The Law of Contract - Term Paper Example

Running Head: Contracts and Performance-Based Acquisition Contracts and Performance-Based Acquisition [Institute’s INTRODUCTIONA Contract is a pivotal element, which binds the concerned parties to a certain liability and is included in the principles of their contract (Phillip, 2010). However, the parties to a contract have the liberty to choose the contract which could be applicable to the entire contract and if it relates to a specific part of it. The types of contract can be described as follows: Fixed price contracts They are used to acquire commercial items or services that are based on definite specifications. They can give the contractor a great incentive to control the cost and perform with effectiveness and can impose the administrative burden on parties. They are the most common form of contract and are used in majority of the contractual agreements. Cost reimbursement contracts They are used when uncertainties are involved in contracts and they do not allow costs to be submitted with accuracy to a fixed price contract. It is a favorable contract in conditions where the outcome of the contract or the project is uncertain. Letter contracts A contract which has a written preliminary contractual instrument and which is able to authorize a specified contractor and can begin manufacturing supplies and in performing some specific services is called a letter contract. It could be used in circumstances where the interests of government demand that the contractor is given a binding level of commitment and contractor is able to start working instantly and is able to negotiate a contract in the specified time. Performance based-contracts/Acquisitions Performance based contracts are not literally contracts but a specific acquisition method where requirements can be described by a performance work statement or a certain statement of objectives. Performance based contracts are made to ensure that contractors are able to meet quality levels and payment is related to the specified contract standards. CONTRACT TO BE USED FOR VEHICLE PURCHASE The choice of which contract is to be chosen for vehicle purchase is related to general contract law. Parties to a contract are allowed to select the contract in which they have certain rights and obligations towards each other (Koffman, 2007). It is the most pivotal concept of contract through which parties are obligated to make promises and they are bound to follow those promises made. The ideal contract, which could be chosen for vehicle purchase, is performance-based contract as it portrays a sense of mutual consideration among the parties that may not be any direct or formal prerequisite for selection of a contractual law unless the parties to a contract agree to it. As mentioned before, this contract will ensure that contractors are able to meet the desired levels of quality. SEALED AND NEGOTIATED BIDDING CONTRACT Sealed Bidding Sealed bidding is a method of contracting which requires comparative bids, public opening of bids and awards. The choice of rule of law allows the parties to a sealed bidding contract with a well-grounded relationship in a strict contractual capacity and it allows an unbiased and fair approach towards this strategy. Advantages (Pros) of Sealed bidding contract Sealed bidding is able to describe the requirement of the government with accuracy and without any ambiguity. Any specifications, which intentionally limit the number of bidders, are prohibited. Invitations are publicized through various mediums so that prospective bidders are able to prepare and submit their bids in an effective manner. Bids are evaluated with any cumbersome or lengthy discussions and are considered only upon price and price related factors that are discussed during the bidding. Limitations (Cons) of Sealed bidding contract There are a certain limitations of sealed bidding contract, which are as follows: No contract will be awarded if sealed bidding has been solicited No contract will be awarded if sealed bidding has been submitted No contract will be awarded if the contract is made to the responsive bidder whose bid seems to be responsive and to the terms of invitation which are required for bids and which are favorable for the government but only when price and price related factors are implicit in the invitation Negotiated Contracts Negotiated contracts are the type of contract that involves the process of discussing and compromising on contract terms to reach a certain contract. Examples of Negotiated contracts include contracts for real estate, finance etc. Negotiable contracts could be a good choice for vehicle purchase as they are purchased in bulk and a certain agreement can be reached due to the economies of scale involved. Advantages of Negotiated contracts Services or goods which have to be provided are vividly elaborated Compensation or payment is vividly mentioned in the contract that may well include Total Cost of the project, Schedule of the Payment and financing terms of the project. Potential risks, rewards and liabilities of the project are clearly mentioned. Disadvantages of Negotiated contracts Negotiated contracts may show weakness or vulnerability of a party because negotiation itself proves that the contracting party is not powerful enough and can easily be manipulated or took advantage of. Governments may not want to show any sign of vulnerability and thus may not want to sign negotiable contracts, while contracting parties may avoid negotiations because they may feel they may not be able to implement the desired stipulations into the contract. Negotiated contracts at times require compromise and settlement from one of the parties to a contract and this may create a win-lose situation for the parties to a contract. Best contract for this purchase-Sealed bidding or negotiable contract The best possible contract for this bidding should be sealed bidding, as it is relevant to the vehicle purchase and evaluation process. There are certain factors, which will include the legal regulations of the related parties where the parties or their representatives are actively present whenever the contract ends, the regulations of this contract state bind the associated parties to follow the contract stipulations strictly, until the contract had ended. Whenever the law relevant to the contract is evaluated, the change in choice of law should be without any agreement to the contracts validity (Heinrich, 2002). RESPONSIBILITIES OF CONTRACTING OFFICER DURING THE PROPOSAL EVALUATION PROCESS The contracting officer is the channel of business communication between the government and the private contractor. He ensures that the evaluation process of the contract proves to be mutually beneficial (Wilmot, 2009). The core responsibilities of the contracting officer during the proposal evaluation process are as follows: The Contracting officer is responsible for monitoring the progress of the contract to fulfill the technical requirements that have been specified in the contract. Contracting officer have to obtain the advice of counsel and have to obtain help of technical specialists to evaluate conflicts, which may arise in the future, and he has to develop any future solicitation provisions. When issuing a solicitation for a contract, the contracting officer has to recommend the head of contracting activity a course of action to resolve a potential conflict. REQUIREMENTS FOR PERFORMANCE BASED ACQUISITION A performance based acquisition contract must include: Performance Work Statement (PWS) Government can prepare a PWS and it could result from certain statement of objectives that are crucial for the government. Measurable performance standards They help to establish the performance level required by a government to meet the contractual agreement specifications. The standards have to be measurable and they should be structured in the manner, which allows in evaluating the contractor’s performance (Bolton, 1990). Performance Incentives Performance incentives could be used whenever appropriate and when the government is able to correspond to performance standards, which are mentioned in a contract. REQUIREMENTS FOR THE VEHICLE PURCHASE INCLUDED IN A PERFORMANCE-BASED CONTRACT It should be borne in mind that parties to a contract must be capable of interpreting and supplementing a specified set of rules, which are based entirely on performance-based contract law, and they should be exactly in the same manner when they are interpreting those laws (Scott, 2009, p.489). Identifying the parties to a contract and the reason for the contract The most essential part of a contract is that it should specify the parties to a contract and it should state their complete legal names and should clearly mention the reason for the performance based contract. Description of the vehicles The contract should be written in a manner which is able to describe a proper description of the fleet of vehicles which are about to be sold. Details such as model and year of the manufacturing of the car should be mentioned. Date of the sale and purchase price should be stated The type or mode of payment, which will be made for the fleet of vehicles, should be mentioned clearly in the performance-based contract. Along with that, the date of sale or the date of transfer of vehicles should be clearly mentioned in the contract. A statement about the condition of the vehicle In the sale of a particular vehicle or a fleet of vehicles, the condition or the warranty for condition should be mentioned. The document the seller will provide to the purchasing party The seller should provide the purchasing party and other relevant documents, which are essential to the contract. Signature of the parties to the contract The parties to a contract should sign the contract and mention the date. After the contract is signed, copies of the original contract should be provided to both the parties. REFERENCES Bolton, P. (1990). The American Economic Review. JSTOR. Heinrich, C. (2002). Public Administration Review. Wiley Online Library. Koffman, L. (2007). The Law of Contract. Oxford University Press. Philipp, H. (2010) Clarifying the concept of performance-based contracting in manufacturing industries: a research synthesis. Journal of Service Management, 21, pp.625 – 655 Scott, F. (2009). Reciprocal Altruism as the Basis for Contract. University of Louisville Law Review, p.489. Wilmot, L. (2009). Contract Law. Oxford University Press. Read More