Types of Contracts and Performance-Based Acquisition - Assignment Example

? Types of Contracts and Performance-Based Acquisition Federal contracts refers to acquisition contracts including those subject to the Federal Acquisition Regulation (FAR) that are awarded by an agency, and any other acquisition contract for real, personal property or services that are not subject to the FAR. According to Feldman (2007, 273-429), federal contracts are broadly categorized into fixed cost contracts, cost reimbursement contracts, indefinite delivery contracts and time-and-materials and labor hour contracts. Fixed cost contracts are those types of contracts that provide for a constant price set by the government and are not subject to fluctuations. They further can be categorized into either firm fixed price contracts or fixed price costs with economic price adjustment. For firm fixed price contracts, the contract is not subject to adjustment by the government since it is based on the contractor’s cost experience during the performance. Therefore the contractor will bear full responsibility. On the other hand, fixed price costs with economic price adjustment are those that provides for an upward or downward revision of the contract price, based on the occurrence of contingencies. This aims to protect the government in case of a decrease in labor or material as well as protect the contractor in case of an increase. According to Feldman (2007, 147) economic price adjustments on fixed price costs can be made based on either market prices established in the contract, the costs of labor or material experienced by the contractor during the contract performance or the cost indexes of labor or material specifically identified in the contract According to Compton (2009, p.p. 66-70) cost reimbursement contracts are only favorable when the uncertainties involved in the contract performance do not allow anticipated costs to be estimated with sufficient accuracy for using any other type of fixed cost contract. They employ more open-ended specifications than fixed price contracts and also eliminate undue performance risks. Therefore from the government’s contracting officer perspective, I will expect the contractor to be entitled to recover all allowable costs in the contract. Cost reimbursement contracts are categorized into cost plus percentage cost prohibition, cost plus incentive fee contracts, cost plus award fee contracts and cost fixed fee contracts. For cost plus percentage cost prohibition, the government pays all the contractors’ costs. These are costs incurred during the progress of the contract and are normally not recognized at the time of contracting. Cost plus incentive fee contracts provides for payment of a negotiated fee that is fixed at the inception of the contract. This fee does not vary based on the actual costs of performance but may be adjusted due to changes in the work performed under the contract. Cost plus award fee contracts provides for a base fee fixed at the inception of the contract and an award fee based on the governments unilateral of the performance at certain intervals. Lastly, cost fixed fee contracts provides for payment of a negotiated fee which is fixed at the inception of the contract and this fee may only be adjusted due to the changes in the work performed under the contract. In Compton (2009, p.p. 66-70) indefinite delivery contracts defines the number of times or quantities of the future deliveries and are known only at the time of the contract award. They are also categorized into definite quantity contracts, requirement contracts and indefinite quantity contracts. Definite quantity contracts provides for the delivery of a defined quantity of supplies or services for a definite period with deliveries scheduled for specified locations upon the order. Requirement contracts are types of indefinite delivery contracts where the agency acquires purchase requirements for designated services from somebody while the supplier agrees and fills the agency’s need during the contract period. Indefinite quantity contracts provides for the furnishing of indefinite quantities within stated contract limits during a fixed period. However the contractor will be required to state the minimum quantity that can be ordered under the contract. Time and material contracts are those contracts that oblige the contractor to various labor categories that are described in the schedule for the provision of services for a specified time period at fixed hourly rates. On the other hand, labor hour contracts represent a variation of time –and –material contract since the contractor does not provides any material to the agency. According to Feldman (2007, 209), performance-based acquisition serves to allow the government to acquire services in a more cost-effective way by saving the government money while maximizing contractor performance. This type of acquisition is based on the following order of preferences; firm-fixed performance based on task order, performance-based contract based on task order that is not firm-fixed price and any other contract that is not performance based. Therefore as the government employee in charge of acquisition, I will prefer the use of fixed price contracts in the purchase of the vehicles. This is majorly because fixed-price contract is suitable for obtaining supplies or services on the basis of fairly realistic functional or detailed specifications. The government will be able to appoint a contracting officer to establish fair and reasonable prices at the outset. In Compton (2009, p.p. 53-66) sealed bidding is defined as a competitive process on which bids are solicited through an invitation for bids. Its advantage includes the provision of sufficient time for the government to prepare for solicitation, response from the interested bidders and then evaluation. Its drawbacks are that the government may at times not be able to obtain the best for their money due to weaknesses, deficiencies and poor past performance; all that is not discussed with sealed bidders and the goods or services to be supplied by the vendor may only be minimally acceptable as there are no discussions permitted with the government. Negotiated contracts entail both the competitive and noncompetitive acquisitions and may either be fixed price or cost-reimbursement contracts. It’s advantageous in that it enables the government to use various strategies especially when other such as fixe price contracts is not appropriate and cannot be used for acquisition. Therefore, as a government officer, I will prefer sealed bidding for the acquisition of vehicles for the government to be used in Arizona since the advantages are favorable for the government operations activities. This is because it provides sufficient time for the preparation of solicitation, interested bidders and for evaluation by the government. It is also appropriate since the government’s requirements are clear and definitive and do not require discussions with the bidders. In Compton (2009, p.p. 55-58), the government will appoint a contracting officer whose responsibilities during the proposal evaluation process will include determining the competitive range and selecting the vendors whose proposals will score highly for further consideration, advising the vendors on any deficiencies on their proposals for correction before submission for further consideration and then awarding the contract to the vendor whose proposal has been determined to be the value to the government with price and other factors considered. In Keyes (1990), performance-based acquisitions for government goods and services that will be presented by the vendors must meet some criteria i.e. a clearly written performance work statement that will help vendors understand what is to be produced and the performance and quality standards. It should also include the statement of objectives from the government that describes the purpose, mission, performance period, the background and the performance objectives. Therefore from the government’s perspective, the contractor must meet the government’s requirements as set in the contract for the vehicle purchase. These will include the contractor appointing a contracting officer from their side to liaise with government officer in the management of the contract. Also the contractor shall provide a statement of work form that will describe the specifications of the vehicles e.g. the price, the manufacturer and the quality assurance plan. The contractor will adhere to the terms and conditions as set in FAR i.e. the period of performance, reporting and the payment schedule for the vehicles. This will ensure that regulations set in the contract are strictly followed. Also the contractor shall define how the contract will be managed, the order of precedence and debarment and suspension. Lastly, the contractor shall agree in signing that all the regulations set in the contract will be strictly adhered to and the deliveries will be made as per the guidelines and the quality assurance plan. (Rumbaugh, 2010) References Edwards, V., Nash, R., & Schooner, S. (2007). Government Contracts: A comprehensive Guide to the Language of Procurement (3rd ed.). Washington DC: Wolters Kluwer. Rumbaugh, M. G. (2010). Unified Contract Format. In Understanding Government Contract Source Selection. USA: Management Concepts Inc. Compton, P. B. (2010). Federal Acquisition: Key Issues and Guidance. USA: Management Concepts Inc. Feldman, N. W., & Keyes, W. N. (2011). Government Contracts in a Nutshell (5th ed.). West. Keyes, W. N. (1990). Government Contracts in a Nutshell (2nd ed.). West Group. Read More