stretches beyond the “lonely” public organization (Pierre and Peters 2000; Lynn et al. 2001). Indeed, governmental and nongovernmental organizations often develop mutual dependency in a service delivery or policy domain, which has been conceptualized in various ways including public sector networks, alliances, partnerships, and...
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...Running head: Independent The Independent Government Cost Estimate and the Statement of Work Regina M. Grant Strayer University Overpayment, poorly written cost estimates, unreliable cost estimate, inadequate or no IGCE, and inadequate payments for goods and services contracted seems to be the theme throughout recent Department of Veterans Affairs (VA) Office of Inspector General Audits of its various VA departments’ acquisition program offices (VA OIG AUDITS 2009). These audits found major problems with its acquisition process due to unauthorized, wasteful or questionable costs resulting in the government losing millions of dollars on bad contracts. This paper will evaluate the importance of the IGCE and reasons for confidentially; present a detailed cost estimate based on a notional contract and evaluate types of statements of work in regard to the notional contract; and finally, determine the most appropriate type of statement of work for this contract. The Importance of the Independent Government Cost Estimate (IGCE) What is the IGCE? The IGCE is the government’s estimate of the resources and projected cost of the resources a contractor will incur in the performance of a contract. These costs include direct costs such as labor, products, equipment, travel, and transportation; indirect costs such as labor overhead, material overhead, and general and administrative (G&A) expenses; and profit or fee (DoD COR Handbook, 2012). It is a...
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...different types of contracts and cover performance-based acquisition. Discuss which contract that would be warranted on vehicle purchase. Also, evaluate the pros and cons of sealed bidding, and negotiated contracts. Cover, which one would be best purchasing of vehicles in this case. Furthermore, we will cover the responsibilities of the contracting officer during the proposal evaluation. Assess the requirements for performance-based acquisitions and last create requirements for the vehicle purchase that could be included in a performance-based contract with rationale. Examine the types of contacts and performance-based acquisition Types of contracts that can be used are fixed-price, cost-reimbursement,...
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...Assignment 5: Federal Contracting Activities and Contract Types David Moore Strayer University Cost and Analysis BUS 315 Michael Raponi March 15, 2016 Assignment 5: Federal Contracting Activities and Contract Types History and Background of Companies Competing for the Contract Dronnet is an empowering company within the Information Technology industry. The company specializes in using technology to resolve some of the most pertinent issues in the society today. The company has been in operation for less than five years, hence, the classification as a startup company. Regardless, the company has been experiencing positive growth since its establishment and has been able to win at least one major contract from the government. The first contract for the company was the Tanker Contract that has been able to execute with efficiency. The company's workforce or human resource is estimated to be about 25 people, with most of them being technologists. The organization has been praise within its state for contributing to economic development as one of the emerging business employing many people. The success of Dronnet in recent years has been attributed to its good management that places more emphasis on issues such as transparency and accountability. The organization also works on an efficient business model that enables it to manage its costs effectively. As such, most of its products are produced through cost-efficient and environmentally friendly methods. On the other...
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...Time and Material Contracts Scott L. Earle Con 280 - Source Selection and Acquisition of Service Contracts March 12, 2012 Various DAU Faculty from Huntsville, AL Campus Time and Material Contracts Department of Defense (DoD) Contract Officers and Contracting Specialists are tasked with being the stewards of the American taxpayer’s hard earned dollars and it is a responsibility they take personally. Acquisition personnel are tasked with utilizing the proper contract vehicle to procure services, materials, supplies, constructions projects, and countless other items. Contract vehicles are not one size fit all and depending on the circumstance the acquisition personnel will reach into their tool box and choose the correct vehicle to administer the contract. There is a wide selection of contract types available to provide needed flexibility in acquiring the large variety and volume of supplies required by the DoD. The various contract types vary according to the degree and timing of the responsibility assumed by the contractor for the costs of performance, and the amount and nature of the incentive offered to the contractor for achieving or exceeding specified standards or goals. Contract types are grouped into two broad categories; Fixed-price contracts and Cost-reimbursement contracts. The specific contract types range from firm-fixed price, in which the contractor has full responsibility for the performance costs and resulting profit (or loss), to cost-plus-fixed-fee...
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...Embedded in certain contracts are several types of incentives; cost, performance, and delivery that encourage contractors to perform within contract requirements. Burleson states that cost-incentive contracts are the most common and the target profit or fee is established at the start of the contract. “Full profit or fee is paid when the actual cost meets the target cost. A fee reduction results when the actual cost exceeds the target cost, and an increase in profit or fee results from actual cost that is below the target cost” (Burleson & Wilson, 2007). Performance incentives are appropriate when the results of a contract, service or delivery, are considerably important. Performance incentives can be compared with the contractor’s performance on a service contract, or measured against performance data of a delivered system or product. Both cost and performance incentives also may “include positive and negative performance evaluations and a similar fee increase or reduction using a fee adjustment formula” (Burleson & Wilson, 2007). The FAR states, “No incentive contract may provide for other incentives without also providing a cost incentive (or constraint)” (Federal Acquisition Regulation, 2012). If improvement in the contract delivery schedule is the Government’s focus, then it is appropriate to negotiate a delivery incentive contract. “Deliveries can be objectively measured by the delivery data and quantity delivered; as in other incentive structures, delivery incentives...
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...We have just exercised the last option on the current Navy contract and must start the process to re-compete the next contract for this on-going requirement. The new contract will be valued at over $150 million. The current contract is a fixed price award fee, but recently we went to a briefing given by the Air Force on a relatively new type of contract incentive called Award Term and are considering this as an option. There has been much discussion on what type of contract we will use for the re-compete for the follow on contact. In this paper I will cover the background of the award term incentive acquisition, compare different types of contracts, discuss the pros and cons of the award term method, and whether it meets the Competition in Contracting Act (CICA) requirements. If you search the Federal Acquisition Regulation (FAR) for award term incentive, you won’t find it there. It was designed by Mr. Thomas Jordan in 1997 at Kelly Air Force Base. He used it on a task order contract for the Air Force’s Aeronautical Systems Centers award to McDonnell Douglas Corporation for services on the F-15C aircraft. The contract had a seven year base period, which the contractor could extend to 15 years by rendering excellent service. This type of incentive was not in the Federal Acquisition Regulation (FAR), but was comparable to the award-fee incentive-type contract found in the FAR Part 16.405-2 [1]. Acquisitions that have included award term incentives have been conducted...
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...Contract Planning The Acquisition Environment The acquisition environment is influenced by each organization's mission support strategy, successful customer relationships, and core principles of decision making. This lesson provides you with an opportunity to guide your actions and to research and develop a strategy so you can recognize when your efforts support the mission. In this lesson, you will cite key components of successful customer relationships and describe how your office achieves success through the key relationship criteria it exhibits and apply these key components by choosing appropriate methods of dealing with your customers in a practice scenario. This lesson will help you build a foundation for good decision making based on the core principles of power and responsibility and give an opportunity to apply the Seven-step Path to Better Decisions in a practice scenario. Mission Support Strategy The mission support strategy is a systematic plan of action that aligns the organization's activities with its mission and objectives. The Terminal Learning Objective is: Given a customer need, reinforce areas of mutual interest within an acquisition environment (requiring activity, contractor, contracting office, others). The Enabling Learning Objectives are: * Apply the factors in development of your mission support strategy. * Apply the key characteristics for successful customer relationships. * Apply the Seven-step Path to Better Decisions...
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...Contract Administration and Change Issues Government Contract Law/LEG 505 [ June 3, 2011 ] Abstract Contract administration varies from contract to contract and contractor to contractor. There are many factors that come into play when dealing with contractors, government personnel and the demands that each party may bring to the table. The Contracting Officer must be able to handle the administration of the contract, communicate effectively with all stakeholders involved with the contract and ensure that any contractual issues are handled within the legal and federal guidelines for a timely resolution that does not affect the budget or scope of the contracts original intent. However, in the event the contract may need to be modified, the Contracting Officer needs to be fully aware of the appropriate steps to do so. Contract Administration and Change Issues The administration of a contract does not end once the contract is awarded. In all reality, the true administration happens after award and during the life of the contract. It is up to the Contracting Officer to balance the requirements of the Government and the needs of the contractor. It is their responsibility to ensure prompt payment for services rendered or products delivered and that the customer’s needs are being met as detailed in the terms and conditions of the contract. It is also the Contracting Officers role to balance the Government and customer and to ensure that all parties are being treated...
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...Types of Contracts [pic] Choosing type appropriate contract type is essential to successful performance under a contract. The type of contract determines the cost and performance risks which are placed on the contractor. There are two broad contract groups--fixed price and cost reimbursement. Within each of these groups, there are various types of contracts which can be used individually or in combination. [pic] Firm Fixed Price Contracts [pic] This type of contract requires the contractor to successfully perform the contract and deliver conforming supplies or services for a price agreed to up front. This type of contract places the most performance and cost risk paid. It if costs them more than they expected, they still get the amount originally agreed upon. If it costs them less, they make more profit. A firm-fixed price contract is suitable for supplies and services that can be described in sufficient detail to ensure complete understanding of the requirements by both parties and assessment of the inherent risks of performance. [pic] Other Fixed Fixed Price Contracts [pic] Within the fixed price contract group you can award contracts with: • economic price adjustment factors to allow for industries where costs fluctuate frequently either up or down • various incentive types which can be used to reward good performance or to impose provisions to deduct for poor performance • price redetermination provisions which permit issuing an order on a fixed...
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