Federal Contract, Actives and Contract Types: Dell Incorporation - Research Paper Example

?RUNNING HEAD: Federal Contract, Actives and Contract Types 10th May Overview and background ofDell incorporation Dell incorporation is a computer technology company in America which has its base in 1 Dell Way. The company is the third largest multinational corporation, after HP and Lenovo, with a total of 103,300 employees around the world. Its main growth strategy has been through the increase of its client base, mergers and acquiring other firms. Dell was founded in the year 1984 by Michael Dell who was then a university student at the Texas University, at the age of 19 years. Dell was selling PCs as a fresh man from his room in the university. At that time, the company was doing business in the name PCs limited although Michael had it incorporated as Dell Computer Corporation (Business Day, 2011). After getting 3000,000 dollars from his family to expand the business, Michael drooped out of school with the intention of concentrating more on his business. Turbo PC was the first computer design to be produced by Dell Company after about one year of its foundation and the PC sold for US$795. The company went public in 1988 with company stock of 3.5 million shares. In the year 1988, PC limited was rebranded to Dell Computer Corporation and at this time it had started going global (Catherine, 1999).The company continued growing well and it was listed in the 500 fortune companies in the year 1992 and that’s when the founder, Michael Dell was named as the youngest CEO. Michael Dell handed over the CEO title to Kevin Rolling in 2004 but he retained the title of chairman even though this did not last since Kevin Rolling resigned after four years due to poor performance of the company and Michael Dell assumed the position of the CEO again. Major contract that was awarded to Dell Incorporation Early in 2012, Dell Incorporation was awarded a three years $120M DHS immigration contract where its role was to carry out application processing across the country in over 60 sites. The company had invested so much time and other resources to win this $120 million contract which was carried out under the umbrella of Dell Perot Systems. At the time the company was awarded the contract, Dell Perot had been assisting the bureau responsible for Citizenship and Immigration Services in records management for the past six years (Business Day, 2011). So as much as this was a new contract, it had some elements of follow up. This contract entails record distribution management, FBI finger prints and name checks, scheduling of oath ceremony, file operation and working on the requirements of the awaiting application and appeal inventory. The contract is headed by George Wallace who is the project senior manager. One of the major aspects that led to the contract award is due to the fact that Dell Perot is a leader who is very dynamic, creative and possesses highly polished technical and project management skills. Description of the contract Although the company was able to convince the immigration department that it was capable of reducing the level of their risks and assist in gaining efficiencies throughout this contract, there were some protests from CMI. CMI based its protest on the argument that the agency responsible did an inadequate realism analysis of the proposal presented by Dell Perot’s proposal. This, according to CMI, led to Dell Perot being rated way above what it is warranted. However, this argument never persuaded the accountability office of the government and therefore CMI was denied the protest. The government accountability was justified in denying the CMI protest since in the months of February and March there was a reduction by 10 percent in the number of USCIS' offices through the help of Perot Systems (Mahoney, 1996). In mid March, the company also engaged in its main role that is to help the agency in processing immigration and citizenship applications. Another justification why this contract was awarded to Dell and not another company is because Dell had done its home work and was adequately prepared for such a contract. Dell had started planning before the request for proposals was actually made. The company also had invested a great deal of time in vetting the teammates who proved able. These team members had to be proven independent professionals who had leadership qualities in their fields since they had to cover over 60 different locations in the country. These aspects of Dell Perot systems have given the company 100 percent win rate in every contract it focused at including the one discussed in this paper. Major direct costs incurred by Dell Perot Systems in the $120M DHS immigration Direct costs are the expenses that are attributed directly to the production of a product or offering a service. In this case, these costs will be incurred in the installation of complete equipment since the contract is basically a service one. The company has incurred and will incur a number of direct costs during the three years of this contract. The direct costs include direct materials direct labor and direct expenses. Direct materials are those hardware and all the accessories that the contract demand in order to enhance smooth running of all the operations and some of them must be there for example the computers, printers and finger print readers. Although Dell produces this equipment, they will be installed at their market price a cost that will be directly charged on the contract (Reed, 2010). Included in this costs also are all the paper and stationeries required for the processes of registration and proper documentation. Direct labor on the other hand comprises of the salaries and wages paid to various employees and all the other supporting staff. Dell Perot Systems has two types of employees: permanent employees and those who are on casual or contract basis. Whichever terms the employees are working under, they all count as far as labor costs are concerned. Since this is a service job, labor costs forms the largest part of the costs incurred. Direct expenses are those cost that Dell Perot Systems incurred which are not under direct materials or labor. These expenses are not definite and we will highlight some of them. They include: travel costs, consulting charges, communication charges, training of the employees and employees’ welfare expenses. Major Indirect costs incurred by Dell Perot Systems in the $120M DHS immigration Indirect costs are those costs that a company incurs but it cannot relate them directly to a specific task or activity. These costs are either fixed indirect costs or variable indirect costs. The fixed costs are incurred for a specific period while the variable costs occur during certain tasks. Dell incurred these costs in form of the following; administration and personnel, rental and repair and maintenance. Apart from the cost incurred through the payment of salary and wages, Dell Perot Systems has incurred administration and personnel costs which are indirect costs. These costs include the payment of security services, auditing and legal services offered by other companies and institution in support of what Dell Perot Systems is doing. Rental cost is the second type of indirect costs incurred by Dell Perot Systems. These costs include the costs incurred in the rental of space for offices and extra machines and equipment. These costs vary as with the different activities involve in the contract work. The third major indirect cost incurred by Dell is the repair and maintenance of machine and equipment. Due to tear and wear different machines and equipment will require maintenance and others repair. Reference Business Day. (2011). Dell Inc .Available from http://topics.nytimes.com/top/news/business/companies/dell_inc/index.html Catherine, F. (1999). Direct from Dell: Strategies That Revolutionized an Industry. New York: HarperBusiness. Mahoney, J. (1996). Dell's success is Round Rock's gain. Austin American-Statesman. January 9, 1996. A1. Retrieved on May 9, 2012. Reed, K. (2010). Dell pays $100m penalty to settle accounting fraud charges. Accountancy Age. Retrieved May 8, 2012. Read More