Assignment:
Please before you understand that this bid requires a forum post along with 3 forum post responses below, both must be done. The budget is what it is posted, please do not try to raise the price, either you will do it or the next person will. The forum post is due by Thursday and the responses by Sun; I will annotate this posting with responses once I get them and contact you.
Annotate two points of interest from your readings this week by Thursday of this week. Read Chapters 1-2 of the CMBOK for more details about contract management. Your initial post should be at least 250 words. Please respond to at least 3 other students. Responses should be a minimum of 100 words and can include direct questions.
Note: Please bear in mind throughout the course the "theoretical" position you hold within the organization is that of a Program or Contract Manager as you make your recommendations.
Purpose of this assignment:
Explain how to execute an appropriate contract arrangement.
Links to help with this are:
Guide to contract types located at: https://energy.gov/sites/prod/files/maprod/documents/AcqGuide16pt1.pdf
OSD reading on contract types located at: https://www.acq.osd.mil/dpap/cpf/docs/contract_pricing_finance_guide/vol4_ch1.pdf
Instructions: Your initial post should be at least 250 words. Please respond to at least 3 other students. Responses should be a minimum of 100 words and include direct questions.
Response Question 1
A contract sets up arrangements that are clear and certain regarding the relationship and performance requirements of the parties involved" ("General Guide To Contract Types For Requirements Officials," 2008)" The term "Contract type" has different meanings and signifies differences in contract structure or form. It signifies the different compensation arrangement. Most compensation arrangements fall into two major groups: cost reimbursement or fixed price. The goal is to find the best business arrangement between the parties. The objective is a selection of contract type should be to establish the pricing arrangement that is most likely to produce a fair and reasonable price for performing a given SOW. "There are three types of incentive contracts that provide for changes in profit/fee following an agreed-to formula-type incentive arrangement: the fixed-price incentive firm target (FPIF); fixed-price incentive successive targets (FPIS); and cost. There two other incentive contracts described in the FAR -- the cost-plus-award-fee (CPAF) contract and the fixed-price contract with award fee (FPAF). A fixed-price with economic price adjustment (FPEPA) contract is designed to cope with the economic uncertainties that threaten long-term fixed-price arrangements" ("Establishing and Monitoring Contract Type," n.d.). A renewal of further performance under the term form is considered a new procurement and involves a new fee and cost arrangements. The main advantage of contracts is that they spell out the specific terms that the contracting parties have agreed upon, and in the event of a breach - where one or more parties fail to fulfill their obligations - serve as a guide for a court of law to determine the proper remedy for the injured party or parties.
Response Question 2:
When it comes to making a contract with a company, different factors influence how that contract will be written. In most cases, there are many different types of contracts, but they break down mostly into two categories. The first type is fixed pricing which makes a contractor have to deliver the services or goods to the best of their ability for a specified price. In fixed pricing, it puts all the risk on the contractor making them take more responsibility in controlling cost and effectiveness of the service. The second type is cost reimbursement contracts that the contractor will perform their service until there are no more funds. Once the funding is gone, the contractor is no longer required to complete the function that is required.
When it comes to determining what type of contract to use the contracting officer has many different things to account for when they make the Statement of Work. The first one is the amount of risk that they are willing to take in the contract. If the contracting office can get away with minimal risk or acceptable risk, they will choose the type the pervades that. The second thing that needs to be looked at is labor and material being completed in the time. The government is not going to want to pay for wasted material and overtime on workers if jobs cannot be achieved like they are proposed. The last and most crucial part is can the job be completed by the contractor.
Response Question 3:
The term contract is a term most people understand without much explanation. A contract involves legally binding promises from all parties contained within that contract. The contract is legally binding regarding common law and administrative law. The basic rules of a contract are contained in the Federal Acquisitions Regulations (FAR). As our reading this week explains, contract types may be defined differently. One may define a contract type as it is in regards to payment terms. A contract type may also be defined according to how it is formed or structured. A contract, especially with the government, does not always involve the typical structure most may be familiar with which includes a statement of work and performance details. Procuring a service or goods may involve the government issuing a purchase order. Contract types come in many forms. The reading this week titled General Guide To Contract Types by the Department of Energy, explains how the contract can be identified according to its purpose, such as a service contract or purchase of an item or items.
Regarding my experience as a FAC COR, I determine what is actually needed by my department. I write the statement of work (SOW)for the requirement and submit it to the contract officer. The SOW is critical in determining the contract arrangement or type. The main thought while writing the SOW is risk associated with performance and cost. Most of our service contracts are maintenance agreements that pertain to service for equipment. For the contract type or arrangement to be designated correctly and efficiently, the person writing the statement of work must have completed current and accurate market research. These service contracts can be priced accurately and therefore a firm fixed price contract is usually determined. This also places most risk on the contractor. Contract types may go differently according to the risk or lack of knowledge regarding requirement specifics.