Government Contracting, Acquisition, and Procurement Law - Term Paper Example

GOVERNMENT CONTRACT or ACQUISITIONS "Contracting & Payment Options" ` Part 7: Payment Options; The federal government and other government units make payments for their contracts through various methods. The most preferred method for contract payment is the performance based payment (PBP) method, which is popular for negotiated and fixed price contracts. The other methods are the partial payments for supplies and services, and contractor benefits payment, which are made for services and supplies contracts that are part of a major contract. Through the partial payment method, contractors enjoy interim payments while the contract is underway. Finally, the electronic funds transfer-EFT, which is a requirement for making payment for all Federal contracts except for international contractors that, are outside of the United States (the FAR 52.232-33) (Acquisition Central, 2014). The performance based payment method is based on the attainment of some specific, measurable accomplishments or events, which are valued and defined before the start of the contract. PBP payment that is based on some quantifiable defined event or other measures. In addition, the PBP is regarded as the customary method of contract financing through which the price of the contract is recoverable in case the contractor defaults in completing the contract. Either PBP is not regard as payment for goods or services or received; payment for partial deliveries; an incentive arrangement or payment for costs already incurred. Finally, PBPs are used for negotiated and fixed price contracts. On the other hand, partial payments is used for making payment for services and supplies for contracts that are part of a major contract; payment for cost already incurred; can be considered as an incentive arrangement for the contractors; it is payment for services and goods already accepted. Finally, the electronic funds transfer-EFT is mode of payment for all types of contracts of the Federal government, which incorporates all the aforementioned payment methods. Pros of Performance-Based Contracts Enhanced schedule and technical focus; Broadened contractor participation; Reduced costs of oversight; Potential cash flow improvement for the contractor (win-win situation for government and contractor) and; In case of default, the price of the contract is fully recoverable Cons of Performance-Based Contracts Setting the milestones for valuation of the contract upon which payment is to be made would be difficult. Only applicable to fixed price contracts Pros of Partial Payments It is an incentive program for contractor to complete the contract; Helps government determine the costs that already been incur for the purpose of filling and valuation; Provides cash flow to the contractor to enable him contract the complete and; Enables the government to determine quality of services and goods provided by contractor early enough. Cons of partial payments The method is only applicable to supplies and services and; In case of default the government will the interim payments already made. Pros of the Electronic Funds Transfer-EFT FAR 52.232-33 (b)-if the contractors information is incorrect in the database, the government will not make payment to the contractor thus helping it not make bogus payments to ghost contractors. Enables government protect tax payers money by avoiding handling of cash by individuals and; Enable government make payments promptly to contractors. Cons of Electronic Funds Transfer-EFT According to FAR 52.232-33 2(b) in case there are no sufficient funds, the government will then extend the payment date until there are available funds to be paid by EFT. Part 8: Prompt Payment Act; The Prompt Payment Act 32.9 was enacted in the year 1982 by the congress to speed up the process of making payment to contractors the moment they had submitted and met all the requirements stipulated in the law. The act required the state agencies to pay penalties in case they delayed the payment to the contractors in time. The three elements that stipulated in the act include: The invoices or vouchers-Invoice for payment of construction contracts; final payments-the congress should make provisions for payments extended rather than being based on the 30 day requirement to allow the contracting officer’s agency time to examine the quality of work, to determine if it meets the Federal government compliance standard. Contract terms-The payment terms of the contract are not stipulated in the contract. The congress should make provisions to articulate the timing of payment, when the due date of payment for the contract is to be made. The thirty-day requirements-The payment start date will begin when the invoice is received. The congress should make provisions to define what the start date means, whether, it is when supplies are received and accepted or when a proper invoice is received. Part 9: Limiting government Cost; Cost Reimbursement Contracts There are different ways of limiting cost on the cost reimbursement contracts. As the contracts officer for the IRS I will use a strategy that inserts the clauses of FAR 52.232-20 & 21 and FAR 52.216,6,16 & 17 that stipulate the financial reporting requirements for contracts of cost reimbursement (Feldman, 2013). For instance, clause 532.7201, (b) states that, except for only fixed price contracts that have an element of cost redetermination where there is no downward or upward readjustment of price. Then as the contracting officer, I am under no obligation to approve any final payment voucher or invoice for contracts of time & material or labor hour based contracts, cost reimbursement contracts, and cost re-imbursement portion contracts with fixed price. This is because these contracts are subject to audit before payment and consultation has been made with Field Audit Office or Inspector General Auditing; and receipt & review of the audit report of the contract has been carried out. Therefore, as the contracting officer of the IRS I will employ this strategy to help me minimize cost to be paid to the contractors because audits will reflect the true costs incurred by the contractors in the course of doing their contract. This will ensure that costs do not exceed those specified in the schedules or in the case of cost sharing the governments share does not exceed that specified in the cost schedule (Kathuria, 2009). Part 10: Truth in Negotiations Act (TINA); The Truth in Negotiations Act (TINA) was enact to protect the Federal government from pricing that is perceived defective when negotiating non-competitive contracts with prices equal to or over $650, 000. TINA demand that contractors submit price or cost data that current, complete and accurately certified, at the date of agreeing on the price of the contract (Jeffrey, n.d.). Therefore, sole purpose of TINA is to protect the Federal government from being defrauded by the contractor. Some suggestions put forward concerning the Federal acquisition for technology and solicitation for technical data for acquiring computer software include: Creating exceptions to TINA when acquiring commercial items; to be allowed to be based on market prices. By allowing acquisition of ICT services and products to be based on catalog prices, then the need of conducting post award audits for the given contract will be necessary by the government. This will help the government to speed up the process of acquiring technical services by avoiding the normal lengthy processes of procuring ICT services and products. In addition, this will help eliminate the conservatism nature of contracting officers, which can lead to risk aversion of carrying out a cost/benefit analysis. Modification of the Federal Acquisition Streamlining Act- FASA hierarchical information requirements for determining price reasonableness of price for acquiring ICT goods and services; i.e. past dealings/historical data and market/catalog price. Thus, for the purpose of obtaining ICT services I would recommend modification of this requirement to be consistent with above recommendation so that the process of determining and evaluating technical data is simplified for the purpose of speeding up the process of acquiring technical services by avoiding the normal lengthy processes of procuring ICT services and products. Part 11: Buy American Act (BAA); This act was passed by the congress in the year 1933 to provide preferential treatment to the local Americans in awarding Federal contracts for the supply of manufactured goods, construction material and other supplies. Either the act provides for the procedures or policies to be followed by contracting officers when accepting foreign contracts for supplies i.e. accept the foreign supplies when their price is better than the lowest reasonable domestic price; and two, the act requires that the Federal government uses only local construction materials for construction purpose with some exceptions when the materials can be acquired from foreigners (ACQuipedia, 2009). Exceptions: Information technology i.e. a commercial item-There is an exception to the purchase of the ICT supplies when using the fiscal year 2004 and the subsequent year funds. Non-availability-the BAA does not apply in regard to materials, articles or supplies if the materials, articles or supplies of the kind or class to be acquired both as components or end items ate not produced, manufactured or mined or in the U.S in sufficiently & reasonably available commercial amounts or quantities with satisfactory qualities. Therefore, from the above two exceptions it is evident that the Federal government allows for the acquisition of the ICT items and non-available items from foreigners. The owners or inventors patent some technological items and thus, producing them in the U.S would be illegal and breach of the fundamental rights of the inventor’s sole right to developing the item. Therefore, this implies that, contracting officers are free to make purchases for some items as stipulated in the FAR 25.103 b and e. I think by making the exceptions to ICT and non-available materials, the law is being flexible with respect to ethical procurement and production practices that avoids infringing on the rights of others e.g. the investors of technology items. In addition, in situations where materials, articles and supplies for constructions are not reasonably sufficient then it becomes to procure for such materials from foreigners if the completion of such projects is anything to go by. Moreover, technical items and some materials are imperative to the construction projects. Finally, ICT items, materials, articles and supplies would provide for cost advantages since procuring finished products for use during the construction process would help the Federal government in minimizing the total cost of the contract rather than when the government mined, manufactured or produced such items. References Acquisition Central. (2014). Federal Acquisition Regulation (FAR). Retrieved from http://www.acquisition.gov/far/index.html. ACQuipedia. (2009). Buy American Act. Retrieved from https://dap.dau.mil/acquipedia/Pages/ArticleDetails.aspx?aid=0c0d16e2-026c-44a2-b378-b1fb52f25669. Feldman, S. W. (2013). Government contract guidebook (4th, 2013-2014 ed.). Eagan, MN: Thomson Reuters, Westlaw. Jeffrey, R., (n.d.). The Truth in Negotiations Act: What is Fair and Reasonable? Kathuria, S. (2009). Best practices for compliance with the new government contractor compliance and ethics rules under the federal acquisition regulation. Public Contract Law Journal, 803-856. Read More