Political Influence on the Awarding of Government Contracts
Politics play a role in different sectors of U.S. life. Since Congress establishes the
rules that direct government contracting, politics influences government contract
administration. Outsourcing offers ways to improve governmental contracting activities
through institutionalization of civil–military integration policies regardless of political
affiliation (Awortwi, 2012). However, such redistribution of resources can lead to
political disagreements rather than practical optimization. Private companies may try to
use campaign contributions as bargaining tools to obtain government contracts (Witko,
2011).
In seeking to understand the impact that corporations and political proponents
have on the distribution of government contracts, Kidalov and Snider (2011) studied
political impact on contract performance. Politics can affect contracting decisions;
therefore, the need exists to establish legal frameworks for contract delivery (Kidalov &
Snider, 2011). There should be separation of politics, economic, and government
contracting (Witko, 2011). Bromberg (2014) looked at why certain contractors received
awards based on their political connections. Witko (2011) assessed that politics influences
the dissemination of government contracts.
Private companies seek to determine the awarding of government contracts by
contributing to political campaigns (Witko, 2011). With increased financial support that
an organization contributes to political campaigns, chance increases that the organization
may receive a government contract (Bromberg, 2014). Political influences might be
harmful to the contracting process (Jing, 2012). Zaidi et al. (2012) added to the body of
knowledge by exploring the impact that politics has on government contracting
employees working in overseas locations. Political control attributed to misuse and
incompetence of contract performance (Zaidi et al., 2012).
Politics can affect the contracting/procurement process; therefore, government
contracting organizations provide extra attention to the consequences of political pressure
on contract administration (Diggs & Roman, 2012). Yang and VanLandingham (2012)
observed an increase in the number of politically influenced government contracting
arrangements in the past decade. The government contracts awarded depends on how
politically active the business is (Yang & VanLandingham, 2012). Despite the
government contracting reforms, suppliers continue to win contracts based on their
political contributions (Witko, 2011). Detecting improper behaviors when administering
government contracts may be difficult; however, government authorities enacted laws and
controls to prevent unethical behaviors in government contracting (Acquisition Central,
2014). The contract design influences various factors related to awarding the contract to a
supplier.
Contract Design
Government contracting employees might attempt to create government contracts
based on government contracting guidelines. Government outsourcing is an essential
delivery replacement to improve the effectiveness and flexibility benefits for private and
public companies (Van Milligen, 2012). The can stakeholders influence government
organizations to operate effectively and efficiently (Van Milligen, 2012). Government
contracting organizations assess the task of determining what companies can best offer
products and services, and what contract design will be most useful to assign.
In identifying the factors that affect contract design choices, it is necessary to
understand government contract design (Kim & Brown, 2012). Contract type and length
of the performance can affect contract design decisions (Amey, 2012). Contract type
refers to how the supplier reimburses the government contracting organization
(Acquisition Central, 2014). The contract type option determines the contract design
elements such as effectiveness of contract spending (Amey, 2012; Lamothe & Lamothe,
2012). Government contracting employees execute government contracts through
contract implementation and design. Government contracting employees use contract
design to maintain the affiliation with suppliers and government contracting organizations
(SBA, 2014). Government contracts offer valued components in the delivery of goods
and services (Malatesta & Smith, 2012b). There are two contract types in government
contracting, fixed-price and cost-reimbursement (Bumgarner &
Newswander, 2012). The goods or service procured determines the contract type.
To understand what effect a contract has on government contracting employees’
procurement of goods and services, government contracting employee must know the
difference between each government contract type. Despite the type of government
contract, government contracting employees must follow the guidelines published in the
FAR and other government contracting regulations. As stated in FAR part 16, fixed-price
contracts are non-negotiable, non-adjustable and offer maximum risk and full
responsibility for all contract costs to the supplier (Acquisition Central, 2014). When
negotiating a fixed-price contract, the supplier agrees to adhere to the contract
requirements of a fixed-price and delivery within a specified time-frame (Malatesta &
Smith, 2012b).
Using a firm-fixed price contract is possible if the government obtains the price
for goods or services in advance (Malatesta & Smith, 2012b). When servicing a
fixedprice contract, private companies receive fewer profits (Cribb, 2011). Offering
fixedprice contracts to suppliers incentivizes the supplier to deliver quality outcomes to
government contracting organizations. Vendors offering lower prices receive fixed-price
contracts (Maser & Thompson, 2013). From 1993 through 2008, defense contracting
doubled from $200 billion to $400 billion (Roberts, 2010). It is unclear why during the
same time-frame, government contracting employees reduced the number of fixed-price
contracts used and replaced them with cost-reimbursement contracts (Roberts, 2010).
Government contracting organizations and suppliers negotiates cost-reimbursement
contracts based on estimates of cost for goods or services (Acquisition Central, 2014).
Cost reimbursement contracts ensure suppliers that the government will reimburse
the Supplier all reasonable cost occurred while executing the contract (Acquisition
Central, 2014). Government contracting organizations discourage employees from using
cost-reimbursement contracts due to the potential excessive cost to the government
(Bumgarner & Newswander, 2012). In 2009, Congress passed the American Recovery
and Reinvestment Act (ARRA). The ARRA provided that the federal government
organization communicate a preference for using fixed-price contracts instead of
costreimbursement contracts (Honek, Azar, & Menassa, 2012; Orndoff & Papkov, 2012).
The Office of Management and Budget issued guidance to government contracting
organizations regarding the use of cost-reimbursement contracts (OMB, 2003).
Fixedprice contracts offered to suppliers may be beneficial to the government contracting
organizations because government contracting employees can control costs associated
with fixed-price contracts. Although cost-reimbursement contracts provide extreme
benefits to suppliers, cost-reimbursement contracts can offer high cost and low value to
the government.
Effective contract liability exists when government contracting agencies
understand the prerequisites of contracting guidelines (Malatesta & Smith, 2012a).
Government contracting organizations can ensure suppliers’ responsibility for
implementation of contract requirements (Malatesta & Smith, 2012a). Government
contracting organizations use different contract designs (Kim & Brown, 2012). The
category of a contract comprises decision-making since the contract affects service and
performance (Kim & Brown, 2012). A government contract design reduces transaction
costs associated with delivering services (Lumineau, Frechet, & Puthod, 2011). The
design of each government contracts ensures best value to the government organization
and customer.
Political and economic external forces may affect government contracting
employees to go outside the scope of the contract; therefore, providing opportunities for
circumventing of the legal parameters (Johnston & Girth, 2012). When delivering
contracts, competition is expected (Lamothe & Lamothe, 2012). Competition offers a
level of cost control and provides quality delivery of goods and services. The length of a
government contract may influence contract performance.
Government contract period is an agreed time to deliver goods or services to
government contracting customers (Acquisition Central, 2014). Three elements of
contract length exist in government contracting: spot market transactions, long-term
measures, and contracts that specify a base period such as extending contracts for
additional periods of time (Amey, 2012). Government contracting organizations prefer
short-term contracts since a short-term contract reduces the risk to both the government
contracting organizations and suppliers (Mols, 2010). Amey (2012) assessed that
government contracting organizations use long-term contracts if uncertainty exists
regarding the outcome of a contract.
The value of the contract results from the contract type and extent (Malatesta &
Smith, 2012b). Fixed-price contracts determine the value ex-ante while
costreimbursement contracts determine the value ex-post (Acquisition Central, 2014).
Government contracting organizations can organize each contract to add length and value
(Malatesta & Smith, 2012b). If the production of the goods or service is easy, the contract
period is shorter. However, if difficulties occur with implementation of the goods and
services, the government may extend the agreement to account for unknown factors
(Acquisition Central, 2014). Government contracting employees must create government
contracts to reduce production costs, reduce transaction costs, offer a profit to the
supplier, and provide the government with quality goods and services. Different
government contracting organizations experience with administering specific contracts
and suppliers who provide the goods and services as specified in each contract.
Standards, Guidelines, Compliance, and Regulations
Detailing the standards and guidelines that govern government contracting is
essential to government contracting employees understanding the requirements for
conducting their jobs ethically. Public service ethics requires that companies establish
clear guidelines that conform to a changing global economic request for ethical standards
(Adams & Balfour, 2010). The Small Business Administration established guidelines that
provide adequate assistance to small businesses competing for government contracts
(Johnston & Girth, 2012). Organizational standards should govern the company’s ethical
values (Noordegraaf, 2011). Government contracting employees’ lack of adherence to an
organization’s standard operating procedures may be routine (Sinocruz, Hildebrand,
Neuman, & Branaghan, 2011). Sinocruz et al. (2011) maintained that inconsistencies in
establishing standard operating procedures might be a contributing factor to employees’
inconstancy.
Understanding how ethical guidelines affect private companies may help
government contracting employees to understand the importance of government rules. In
an effort to understand how guidelines affect organizational standards, Ailon (2012) and
Zhong (2011) looked at ethical decision making in large organizations such as ENRON.
Although Enron established ethical standards, employees regularly engaged in unethical
behaviors (Zhong, 2011). Unethical behaviors in Enron affected both individuals and
stakeholders (Ailon, 2012). Kumar (2014) considered standard operating procedures
(SOPs), and the impact that vague guidelines might have on management processes.
SOPs provide guidelines for employees to ensure proper completion of the job
(Manghani, 2011). An organization’s standards of conduct should contain the company’s
ethical guidelines and values (Griffith, Connelly, & Thiel, 2011). An organization’s
compliance plan should incorporate ethics (Rowe & Kellam, 2011). U.S. federal
regulations 5 CFR 2635-Standards of Conduct for Employees of the Executive Branch,
41 USC 423-Procurement Integrity Act, and FAR-Federal Acquisition Regulations
provide guidelines regarding government contracting personnel ethical behavior
(Government Printing Office, 2011).
Revisiting government contracting compliance and regulations is necessary due to
continued unethical behaviors by government contracting employees while administering
government contracts (U.S. GAO, 2009). Not all government contracting employees are
dishonest; however, to demonstrate ethical behavior when administering government
contracts, employees must recuse themselves from instances that may indicate unethical
behaviors (Acquisition Central, 2014; Clark, 2011). In case government contracting
employees encounter instances of unethical behaviors, knowing what and why
government contracting rules exist may help employees in their ethical decision-making.
Conforming to compliance and regulations can be difficult if no guidance occurs
(Adams & Balfour, 2010). Within the context of the government contracting, compliance
with FAR regulations exists. Due to continued unethical behaviors, the FAR Council
established new ethics laws that required the creation of written codes of business ethics
(Johnson, Feng, Stizabee, & Jernigan, 2013). Government contracting ethics required
augmentation (U.S. GAO, 2009). Compliance violations required the restructuring of the
government contracting regulations (Johnson et al., 2013).
FAR regulation echoes the government contracting compliance rules (Cohn,
2011). Re-engineered subsections of the FAR clarify areas of the original law that seem
confusing or unclear (Mukhopadhyay, 2011). Timely disclosures of unethical
observations in some government contracting organizations remained a problem (U.S.
GAO, 2009). Under Title 48 of the U.S. code of regulations, FAR part 3 prescribes
policies and guidelines for avoiding inappropriate business practices and personal
conflicts of interest when administering government contracts (Acquisition Central,
2014). Organizations may allow the government contracting employees to report
unethical behaviors without fear of reprisal (Cassematis & Wortley, 2013). If the
government contracting employees act unethically when administering government
contracts, the employee may damage the public trust.
FAR Part 3 provides ethics and compliance rules and requirements for individuals
doing government contracting business (Acquisition Central, 2014). The Competition in
Contracting Act (CICA) allows the U.S. GAO to disclose full and thorough
decisionmaking requirement in the government contracting (Maser, Subbotin, &
Thompson, 2010). Government contracting rules and regulations provide tools that may
exclude government contracting employees from behaving unethically (U.S. GAO,
2009). Congress established additional guidelines and regulations to assist government
contracting employees when administering government contracts.
In seeking to understand the impact that corporations and political proponents
have on the distribution of government contracts, Kidalov and Snider (2011) studied
political impact on contract performance. Politics can affect contracting decisions;
therefore, the need exists to establish legal frameworks for contract delivery (Kidalov &
Snider, 2011). There should be separation of politics, economic, and government
contracting (Witko, 2011). Bromberg (2014) looked at why certain contractors received
awards based on their political connections. Witko (2011) assessed that politics influences
the dissemination of government contracts.
Private companies seek to determine the awarding of government contracts by
contributing to political campaigns (Witko, 2011). With increased financial support that
an organization contributes to political campaigns, chance increases that the organization
may receive a government contract (Bromberg, 2014). Political influences might be
harmful to the contracting process (Jing, 2012). Zaidi et al. (2012) added to the body of
knowledge by exploring the impact that politics has on government contracting
employees working in overseas locations. Political control attributed to misuse and
incompetence of contract performance (Zaidi et al., 2012).
Politics can affect the contracting/procurement process; therefore, government
contracting organizations provide extra attention to the consequences of political pressure
on contract administration (Diggs & Roman, 2012). Yang and VanLandingham (2012)
observed an increase in the number of politically influenced government contracting
arrangements in the past decade. The government contracts awarded depends on how
politically active the business is (Yang & VanLandingham, 2012). Despite the
government contracting reforms, suppliers continue to win contracts based on their
political contributions (Witko, 2011). Detecting improper behaviors when administering
government contracts may be difficult; however, government authorities enacted laws and
controls to prevent unethical behaviors in government contracting (Acquisition Central,
2014). The contract design influences various factors related to awarding the contract to a
supplier.
Contract Design
Government contracting employees might attempt to create government contracts
based on government contracting guidelines. Government outsourcing is an essential
delivery replacement to improve the effectiveness and flexibility benefits for private and
public companies (Van Milligen, 2012). The can stakeholders influence government
organizations to operate effectively and efficiently (Van Milligen, 2012). Government
contracting organizations assess the task of determining what companies can best offer
products and services, and what contract design will be most useful to assign.
In identifying the factors that affect contract design choices, it is necessary to
understand government contract design (Kim & Brown, 2012). Contract type and length
of the performance can affect contract design decisions (Amey, 2012). Contract type
refers to how the supplier reimburses the government contracting organization
(Acquisition Central, 2014). The contract type option determines the contract design
elements such as effectiveness of contract spending (Amey, 2012; Lamothe & Lamothe,
2012). Government contracting employees execute government contracts through
contract implementation and design. Government contracting employees use contract
design to maintain the affiliation with suppliers and government contracting organizations
(SBA, 2014). Government contracts offer valued components in the delivery of goods
and services (Malatesta & Smith, 2012b). There are two contract types in government
contracting, fixed-price and cost-reimbursement (Bumgarner &
Newswander, 2012). The goods or service procured determines the contract type.
To understand what effect a contract has on government contracting employees’
procurement of goods and services, government contracting employee must know the
difference between each government contract type. Despite the type of government
contract, government contracting employees must follow the guidelines published in the
FAR and other government contracting regulations. As stated in FAR part 16, fixed-price
contracts are non-negotiable, non-adjustable and offer maximum risk and full
responsibility for all contract costs to the supplier (Acquisition Central, 2014). When
negotiating a fixed-price contract, the supplier agrees to adhere to the contract
requirements of a fixed-price and delivery within a specified time-frame (Malatesta &
Smith, 2012b).
Using a firm-fixed price contract is possible if the government obtains the price
for goods or services in advance (Malatesta & Smith, 2012b). When servicing a
fixedprice contract, private companies receive fewer profits (Cribb, 2011). Offering
fixedprice contracts to suppliers incentivizes the supplier to deliver quality outcomes to
government contracting organizations. Vendors offering lower prices receive fixed-price
contracts (Maser & Thompson, 2013). From 1993 through 2008, defense contracting
doubled from $200 billion to $400 billion (Roberts, 2010). It is unclear why during the
same time-frame, government contracting employees reduced the number of fixed-price
contracts used and replaced them with cost-reimbursement contracts (Roberts, 2010).
Government contracting organizations and suppliers negotiates cost-reimbursement
contracts based on estimates of cost for goods or services (Acquisition Central, 2014).
Cost reimbursement contracts ensure suppliers that the government will reimburse
the Supplier all reasonable cost occurred while executing the contract (Acquisition
Central, 2014). Government contracting organizations discourage employees from using
cost-reimbursement contracts due to the potential excessive cost to the government
(Bumgarner & Newswander, 2012). In 2009, Congress passed the American Recovery
and Reinvestment Act (ARRA). The ARRA provided that the federal government
organization communicate a preference for using fixed-price contracts instead of
costreimbursement contracts (Honek, Azar, & Menassa, 2012; Orndoff & Papkov, 2012).
The Office of Management and Budget issued guidance to government contracting
organizations regarding the use of cost-reimbursement contracts (OMB, 2003).
Fixedprice contracts offered to suppliers may be beneficial to the government contracting
organizations because government contracting employees can control costs associated
with fixed-price contracts. Although cost-reimbursement contracts provide extreme
benefits to suppliers, cost-reimbursement contracts can offer high cost and low value to
the government.
Effective contract liability exists when government contracting agencies
understand the prerequisites of contracting guidelines (Malatesta & Smith, 2012a).
Government contracting organizations can ensure suppliers’ responsibility for
implementation of contract requirements (Malatesta & Smith, 2012a). Government
contracting organizations use different contract designs (Kim & Brown, 2012). The
category of a contract comprises decision-making since the contract affects service and
performance (Kim & Brown, 2012). A government contract design reduces transaction
costs associated with delivering services (Lumineau, Frechet, & Puthod, 2011). The
design of each government contracts ensures best value to the government organization
and customer.
Political and economic external forces may affect government contracting
employees to go outside the scope of the contract; therefore, providing opportunities for
circumventing of the legal parameters (Johnston & Girth, 2012). When delivering
contracts, competition is expected (Lamothe & Lamothe, 2012). Competition offers a
level of cost control and provides quality delivery of goods and services. The length of a
government contract may influence contract performance.
Government contract period is an agreed time to deliver goods or services to
government contracting customers (Acquisition Central, 2014). Three elements of
contract length exist in government contracting: spot market transactions, long-term
measures, and contracts that specify a base period such as extending contracts for
additional periods of time (Amey, 2012). Government contracting organizations prefer
short-term contracts since a short-term contract reduces the risk to both the government
contracting organizations and suppliers (Mols, 2010). Amey (2012) assessed that
government contracting organizations use long-term contracts if uncertainty exists
regarding the outcome of a contract.
The value of the contract results from the contract type and extent (Malatesta &
Smith, 2012b). Fixed-price contracts determine the value ex-ante while
costreimbursement contracts determine the value ex-post (Acquisition Central, 2014).
Government contracting organizations can organize each contract to add length and value
(Malatesta & Smith, 2012b). If the production of the goods or service is easy, the contract
period is shorter. However, if difficulties occur with implementation of the goods and
services, the government may extend the agreement to account for unknown factors
(Acquisition Central, 2014). Government contracting employees must create government
contracts to reduce production costs, reduce transaction costs, offer a profit to the
supplier, and provide the government with quality goods and services. Different
government contracting organizations experience with administering specific contracts
and suppliers who provide the goods and services as specified in each contract.
Standards, Guidelines, Compliance, and Regulations
Detailing the standards and guidelines that govern government contracting is
essential to government contracting employees understanding the requirements for
conducting their jobs ethically. Public service ethics requires that companies establish
clear guidelines that conform to a changing global economic request for ethical standards
(Adams & Balfour, 2010). The Small Business Administration established guidelines that
provide adequate assistance to small businesses competing for government contracts
(Johnston & Girth, 2012). Organizational standards should govern the company’s ethical
values (Noordegraaf, 2011). Government contracting employees’ lack of adherence to an
organization’s standard operating procedures may be routine (Sinocruz, Hildebrand,
Neuman, & Branaghan, 2011). Sinocruz et al. (2011) maintained that inconsistencies in
establishing standard operating procedures might be a contributing factor to employees’
inconstancy.
Understanding how ethical guidelines affect private companies may help
government contracting employees to understand the importance of government rules. In
an effort to understand how guidelines affect organizational standards, Ailon (2012) and
Zhong (2011) looked at ethical decision making in large organizations such as ENRON.
Although Enron established ethical standards, employees regularly engaged in unethical
behaviors (Zhong, 2011). Unethical behaviors in Enron affected both individuals and
stakeholders (Ailon, 2012). Kumar (2014) considered standard operating procedures
(SOPs), and the impact that vague guidelines might have on management processes.
SOPs provide guidelines for employees to ensure proper completion of the job
(Manghani, 2011). An organization’s standards of conduct should contain the company’s
ethical guidelines and values (Griffith, Connelly, & Thiel, 2011). An organization’s
compliance plan should incorporate ethics (Rowe & Kellam, 2011). U.S. federal
regulations 5 CFR 2635-Standards of Conduct for Employees of the Executive Branch,
41 USC 423-Procurement Integrity Act, and FAR-Federal Acquisition Regulations
provide guidelines regarding government contracting personnel ethical behavior
(Government Printing Office, 2011).
Revisiting government contracting compliance and regulations is necessary due to
continued unethical behaviors by government contracting employees while administering
government contracts (U.S. GAO, 2009). Not all government contracting employees are
dishonest; however, to demonstrate ethical behavior when administering government
contracts, employees must recuse themselves from instances that may indicate unethical
behaviors (Acquisition Central, 2014; Clark, 2011). In case government contracting
employees encounter instances of unethical behaviors, knowing what and why
government contracting rules exist may help employees in their ethical decision-making.
Conforming to compliance and regulations can be difficult if no guidance occurs
(Adams & Balfour, 2010). Within the context of the government contracting, compliance
with FAR regulations exists. Due to continued unethical behaviors, the FAR Council
established new ethics laws that required the creation of written codes of business ethics
(Johnson, Feng, Stizabee, & Jernigan, 2013). Government contracting ethics required
augmentation (U.S. GAO, 2009). Compliance violations required the restructuring of the
government contracting regulations (Johnson et al., 2013).
FAR regulation echoes the government contracting compliance rules (Cohn,
2011). Re-engineered subsections of the FAR clarify areas of the original law that seem
confusing or unclear (Mukhopadhyay, 2011). Timely disclosures of unethical
observations in some government contracting organizations remained a problem (U.S.
GAO, 2009). Under Title 48 of the U.S. code of regulations, FAR part 3 prescribes
policies and guidelines for avoiding inappropriate business practices and personal
conflicts of interest when administering government contracts (Acquisition Central,
2014). Organizations may allow the government contracting employees to report
unethical behaviors without fear of reprisal (Cassematis & Wortley, 2013). If the
government contracting employees act unethically when administering government
contracts, the employee may damage the public trust.
FAR Part 3 provides ethics and compliance rules and requirements for individuals
doing government contracting business (Acquisition Central, 2014). The Competition in
Contracting Act (CICA) allows the U.S. GAO to disclose full and thorough
decisionmaking requirement in the government contracting (Maser, Subbotin, &
Thompson, 2010). Government contracting rules and regulations provide tools that may
exclude government contracting employees from behaving unethically (U.S. GAO,
2009). Congress established additional guidelines and regulations to assist government
contracting employees when administering government contracts.
In seeking to understand the impact that corporations and political proponents
have on the distribution of government contracts, Kidalov and Snider (2011) studied
political impact on contract performance. Politics can affect contracting decisions;
therefore, the need exists to establish legal frameworks for contract delivery (Kidalov &
Snider, 2011). There should be separation of politics, economic, and government
contracting (Witko, 2011). Bromberg (2014) looked at why certain contractors received
awards based on their political connections. Witko (2011) assessed that politics influences
the dissemination of government contracts.
Private companies seek to determine the awarding of government contracts by
contributing to political campaigns (Witko, 2011). With increased financial support that
an organization contributes to political campaigns, chance increases that the organization
may receive a government contract (Bromberg, 2014). Political influences might be
harmful to the contracting process (Jing, 2012). Zaidi et al. (2012) added to the body of
knowledge by exploring the impact that politics has on government contracting
employees working in overseas locations. Political control attributed to misuse and
incompetence of contract performance (Zaidi et al., 2012).
Politics can affect the contracting/procurement process; therefore, government
contracting organizations provide extra attention to the consequences of political pressure
on contract administration (Diggs & Roman, 2012). Yang and VanLandingham (2012)
observed an increase in the number of politically influenced government contracting
arrangements in the past decade. The government contracts awarded depends on how
politically active the business is (Yang & VanLandingham, 2012). Despite the
government contracting reforms, suppliers continue to win contracts based on their
political contributions (Witko, 2011). Detecting improper behaviors when administering
government contracts may be difficult; however, government authorities enacted laws and
controls to prevent unethical behaviors in government contracting (Acquisition Central,
2014). The contract design influences various factors related to awarding the contract to a
supplier.
Contract Design
Government contracting employees might attempt to create government contracts
based on government contracting guidelines. Government outsourcing is an essential
delivery replacement to improve the effectiveness and flexibility benefits for private and
public companies (Van Milligen, 2012). The can stakeholders influence government
organizations to operate effectively and efficiently (Van Milligen, 2012). Government
contracting organizations assess the task of determining what companies can best offer
products and services, and what contract design will be most useful to assign.
In identifying the factors that affect contract design choices, it is necessary to
understand government contract design (Kim & Brown, 2012). Contract type and length
of the performance can affect contract design decisions (Amey, 2012). Contract type
refers to how the supplier reimburses the government contracting organization
(Acquisition Central, 2014). The contract type option determines the contract design
elements such as effectiveness of contract spending (Amey, 2012; Lamothe & Lamothe,
2012). Government contracting employees execute government contracts through
contract implementation and design. Government contracting employees use contract
design to maintain the affiliation with suppliers and government contracting organizations
(SBA, 2014). Government contracts offer valued components in the delivery of goods
and services (Malatesta & Smith, 2012b). There are two contract types in government
contracting, fixed-price and cost-reimbursement (Bumgarner &
Newswander, 2012). The goods or service procured determines the contract type.
To understand what effect a contract has on government contracting employees’
procurement of goods and services, government contracting employee must know the
difference between each government contract type. Despite the type of government
contract, government contracting employees must follow the guidelines published in the
FAR and other government contracting regulations. As stated in FAR part 16, fixed-price
contracts are non-negotiable, non-adjustable and offer maximum risk and full
responsibility for all contract costs to the supplier (Acquisition Central, 2014). When
negotiating a fixed-price contract, the supplier agrees to adhere to the contract
requirements of a fixed-price and delivery within a specified time-frame (Malatesta &
Smith, 2012b).
Using a firm-fixed price contract is possible if the government obtains the price
for goods or services in advance (Malatesta & Smith, 2012b). When servicing a
fixedprice contract, private companies receive fewer profits (Cribb, 2011). Offering
fixedprice contracts to suppliers incentivizes the supplier to deliver quality outcomes to
government contracting organizations. Vendors offering lower prices receive fixed-price
contracts (Maser & Thompson, 2013). From 1993 through 2008, defense contracting
doubled from $200 billion to $400 billion (Roberts, 2010). It is unclear why during the
same time-frame, government contracting employees reduced the number of fixed-price
contracts used and replaced them with cost-reimbursement contracts (Roberts, 2010).
Government contracting organizations and suppliers negotiates cost-reimbursement
contracts based on estimates of cost for goods or services (Acquisition Central, 2014).
Cost reimbursement contracts ensure suppliers that the government will reimburse
the Supplier all reasonable cost occurred while executing the contract (Acquisition
Central, 2014). Government contracting organizations discourage employees from using
cost-reimbursement contracts due to the potential excessive cost to the government
(Bumgarner & Newswander, 2012). In 2009, Congress passed the American Recovery
and Reinvestment Act (ARRA). The ARRA provided that the federal government
organization communicate a preference for using fixed-price contracts instead of
costreimbursement contracts (Honek, Azar, & Menassa, 2012; Orndoff & Papkov, 2012).
The Office of Management and Budget issued guidance to government contracting
organizations regarding the use of cost-reimbursement contracts (OMB, 2003).
Fixedprice contracts offered to suppliers may be beneficial to the government contracting
organizations because government contracting employees can control costs associated
with fixed-price contracts. Although cost-reimbursement contracts provide extreme
benefits to suppliers, cost-reimbursement contracts can offer high cost and low value to
the government.
Effective contract liability exists when government contracting agencies
understand the prerequisites of contracting guidelines (Malatesta & Smith, 2012a).
Government contracting organizations can ensure suppliers’ responsibility for
implementation of contract requirements (Malatesta & Smith, 2012a). Government
contracting organizations use different contract designs (Kim & Brown, 2012). The
category of a contract comprises decision-making since the contract affects service and
performance (Kim & Brown, 2012). A government contract design reduces transaction
costs associated with delivering services (Lumineau, Frechet, & Puthod, 2011). The
design of each government contracts ensures best value to the government organization
and customer.
Political and economic external forces may affect government contracting
employees to go outside the scope of the contract; therefore, providing opportunities for
circumventing of the legal parameters (Johnston & Girth, 2012). When delivering
contracts, competition is expected (Lamothe & Lamothe, 2012). Competition offers a
level of cost control and provides quality delivery of goods and services. The length of a
government contract may influence contract performance.
Government contract period is an agreed time to deliver goods or services to
government contracting customers (Acquisition Central, 2014). Three elements of
contract length exist in government contracting: spot market transactions, long-term
measures, and contracts that specify a base period such as extending contracts for
additional periods of time (Amey, 2012). Government contracting organizations prefer
short-term contracts since a short-term contract reduces the risk to both the government
contracting organizations and suppliers (Mols, 2010). Amey (2012) assessed that
government contracting organizations use long-term contracts if uncertainty exists
regarding the outcome of a contract.
The value of the contract results from the contract type and extent (Malatesta &
Smith, 2012b). Fixed-price contracts determine the value ex-ante while
costreimbursement contracts determine the value ex-post (Acquisition Central, 2014).
Government contracting organizations can organize each contract to add length and value
(Malatesta & Smith, 2012b). If the production of the goods or service is easy, the contract
period is shorter. However, if difficulties occur with implementation of the goods and
services, the government may extend the agreement to account for unknown factors
(Acquisition Central, 2014). Government contracting employees must create government
contracts to reduce production costs, reduce transaction costs, offer a profit to the
supplier, and provide the government with quality goods and services. Different
government contracting organizations experience with administering specific contracts
and suppliers who provide the goods and services as specified in each contract.
Standards, Guidelines, Compliance, and Regulations
Detailing the standards and guidelines that govern government contracting is
essential to government contracting employees understanding the requirements for
conducting their jobs ethically. Public service ethics requires that companies establish
clear guidelines that conform to a changing global economic request for ethical standards
(Adams & Balfour, 2010). The Small Business Administration established guidelines that
provide adequate assistance to small businesses competing for government contracts
(Johnston & Girth, 2012). Organizational standards should govern the company’s ethical
values (Noordegraaf, 2011). Government contracting employees’ lack of adherence to an
organization’s standard operating procedures may be routine (Sinocruz, Hildebrand,
Neuman, & Branaghan, 2011). Sinocruz et al. (2011) maintained that inconsistencies in
establishing standard operating procedures might be a contributing factor to employees’
inconstancy.
Understanding how ethical guidelines affect private companies may help
government contracting employees to understand the importance of government rules. In
an effort to understand how guidelines affect organizational standards, Ailon (2012) and
Zhong (2011) looked at ethical decision making in large organizations such as ENRON.
Although Enron established ethical standards, employees regularly engaged in unethical
behaviors (Zhong, 2011). Unethical behaviors in Enron affected both individuals and
stakeholders (Ailon, 2012). Kumar (2014) considered standard operating procedures
(SOPs), and the impact that vague guidelines might have on management processes.
SOPs provide guidelines for employees to ensure proper completion of the job
(Manghani, 2011). An organization’s standards of conduct should contain the company’s
ethical guidelines and values (Griffith, Connelly, & Thiel, 2011). An organization’s
compliance plan should incorporate ethics (Rowe & Kellam, 2011). U.S. federal
regulations 5 CFR 2635-Standards of Conduct for Employees of the Executive Branch,
41 USC 423-Procurement Integrity Act, and FAR-Federal Acquisition Regulations
provide guidelines regarding government contracting personnel ethical behavior
(Government Printing Office, 2011).
Revisiting government contracting compliance and regulations is necessary due to
continued unethical behaviors by government contracting employees while administering
government contracts (U.S. GAO, 2009). Not all government contracting employees are
dishonest; however, to demonstrate ethical behavior when administering government
contracts, employees must recuse themselves from instances that may indicate unethical
behaviors (Acquisition Central, 2014; Clark, 2011). In case government contracting
employees encounter instances of unethical behaviors, knowing what and why
government contracting rules exist may help employees in their ethical decision-making.
Conforming to compliance and regulations can be difficult if no guidance occurs
(Adams & Balfour, 2010). Within the context of the government contracting, compliance
with FAR regulations exists. Due to continued unethical behaviors, the FAR Council
established new ethics laws that required the creation of written codes of business ethics
(Johnson, Feng, Stizabee, & Jernigan, 2013). Government contracting ethics required
augmentation (U.S. GAO, 2009). Compliance violations required the restructuring of the
government contracting regulations (Johnson et al., 2013).
FAR regulation echoes the government contracting compliance rules (Cohn,
2011). Re-engineered subsections of the FAR clarify areas of the original law that seem
confusing or unclear (Mukhopadhyay, 2011). Timely disclosures of unethical
observations in some government contracting organizations remained a problem (U.S.
GAO, 2009). Under Title 48 of the U.S. code of regulations, FAR part 3 prescribes
policies and guidelines for avoiding inappropriate business practices and personal
conflicts of interest when administering government contracts (Acquisition Central,
2014). Organizations may allow the government contracting employees to report
unethical behaviors without fear of reprisal (Cassematis & Wortley, 2013). If the
government contracting employees act unethically when administering government
contracts, the employee may damage the public trust.
FAR Part 3 provides ethics and compliance rules and requirements for individuals
doing government contracting business (Acquisition Central, 2014). The Competition in
Contracting Act (CICA) allows the U.S. GAO to disclose full and thorough
decisionmaking requirement in the government contracting (Maser, Subbotin, &
Thompson, 2010). Government contracting rules and regulations provide tools that may
exclude government contracting employees from behaving unethically (U.S. GAO,
2009). Congress established additional guidelines and regulations to assist government
contracting employees when administering government contracts.
In seeking to understand the impact that corporations and political proponents
have on the distribution of government contracts, Kidalov and Snider (2011) studied
political impact on contract performance. Politics can affect contracting decisions;
therefore, the need exists to establish legal frameworks for contract delivery (Kidalov &
Snider, 2011). There should be separation of politics, economic, and government
contracting (Witko, 2011). Bromberg (2014) looked at why certain contractors received
awards based on their political connections. Witko (2011) assessed that politics influences
the dissemination of government contracts.
Private companies seek to determine the awarding of government contracts by
contributing to political campaigns (Witko, 2011). With increased financial support that
an organization contributes to political campaigns, chance increases that the organization
may receive a government contract (Bromberg, 2014). Political influences might be
harmful to the contracting process (Jing, 2012). Zaidi et al. (2012) added to the body of
knowledge by exploring the impact that politics has on government contracting
employees working in overseas locations. Political control attributed to misuse and
incompetence of contract performance (Zaidi et al., 2012).
Politics can affect the contracting/procurement process; therefore, government
contracting organizations provide extra attention to the consequences of political pressure
on contract administration (Diggs & Roman, 2012). Yang and VanLandingham (2012)
observed an increase in the number of politically influenced government contracting
arrangements in the past decade. The government contracts awarded depends on how
politically active the business is (Yang & VanLandingham, 2012). Despite the
government contracting reforms, suppliers continue to win contracts based on their
political contributions (Witko, 2011). Detecting improper behaviors when administering
government contracts may be difficult; however, government authorities enacted laws and
controls to prevent unethical behaviors in government contracting (Acquisition Central,
2014). The contract design influences various factors related to awarding the contract to a
supplier.
Contract Design
Government contracting employees might attempt to create government contracts
based on government contracting guidelines. Government outsourcing is an essential
delivery replacement to improve the effectiveness and flexibility benefits for private and
public companies (Van Milligen, 2012). The can stakeholders influence government
organizations to operate effectively and efficiently (Van Milligen, 2012). Government
contracting organizations assess the task of determining what companies can best offer
products and services, and what contract design will be most useful to assign.
In identifying the factors that affect contract design choices, it is necessary to
understand government contract design (Kim & Brown, 2012). Contract type and length
of the performance can affect contract design decisions (Amey, 2012). Contract type
refers to how the supplier reimburses the government contracting organization
(Acquisition Central, 2014). The contract type option determines the contract design
elements such as effectiveness of contract spending (Amey, 2012; Lamothe & Lamothe,
2012). Government contracting employees execute government contracts through
contract implementation and design. Government contracting employees use contract
design to maintain the affiliation with suppliers and government contracting organizations
(SBA, 2014). Government contracts offer valued components in the delivery of goods
and services (Malatesta & Smith, 2012b). There are two contract types in government
contracting, fixed-price and cost-reimbursement (Bumgarner &
Newswander, 2012). The goods or service procured determines the contract type.
To understand what effect a contract has on government contracting employees’
procurement of goods and services, government contracting employee must know the
difference between each government contract type. Despite the type of government
contract, government contracting employees must follow the guidelines published in the
FAR and other government contracting regulations. As stated in FAR part 16, fixed-price
contracts are non-negotiable, non-adjustable and offer maximum risk and full
responsibility for all contract costs to the supplier (Acquisition Central, 2014). When
negotiating a fixed-price contract, the supplier agrees to adhere to the contract
requirements of a fixed-price and delivery within a specified time-frame (Malatesta &
Smith, 2012b).
Using a firm-fixed price contract is possible if the government obtains the price
for goods or services in advance (Malatesta & Smith, 2012b). When servicing a
fixedprice contract, private companies receive fewer profits (Cribb, 2011). Offering
fixedprice contracts to suppliers incentivizes the supplier to deliver quality outcomes to
government contracting organizations. Vendors offering lower prices receive fixed-price
contracts (Maser & Thompson, 2013). From 1993 through 2008, defense contracting
doubled from $200 billion to $400 billion (Roberts, 2010). It is unclear why during the
same time-frame, government contracting employees reduced the number of fixed-price
contracts used and replaced them with cost-reimbursement contracts (Roberts, 2010).
Government contracting organizations and suppliers negotiates cost-reimbursement
contracts based on estimates of cost for goods or services (Acquisition Central, 2014).
Cost reimbursement contracts ensure suppliers that the government will reimburse
the Supplier all reasonable cost occurred while executing the contract (Acquisition
Central, 2014). Government contracting organizations discourage employees from using
cost-reimbursement contracts due to the potential excessive cost to the government
(Bumgarner & Newswander, 2012). In 2009, Congress passed the American Recovery
and Reinvestment Act (ARRA). The ARRA provided that the federal government
organization communicate a preference for using fixed-price contracts instead of
costreimbursement contracts (Honek, Azar, & Menassa, 2012; Orndoff & Papkov, 2012).
The Office of Management and Budget issued guidance to government contracting
organizations regarding the use of cost-reimbursement contracts (OMB, 2003).
Fixedprice contracts offered to suppliers may be beneficial to the government contracting
organizations because government contracting employees can control costs associated
with fixed-price contracts. Although cost-reimbursement contracts provide extreme
benefits to suppliers, cost-reimbursement contracts can offer high cost and low value to
the government.
Effective contract liability exists when government contracting agencies
understand the prerequisites of contracting guidelines (Malatesta & Smith, 2012a).
Government contracting organizations can ensure suppliers’ responsibility for
implementation of contract requirements (Malatesta & Smith, 2012a). Government
contracting organizations use different contract designs (Kim & Brown, 2012). The
category of a contract comprises decision-making since the contract affects service and
performance (Kim & Brown, 2012). A government contract design reduces transaction
costs associated with delivering services (Lumineau, Frechet, & Puthod, 2011). The
design of each government contracts ensures best value to the government organization
and customer.
Political and economic external forces may affect government contracting
employees to go outside the scope of the contract; therefore, providing opportunities for
circumventing of the legal parameters (Johnston & Girth, 2012). When delivering
contracts, competition is expected (Lamothe & Lamothe, 2012). Competition offers a
level of cost control and provides quality delivery of goods and services. The length of a
government contract may influence contract performance.
Government contract period is an agreed time to deliver goods or services to
government contracting customers (Acquisition Central, 2014). Three elements of
contract length exist in government contracting: spot market transactions, long-term
measures, and contracts that specify a base period such as extending contracts for
additional periods of time (Amey, 2012). Government contracting organizations prefer
short-term contracts since a short-term contract reduces the risk to both the government
contracting organizations and suppliers (Mols, 2010). Amey (2012) assessed that
government contracting organizations use long-term contracts if uncertainty exists
regarding the outcome of a contract.
The value of the contract results from the contract type and extent (Malatesta &
Smith, 2012b). Fixed-price contracts determine the value ex-ante while
costreimbursement contracts determine the value ex-post (Acquisition Central, 2014).
Government contracting organizations can organize each contract to add length and value
(Malatesta & Smith, 2012b). If the production of the goods or service is easy, the contract
period is shorter. However, if difficulties occur with implementation of the goods and
services, the government may extend the agreement to account for unknown factors
(Acquisition Central, 2014). Government contracting employees must create government
contracts to reduce production costs, reduce transaction costs, offer a profit to the
supplier, and provide the government with quality goods and services. Different
government contracting organizations experience with administering specific contracts
and suppliers who provide the goods and services as specified in each contract.
Standards, Guidelines, Compliance, and Regulations
Detailing the standards and guidelines that govern government contracting is
essential to government contracting employees understanding the requirements for
conducting their jobs ethically. Public service ethics requires that companies establish
clear guidelines that conform to a changing global economic request for ethical standards
(Adams & Balfour, 2010). The Small Business Administration established guidelines that
provide adequate assistance to small businesses competing for government contracts
(Johnston & Girth, 2012). Organizational standards should govern the company’s ethical
values (Noordegraaf, 2011). Government contracting employees’ lack of adherence to an
organization’s standard operating procedures may be routine (Sinocruz, Hildebrand,
Neuman, & Branaghan, 2011). Sinocruz et al. (2011) maintained that inconsistencies in
establishing standard operating procedures might be a contributing factor to employees’
inconstancy.
Understanding how ethical guidelines affect private companies may help
government contracting employees to understand the importance of government rules. In
an effort to understand how guidelines affect organizational standards, Ailon (2012) and
Zhong (2011) looked at ethical decision making in large organizations such as ENRON.
Although Enron established ethical standards, employees regularly engaged in unethical
behaviors (Zhong, 2011). Unethical behaviors in Enron affected both individuals and
stakeholders (Ailon, 2012). Kumar (2014) considered standard operating procedures
(SOPs), and the impact that vague guidelines might have on management processes.
SOPs provide guidelines for employees to ensure proper completion of the job
(Manghani, 2011). An organization’s standards of conduct should contain the company’s
ethical guidelines and values (Griffith, Connelly, & Thiel, 2011). An organization’s
compliance plan should incorporate ethics (Rowe & Kellam, 2011). U.S. federal
regulations 5 CFR 2635-Standards of Conduct for Employees of the Executive Branch,
41 USC 423-Procurement Integrity Act, and FAR-Federal Acquisition Regulations
provide guidelines regarding government contracting personnel ethical behavior
(Government Printing Office, 2011).
Revisiting government contracting compliance and regulations is necessary due to
continued unethical behaviors by government contracting employees while administering
government contracts (U.S. GAO, 2009). Not all government contracting employees are
dishonest; however, to demonstrate ethical behavior when administering government
contracts, employees must recuse themselves from instances that may indicate unethical
behaviors (Acquisition Central, 2014; Clark, 2011). In case government contracting
employees encounter instances of unethical behaviors, knowing what and why
government contracting rules exist may help employees in their ethical decision-making.
Conforming to compliance and regulations can be difficult if no guidance occurs
(Adams & Balfour, 2010). Within the context of the government contracting, compliance
with FAR regulations exists. Due to continued unethical behaviors, the FAR Council
established new ethics laws that required the creation of written codes of business ethics
(Johnson, Feng, Stizabee, & Jernigan, 2013). Government contracting ethics required
augmentation (U.S. GAO, 2009). Compliance violations required the restructuring of the
government contracting regulations (Johnson et al., 2013).
FAR regulation echoes the government contracting compliance rules (Cohn,
2011). Re-engineered subsections of the FAR clarify areas of the original law that seem
confusing or unclear (Mukhopadhyay, 2011). Timely disclosures of unethical
observations in some government contracting organizations remained a problem (U.S.
GAO, 2009). Under Title 48 of the U.S. code of regulations, FAR part 3 prescribes
policies and guidelines for avoiding inappropriate business practices and personal
conflicts of interest when administering government contracts (Acquisition Central,
2014). Organizations may allow the government contracting employees to report
unethical behaviors without fear of reprisal (Cassematis & Wortley, 2013). If the
government contracting employees act unethically when administering government
contracts, the employee may damage the public trust.
FAR Part 3 provides ethics and compliance rules and requirements for individuals
doing government contracting business (Acquisition Central, 2014). The Competition in
Contracting Act (CICA) allows the U.S. GAO to disclose full and thorough
decisionmaking requirement in the government contracting (Maser, Subbotin, &
Thompson, 2010). Government contracting rules and regulations provide tools that may
exclude government contracting employees from behaving unethically (U.S. GAO,
2009). Congress established additional guidelines and regulations to assist government
contracting employees when administering government contracts.
In seeking to understand the impact that corporations and political proponents
have on the distribution of government contracts, Kidalov and Snider (2011) studied
political impact on contract performance. Politics can affect contracting decisions;
therefore, the need exists to establish legal frameworks for contract delivery (Kidalov &
Snider, 2011). There should be separation of politics, economic, and government
contracting (Witko, 2011). Bromberg (2014) looked at why certain contractors received
awards based on their political connections. Witko (2011) assessed that politics influences
the dissemination of government contracts.
Private companies seek to determine the awarding of government contracts by
contributing to political campaigns (Witko, 2011). With increased financial support that
an organization contributes to political campaigns, chance increases that the organization
may receive a government contract (Bromberg, 2014). Political influences might be
harmful to the contracting process (Jing, 2012). Zaidi et al. (2012) added to the body of
knowledge by exploring the impact that politics has on government contracting
employees working in overseas locations. Political control attributed to misuse and
incompetence of contract performance (Zaidi et al., 2012).
Politics can affect the contracting/procurement process; therefore, government
contracting organizations provide extra attention to the consequences of political pressure
on contract administration (Diggs & Roman, 2012). Yang and VanLandingham (2012)
observed an increase in the number of politically influenced government contracting
arrangements in the past decade. The government contracts awarded depends on how
politically active the business is (Yang & VanLandingham, 2012). Despite the
government contracting reforms, suppliers continue to win contracts based on their
political contributions (Witko, 2011). Detecting improper behaviors when administering
government contracts may be difficult; however, government authorities enacted laws and
controls to prevent unethical behaviors in government contracting (Acquisition Central,
2014). The contract design influences various factors related to awarding the contract to a
supplier.
Contract Design
Government contracting employees might attempt to create government contracts
based on government contracting guidelines. Government outsourcing is an essential
delivery replacement to improve the effectiveness and flexibility benefits for private and
public companies (Van Milligen, 2012). The can stakeholders influence government
organizations to operate effectively and efficiently (Van Milligen, 2012). Government
contracting organizations assess the task of determining what companies can best offer
products and services, and what contract design will be most useful to assign.
In identifying the factors that affect contract design choices, it is necessary to
understand government contract design (Kim & Brown, 2012). Contract type and length
of the performance can affect contract design decisions (Amey, 2012). Contract type
refers to how the supplier reimburses the government contracting organization
(Acquisition Central, 2014). The contract type option determines the contract design
elements such as effectiveness of contract spending (Amey, 2012; Lamothe & Lamothe,
2012). Government contracting employees execute government contracts through
contract implementation and design. Government contracting employees use contract
design to maintain the affiliation with suppliers and government contracting organizations
(SBA, 2014). Government contracts offer valued components in the delivery of goods
and services (Malatesta & Smith, 2012b). There are two contract types in government
contracting, fixed-price and cost-reimbursement (Bumgarner &
Newswander, 2012). The goods or service procured determines the contract type.
To understand what effect a contract has on government contracting employees’
procurement of goods and services, government contracting employee must know the
difference between each government contract type. Despite the type of government
contract, government contracting employees must follow the guidelines published in the
FAR and other government contracting regulations. As stated in FAR part 16, fixed-price
contracts are non-negotiable, non-adjustable and offer maximum risk and full
responsibility for all contract costs to the supplier (Acquisition Central, 2014). When
negotiating a fixed-price contract, the supplier agrees to adhere to the contract
requirements of a fixed-price and delivery within a specified time-frame (Malatesta &
Smith, 2012b).
Using a firm-fixed price contract is possible if the government obtains the price
for goods or services in advance (Malatesta & Smith, 2012b). When servicing a
fixedprice contract, private companies receive fewer profits (Cribb, 2011). Offering
fixedprice contracts to suppliers incentivizes the supplier to deliver quality outcomes to
government contracting organizations. Vendors offering lower prices receive fixed-price
contracts (Maser & Thompson, 2013). From 1993 through 2008, defense contracting
doubled from $200 billion to $400 billion (Roberts, 2010). It is unclear why during the
same time-frame, government contracting employees reduced the number of fixed-price
contracts used and replaced them with cost-reimbursement contracts (Roberts, 2010).
Government contracting organizations and suppliers negotiates cost-reimbursement
contracts based on estimates of cost for goods or services (Acquisition Central, 2014).
Cost reimbursement contracts ensure suppliers that the government will reimburse
the Supplier all reasonable cost occurred while executing the contract (Acquisition
Central, 2014). Government contracting organizations discourage employees from using
cost-reimbursement contracts due to the potential excessive cost to the government
(Bumgarner & Newswander, 2012). In 2009, Congress passed the American Recovery
and Reinvestment Act (ARRA). The ARRA provided that the federal government
organization communicate a preference for using fixed-price contracts instead of
costreimbursement contracts (Honek, Azar, & Menassa, 2012; Orndoff & Papkov, 2012).
The Office of Management and Budget issued guidance to government contracting
organizations regarding the use of cost-reimbursement contracts (OMB, 2003).
Fixedprice contracts offered to suppliers may be beneficial to the government contracting
organizations because government contracting employees can control costs associated
with fixed-price contracts. Although cost-reimbursement contracts provide extreme
benefits to suppliers, cost-reimbursement contracts can offer high cost and low value to
the government.
Effective contract liability exists when government contracting agencies
understand the prerequisites of contracting guidelines (Malatesta & Smith, 2012a).
Government contracting organizations can ensure suppliers’ responsibility for
implementation of contract requirements (Malatesta & Smith, 2012a). Government
contracting organizations use different contract designs (Kim & Brown, 2012). The
category of a contract comprises decision-making since the contract affects service and
performance (Kim & Brown, 2012). A government contract design reduces transaction
costs associated with delivering services (Lumineau, Frechet, & Puthod, 2011). The
design of each government contracts ensures best value to the government organization
and customer.
Political and economic external forces may affect government contracting
employees to go outside the scope of the contract; therefore, providing opportunities for
circumventing of the legal parameters (Johnston & Girth, 2012). When delivering
contracts, competition is expected (Lamothe & Lamothe, 2012). Competition offers a
level of cost control and provides quality delivery of goods and services. The length of a
government contract may influence contract performance.
Government contract period is an agreed time to deliver goods or services to
government contracting customers (Acquisition Central, 2014). Three elements of
contract length exist in government contracting: spot market transactions, long-term
measures, and contracts that specify a base period such as extending contracts for
additional periods of time (Amey, 2012). Government contracting organizations prefer
short-term contracts since a short-term contract reduces the risk to both the government
contracting organizations and suppliers (Mols, 2010). Amey (2012) assessed that
government contracting organizations use long-term contracts if uncertainty exists
regarding the outcome of a contract.
The value of the contract results from the contract type and extent (Malatesta &
Smith, 2012b). Fixed-price contracts determine the value ex-ante while
costreimbursement contracts determine the value ex-post (Acquisition Central, 2014).
Government contracting organizations can organize each contract to add length and value
(Malatesta & Smith, 2012b). If the production of the goods or service is easy, the contract
period is shorter. However, if difficulties occur with implementation of the goods and
services, the government may extend the agreement to account for unknown factors
(Acquisition Central, 2014). Government contracting employees must create government
contracts to reduce production costs, reduce transaction costs, offer a profit to the
supplier, and provide the government with quality goods and services. Different
government contracting organizations experience with administering specific contracts
and suppliers who provide the goods and services as specified in each contract.
Standards, Guidelines, Compliance, and Regulations
Detailing the standards and guidelines that govern government contracting is
essential to government contracting employees understanding the requirements for
conducting their jobs ethically. Public service ethics requires that companies establish
clear guidelines that conform to a changing global economic request for ethical standards
(Adams & Balfour, 2010). The Small Business Administration established guidelines that
provide adequate assistance to small businesses competing for government contracts
(Johnston & Girth, 2012). Organizational standards should govern the company’s ethical
values (Noordegraaf, 2011). Government contracting employees’ lack of adherence to an
organization’s standard operating procedures may be routine (Sinocruz, Hildebrand,
Neuman, & Branaghan, 2011). Sinocruz et al. (2011) maintained that inconsistencies in
establishing standard operating procedures might be a contributing factor to employees’
inconstancy.
Understanding how ethical guidelines affect private companies may help
government contracting employees to understand the importance of government rules. In
an effort to understand how guidelines affect organizational standards, Ailon (2012) and
Zhong (2011) looked at ethical decision making in large organizations such as ENRON.
Although Enron established ethical standards, employees regularly engaged in unethical
behaviors (Zhong, 2011). Unethical behaviors in Enron affected both individuals and
stakeholders (Ailon, 2012). Kumar (2014) considered standard operating procedures
(SOPs), and the impact that vague guidelines might have on management processes.
SOPs provide guidelines for employees to ensure proper completion of the job
(Manghani, 2011). An organization’s standards of conduct should contain the company’s
ethical guidelines and values (Griffith, Connelly, & Thiel, 2011). An organization’s
compliance plan should incorporate ethics (Rowe & Kellam, 2011). U.S. federal
regulations 5 CFR 2635-Standards of Conduct for Employees of the Executive Branch,
41 USC 423-Procurement Integrity Act, and FAR-Federal Acquisition Regulations
provide guidelines regarding government contracting personnel ethical behavior
(Government Printing Office, 2011).
Revisiting government contracting compliance and regulations is necessary due to
continued unethical behaviors by government contracting employees while administering
government contracts (U.S. GAO, 2009). Not all government contracting employees are
dishonest; however, to demonstrate ethical behavior when administering government
contracts, employees must recuse themselves from instances that may indicate unethical
behaviors (Acquisition Central, 2014; Clark, 2011). In case government contracting
employees encounter instances of unethical behaviors, knowing what and why
government contracting rules exist may help employees in their ethical decision-making.
Conforming to compliance and regulations can be difficult if no guidance occurs
(Adams & Balfour, 2010). Within the context of the government contracting, compliance
with FAR regulations exists. Due to continued unethical behaviors, the FAR Council
established new ethics laws that required the creation of written codes of business ethics
(Johnson, Feng, Stizabee, & Jernigan, 2013). Government contracting ethics required
augmentation (U.S. GAO, 2009). Compliance violations required the restructuring of the
government contracting regulations (Johnson et al., 2013).
FAR regulation echoes the government contracting compliance rules (Cohn,
2011). Re-engineered subsections of the FAR clarify areas of the original law that seem
confusing or unclear (Mukhopadhyay, 2011). Timely disclosures of unethical
observations in some government contracting organizations remained a problem (U.S.
GAO, 2009). Under Title 48 of the U.S. code of regulations, FAR part 3 prescribes
policies and guidelines for avoiding inappropriate business practices and personal
conflicts of interest when administering government contracts (Acquisition Central,
2014). Organizations may allow the government contracting employees to report
unethical behaviors without fear of reprisal (Cassematis & Wortley, 2013). If the
government contracting employees act unethically when administering government
contracts, the employee may damage the public trust.
FAR Part 3 provides ethics and compliance rules and requirements for individuals
doing government contracting business (Acquisition Central, 2014). The Competition in
Contracting Act (CICA) allows the U.S. GAO to disclose full and thorough
decisionmaking requirement in the government contracting (Maser, Subbotin, &
Thompson, 2010). Government contracting rules and regulations provide tools that may
exclude government contracting employees from behaving unethically (U.S. GAO,
2009). Congress established additional guidelines and regulations to assist government
contracting employees when administering government contracts.
In seeking to understand the impact that corporations and political proponents
have on the distribution of government contracts, Kidalov and Snider (2011) studied
political impact on contract performance. Politics can affect contracting decisions;
therefore, the need exists to establish legal frameworks for contract delivery (Kidalov &
Snider, 2011). There should be separation of politics, economic, and government
contracting (Witko, 2011). Bromberg (2014) looked at why certain contractors received
awards based on their political connections. Witko (2011) assessed that politics influences
the dissemination of government contracts.
Private companies seek to determine the awarding of government contracts by
contributing to political campaigns (Witko, 2011). With increased financial support that
an organization contributes to political campaigns, chance increases that the organization
may receive a government contract (Bromberg, 2014). Political influences might be
harmful to the contracting process (Jing, 2012). Zaidi et al. (2012) added to the body of
knowledge by exploring the impact that politics has on government contracting
employees working in overseas locations. Political control attributed to misuse and
incompetence of contract performance (Zaidi et al., 2012).
Politics can affect the contracting/procurement process; therefore, government
contracting organizations provide extra attention to the consequences of political pressure
on contract administration (Diggs & Roman, 2012). Yang and VanLandingham (2012)
observed an increase in the number of politically influenced government contracting
arrangements in the past decade. The government contracts awarded depends on how
politically active the business is (Yang & VanLandingham, 2012). Despite the
government contracting reforms, suppliers continue to win contracts based on their
political contributions (Witko, 2011). Detecting improper behaviors when administering
government contracts may be difficult; however, government authorities enacted laws and
controls to prevent unethical behaviors in government contracting (Acquisition Central,
2014). The contract design influences various factors related to awarding the contract to a
supplier.
Contract Design
Government contracting employees might attempt to create government contracts
based on government contracting guidelines. Government outsourcing is an essential
delivery replacement to improve the effectiveness and flexibility benefits for private and
public companies (Van Milligen, 2012). The can stakeholders influence government
organizations to operate effectively and efficiently (Van Milligen, 2012). Government
contracting organizations assess the task of determining what companies can best offer
products and services, and what contract design will be most useful to assign.
In identifying the factors that affect contract design choices, it is necessary to
understand government contract design (Kim & Brown, 2012). Contract type and length
of the performance can affect contract design decisions (Amey, 2012). Contract type
refers to how the supplier reimburses the government contracting organization
(Acquisition Central, 2014). The contract type option determines the contract design
elements such as effectiveness of contract spending (Amey, 2012; Lamothe & Lamothe,
2012). Government contracting employees execute government contracts through
contract implementation and design. Government contracting employees use contract
design to maintain the affiliation with suppliers and government contracting organizations
(SBA, 2014). Government contracts offer valued components in the delivery of goods
and services (Malatesta & Smith, 2012b). There are two contract types in government
contracting, fixed-price and cost-reimbursement (Bumgarner &
Newswander, 2012). The goods or service procured determines the contract type.
To understand what effect a contract has on government contracting employees’
procurement of goods and services, government contracting employee must know the
difference between each government contract type. Despite the type of government
contract, government contracting employees must follow the guidelines published in the
FAR and other government contracting regulations. As stated in FAR part 16, fixed-price
contracts are non-negotiable, non-adjustable and offer maximum risk and full
responsibility for all contract costs to the supplier (Acquisition Central, 2014). When
negotiating a fixed-price contract, the supplier agrees to adhere to the contract
requirements of a fixed-price and delivery within a specified time-frame (Malatesta &
Smith, 2012b).
Using a firm-fixed price contract is possible if the government obtains the price
for goods or services in advance (Malatesta & Smith, 2012b). When servicing a
fixedprice contract, private companies receive fewer profits (Cribb, 2011). Offering
fixedprice contracts to suppliers incentivizes the supplier to deliver quality outcomes to
government contracting organizations. Vendors offering lower prices receive fixed-price
contracts (Maser & Thompson, 2013). From 1993 through 2008, defense contracting
doubled from $200 billion to $400 billion (Roberts, 2010). It is unclear why during the
same time-frame, government contracting employees reduced the number of fixed-price
contracts used and replaced them with cost-reimbursement contracts (Roberts, 2010).
Government contracting organizations and suppliers negotiates cost-reimbursement
contracts based on estimates of cost for goods or services (Acquisition Central, 2014).
Cost reimbursement contracts ensure suppliers that the government will reimburse
the Supplier all reasonable cost occurred while executing the contract (Acquisition
Central, 2014). Government contracting organizations discourage employees from using
cost-reimbursement contracts due to the potential excessive cost to the government
(Bumgarner & Newswander, 2012). In 2009, Congress passed the American Recovery
and Reinvestment Act (ARRA). The ARRA provided that the federal government
organization communicate a preference for using fixed-price contracts instead of
costreimbursement contracts (Honek, Azar, & Menassa, 2012; Orndoff & Papkov, 2012).
The Office of Management and Budget issued guidance to government contracting
organizations regarding the use of cost-reimbursement contracts (OMB, 2003).
Fixedprice contracts offered to suppliers may be beneficial to the government contracting
organizations because government contracting employees can control costs associated
with fixed-price contracts. Although cost-reimbursement contracts provide extreme
benefits to suppliers, cost-reimbursement contracts can offer high cost and low value to
the government.
Effective contract liability exists when government contracting agencies
understand the prerequisites of contracting guidelines (Malatesta & Smith, 2012a).
Government contracting organizations can ensure suppliers’ responsibility for
implementation of contract requirements (Malatesta & Smith, 2012a). Government
contracting organizations use different contract designs (Kim & Brown, 2012). The
category of a contract comprises decision-making since the contract affects service and
performance (Kim & Brown, 2012). A government contract design reduces transaction
costs associated with delivering services (Lumineau, Frechet, & Puthod, 2011). The
design of each government contracts ensures best value to the government organization
and customer.
Political and economic external forces may affect government contracting
employees to go outside the scope of the contract; therefore, providing opportunities for
circumventing of the legal parameters (Johnston & Girth, 2012). When delivering
contracts, competition is expected (Lamothe & Lamothe, 2012). Competition offers a
level of cost control and provides quality delivery of goods and services. The length of a
government contract may influence contract performance.
Government contract period is an agreed time to deliver goods or services to
government contracting customers (Acquisition Central, 2014). Three elements of
contract length exist in government contracting: spot market transactions, long-term
measures, and contracts that specify a base period such as extending contracts for
additional periods of time (Amey, 2012). Government contracting organizations prefer
short-term contracts since a short-term contract reduces the risk to both the government
contracting organizations and suppliers (Mols, 2010). Amey (2012) assessed that
government contracting organizations use long-term contracts if uncertainty exists
regarding the outcome of a contract.
The value of the contract results from the contract type and extent (Malatesta &
Smith, 2012b). Fixed-price contracts determine the value ex-ante while
costreimbursement contracts determine the value ex-post (Acquisition Central, 2014).
Government contracting organizations can organize each contract to add length and value
(Malatesta & Smith, 2012b). If the production of the goods or service is easy, the contract
period is shorter. However, if difficulties occur with implementation of the goods and
services, the government may extend the agreement to account for unknown factors
(Acquisition Central, 2014). Government contracting employees must create government
contracts to reduce production costs, reduce transaction costs, offer a profit to the
supplier, and provide the government with quality goods and services. Different
government contracting organizations experience with administering specific contracts
and suppliers who provide the goods and services as specified in each contract.
Standards, Guidelines, Compliance, and Regulations
Detailing the standards and guidelines that govern government contracting is
essential to government contracting employees understanding the requirements for
conducting their jobs ethically. Public service ethics requires that companies establish
clear guidelines that conform to a changing global economic request for ethical standards
(Adams & Balfour, 2010). The Small Business Administration established guidelines that
provide adequate assistance to small businesses competing for government contracts
(Johnston & Girth, 2012). Organizational standards should govern the company’s ethical
values (Noordegraaf, 2011). Government contracting employees’ lack of adherence to an
organization’s standard operating procedures may be routine (Sinocruz, Hildebrand,
Neuman, & Branaghan, 2011). Sinocruz et al. (2011) maintained that inconsistencies in
establishing standard operating procedures might be a contributing factor to employees’
inconstancy.
Understanding how ethical guidelines affect private companies may help
government contracting employees to understand the importance of government rules. In
an effort to understand how guidelines affect organizational standards, Ailon (2012) and
Zhong (2011) looked at ethical decision making in large organizations such as ENRON.
Although Enron established ethical standards, employees regularly engaged in unethical
behaviors (Zhong, 2011). Unethical behaviors in Enron affected both individuals and
stakeholders (Ailon, 2012). Kumar (2014) considered standard operating procedures
(SOPs), and the impact that vague guidelines might have on management processes.
SOPs provide guidelines for employees to ensure proper completion of the job
(Manghani, 2011). An organization’s standards of conduct should contain the company’s
ethical guidelines and values (Griffith, Connelly, & Thiel, 2011). An organization’s
compliance plan should incorporate ethics (Rowe & Kellam, 2011). U.S. federal
regulations 5 CFR 2635-Standards of Conduct for Employees of the Executive Branch,
41 USC 423-Procurement Integrity Act, and FAR-Federal Acquisition Regulations
provide guidelines regarding government contracting personnel ethical behavior
(Government Printing Office, 2011).
Revisiting government contracting compliance and regulations is necessary due to
continued unethical behaviors by government contracting employees while administering
government contracts (U.S. GAO, 2009). Not all government contracting employees are
dishonest; however, to demonstrate ethical behavior when administering government
contracts, employees must recuse themselves from instances that may indicate unethical
behaviors (Acquisition Central, 2014; Clark, 2011). In case government contracting
employees encounter instances of unethical behaviors, knowing what and why
government contracting rules exist may help employees in their ethical decision-making.
Conforming to compliance and regulations can be difficult if no guidance occurs
(Adams & Balfour, 2010). Within the context of the government contracting, compliance
with FAR regulations exists. Due to continued unethical behaviors, the FAR Council
established new ethics laws that required the creation of written codes of business ethics
(Johnson, Feng, Stizabee, & Jernigan, 2013). Government contracting ethics required
augmentation (U.S. GAO, 2009). Compliance violations required the restructuring of the
government contracting regulations (Johnson et al., 2013).
FAR regulation echoes the government contracting compliance rules (Cohn,
2011). Re-engineered subsections of the FAR clarify areas of the original law that seem
confusing or unclear (Mukhopadhyay, 2011). Timely disclosures of unethical
observations in some government contracting organizations remained a problem (U.S.
GAO, 2009). Under Title 48 of the U.S. code of regulations, FAR part 3 prescribes
policies and guidelines for avoiding inappropriate business practices and personal
conflicts of interest when administering government contracts (Acquisition Central,
2014). Organizations may allow the government contracting employees to report
unethical behaviors without fear of reprisal (Cassematis & Wortley, 2013). If the
government contracting employees act unethically when administering government
contracts, the employee may damage the public trust.
FAR Part 3 provides ethics and compliance rules and requirements for individuals
doing government contracting business (Acquisition Central, 2014). The Competition in
Contracting Act (CICA) allows the U.S. GAO to disclose full and thorough
decisionmaking requirement in the government contracting (Maser, Subbotin, &
Thompson, 2010). Government contracting rules and regulations provide tools that may
exclude government contracting employees from behaving unethically (U.S. GAO,
2009). Congress established additional guidelines and regulations to assist government
contracting employees when administering government contracts.
In seeking to understand the impact that corporations and political proponents
have on the distribution of government contracts, Kidalov and Snider (2011) studied
political impact on contract performance. Politics can affect contracting decisions;
therefore, the need exists to establish legal frameworks for contract delivery (Kidalov &
Snider, 2011). There should be separation of politics, economic, and government
contracting (Witko, 2011). Bromberg (2014) looked at why certain contractors received
awards based on their political connections. Witko (2011) assessed that politics influences
the dissemination of government contracts.
Private companies seek to determine the awarding of government contracts by
contributing to political campaigns (Witko, 2011). With increased financial support that
an organization contributes to political campaigns, chance increases that the organization
may receive a government contract (Bromberg, 2014). Political influences might be
harmful to the contracting process (Jing, 2012). Zaidi et al. (2012) added to the body of
knowledge by exploring the impact that politics has on government contracting
employees working in overseas locations. Political control attributed to misuse and
incompetence of contract performance (Zaidi et al., 2012).
Politics can affect the contracting/procurement process; therefore, government
contracting organizations provide extra attention to the consequences of political pressure
on contract administration (Diggs & Roman, 2012). Yang and VanLandingham (2012)
observed an increase in the number of politically influenced government contracting
arrangements in the past decade. The government contracts awarded depends on how
politically active the business is (Yang & VanLandingham, 2012). Despite the
government contracting reforms, suppliers continue to win contracts based on their
political contributions (Witko, 2011). Detecting improper behaviors when administering
government contracts may be difficult; however, government authorities enacted laws and
controls to prevent unethical behaviors in government contracting (Acquisition Central,
2014). The contract design influences various factors related to awarding the contract to a
supplier.
Contract Design
Government contracting employees might attempt to create government contracts
based on government contracting guidelines. Government outsourcing is an essential
delivery replacement to improve the effectiveness and flexibility benefits for private and
public companies (Van Milligen, 2012). The can stakeholders influence government
organizations to operate effectively and efficiently (Van Milligen, 2012). Government
contracting organizations assess the task of determining what companies can best offer
products and services, and what contract design will be most useful to assign.
In identifying the factors that affect contract design choices, it is necessary to
understand government contract design (Kim & Brown, 2012). Contract type and length
of the performance can affect contract design decisions (Amey, 2012). Contract type
refers to how the supplier reimburses the government contracting organization
(Acquisition Central, 2014). The contract type option determines the contract design
elements such as effectiveness of contract spending (Amey, 2012; Lamothe & Lamothe,
2012). Government contracting employees execute government contracts through
contract implementation and design. Government contracting employees use contract
design to maintain the affiliation with suppliers and government contracting organizations
(SBA, 2014). Government contracts offer valued components in the delivery of goods
and services (Malatesta & Smith, 2012b). There are two contract types in government
contracting, fixed-price and cost-reimbursement (Bumgarner &
Newswander, 2012). The goods or service procured determines the contract type.
To understand what effect a contract has on government contracting employees’
procurement of goods and services, government contracting employee must know the
difference between each government contract type. Despite the type of government
contract, government contracting employees must follow the guidelines published in the
FAR and other government contracting regulations. As stated in FAR part 16, fixed-price
contracts are non-negotiable, non-adjustable and offer maximum risk and full
responsibility for all contract costs to the supplier (Acquisition Central, 2014). When
negotiating a fixed-price contract, the supplier agrees to adhere to the contract
requirements of a fixed-price and delivery within a specified time-frame (Malatesta &
Smith, 2012b).
Using a firm-fixed price contract is possible if the government obtains the price
for goods or services in advance (Malatesta & Smith, 2012b). When servicing a
fixedprice contract, private companies receive fewer profits (Cribb, 2011). Offering
fixedprice contracts to suppliers incentivizes the supplier to deliver quality outcomes to
government contracting organizations. Vendors offering lower prices receive fixed-price
contracts (Maser & Thompson, 2013). From 1993 through 2008, defense contracting
doubled from $200 billion to $400 billion (Roberts, 2010). It is unclear why during the
same time-frame, government contracting employees reduced the number of fixed-price
contracts used and replaced them with cost-reimbursement contracts (Roberts, 2010).
Government contracting organizations and suppliers negotiates cost-reimbursement
contracts based on estimates of cost for goods or services (Acquisition Central, 2014).
Cost reimbursement contracts ensure suppliers that the government will reimburse
the Supplier all reasonable cost occurred while executing the contract (Acquisition
Central, 2014). Government contracting organizations discourage employees from using
cost-reimbursement contracts due to the potential excessive cost to the government
(Bumgarner & Newswander, 2012). In 2009, Congress passed the American Recovery
and Reinvestment Act (ARRA). The ARRA provided that the federal government
organization communicate a preference for using fixed-price contracts instead of
costreimbursement contracts (Honek, Azar, & Menassa, 2012; Orndoff & Papkov, 2012).
The Office of Management and Budget issued guidance to government contracting
organizations regarding the use of cost-reimbursement contracts (OMB, 2003).
Fixedprice contracts offered to suppliers may be beneficial to the government contracting
organizations because government contracting employees can control costs associated
with fixed-price contracts. Although cost-reimbursement contracts provide extreme
benefits to suppliers, cost-reimbursement contracts can offer high cost and low value to
the government.
Effective contract liability exists when government contracting agencies
understand the prerequisites of contracting guidelines (Malatesta & Smith, 2012a).
Government contracting organizations can ensure suppliers’ responsibility for
implementation of contract requirements (Malatesta & Smith, 2012a). Government
contracting organizations use different contract designs (Kim & Brown, 2012). The
category of a contract comprises decision-making since the contract affects service and
performance (Kim & Brown, 2012). A government contract design reduces transaction
costs associated with delivering services (Lumineau, Frechet, & Puthod, 2011). The
design of each government contracts ensures best value to the government organization
and customer.
Political and economic external forces may affect government contracting
employees to go outside the scope of the contract; therefore, providing opportunities for
circumventing of the legal parameters (Johnston & Girth, 2012). When delivering
contracts, competition is expected (Lamothe & Lamothe, 2012). Competition offers a
level of cost control and provides quality delivery of goods and services. The length of a
government contract may influence contract performance.
Government contract period is an agreed time to deliver goods or services to
government contracting customers (Acquisition Central, 2014). Three elements of
contract length exist in government contracting: spot market transactions, long-term
measures, and contracts that specify a base period such as extending contracts for
additional periods of time (Amey, 2012). Government contracting organizations prefer
short-term contracts since a short-term contract reduces the risk to both the government
contracting organizations and suppliers (Mols, 2010). Amey (2012) assessed that
government contracting organizations use long-term contracts if uncertainty exists
regarding the outcome of a contract.
The value of the contract results from the contract type and extent (Malatesta &
Smith, 2012b). Fixed-price contracts determine the value ex-ante while
costreimbursement contracts determine the value ex-post (Acquisition Central, 2014).
Government contracting organizations can organize each contract to add length and value
(Malatesta & Smith, 2012b). If the production of the goods or service is easy, the contract
period is shorter. However, if difficulties occur with implementation of the goods and
services, the government may extend the agreement to account for unknown factors
(Acquisition Central, 2014). Government contracting employees must create government
contracts to reduce production costs, reduce transaction costs, offer a profit to the
supplier, and provide the government with quality goods and services. Different
government contracting organizations experience with administering specific contracts
and suppliers who provide the goods and services as specified in each contract.
Standards, Guidelines, Compliance, and Regulations
Detailing the standards and guidelines that govern government contracting is
essential to government contracting employees understanding the requirements for
conducting their jobs ethically. Public service ethics requires that companies establish
clear guidelines that conform to a changing global economic request for ethical standards
(Adams & Balfour, 2010). The Small Business Administration established guidelines that
provide adequate assistance to small businesses competing for government contracts
(Johnston & Girth, 2012). Organizational standards should govern the company’s ethical
values (Noordegraaf, 2011). Government contracting employees’ lack of adherence to an
organization’s standard operating procedures may be routine (Sinocruz, Hildebrand,
Neuman, & Branaghan, 2011). Sinocruz et al. (2011) maintained that inconsistencies in
establishing standard operating procedures might be a contributing factor to employees’
inconstancy.
Understanding how ethical guidelines affect private companies may help
government contracting employees to understand the importance of government rules. In
an effort to understand how guidelines affect organizational standards, Ailon (2012) and
Zhong (2011) looked at ethical decision making in large organizations such as ENRON.
Although Enron established ethical standards, employees regularly engaged in unethical
behaviors (Zhong, 2011). Unethical behaviors in Enron affected both individuals and
stakeholders (Ailon, 2012). Kumar (2014) considered standard operating procedures
(SOPs), and the impact that vague guidelines might have on management processes.
SOPs provide guidelines for employees to ensure proper completion of the job
(Manghani, 2011). An organization’s standards of conduct should contain the company’s
ethical guidelines and values (Griffith, Connelly, & Thiel, 2011). An organization’s
compliance plan should incorporate ethics (Rowe & Kellam, 2011). U.S. federal
regulations 5 CFR 2635-Standards of Conduct for Employees of the Executive Branch,
41 USC 423-Procurement Integrity Act, and FAR-Federal Acquisition Regulations
provide guidelines regarding government contracting personnel ethical behavior
(Government Printing Office, 2011).
Revisiting government contracting compliance and regulations is necessary due to
continued unethical behaviors by government contracting employees while administering
government contracts (U.S. GAO, 2009). Not all government contracting employees are
dishonest; however, to demonstrate ethical behavior when administering government
contracts, employees must recuse themselves from instances that may indicate unethical
behaviors (Acquisition Central, 2014; Clark, 2011). In case government contracting
employees encounter instances of unethical behaviors, knowing what and why
government contracting rules exist may help employees in their ethical decision-making.
Conforming to compliance and regulations can be difficult if no guidance occurs
(Adams & Balfour, 2010). Within the context of the government contracting, compliance
with FAR regulations exists. Due to continued unethical behaviors, the FAR Council
established new ethics laws that required the creation of written codes of business ethics
(Johnson, Feng, Stizabee, & Jernigan, 2013). Government contracting ethics required
augmentation (U.S. GAO, 2009). Compliance violations required the restructuring of the
government contracting regulations (Johnson et al., 2013).
FAR regulation echoes the government contracting compliance rules (Cohn,
2011). Re-engineered subsections of the FAR clarify areas of the original law that seem
confusing or unclear (Mukhopadhyay, 2011). Timely disclosures of unethical
observations in some government contracting organizations remained a problem (U.S.
GAO, 2009). Under Title 48 of the U.S. code of regulations, FAR part 3 prescribes
policies and guidelines for avoiding inappropriate business practices and personal
conflicts of interest when administering government contracts (Acquisition Central,
2014). Organizations may allow the government contracting employees to report
unethical behaviors without fear of reprisal (Cassematis & Wortley, 2013). If the
government contracting employees act unethically when administering government
contracts, the employee may damage the public trust.
FAR Part 3 provides ethics and compliance rules and requirements for individuals
doing government contracting business (Acquisition Central, 2014). The Competition in
Contracting Act (CICA) allows the U.S. GAO to disclose full and thorough
decisionmaking requirement in the government contracting (Maser, Subbotin, &
Thompson, 2010). Government contracting rules and regulations provide tools that may
exclude government contracting employees from behaving unethically (U.S. GAO,
2009). Congress established additional guidelines and regulations to assist government
contracting employees when administering government contracts.
In seeking to understand the impact that corporations and political proponents
have on the distribution of government contracts, Kidalov and Snider (2011) studied
political impact on contract performance. Politics can affect contracting decisions;
therefore, the need exists to establish legal frameworks for contract delivery (Kidalov &
Snider, 2011). There should be separation of politics, economic, and government
contracting (Witko, 2011). Bromberg (2014) looked at why certain contractors received
awards based on their political connections. Witko (2011) assessed that politics influences
the dissemination of government contracts.
Private companies seek to determine the awarding of government contracts by
contributing to political campaigns (Witko, 2011). With increased financial support that
an organization contributes to political campaigns, chance increases that the organization
may receive a government contract (Bromberg, 2014). Political influences might be
harmful to the contracting process (Jing, 2012). Zaidi et al. (2012) added to the body of
knowledge by exploring the impact that politics has on government contracting
employees working in overseas locations. Political control attributed to misuse and
incompetence of contract performance (Zaidi et al., 2012).
Politics can affect the contracting/procurement process; therefore, government
contracting organizations provide extra attention to the consequences of political pressure
on contract administration (Diggs & Roman, 2012). Yang and VanLandingham (2012)
observed an increase in the number of politically influenced government contracting
arrangements in the past decade. The government contracts awarded depends on how
politically active the business is (Yang & VanLandingham, 2012). Despite the
government contracting reforms, suppliers continue to win contracts based on their
political contributions (Witko, 2011). Detecting improper behaviors when administering
government contracts may be difficult; however, government authorities enacted laws and
controls to prevent unethical behaviors in government contracting (Acquisition Central,
2014). The contract design influences various factors related to awarding the contract to a
supplier.
Contract Design
Government contracting employees might attempt to create government contracts
based on government contracting guidelines. Government outsourcing is an essential
delivery replacement to improve the effectiveness and flexibility benefits for private and
public companies (Van Milligen, 2012). The can stakeholders influence government
organizations to operate effectively and efficiently (Van Milligen, 2012). Government
contracting organizations assess the task of determining what companies can best offer
products and services, and what contract design will be most useful to assign.
In identifying the factors that affect contract design choices, it is necessary to
understand government contract design (Kim & Brown, 2012). Contract type and length
of the performance can affect contract design decisions (Amey, 2012). Contract type
refers to how the supplier reimburses the government contracting organization
(Acquisition Central, 2014). The contract type option determines the contract design
elements such as effectiveness of contract spending (Amey, 2012; Lamothe & Lamothe,
2012). Government contracting employees execute government contracts through
contract implementation and design. Government contracting employees use contract
design to maintain the affiliation with suppliers and government contracting organizations
(SBA, 2014). Government contracts offer valued components in the delivery of goods
and services (Malatesta & Smith, 2012b). There are two contract types in government
contracting, fixed-price and cost-reimbursement (Bumgarner &
Newswander, 2012). The goods or service procured determines the contract type.
To understand what effect a contract has on government contracting employees’
procurement of goods and services, government contracting employee must know the
difference between each government contract type. Despite the type of government
contract, government contracting employees must follow the guidelines published in the
FAR and other government contracting regulations. As stated in FAR part 16, fixed-price
contracts are non-negotiable, non-adjustable and offer maximum risk and full
responsibility for all contract costs to the supplier (Acquisition Central, 2014). When
negotiating a fixed-price contract, the supplier agrees to adhere to the contract
requirements of a fixed-price and delivery within a specified time-frame (Malatesta &
Smith, 2012b).
Using a firm-fixed price contract is possible if the government obtains the price
for goods or services in advance (Malatesta & Smith, 2012b). When servicing a
fixedprice contract, private companies receive fewer profits (Cribb, 2011). Offering
fixedprice contracts to suppliers incentivizes the supplier to deliver quality outcomes to
government contracting organizations. Vendors offering lower prices receive fixed-price
contracts (Maser & Thompson, 2013). From 1993 through 2008, defense contracting
doubled from $200 billion to $400 billion (Roberts, 2010). It is unclear why during the
same time-frame, government contracting employees reduced the number of fixed-price
contracts used and replaced them with cost-reimbursement contracts (Roberts, 2010).
Government contracting organizations and suppliers negotiates cost-reimbursement
contracts based on estimates of cost for goods or services (Acquisition Central, 2014).
Cost reimbursement contracts ensure suppliers that the government will reimburse
the Supplier all reasonable cost occurred while executing the contract (Acquisition
Central, 2014). Government contracting organizations discourage employees from using
cost-reimbursement contracts due to the potential excessive cost to the government
(Bumgarner & Newswander, 2012). In 2009, Congress passed the American Recovery
and Reinvestment Act (ARRA). The ARRA provided that the federal government
organization communicate a preference for using fixed-price contracts instead of
costreimbursement contracts (Honek, Azar, & Menassa, 2012; Orndoff & Papkov, 2012).
The Office of Management and Budget issued guidance to government contracting
organizations regarding the use of cost-reimbursement contracts (OMB, 2003).
Fixedprice contracts offered to suppliers may be beneficial to the government contracting
organizations because government contracting employees can control costs associated
with fixed-price contracts. Although cost-reimbursement contracts provide extreme
benefits to suppliers, cost-reimbursement contracts can offer high cost and low value to
the government.
Effective contract liability exists when government contracting agencies
understand the prerequisites of contracting guidelines (Malatesta & Smith, 2012a).
Government contracting organizations can ensure suppliers’ responsibility for
implementation of contract requirements (Malatesta & Smith, 2012a). Government
contracting organizations use different contract designs (Kim & Brown, 2012). The
category of a contract comprises decision-making since the contract affects service and
performance (Kim & Brown, 2012). A government contract design reduces transaction
costs associated with delivering services (Lumineau, Frechet, & Puthod, 2011). The
design of each government contracts ensures best value to the government organization
and customer.
Political and economic external forces may affect government contracting
employees to go outside the scope of the contract; therefore, providing opportunities for
circumventing of the legal parameters (Johnston & Girth, 2012). When delivering
contracts, competition is expected (Lamothe & Lamothe, 2012). Competition offers a
level of cost control and provides quality delivery of goods and services. The length of a
government contract may influence contract performance.
Government contract period is an agreed time to deliver goods or services to
government contracting customers (Acquisition Central, 2014). Three elements of
contract length exist in government contracting: spot market transactions, long-term
measures, and contracts that specify a base period such as extending contracts for
additional periods of time (Amey, 2012). Government contracting organizations prefer
short-term contracts since a short-term contract reduces the risk to both the government
contracting organizations and suppliers (Mols, 2010). Amey (2012) assessed that
government contracting organizations use long-term contracts if uncertainty exists
regarding the outcome of a contract.
The value of the contract results from the contract type and extent (Malatesta &
Smith, 2012b). Fixed-price contracts determine the value ex-ante while
costreimbursement contracts determine the value ex-post (Acquisition Central, 2014).
Government contracting organizations can organize each contract to add length and value
(Malatesta & Smith, 2012b). If the production of the goods or service is easy, the contract
period is shorter. However, if difficulties occur with implementation of the goods and
services, the government may extend the agreement to account for unknown factors
(Acquisition Central, 2014). Government contracting employees must create government
contracts to reduce production costs, reduce transaction costs, offer a profit to the
supplier, and provide the government with quality goods and services. Different
government contracting organizations experience with administering specific contracts
and suppliers who provide the goods and services as specified in each contract.
Standards, Guidelines, Compliance, and Regulations
Detailing the standards and guidelines that govern government contracting is
essential to government contracting employees understanding the requirements for
conducting their jobs ethically. Public service ethics requires that companies establish
clear guidelines that conform to a changing global economic request for ethical standards
(Adams & Balfour, 2010). The Small Business Administration established guidelines that
provide adequate assistance to small businesses competing for government contracts
(Johnston & Girth, 2012). Organizational standards should govern the company’s ethical
values (Noordegraaf, 2011). Government contracting employees’ lack of adherence to an
organization’s standard operating procedures may be routine (Sinocruz, Hildebrand,
Neuman, & Branaghan, 2011). Sinocruz et al. (2011) maintained that inconsistencies in
establishing standard operating procedures might be a contributing factor to employees’
inconstancy.
Understanding how ethical guidelines affect private companies may help
government contracting employees to understand the importance of government rules. In
an effort to understand how guidelines affect organizational standards, Ailon (2012) and
Zhong (2011) looked at ethical decision making in large organizations such as ENRON.
Although Enron established ethical standards, employees regularly engaged in unethical
behaviors (Zhong, 2011). Unethical behaviors in Enron affected both individuals and
stakeholders (Ailon, 2012). Kumar (2014) considered standard operating procedures
(SOPs), and the impact that vague guidelines might have on management processes.
SOPs provide guidelines for employees to ensure proper completion of the job
(Manghani, 2011). An organization’s standards of conduct should contain the company’s
ethical guidelines and values (Griffith, Connelly, & Thiel, 2011). An organization’s
compliance plan should incorporate ethics (Rowe & Kellam, 2011). U.S. federal
regulations 5 CFR 2635-Standards of Conduct for Employees of the Executive Branch,
41 USC 423-Procurement Integrity Act, and FAR-Federal Acquisition Regulations
provide guidelines regarding government contracting personnel ethical behavior
(Government Printing Office, 2011).
Revisiting government contracting compliance and regulations is necessary due to
continued unethical behaviors by government contracting employees while administering
government contracts (U.S. GAO, 2009). Not all government contracting employees are
dishonest; however, to demonstrate ethical behavior when administering government
contracts, employees must recuse themselves from instances that may indicate unethical
behaviors (Acquisition Central, 2014; Clark, 2011). In case government contracting
employees encounter instances of unethical behaviors, knowing what and why
government contracting rules exist may help employees in their ethical decision-making.
Conforming to compliance and regulations can be difficult if no guidance occurs
(Adams & Balfour, 2010). Within the context of the government contracting, compliance
with FAR regulations exists. Due to continued unethical behaviors, the FAR Council
established new ethics laws that required the creation of written codes of business ethics
(Johnson, Feng, Stizabee, & Jernigan, 2013). Government contracting ethics required
augmentation (U.S. GAO, 2009). Compliance violations required the restructuring of the
government contracting regulations (Johnson et al., 2013).
FAR regulation echoes the government contracting compliance rules (Cohn,
2011). Re-engineered subsections of the FAR clarify areas of the original law that seem
confusing or unclear (Mukhopadhyay, 2011). Timely disclosures of unethical
observations in some government contracting organizations remained a problem (U.S.
GAO, 2009). Under Title 48 of the U.S. code of regulations, FAR part 3 prescribes
policies and guidelines for avoiding inappropriate business practices and personal
conflicts of interest when administering government contracts (Acquisition Central,
2014). Organizations may allow the government contracting employees to report
unethical behaviors without fear of reprisal (Cassematis & Wortley, 2013). If the
government contracting employees act unethically when administering government
contracts, the employee may damage the public trust.
FAR Part 3 provides ethics and compliance rules and requirements for individuals
doing government contracting business (Acquisition Central, 2014). The Competition in
Contracting Act (CICA) allows the U.S. GAO to disclose full and thorough
decisionmaking requirement in the government contracting (Maser, Subbotin, &
Thompson, 2010). Government contracting rules and regulations provide tools that may
exclude government contracting employees from behaving unethically (U.S. GAO,
2009). Congress established additional guidelines and regulations to assist government
contracting employees when administering government contracts.
In seeking to understand the impact that corporations and political proponents
have on the distribution of government contracts, Kidalov and Snider (2011) studied
political impact on contract performance. Politics can affect contracting decisions;
therefore, the need exists to establish legal frameworks for contract delivery (Kidalov &
Snider, 2011). There should be separation of politics, economic, and government
contracting (Witko, 2011). Bromberg (2014) looked at why certain contractors received
awards based on their political connections. Witko (2011) assessed that politics influences
the dissemination of government contracts.
Private companies seek to determine the awarding of government contracts by
contributing to political campaigns (Witko, 2011). With increased financial support that
an organization contributes to political campaigns, chance increases that the organization
may receive a government contract (Bromberg, 2014). Political influences might be
harmful to the contracting process (Jing, 2012). Zaidi et al. (2012) added to the body of
knowledge by exploring the impact that politics has on government contracting
employees working in overseas locations. Political control attributed to misuse and
incompetence of contract performance (Zaidi et al., 2012).
Politics can affect the contracting/procurement process; therefore, government
contracting organizations provide extra attention to the consequences of political pressure
on contract administration (Diggs & Roman, 2012). Yang and VanLandingham (2012)
observed an increase in the number of politically influenced government contracting
arrangements in the past decade. The government contracts awarded depends on how
politically active the business is (Yang & VanLandingham, 2012). Despite the
government contracting reforms, suppliers continue to win contracts based on their
political contributions (Witko, 2011). Detecting improper behaviors when administering
government contracts may be difficult; however, government authorities enacted laws and
controls to prevent unethical behaviors in government contracting (Acquisition Central,
2014). The contract design influences various factors related to awarding the contract to a
supplier.
Contract Design
Government contracting employees might attempt to create government contracts
based on government contracting guidelines. Government outsourcing is an essential
delivery replacement to improve the effectiveness and flexibility benefits for private and
public companies (Van Milligen, 2012). The can stakeholders influence government
organizations to operate effectively and efficiently (Van Milligen, 2012). Government
contracting organizations assess the task of determining what companies can best offer
products and services, and what contract design will be most useful to assign.
In identifying the factors that affect contract design choices, it is necessary to
understand government contract design (Kim & Brown, 2012). Contract type and length
of the performance can affect contract design decisions (Amey, 2012). Contract type
refers to how the supplier reimburses the government contracting organization
(Acquisition Central, 2014). The contract type option determines the contract design
elements such as effectiveness of contract spending (Amey, 2012; Lamothe & Lamothe,
2012). Government contracting employees execute government contracts through
contract implementation and design. Government contracting employees use contract
design to maintain the affiliation with suppliers and government contracting organizations
(SBA, 2014). Government contracts offer valued components in the delivery of goods
and services (Malatesta & Smith, 2012b). There are two contract types in government
contracting, fixed-price and cost-reimbursement (Bumgarner &
Newswander, 2012). The goods or service procured determines the contract type.
To understand what effect a contract has on government contracting employees’
procurement of goods and services, government contracting employee must know the
difference between each government contract type. Despite the type of government
contract, government contracting employees must follow the guidelines published in the
FAR and other government contracting regulations. As stated in FAR part 16, fixed-price
contracts are non-negotiable, non-adjustable and offer maximum risk and full
responsibility for all contract costs to the supplier (Acquisition Central, 2014). When
negotiating a fixed-price contract, the supplier agrees to adhere to the contract
requirements of a fixed-price and delivery within a specified time-frame (Malatesta &
Smith, 2012b).
Using a firm-fixed price contract is possible if the government obtains the price
for goods or services in advance (Malatesta & Smith, 2012b). When servicing a
fixedprice contract, private companies receive fewer profits (Cribb, 2011). Offering
fixedprice contracts to suppliers incentivizes the supplier to deliver quality outcomes to
government contracting organizations. Vendors offering lower prices receive fixed-price
contracts (Maser & Thompson, 2013). From 1993 through 2008, defense contracting
doubled from $200 billion to $400 billion (Roberts, 2010). It is unclear why during the
same time-frame, government contracting employees reduced the number of fixed-price
contracts used and replaced them with cost-reimbursement contracts (Roberts, 2010).
Government contracting organizations and suppliers negotiates cost-reimbursement
contracts based on estimates of cost for goods or services (Acquisition Central, 2014).
Cost reimbursement contracts ensure suppliers that the government will reimburse
the Supplier all reasonable cost occurred while executing the contract (Acquisition
Central, 2014). Government contracting organizations discourage employees from using
cost-reimbursement contracts due to the potential excessive cost to the government
(Bumgarner & Newswander, 2012). In 2009, Congress passed the American Recovery
and Reinvestment Act (ARRA). The ARRA provided that the federal government
organization communicate a preference for using fixed-price contracts instead of
costreimbursement contracts (Honek, Azar, & Menassa, 2012; Orndoff & Papkov, 2012).
The Office of Management and Budget issued guidance to government contracting
organizations regarding the use of cost-reimbursement contracts (OMB, 2003).
Fixedprice contracts offered to suppliers may be beneficial to the government contracting
organizations because government contracting employees can control costs associated
with fixed-price contracts. Although cost-reimbursement contracts provide extreme
benefits to suppliers, cost-reimbursement contracts can offer high cost and low value to
the government.
Effective contract liability exists when government contracting agencies
understand the prerequisites of contracting guidelines (Malatesta & Smith, 2012a).
Government contracting organizations can ensure suppliers’ responsibility for
implementation of contract requirements (Malatesta & Smith, 2012a). Government
contracting organizations use different contract designs (Kim & Brown, 2012). The
category of a contract comprises decision-making since the contract affects service and
performance (Kim & Brown, 2012). A government contract design reduces transaction
costs associated with delivering services (Lumineau, Frechet, & Puthod, 2011). The
design of each government contracts ensures best value to the government organization
and customer.
Political and economic external forces may affect government contracting
employees to go outside the scope of the contract; therefore, providing opportunities for
circumventing of the legal parameters (Johnston & Girth, 2012). When delivering
contracts, competition is expected (Lamothe & Lamothe, 2012). Competition offers a
level of cost control and provides quality delivery of goods and services. The length of a
government contract may influence contract performance.
Government contract period is an agreed time to deliver goods or services to
government contracting customers (Acquisition Central, 2014). Three elements of
contract length exist in government contracting: spot market transactions, long-term
measures, and contracts that specify a base period such as extending contracts for
additional periods of time (Amey, 2012). Government contracting organizations prefer
short-term contracts since a short-term contract reduces the risk to both the government
contracting organizations and suppliers (Mols, 2010). Amey (2012) assessed that
government contracting organizations use long-term contracts if uncertainty exists
regarding the outcome of a contract.
The value of the contract results from the contract type and extent (Malatesta &
Smith, 2012b). Fixed-price contracts determine the value ex-ante while
costreimbursement contracts determine the value ex-post (Acquisition Central, 2014).
Government contracting organizations can organize each contract to add length and value
(Malatesta & Smith, 2012b). If the production of the goods or service is easy, the contract
period is shorter. However, if difficulties occur with implementation of the goods and
services, the government may extend the agreement to account for unknown factors
(Acquisition Central, 2014). Government contracting employees must create government
contracts to reduce production costs, reduce transaction costs, offer a profit to the
supplier, and provide the government with quality goods and services. Different
government contracting organizations experience with administering specific contracts
and suppliers who provide the goods and services as specified in each contract.
Standards, Guidelines, Compliance, and Regulations
Detailing the standards and guidelines that govern government contracting is
essential to government contracting employees understanding the requirements for
conducting their jobs ethically. Public service ethics requires that companies establish
clear guidelines that conform to a changing global economic request for ethical standards
(Adams & Balfour, 2010). The Small Business Administration established guidelines that
provide adequate assistance to small businesses competing for government contracts
(Johnston & Girth, 2012). Organizational standards should govern the company’s ethical
values (Noordegraaf, 2011). Government contracting employees’ lack of adherence to an
organization’s standard operating procedures may be routine (Sinocruz, Hildebrand,
Neuman, & Branaghan, 2011). Sinocruz et al. (2011) maintained that inconsistencies in
establishing standard operating procedures might be a contributing factor to employees’
inconstancy.
Understanding how ethical guidelines affect private companies may help
government contracting employees to understand the importance of government rules. In
an effort to understand how guidelines affect organizational standards, Ailon (2012) and
Zhong (2011) looked at ethical decision making in large organizations such as ENRON.
Although Enron established ethical standards, employees regularly engaged in unethical
behaviors (Zhong, 2011). Unethical behaviors in Enron affected both individuals and
stakeholders (Ailon, 2012). Kumar (2014) considered standard operating procedures
(SOPs), and the impact that vague guidelines might have on management processes.
SOPs provide guidelines for employees to ensure proper completion of the job
(Manghani, 2011). An organization’s standards of conduct should contain the company’s
ethical guidelines and values (Griffith, Connelly, & Thiel, 2011). An organization’s
compliance plan should incorporate ethics (Rowe & Kellam, 2011). U.S. federal
regulations 5 CFR 2635-Standards of Conduct for Employees of the Executive Branch,
41 USC 423-Procurement Integrity Act, and FAR-Federal Acquisition Regulations
provide guidelines regarding government contracting personnel ethical behavior
(Government Printing Office, 2011).
Revisiting government contracting compliance and regulations is necessary due to
continued unethical behaviors by government contracting employees while administering
government contracts (U.S. GAO, 2009). Not all government contracting employees are
dishonest; however, to demonstrate ethical behavior when administering government
contracts, employees must recuse themselves from instances that may indicate unethical
behaviors (Acquisition Central, 2014; Clark, 2011). In case government contracting
employees encounter instances of unethical behaviors, knowing what and why
government contracting rules exist may help employees in their ethical decision-making.
Conforming to compliance and regulations can be difficult if no guidance occurs
(Adams & Balfour, 2010). Within the context of the government contracting, compliance
with FAR regulations exists. Due to continued unethical behaviors, the FAR Council
established new ethics laws that required the creation of written codes of business ethics
(Johnson, Feng, Stizabee, & Jernigan, 2013). Government contracting ethics required
augmentation (U.S. GAO, 2009). Compliance violations required the restructuring of the
government contracting regulations (Johnson et al., 2013).
FAR regulation echoes the government contracting compliance rules (Cohn,
2011). Re-engineered subsections of the FAR clarify areas of the original law that seem
confusing or unclear (Mukhopadhyay, 2011). Timely disclosures of unethical
observations in some government contracting organizations remained a problem (U.S.
GAO, 2009). Under Title 48 of the U.S. code of regulations, FAR part 3 prescribes
policies and guidelines for avoiding inappropriate business practices and personal
conflicts of interest when administering government contracts (Acquisition Central,
2014). Organizations may allow the government contracting employees to report
unethical behaviors without fear of reprisal (Cassematis & Wortley, 2013). If the
government contracting employees act unethically when administering government
contracts, the employee may damage the public trust.
FAR Part 3 provides ethics and compliance rules and requirements for individuals
doing government contracting business (Acquisition Central, 2014). The Competition in
Contracting Act (CICA) allows the U.S. GAO to disclose full and thorough
decisionmaking requirement in the government contracting (Maser, Subbotin, &
Thompson, 2010). Government contracting rules and regulations provide tools that may
exclude government contracting employees from behaving unethically (U.S. GAO,
2009). Congress established additional guidelines and regulations to assist government
contracting employees when administering government contracts.
In seeking to understand the impact that corporations and political proponents
have on the distribution of government contracts, Kidalov and Snider (2011) studied
political impact on contract performance. Politics can affect contracting decisions;
therefore, the need exists to establish legal frameworks for contract delivery (Kidalov &
Snider, 2011). There should be separation of politics, economic, and government
contracting (Witko, 2011). Bromberg (2014) looked at why certain contractors received
awards based on their political connections. Witko (2011) assessed that politics influences
the dissemination of government contracts.
Private companies seek to determine the awarding of government contracts by
contributing to political campaigns (Witko, 2011). With increased financial support that
an organization contributes to political campaigns, chance increases that the organization
may receive a government contract (Bromberg, 2014). Political influences might be
harmful to the contracting process (Jing, 2012). Zaidi et al. (2012) added to the body of
knowledge by exploring the impact that politics has on government contracting
employees working in overseas locations. Political control attributed to misuse and
incompetence of contract performance (Zaidi et al., 2012).
Politics can affect the contracting/procurement process; therefore, government
contracting organizations provide extra attention to the consequences of political pressure
on contract administration (Diggs & Roman, 2012). Yang and VanLandingham (2012)
observed an increase in the number of politically influenced government contracting
arrangements in the past decade. The government contracts awarded depends on how
politically active the business is (Yang & VanLandingham, 2012). Despite the
government contracting reforms, suppliers continue to win contracts based on their
political contributions (Witko, 2011). Detecting improper behaviors when administering
government contracts may be difficult; however, government authorities enacted laws and
controls to prevent unethical behaviors in government contracting (Acquisition Central,
2014). The contract design influences various factors related to awarding the contract to a
supplier.
Contract Design
Government contracting employees might attempt to create government contracts
based on government contracting guidelines. Government outsourcing is an essential
delivery replacement to improve the effectiveness and flexibility benefits for private and
public companies (Van Milligen, 2012). The can stakeholders influence government
organizations to operate effectively and efficiently (Van Milligen, 2012). Government
contracting organizations assess the task of determining what companies can best offer
products and services, and what contract design will be most useful to assign.
In identifying the factors that affect contract design choices, it is necessary to
understand government contract design (Kim & Brown, 2012). Contract type and length
of the performance can affect contract design decisions (Amey, 2012). Contract type
refers to how the supplier reimburses the government contracting organization
(Acquisition Central, 2014). The contract type option determines the contract design
elements such as effectiveness of contract spending (Amey, 2012; Lamothe & Lamothe,
2012). Government contracting employees execute government contracts through
contract implementation and design. Government contracting employees use contract
design to maintain the affiliation with suppliers and government contracting organizations
(SBA, 2014). Government contracts offer valued components in the delivery of goods
and services (Malatesta & Smith, 2012b). There are two contract types in government
contracting, fixed-price and cost-reimbursement (Bumgarner &
Newswander, 2012). The goods or service procured determines the contract type.
To understand what effect a contract has on government contracting employees’
procurement of goods and services, government contracting employee must know the
difference between each government contract type. Despite the type of government
contract, government contracting employees must follow the guidelines published in the
FAR and other government contracting regulations. As stated in FAR part 16, fixed-price
contracts are non-negotiable, non-adjustable and offer maximum risk and full
responsibility for all contract costs to the supplier (Acquisition Central, 2014). When
negotiating a fixed-price contract, the supplier agrees to adhere to the contract
requirements of a fixed-price and delivery within a specified time-frame (Malatesta &
Smith, 2012b).
Using a firm-fixed price contract is possible if the government obtains the price
for goods or services in advance (Malatesta & Smith, 2012b). When servicing a
fixedprice contract, private companies receive fewer profits (Cribb, 2011). Offering
fixedprice contracts to suppliers incentivizes the supplier to deliver quality outcomes to
government contracting organizations. Vendors offering lower prices receive fixed-price
contracts (Maser & Thompson, 2013). From 1993 through 2008, defense contracting
doubled from $200 billion to $400 billion (Roberts, 2010). It is unclear why during the
same time-frame, government contracting employees reduced the number of fixed-price
contracts used and replaced them with cost-reimbursement contracts (Roberts, 2010).
Government contracting organizations and suppliers negotiates cost-reimbursement
contracts based on estimates of cost for goods or services (Acquisition Central, 2014).
Cost reimbursement contracts ensure suppliers that the government will reimburse
the Supplier all reasonable cost occurred while executing the contract (Acquisition
Central, 2014). Government contracting organizations discourage employees from using
cost-reimbursement contracts due to the potential excessive cost to the government
(Bumgarner & Newswander, 2012). In 2009, Congress passed the American Recovery
and Reinvestment Act (ARRA). The ARRA provided that the federal government
organization communicate a preference for using fixed-price contracts instead of
costreimbursement contracts (Honek, Azar, & Menassa, 2012; Orndoff & Papkov, 2012).
The Office of Management and Budget issued guidance to government contracting
organizations regarding the use of cost-reimbursement contracts (OMB, 2003).
Fixedprice contracts offered to suppliers may be beneficial to the government contracting
organizations because government contracting employees can control costs associated
with fixed-price contracts. Although cost-reimbursement contracts provide extreme
benefits to suppliers, cost-reimbursement contracts can offer high cost and low value to
the government.
Effective contract liability exists when government contracting agencies
understand the prerequisites of contracting guidelines (Malatesta & Smith, 2012a).
Government contracting organizations can ensure suppliers’ responsibility for
implementation of contract requirements (Malatesta & Smith, 2012a). Government
contracting organizations use different contract designs (Kim & Brown, 2012). The
category of a contract comprises decision-making since the contract affects service and
performance (Kim & Brown, 2012). A government contract design reduces transaction
costs associated with delivering services (Lumineau, Frechet, & Puthod, 2011). The
design of each government contracts ensures best value to the government organization
and customer.
Political and economic external forces may affect government contracting
employees to go outside the scope of the contract; therefore, providing opportunities for
circumventing of the legal parameters (Johnston & Girth, 2012). When delivering
contracts, competition is expected (Lamothe & Lamothe, 2012). Competition offers a
level of cost control and provides quality delivery of goods and services. The length of a
government contract may influence contract performance.
Government contract period is an agreed time to deliver goods or services to
government contracting customers (Acquisition Central, 2014). Three elements of
contract length exist in government contracting: spot market transactions, long-term
measures, and contracts that specify a base period such as extending contracts for
additional periods of time (Amey, 2012). Government contracting organizations prefer
short-term contracts since a short-term contract reduces the risk to both the government
contracting organizations and suppliers (Mols, 2010). Amey (2012) assessed that
government contracting organizations use long-term contracts if uncertainty exists
regarding the outcome of a contract.
The value of the contract results from the contract type and extent (Malatesta &
Smith, 2012b). Fixed-price contracts determine the value ex-ante while
costreimbursement contracts determine the value ex-post (Acquisition Central, 2014).
Government contracting organizations can organize each contract to add length and value
(Malatesta & Smith, 2012b). If the production of the goods or service is easy, the contract
period is shorter. However, if difficulties occur with implementation of the goods and
services, the government may extend the agreement to account for unknown factors
(Acquisition Central, 2014). Government contracting employees must create government
contracts to reduce production costs, reduce transaction costs, offer a profit to the
supplier, and provide the government with quality goods and services. Different
government contracting organizations experience with administering specific contracts
and suppliers who provide the goods and services as specified in each contract.
Standards, Guidelines, Compliance, and Regulations
Detailing the standards and guidelines that govern government contracting is
essential to government contracting employees understanding the requirements for
conducting their jobs ethically. Public service ethics requires that companies establish
clear guidelines that conform to a changing global economic request for ethical standards
(Adams & Balfour, 2010). The Small Business Administration established guidelines that
provide adequate assistance to small businesses competing for government contracts
(Johnston & Girth, 2012). Organizational standards should govern the company’s ethical
values (Noordegraaf, 2011). Government contracting employees’ lack of adherence to an
organization’s standard operating procedures may be routine (Sinocruz, Hildebrand,
Neuman, & Branaghan, 2011). Sinocruz et al. (2011) maintained that inconsistencies in
establishing standard operating procedures might be a contributing factor to employees’
inconstancy.
Understanding how ethical guidelines affect private companies may help
government contracting employees to understand the importance of government rules. In
an effort to understand how guidelines affect organizational standards, Ailon (2012) and
Zhong (2011) looked at ethical decision making in large organizations such as ENRON.
Although Enron established ethical standards, employees regularly engaged in unethical
behaviors (Zhong, 2011). Unethical behaviors in Enron affected both individuals and
stakeholders (Ailon, 2012). Kumar (2014) considered standard operating procedures
(SOPs), and the impact that vague guidelines might have on management processes.
SOPs provide guidelines for employees to ensure proper completion of the job
(Manghani, 2011). An organization’s standards of conduct should contain the company’s
ethical guidelines and values (Griffith, Connelly, & Thiel, 2011). An organization’s
compliance plan should incorporate ethics (Rowe & Kellam, 2011). U.S. federal
regulations 5 CFR 2635-Standards of Conduct for Employees of the Executive Branch,
41 USC 423-Procurement Integrity Act, and FAR-Federal Acquisition Regulations
provide guidelines regarding government contracting personnel ethical behavior
(Government Printing Office, 2011).
Revisiting government contracting compliance and regulations is necessary due to
continued unethical behaviors by government contracting employees while administering
government contracts (U.S. GAO, 2009). Not all government contracting employees are
dishonest; however, to demonstrate ethical behavior when administering government
contracts, employees must recuse themselves from instances that may indicate unethical
behaviors (Acquisition Central, 2014; Clark, 2011). In case government contracting
employees encounter instances of unethical behaviors, knowing what and why
government contracting rules exist may help employees in their ethical decision-making.
Conforming to compliance and regulations can be difficult if no guidance occurs
(Adams & Balfour, 2010). Within the context of the government contracting, compliance
with FAR regulations exists. Due to continued unethical behaviors, the FAR Council
established new ethics laws that required the creation of written codes of business ethics
(Johnson, Feng, Stizabee, & Jernigan, 2013). Government contracting ethics required
augmentation (U.S. GAO, 2009). Compliance violations required the restructuring of the
government contracting regulations (Johnson et al., 2013).
FAR regulation echoes the government contracting compliance rules (Cohn,
2011). Re-engineered subsections of the FAR clarify areas of the original law that seem
confusing or unclear (Mukhopadhyay, 2011). Timely disclosures of unethical
observations in some government contracting organizations remained a problem (U.S.
GAO, 2009). Under Title 48 of the U.S. code of regulations, FAR part 3 prescribes
policies and guidelines for avoiding inappropriate business practices and personal
conflicts of interest when administering government contracts (Acquisition Central,
2014). Organizations may allow the government contracting employees to report
unethical behaviors without fear of reprisal (Cassematis & Wortley, 2013). If the
government contracting employees act unethically when administering government
contracts, the employee may damage the public trust.
FAR Part 3 provides ethics and compliance rules and requirements for individuals
doing government contracting business (Acquisition Central, 2014). The Competition in
Contracting Act (CICA) allows the U.S. GAO to disclose full and thorough
decisionmaking requirement in the government contracting (Maser, Subbotin, &
Thompson, 2010). Government contracting rules and regulations provide tools that may
exclude government contracting employees from behaving unethically (U.S. GAO,
2009). Congress established additional guidelines and regulations to assist government
contracting employees when administering government contracts.
In seeking to understand the impact that corporations and political proponents
have on the distribution of government contracts, Kidalov and Snider (2011) studied
political impact on contract performance. Politics can affect contracting decisions;
therefore, the need exists to establish legal frameworks for contract delivery (Kidalov &
Snider, 2011). There should be separation of politics, economic, and government
contracting (Witko, 2011). Bromberg (2014) looked at why certain contractors received
awards based on their political connections. Witko (2011) assessed that politics influences
the dissemination of government contracts.
Private companies seek to determine the awarding of government contracts by
contributing to political campaigns (Witko, 2011). With increased financial support that
an organization contributes to political campaigns, chance increases that the organization
may receive a government contract (Bromberg, 2014). Political influences might be
harmful to the contracting process (Jing, 2012). Zaidi et al. (2012) added to the body of
knowledge by exploring the impact that politics has on government contracting
employees working in overseas locations. Political control attributed to misuse and
incompetence of contract performance (Zaidi et al., 2012).
Politics can affect the contracting/procurement process; therefore, government
contracting organizations provide extra attention to the consequences of political pressure
on contract administration (Diggs & Roman, 2012). Yang and VanLandingham (2012)
observed an increase in the number of politically influenced government contracting
arrangements in the past decade. The government contracts awarded depends on how
politically active the business is (Yang & VanLandingham, 2012). Despite the
government contracting reforms, suppliers continue to win contracts based on their
political contributions (Witko, 2011). Detecting improper behaviors when administering
government contracts may be difficult; however, government authorities enacted laws and
controls to prevent unethical behaviors in government contracting (Acquisition Central,
2014). The contract design influences various factors related to awarding the contract to a
supplier.
Contract Design
Government contracting employees might attempt to create government contracts
based on government contracting guidelines. Government outsourcing is an essential
delivery replacement to improve the effectiveness and flexibility benefits for private and
public companies (Van Milligen, 2012). The can stakeholders influence government
organizations to operate effectively and efficiently (Van Milligen, 2012). Government
contracting organizations assess the task of determining what companies can best offer
products and services, and what contract design will be most useful to assign.
In identifying the factors that affect contract design choices, it is necessary to
understand government contract design (Kim & Brown, 2012). Contract type and length
of the performance can affect contract design decisions (Amey, 2012). Contract type
refers to how the supplier reimburses the government contracting organization
(Acquisition Central, 2014). The contract type option determines the contract design
elements such as effectiveness of contract spending (Amey, 2012; Lamothe & Lamothe,
2012). Government contracting employees execute government contracts through
contract implementation and design. Government contracting employees use contract
design to maintain the affiliation with suppliers and government contracting organizations
(SBA, 2014). Government contracts offer valued components in the delivery of goods
and services (Malatesta & Smith, 2012b). There are two contract types in government
contracting, fixed-price and cost-reimbursement (Bumgarner &
Newswander, 2012). The goods or service procured determines the contract type.
To understand what effect a contract has on government contracting employees’
procurement of goods and services, government contracting employee must know the
difference between each government contract type. Despite the type of government
contract, government contracting employees must follow the guidelines published in the
FAR and other government contracting regulations. As stated in FAR part 16, fixed-price
contracts are non-negotiable, non-adjustable and offer maximum risk and full
responsibility for all contract costs to the supplier (Acquisition Central, 2014). When
negotiating a fixed-price contract, the supplier agrees to adhere to the contract
requirements of a fixed-price and delivery within a specified time-frame (Malatesta &
Smith, 2012b).
Using a firm-fixed price contract is possible if the government obtains the price
for goods or services in advance (Malatesta & Smith, 2012b). When servicing a
fixedprice contract, private companies receive fewer profits (Cribb, 2011). Offering
fixedprice contracts to suppliers incentivizes the supplier to deliver quality outcomes to
government contracting organizations. Vendors offering lower prices receive fixed-price
contracts (Maser & Thompson, 2013). From 1993 through 2008, defense contracting
doubled from $200 billion to $400 billion (Roberts, 2010). It is unclear why during the
same time-frame, government contracting employees reduced the number of fixed-price
contracts used and replaced them with cost-reimbursement contracts (Roberts, 2010).
Government contracting organizations and suppliers negotiates cost-reimbursement
contracts based on estimates of cost for goods or services (Acquisition Central, 2014).
Cost reimbursement contracts ensure suppliers that the government will reimburse
the Supplier all reasonable cost occurred while executing the contract (Acquisition
Central, 2014). Government contracting organizations discourage employees from using
cost-reimbursement contracts due to the potential excessive cost to the government
(Bumgarner & Newswander, 2012). In 2009, Congress passed the American Recovery
and Reinvestment Act (ARRA). The ARRA provided that the federal government
organization communicate a preference for using fixed-price contracts instead of
costreimbursement contracts (Honek, Azar, & Menassa, 2012; Orndoff & Papkov, 2012).
The Office of Management and Budget issued guidance to government contracting
organizations regarding the use of cost-reimbursement contracts (OMB, 2003).
Fixedprice contracts offered to suppliers may be beneficial to the government contracting
organizations because government contracting employees can control costs associated
with fixed-price contracts. Although cost-reimbursement contracts provide extreme
benefits to suppliers, cost-reimbursement contracts can offer high cost and low value to
the government.
Effective contract liability exists when government contracting agencies
understand the prerequisites of contracting guidelines (Malatesta & Smith, 2012a).
Government contracting organizations can ensure suppliers’ responsibility for
implementation of contract requirements (Malatesta & Smith, 2012a). Government
contracting organizations use different contract designs (Kim & Brown, 2012). The
category of a contract comprises decision-making since the contract affects service and
performance (Kim & Brown, 2012). A government contract design reduces transaction
costs associated with delivering services (Lumineau, Frechet, & Puthod, 2011). The
design of each government contracts ensures best value to the government organization
and customer.
Political and economic external forces may affect government contracting
employees to go outside the scope of the contract; therefore, providing opportunities for
circumventing of the legal parameters (Johnston & Girth, 2012). When delivering
contracts, competition is expected (Lamothe & Lamothe, 2012). Competition offers a
level of cost control and provides quality delivery of goods and services. The length of a
government contract may influence contract performance.
Government contract period is an agreed time to deliver goods or services to
government contracting customers (Acquisition Central, 2014). Three elements of
contract length exist in government contracting: spot market transactions, long-term
measures, and contracts that specify a base period such as extending contracts for
additional periods of time (Amey, 2012). Government contracting organizations prefer
short-term contracts since a short-term contract reduces the risk to both the government
contracting organizations and suppliers (Mols, 2010). Amey (2012) assessed that
government contracting organizations use long-term contracts if uncertainty exists
regarding the outcome of a contract.
The value of the contract results from the contract type and extent (Malatesta &
Smith, 2012b). Fixed-price contracts determine the value ex-ante while
costreimbursement contracts determine the value ex-post (Acquisition Central, 2014).
Government contracting organizations can organize each contract to add length and value
(Malatesta & Smith, 2012b). If the production of the goods or service is easy, the contract
period is shorter. However, if difficulties occur with implementation of the goods and
services, the government may extend the agreement to account for unknown factors
(Acquisition Central, 2014). Government contracting employees must create government
contracts to reduce production costs, reduce transaction costs, offer a profit to the
supplier, and provide the government with quality goods and services. Different
government contracting organizations experience with administering specific contracts
and suppliers who provide the goods and services as specified in each contract.
Standards, Guidelines, Compliance, and Regulations
Detailing the standards and guidelines that govern government contracting is
essential to government contracting employees understanding the requirements for
conducting their jobs ethically. Public service ethics requires that companies establish
clear guidelines that conform to a changing global economic request for ethical standards
(Adams & Balfour, 2010). The Small Business Administration established guidelines that
provide adequate assistance to small businesses competing for government contracts
(Johnston & Girth, 2012). Organizational standards should govern the company’s ethical
values (Noordegraaf, 2011). Government contracting employees’ lack of adherence to an
organization’s standard operating procedures may be routine (Sinocruz, Hildebrand,
Neuman, & Branaghan, 2011). Sinocruz et al. (2011) maintained that inconsistencies in
establishing standard operating procedures might be a contributing factor to employees’
inconstancy.
Understanding how ethical guidelines affect private companies may help
government contracting employees to understand the importance of government rules. In
an effort to understand how guidelines affect organizational standards, Ailon (2012) and
Zhong (2011) looked at ethical decision making in large organizations such as ENRON.
Although Enron established ethical standards, employees regularly engaged in unethical
behaviors (Zhong, 2011). Unethical behaviors in Enron affected both individuals and
stakeholders (Ailon, 2012). Kumar (2014) considered standard operating procedures
(SOPs), and the impact that vague guidelines might have on management processes.
SOPs provide guidelines for employees to ensure proper completion of the job
(Manghani, 2011). An organization’s standards of conduct should contain the company’s
ethical guidelines and values (Griffith, Connelly, & Thiel, 2011). An organization’s
compliance plan should incorporate ethics (Rowe & Kellam, 2011). U.S. federal
regulations 5 CFR 2635-Standards of Conduct for Employees of the Executive Branch,
41 USC 423-Procurement Integrity Act, and FAR-Federal Acquisition Regulations
provide guidelines regarding government contracting personnel ethical behavior
(Government Printing Office, 2011).
Revisiting government contracting compliance and regulations is necessary due to
continued unethical behaviors by government contracting employees while administering
government contracts (U.S. GAO, 2009). Not all government contracting employees are
dishonest; however, to demonstrate ethical behavior when administering government
contracts, employees must recuse themselves from instances that may indicate unethical
behaviors (Acquisition Central, 2014; Clark, 2011). In case government contracting
employees encounter instances of unethical behaviors, knowing what and why
government contracting rules exist may help employees in their ethical decision-making.
Conforming to compliance and regulations can be difficult if no guidance occurs
(Adams & Balfour, 2010). Within the context of the government contracting, compliance
with FAR regulations exists. Due to continued unethical behaviors, the FAR Council
established new ethics laws that required the creation of written codes of business ethics
(Johnson, Feng, Stizabee, & Jernigan, 2013). Government contracting ethics required
augmentation (U.S. GAO, 2009). Compliance violations required the restructuring of the
government contracting regulations (Johnson et al., 2013).
FAR regulation echoes the government contracting compliance rules (Cohn,
2011). Re-engineered subsections of the FAR clarify areas of the original law that seem
confusing or unclear (Mukhopadhyay, 2011). Timely disclosures of unethical
observations in some government contracting organizations remained a problem (U.S.
GAO, 2009). Under Title 48 of the U.S. code of regulations, FAR part 3 prescribes
policies and guidelines for avoiding inappropriate business practices and personal
conflicts of interest when administering government contracts (Acquisition Central,
2014). Organizations may allow the government contracting employees to report
unethical behaviors without fear of reprisal (Cassematis & Wortley, 2013). If the
government contracting employees act unethically when administering government
contracts, the employee may damage the public trust.
FAR Part 3 provides ethics and compliance rules and requirements for individuals
doing government contracting business (Acquisition Central, 2014). The Competition in
Contracting Act (CICA) allows the U.S. GAO to disclose full and thorough
decisionmaking requirement in the government contracting (Maser, Subbotin, &
Thompson, 2010). Government contracting rules and regulations provide tools that may
exclude government contracting employees from behaving unethically (U.S. GAO,
2009). Congress established additional guidelines and regulations to assist government
contracting employees when administering government contracts.
In seeking to understand the impact that corporations and political proponents
have on the distribution of government contracts, Kidalov and Snider (2011) studied
political impact on contract performance. Politics can affect contracting decisions;
therefore, the need exists to establish legal frameworks for contract delivery (Kidalov &
Snider, 2011). There should be separation of politics, economic, and government
contracting (Witko, 2011). Bromberg (2014) looked at why certain contractors received
awards based on their political connections. Witko (2011) assessed that politics influences
the dissemination of government contracts.
Private companies seek to determine the awarding of government contracts by
contributing to political campaigns (Witko, 2011). With increased financial support that
an organization contributes to political campaigns, chance increases that the organization
may receive a government contract (Bromberg, 2014). Political influences might be
harmful to the contracting process (Jing, 2012). Zaidi et al. (2012) added to the body of
knowledge by exploring the impact that politics has on government contracting
employees working in overseas locations. Political control attributed to misuse and
incompetence of contract performance (Zaidi et al., 2012).
Politics can affect the contracting/procurement process; therefore, government
contracting organizations provide extra attention to the consequences of political pressure
on contract administration (Diggs & Roman, 2012). Yang and VanLandingham (2012)
observed an increase in the number of politically influenced government contracting
arrangements in the past decade. The government contracts awarded depends on how
politically active the business is (Yang & VanLandingham, 2012). Despite the
government contracting reforms, suppliers continue to win contracts based on their
political contributions (Witko, 2011). Detecting improper behaviors when administering
government contracts may be difficult; however, government authorities enacted laws and
controls to prevent unethical behaviors in government contracting (Acquisition Central,
2014). The contract design influences various factors related to awarding the contract to a
supplier.
Contract Design
Government contracting employees might attempt to create government contracts
based on government contracting guidelines. Government outsourcing is an essential
delivery replacement to improve the effectiveness and flexibility benefits for private and
public companies (Van Milligen, 2012). The can stakeholders influence government
organizations to operate effectively and efficiently (Van Milligen, 2012). Government
contracting organizations assess the task of determining what companies can best offer
products and services, and what contract design will be most useful to assign.
In identifying the factors that affect contract design choices, it is necessary to
understand government contract design (Kim & Brown, 2012). Contract type and length
of the performance can affect contract design decisions (Amey, 2012). Contract type
refers to how the supplier reimburses the government contracting organization
(Acquisition Central, 2014). The contract type option determines the contract design
elements such as effectiveness of contract spending (Amey, 2012; Lamothe & Lamothe,
2012). Government contracting employees execute government contracts through
contract implementation and design. Government contracting employees use contract
design to maintain the affiliation with suppliers and government contracting organizations
(SBA, 2014). Government contracts offer valued components in the delivery of goods
and services (Malatesta & Smith, 2012b). There are two contract types in government
contracting, fixed-price and cost-reimbursement (Bumgarner &
Newswander, 2012). The goods or service procured determines the contract type.
To understand what effect a contract has on government contracting employees’
procurement of goods and services, government contracting employee must know the
difference between each government contract type. Despite the type of government
contract, government contracting employees must follow the guidelines published in the
FAR and other government contracting regulations. As stated in FAR part 16, fixed-price
contracts are non-negotiable, non-adjustable and offer maximum risk and full
responsibility for all contract costs to the supplier (Acquisition Central, 2014). When
negotiating a fixed-price contract, the supplier agrees to adhere to the contract
requirements of a fixed-price and delivery within a specified time-frame (Malatesta &
Smith, 2012b).
Using a firm-fixed price contract is possible if the government obtains the price
for goods or services in advance (Malatesta & Smith, 2012b). When servicing a
fixedprice contract, private companies receive fewer profits (Cribb, 2011). Offering
fixedprice contracts to suppliers incentivizes the supplier to deliver quality outcomes to
government contracting organizations. Vendors offering lower prices receive fixed-price
contracts (Maser & Thompson, 2013). From 1993 through 2008, defense contracting
doubled from $200 billion to $400 billion (Roberts, 2010). It is unclear why during the
same time-frame, government contracting employees reduced the number of fixed-price
contracts used and replaced them with cost-reimbursement contracts (Roberts, 2010).
Government contracting organizations and suppliers negotiates cost-reimbursement
contracts based on estimates of cost for goods or services (Acquisition Central, 2014).
Cost reimbursement contracts ensure suppliers that the government will reimburse
the Supplier all reasonable cost occurred while executing the contract (Acquisition
Central, 2014). Government contracting organizations discourage employees from using
cost-reimbursement contracts due to the potential excessive cost to the government
(Bumgarner & Newswander, 2012). In 2009, Congress passed the American Recovery
and Reinvestment Act (ARRA). The ARRA provided that the federal government
organization communicate a preference for using fixed-price contracts instead of
costreimbursement contracts (Honek, Azar, & Menassa, 2012; Orndoff & Papkov, 2012).
The Office of Management and Budget issued guidance to government contracting
organizations regarding the use of cost-reimbursement contracts (OMB, 2003).
Fixedprice contracts offered to suppliers may be beneficial to the government contracting
organizations because government contracting employees can control costs associated
with fixed-price contracts. Although cost-reimbursement contracts provide extreme
benefits to suppliers, cost-reimbursement contracts can offer high cost and low value to
the government.
Effective contract liability exists when government contracting agencies
understand the prerequisites of contracting guidelines (Malatesta & Smith, 2012a).
Government contracting organizations can ensure suppliers’ responsibility for
implementation of contract requirements (Malatesta & Smith, 2012a). Government
contracting organizations use different contract designs (Kim & Brown, 2012). The
category of a contract comprises decision-making since the contract affects service and
performance (Kim & Brown, 2012). A government contract design reduces transaction
costs associated with delivering services (Lumineau, Frechet, & Puthod, 2011). The
design of each government contracts ensures best value to the government organization
and customer.
Political and economic external forces may affect government contracting
employees to go outside the scope of the contract; therefore, providing opportunities for
circumventing of the legal parameters (Johnston & Girth, 2012). When delivering
contracts, competition is expected (Lamothe & Lamothe, 2012). Competition offers a
level of cost control and provides quality delivery of goods and services. The length of a
government contract may influence contract performance.
Government contract period is an agreed time to deliver goods or services to
government contracting customers (Acquisition Central, 2014). Three elements of
contract length exist in government contracting: spot market transactions, long-term
measures, and contracts that specify a base period such as extending contracts for
additional periods of time (Amey, 2012). Government contracting organizations prefer
short-term contracts since a short-term contract reduces the risk to both the government
contracting organizations and suppliers (Mols, 2010). Amey (2012) assessed that
government contracting organizations use long-term contracts if uncertainty exists
regarding the outcome of a contract.
The value of the contract results from the contract type and extent (Malatesta &
Smith, 2012b). Fixed-price contracts determine the value ex-ante while
costreimbursement contracts determine the value ex-post (Acquisition Central, 2014).
Government contracting organizations can organize each contract to add length and value
(Malatesta & Smith, 2012b). If the production of the goods or service is easy, the contract
period is shorter. However, if difficulties occur with implementation of the goods and
services, the government may extend the agreement to account for unknown factors
(Acquisition Central, 2014). Government contracting employees must create government
contracts to reduce production costs, reduce transaction costs, offer a profit to the
supplier, and provide the government with quality goods and services. Different
government contracting organizations experience with administering specific contracts
and suppliers who provide the goods and services as specified in each contract.
Standards, Guidelines, Compliance, and Regulations
Detailing the standards and guidelines that govern government contracting is
essential to government contracting employees understanding the requirements for
conducting their jobs ethically. Public service ethics requires that companies establish
clear guidelines that conform to a changing global economic request for ethical standards
(Adams & Balfour, 2010). The Small Business Administration established guidelines that
provide adequate assistance to small businesses competing for government contracts
(Johnston & Girth, 2012). Organizational standards should govern the company’s ethical
values (Noordegraaf, 2011). Government contracting employees’ lack of adherence to an
organization’s standard operating procedures may be routine (Sinocruz, Hildebrand,
Neuman, & Branaghan, 2011). Sinocruz et al. (2011) maintained that inconsistencies in
establishing standard operating procedures might be a contributing factor to employees’
inconstancy.
Understanding how ethical guidelines affect private companies may help
government contracting employees to understand the importance of government rules. In
an effort to understand how guidelines affect organizational standards, Ailon (2012) and
Zhong (2011) looked at ethical decision making in large organizations such as ENRON.
Although Enron established ethical standards, employees regularly engaged in unethical
behaviors (Zhong, 2011). Unethical behaviors in Enron affected both individuals and
stakeholders (Ailon, 2012). Kumar (2014) considered standard operating procedures
(SOPs), and the impact that vague guidelines might have on management processes.
SOPs provide guidelines for employees to ensure proper completion of the job
(Manghani, 2011). An organization’s standards of conduct should contain the company’s
ethical guidelines and values (Griffith, Connelly, & Thiel, 2011). An organization’s
compliance plan should incorporate ethics (Rowe & Kellam, 2011). U.S. federal
regulations 5 CFR 2635-Standards of Conduct for Employees of the Executive Branch,
41 USC 423-Procurement Integrity Act, and FAR-Federal Acquisition Regulations
provide guidelines regarding government contracting personnel ethical behavior
(Government Printing Office, 2011).
Revisiting government contracting compliance and regulations is necessary due to
continued unethical behaviors by government contracting employees while administering
government contracts (U.S. GAO, 2009). Not all government contracting employees are
dishonest; however, to demonstrate ethical behavior when administering government
contracts, employees must recuse themselves from instances that may indicate unethical
behaviors (Acquisition Central, 2014; Clark, 2011). In case government contracting
employees encounter instances of unethical behaviors, knowing what and why
government contracting rules exist may help employees in their ethical decision-making.
Conforming to compliance and regulations can be difficult if no guidance occurs
(Adams & Balfour, 2010). Within the context of the government contracting, compliance
with FAR regulations exists. Due to continued unethical behaviors, the FAR Council
established new ethics laws that required the creation of written codes of business ethics
(Johnson, Feng, Stizabee, & Jernigan, 2013). Government contracting ethics required
augmentation (U.S. GAO, 2009). Compliance violations required the restructuring of the
government contracting regulations (Johnson et al., 2013).
FAR regulation echoes the government contracting compliance rules (Cohn,
2011). Re-engineered subsections of the FAR clarify areas of the original law that seem
confusing or unclear (Mukhopadhyay, 2011). Timely disclosures of unethical
observations in some government contracting organizations remained a problem (U.S.
GAO, 2009). Under Title 48 of the U.S. code of regulations, FAR part 3 prescribes
policies and guidelines for avoiding inappropriate business practices and personal
conflicts of interest when administering government contracts (Acquisition Central,
2014). Organizations may allow the government contracting employees to report
unethical behaviors without fear of reprisal (Cassematis & Wortley, 2013). If the
government contracting employees act unethically when administering government
contracts, the employee may damage the public trust.
FAR Part 3 provides ethics and compliance rules and requirements for individuals
doing government contracting business (Acquisition Central, 2014). The Competition in
Contracting Act (CICA) allows the U.S. GAO to disclose full and thorough
decisionmaking requirement in the government contracting (Maser, Subbotin, &
Thompson, 2010). Government contracting rules and regulations provide tools that may
exclude government contracting employees from behaving unethically (U.S. GAO,
2009). Congress established additional guidelines and regulations to assist government
contracting employees when administering government contracts.
In seeking to understand the impact that corporations and political proponents
have on the distribution of government contracts, Kidalov and Snider (2011) studied
political impact on contract performance. Politics can affect contracting decisions;
therefore, the need exists to establish legal frameworks for contract delivery (Kidalov &
Snider, 2011). There should be separation of politics, economic, and government
contracting (Witko, 2011). Bromberg (2014) looked at why certain contractors received
awards based on their political connections. Witko (2011) assessed that politics influences
the dissemination of government contracts.
Private companies seek to determine the awarding of government contracts by
contributing to political campaigns (Witko, 2011). With increased financial support that
an organization contributes to political campaigns, chance increases that the organization
may receive a government contract (Bromberg, 2014). Political influences might be
harmful to the contracting process (Jing, 2012). Zaidi et al. (2012) added to the body of
knowledge by exploring the impact that politics has on government contracting
employees working in overseas locations. Political control attributed to misuse and
incompetence of contract performance (Zaidi et al., 2012).
Politics can affect the contracting/procurement process; therefore, government
contracting organizations provide extra attention to the consequences of political pressure
on contract administration (Diggs & Roman, 2012). Yang and VanLandingham (2012)
observed an increase in the number of politically influenced government contracting
arrangements in the past decade. The government contracts awarded depends on how
politically active the business is (Yang & VanLandingham, 2012). Despite the
government contracting reforms, suppliers continue to win contracts based on their
political contributions (Witko, 2011). Detecting improper behaviors when administering
government contracts may be difficult; however, government authorities enacted laws and
controls to prevent unethical behaviors in government contracting (Acquisition Central,
2014). The contract design influences various factors related to awarding the contract to a
supplier.
Contract Design
Government contracting employees might attempt to create government contracts
based on government contracting guidelines. Government outsourcing is an essential
delivery replacement to improve the effectiveness and flexibility benefits for private and
public companies (Van Milligen, 2012). The can stakeholders influence government
organizations to operate effectively and efficiently (Van Milligen, 2012). Government
contracting organizations assess the task of determining what companies can best offer
products and services, and what contract design will be most useful to assign.
In identifying the factors that affect contract design choices, it is necessary to
understand government contract design (Kim & Brown, 2012). Contract type and length
of the performance can affect contract design decisions (Amey, 2012). Contract type
refers to how the supplier reimburses the government contracting organization
(Acquisition Central, 2014). The contract type option determines the contract design
elements such as effectiveness of contract spending (Amey, 2012; Lamothe & Lamothe,
2012). Government contracting employees execute government contracts through
contract implementation and design. Government contracting employees use contract
design to maintain the affiliation with suppliers and government contracting organizations
(SBA, 2014). Government contracts offer valued components in the delivery of goods
and services (Malatesta & Smith, 2012b). There are two contract types in government
contracting, fixed-price and cost-reimbursement (Bumgarner &
Newswander, 2012). The goods or service procured determines the contract type.
To understand what effect a contract has on government contracting employees’
procurement of goods and services, government contracting employee must know the
difference between each government contract type. Despite the type of government
contract, government contracting employees must follow the guidelines published in the
FAR and other government contracting regulations. As stated in FAR part 16, fixed-price
contracts are non-negotiable, non-adjustable and offer maximum risk and full
responsibility for all contract costs to the supplier (Acquisition Central, 2014). When
negotiating a fixed-price contract, the supplier agrees to adhere to the contract
requirements of a fixed-price and delivery within a specified time-frame (Malatesta &
Smith, 2012b).
Using a firm-fixed price contract is possible if the government obtains the price
for goods or services in advance (Malatesta & Smith, 2012b). When servicing a
fixedprice contract, private companies receive fewer profits (Cribb, 2011). Offering
fixedprice contracts to suppliers incentivizes the supplier to deliver quality outcomes to
government contracting organizations. Vendors offering lower prices receive fixed-price
contracts (Maser & Thompson, 2013). From 1993 through 2008, defense contracting
doubled from $200 billion to $400 billion (Roberts, 2010). It is unclear why during the
same time-frame, government contracting employees reduced the number of fixed-price
contracts used and replaced them with cost-reimbursement contracts (Roberts, 2010).
Government contracting organizations and suppliers negotiates cost-reimbursement
contracts based on estimates of cost for goods or services (Acquisition Central, 2014).
Cost reimbursement contracts ensure suppliers that the government will reimburse
the Supplier all reasonable cost occurred while executing the contract (Acquisition
Central, 2014). Government contracting organizations discourage employees from using
cost-reimbursement contracts due to the potential excessive cost to the government
(Bumgarner & Newswander, 2012). In 2009, Congress passed the American Recovery
and Reinvestment Act (ARRA). The ARRA provided that the federal government
organization communicate a preference for using fixed-price contracts instead of
costreimbursement contracts (Honek, Azar, & Menassa, 2012; Orndoff & Papkov, 2012).
The Office of Management and Budget issued guidance to government contracting
organizations regarding the use of cost-reimbursement contracts (OMB, 2003).
Fixedprice contracts offered to suppliers may be beneficial to the government contracting
organizations because government contracting employees can control costs associated
with fixed-price contracts. Although cost-reimbursement contracts provide extreme
benefits to suppliers, cost-reimbursement contracts can offer high cost and low value to
the government.
Effective contract liability exists when government contracting agencies
understand the prerequisites of contracting guidelines (Malatesta & Smith, 2012a).
Government contracting organizations can ensure suppliers’ responsibility for
implementation of contract requirements (Malatesta & Smith, 2012a). Government
contracting organizations use different contract designs (Kim & Brown, 2012). The
category of a contract comprises decision-making since the contract affects service and
performance (Kim & Brown, 2012). A government contract design reduces transaction
costs associated with delivering services (Lumineau, Frechet, & Puthod, 2011). The
design of each government contracts ensures best value to the government organization
and customer.
Political and economic external forces may affect government contracting
employees to go outside the scope of the contract; therefore, providing opportunities for
circumventing of the legal parameters (Johnston & Girth, 2012). When delivering
contracts, competition is expected (Lamothe & Lamothe, 2012). Competition offers a
level of cost control and provides quality delivery of goods and services. The length of a
government contract may influence contract performance.
Government contract period is an agreed time to deliver goods or services to
government contracting customers (Acquisition Central, 2014). Three elements of
contract length exist in government contracting: spot market transactions, long-term
measures, and contracts that specify a base period such as extending contracts for
additional periods of time (Amey, 2012). Government contracting organizations prefer
short-term contracts since a short-term contract reduces the risk to both the government
contracting organizations and suppliers (Mols, 2010). Amey (2012) assessed that
government contracting organizations use long-term contracts if uncertainty exists
regarding the outcome of a contract.
The value of the contract results from the contract type and extent (Malatesta &
Smith, 2012b). Fixed-price contracts determine the value ex-ante while
costreimbursement contracts determine the value ex-post (Acquisition Central, 2014).
Government contracting organizations can organize each contract to add length and value
(Malatesta & Smith, 2012b). If the production of the goods or service is easy, the contract
period is shorter. However, if difficulties occur with implementation of the goods and
services, the government may extend the agreement to account for unknown factors
(Acquisition Central, 2014). Government contracting employees must create government
contracts to reduce production costs, reduce transaction costs, offer a profit to the
supplier, and provide the government with quality goods and services. Different
government contracting organizations experience with administering specific contracts
and suppliers who provide the goods and services as specified in each contract.
Standards, Guidelines, Compliance, and Regulations
Detailing the standards and guidelines that govern government contracting is
essential to government contracting employees understanding the requirements for
conducting their jobs ethically. Public service ethics requires that companies establish
clear guidelines that conform to a changing global economic request for ethical standards
(Adams & Balfour, 2010). The Small Business Administration established guidelines that
provide adequate assistance to small businesses competing for government contracts
(Johnston & Girth, 2012). Organizational standards should govern the company’s ethical
values (Noordegraaf, 2011). Government contracting employees’ lack of adherence to an
organization’s standard operating procedures may be routine (Sinocruz, Hildebrand,
Neuman, & Branaghan, 2011). Sinocruz et al. (2011) maintained that inconsistencies in
establishing standard operating procedures might be a contributing factor to employees’
inconstancy.
Understanding how ethical guidelines affect private companies may help
government contracting employees to understand the importance of government rules. In
an effort to understand how guidelines affect organizational standards, Ailon (2012) and
Zhong (2011) looked at ethical decision making in large organizations such as ENRON.
Although Enron established ethical standards, employees regularly engaged in unethical
behaviors (Zhong, 2011). Unethical behaviors in Enron affected both individuals and
stakeholders (Ailon, 2012). Kumar (2014) considered standard operating procedures
(SOPs), and the impact that vague guidelines might have on management processes.
SOPs provide guidelines for employees to ensure proper completion of the job
(Manghani, 2011). An organization’s standards of conduct should contain the company’s
ethical guidelines and values (Griffith, Connelly, & Thiel, 2011). An organization’s
compliance plan should incorporate ethics (Rowe & Kellam, 2011). U.S. federal
regulations 5 CFR 2635-Standards of Conduct for Employees of the Executive Branch,
41 USC 423-Procurement Integrity Act, and FAR-Federal Acquisition Regulations
provide guidelines regarding government contracting personnel ethical behavior
(Government Printing Office, 2011).
Revisiting government contracting compliance and regulations is necessary due to
continued unethical behaviors by government contracting employees while administering
government contracts (U.S. GAO, 2009). Not all government contracting employees are
dishonest; however, to demonstrate ethical behavior when administering government
contracts, employees must recuse themselves from instances that may indicate unethical
behaviors (Acquisition Central, 2014; Clark, 2011). In case government contracting
employees encounter instances of unethical behaviors, knowing what and why
government contracting rules exist may help employees in their ethical decision-making.
Conforming to compliance and regulations can be difficult if no guidance occurs
(Adams & Balfour, 2010). Within the context of the government contracting, compliance
with FAR regulations exists. Due to continued unethical behaviors, the FAR Council
established new ethics laws that required the creation of written codes of business ethics
(Johnson, Feng, Stizabee, & Jernigan, 2013). Government contracting ethics required
augmentation (U.S. GAO, 2009). Compliance violations required the restructuring of the
government contracting regulations (Johnson et al., 2013).
FAR regulation echoes the government contracting compliance rules (Cohn,
2011). Re-engineered subsections of the FAR clarify areas of the original law that seem
confusing or unclear (Mukhopadhyay, 2011). Timely disclosures of unethical
observations in some government contracting organizations remained a problem (U.S.
GAO, 2009). Under Title 48 of the U.S. code of regulations, FAR part 3 prescribes
policies and guidelines for avoiding inappropriate business practices and personal
conflicts of interest when administering government contracts (Acquisition Central,
2014). Organizations may allow the government contracting employees to report
unethical behaviors without fear of reprisal (Cassematis & Wortley, 2013). If the
government contracting employees act unethically when administering government
contracts, the employee may damage the public trust.
FAR Part 3 provides ethics and compliance rules and requirements for individuals
doing government contracting business (Acquisition Central, 2014). The Competition in
Contracting Act (CICA) allows the U.S. GAO to disclose full and thorough
decisionmaking requirement in the government contracting (Maser, Subbotin, &
Thompson, 2010). Government contracting rules and regulations provide tools that may
exclude government contracting employees from behaving unethically (U.S. GAO,
2009). Congress established additional guidelines and regulations to assist government
contracting employees when administering government contracts.
In seeking to understand the impact that corporations and political proponents
have on the distribution of government contracts, Kidalov and Snider (2011) studied
political impact on contract performance. Politics can affect contracting decisions;
therefore, the need exists to establish legal frameworks for contract delivery (Kidalov &
Snider, 2011). There should be separation of politics, economic, and government
contracting (Witko, 2011). Bromberg (2014) looked at why certain contractors received
awards based on their political connections. Witko (2011) assessed that politics influences
the dissemination of government contracts.
Private companies seek to determine the awarding of government contracts by
contributing to political campaigns (Witko, 2011). With increased financial support that
an organization contributes to political campaigns, chance increases that the organization
may receive a government contract (Bromberg, 2014). Political influences might be
harmful to the contracting process (Jing, 2012). Zaidi et al. (2012) added to the body of
knowledge by exploring the impact that politics has on government contracting
employees working in overseas locations. Political control attributed to misuse and
incompetence of contract performance (Zaidi et al., 2012).
Politics can affect the contracting/procurement process; therefore, government
contracting organizations provide extra attention to the consequences of political pressure
on contract administration (Diggs & Roman, 2012). Yang and VanLandingham (2012)
observed an increase in the number of politically influenced government contracting
arrangements in the past decade. The government contracts awarded depends on how
politically active the business is (Yang & VanLandingham, 2012). Despite the
government contracting reforms, suppliers continue to win contracts based on their
political contributions (Witko, 2011). Detecting improper behaviors when administering
government contracts may be difficult; however, government authorities enacted laws and
controls to prevent unethical behaviors in government contracting (Acquisition Central,
2014). The contract design influences various factors related to awarding the contract to a
supplier.
Contract Design
Government contracting employees might attempt to create government contracts
based on government contracting guidelines. Government outsourcing is an essential
delivery replacement to improve the effectiveness and flexibility benefits for private and
public companies (Van Milligen, 2012). The can stakeholders influence government
organizations to operate effectively and efficiently (Van Milligen, 2012). Government
contracting organizations assess the task of determining what companies can best offer
products and services, and what contract design will be most useful to assign.
In identifying the factors that affect contract design choices, it is necessary to
understand government contract design (Kim & Brown, 2012). Contract type and length
of the performance can affect contract design decisions (Amey, 2012). Contract type
refers to how the supplier reimburses the government contracting organization
(Acquisition Central, 2014). The contract type option determines the contract design
elements such as effectiveness of contract spending (Amey, 2012; Lamothe & Lamothe,
2012). Government contracting employees execute government contracts through
contract implementation and design. Government contracting employees use contract
design to maintain the affiliation with suppliers and government contracting organizations
(SBA, 2014). Government contracts offer valued components in the delivery of goods
and services (Malatesta & Smith, 2012b). There are two contract types in government
contracting, fixed-price and cost-reimbursement (Bumgarner &
Newswander, 2012). The goods or service procured determines the contract type.
To understand what effect a contract has on government contracting employees’
procurement of goods and services, government contracting employee must know the
difference between each government contract type. Despite the type of government
contract, government contracting employees must follow the guidelines published in the
FAR and other government contracting regulations. As stated in FAR part 16, fixed-price
contracts are non-negotiable, non-adjustable and offer maximum risk and full
responsibility for all contract costs to the supplier (Acquisition Central, 2014). When
negotiating a fixed-price contract, the supplier agrees to adhere to the contract
requirements of a fixed-price and delivery within a specified time-frame (Malatesta &
Smith, 2012b).
Using a firm-fixed price contract is possible if the government obtains the price
for goods or services in advance (Malatesta & Smith, 2012b). When servicing a
fixedprice contract, private companies receive fewer profits (Cribb, 2011). Offering
fixedprice contracts to suppliers incentivizes the supplier to deliver quality outcomes to
government contracting organizations. Vendors offering lower prices receive fixed-price
contracts (Maser & Thompson, 2013). From 1993 through 2008, defense contracting
doubled from $200 billion to $400 billion (Roberts, 2010). It is unclear why during the
same time-frame, government contracting employees reduced the number of fixed-price
contracts used and replaced them with cost-reimbursement contracts (Roberts, 2010).
Government contracting organizations and suppliers negotiates cost-reimbursement
contracts based on estimates of cost for goods or services (Acquisition Central, 2014).
Cost reimbursement contracts ensure suppliers that the government will reimburse
the Supplier all reasonable cost occurred while executing the contract (Acquisition
Central, 2014). Government contracting organizations discourage employees from using
cost-reimbursement contracts due to the potential excessive cost to the government
(Bumgarner & Newswander, 2012). In 2009, Congress passed the American Recovery
and Reinvestment Act (ARRA). The ARRA provided that the federal government
organization communicate a preference for using fixed-price contracts instead of
costreimbursement contracts (Honek, Azar, & Menassa, 2012; Orndoff & Papkov, 2012).
The Office of Management and Budget issued guidance to government contracting
organizations regarding the use of cost-reimbursement contracts (OMB, 2003).
Fixedprice contracts offered to suppliers may be beneficial to the government contracting
organizations because government contracting employees can control costs associated
with fixed-price contracts. Although cost-reimbursement contracts provide extreme
benefits to suppliers, cost-reimbursement contracts can offer high cost and low value to
the government.
Effective contract liability exists when government contracting agencies
understand the prerequisites of contracting guidelines (Malatesta & Smith, 2012a).
Government contracting organizations can ensure suppliers’ responsibility for
implementation of contract requirements (Malatesta & Smith, 2012a). Government
contracting organizations use different contract designs (Kim & Brown, 2012). The
category of a contract comprises decision-making since the contract affects service and
performance (Kim & Brown, 2012). A government contract design reduces transaction
costs associated with delivering services (Lumineau, Frechet, & Puthod, 2011). The
design of each government contracts ensures best value to the government organization
and customer.
Political and economic external forces may affect government contracting
employees to go outside the scope of the contract; therefore, providing opportunities for
circumventing of the legal parameters (Johnston & Girth, 2012). When delivering
contracts, competition is expected (Lamothe & Lamothe, 2012). Competition offers a
level of cost control and provides quality delivery of goods and services. The length of a
government contract may influence contract performance.
Government contract period is an agreed time to deliver goods or services to
government contracting customers (Acquisition Central, 2014). Three elements of
contract length exist in government contracting: spot market transactions, long-term
measures, and contracts that specify a base period such as extending contracts for
additional periods of time (Amey, 2012). Government contracting organizations prefer
short-term contracts since a short-term contract reduces the risk to both the government
contracting organizations and suppliers (Mols, 2010). Amey (2012) assessed that
government contracting organizations use long-term contracts if uncertainty exists
regarding the outcome of a contract.
The value of the contract results from the contract type and extent (Malatesta &
Smith, 2012b). Fixed-price contracts determine the value ex-ante while
costreimbursement contracts determine the value ex-post (Acquisition Central, 2014).
Government contracting organizations can organize each contract to add length and value
(Malatesta & Smith, 2012b). If the production of the goods or service is easy, the contract
period is shorter. However, if difficulties occur with implementation of the goods and
services, the government may extend the agreement to account for unknown factors
(Acquisition Central, 2014). Government contracting employees must create government
contracts to reduce production costs, reduce transaction costs, offer a profit to the
supplier, and provide the government with quality goods and services. Different
government contracting organizations experience with administering specific contracts
and suppliers who provide the goods and services as specified in each contract.
Standards, Guidelines, Compliance, and Regulations
Detailing the standards and guidelines that govern government contracting is
essential to government contracting employees understanding the requirements for
conducting their jobs ethically. Public service ethics requires that companies establish
clear guidelines that conform to a changing global economic request for ethical standards
(Adams & Balfour, 2010). The Small Business Administration established guidelines that
provide adequate assistance to small businesses competing for government contracts
(Johnston & Girth, 2012). Organizational standards should govern the company’s ethical
values (Noordegraaf, 2011). Government contracting employees’ lack of adherence to an
organization’s standard operating procedures may be routine (Sinocruz, Hildebrand,
Neuman, & Branaghan, 2011). Sinocruz et al. (2011) maintained that inconsistencies in
establishing standard operating procedures might be a contributing factor to employees’
inconstancy.
Understanding how ethical guidelines affect private companies may help
government contracting employees to understand the importance of government rules. In
an effort to understand how guidelines affect organizational standards, Ailon (2012) and
Zhong (2011) looked at ethical decision making in large organizations such as ENRON.
Although Enron established ethical standards, employees regularly engaged in unethical
behaviors (Zhong, 2011). Unethical behaviors in Enron affected both individuals and
stakeholders (Ailon, 2012). Kumar (2014) considered standard operating procedures
(SOPs), and the impact that vague guidelines might have on management processes.
SOPs provide guidelines for employees to ensure proper completion of the job
(Manghani, 2011). An organization’s standards of conduct should contain the company’s
ethical guidelines and values (Griffith, Connelly, & Thiel, 2011). An organization’s
compliance plan should incorporate ethics (Rowe & Kellam, 2011). U.S. federal
regulations 5 CFR 2635-Standards of Conduct for Employees of the Executive Branch,
41 USC 423-Procurement Integrity Act, and FAR-Federal Acquisition Regulations
provide guidelines regarding government contracting personnel ethical behavior
(Government Printing Office, 2011).
Revisiting government contracting compliance and regulations is necessary due to
continued unethical behaviors by government contracting employees while administering
government contracts (U.S. GAO, 2009). Not all government contracting employees are
dishonest; however, to demonstrate ethical behavior when administering government
contracts, employees must recuse themselves from instances that may indicate unethical
behaviors (Acquisition Central, 2014; Clark, 2011). In case government contracting
employees encounter instances of unethical behaviors, knowing what and why
government contracting rules exist may help employees in their ethical decision-making.
Conforming to compliance and regulations can be difficult if no guidance occurs
(Adams & Balfour, 2010). Within the context of the government contracting, compliance
with FAR regulations exists. Due to continued unethical behaviors, the FAR Council
established new ethics laws that required the creation of written codes of business ethics
(Johnson, Feng, Stizabee, & Jernigan, 2013). Government contracting ethics required
augmentation (U.S. GAO, 2009). Compliance violations required the restructuring of the
government contracting regulations (Johnson et al., 2013).
FAR regulation echoes the government contracting compliance rules (Cohn,
2011). Re-engineered subsections of the FAR clarify areas of the original law that seem
confusing or unclear (Mukhopadhyay, 2011). Timely disclosures of unethical
observations in some government contracting organizations remained a problem (U.S.
GAO, 2009). Under Title 48 of the U.S. code of regulations, FAR part 3 prescribes
policies and guidelines for avoiding inappropriate business practices and personal
conflicts of interest when administering government contracts (Acquisition Central,
2014). Organizations may allow the government contracting employees to report
unethical behaviors without fear of reprisal (Cassematis & Wortley, 2013). If the
government contracting employees act unethically when administering government
contracts, the employee may damage the public trust.
FAR Part 3 provides ethics and compliance rules and requirements for individuals
doing government contracting business (Acquisition Central, 2014). The Competition in
Contracting Act (CICA) allows the U.S. GAO to disclose full and thorough
decisionmaking requirement in the government contracting (Maser, Subbotin, &
Thompson, 2010). Government contracting rules and regulations provide tools that may
exclude government contracting employees from behaving unethically (U.S. GAO,
2009). Congress established additional guidelines and regulations to assist government
contracting employees when administering government contracts.
In seeking to understand the impact that corporations and political proponents
have on the distribution of government contracts, Kidalov and Snider (2011) studied
political impact on contract performance. Politics can affect contracting decisions;
therefore, the need exists to establish legal frameworks for contract delivery (Kidalov &
Snider, 2011). There should be separation of politics, economic, and government
contracting (Witko, 2011). Bromberg (2014) looked at why certain contractors received
awards based on their political connections. Witko (2011) assessed that politics influences
the dissemination of government contracts.
Private companies seek to determine the awarding of government contracts by
contributing to political campaigns (Witko, 2011). With increased financial support that
an organization contributes to political campaigns, chance increases that the organization
may receive a government contract (Bromberg, 2014). Political influences might be
harmful to the contracting process (Jing, 2012). Zaidi et al. (2012) added to the body of
knowledge by exploring the impact that politics has on government contracting
employees working in overseas locations. Political control attributed to misuse and
incompetence of contract performance (Zaidi et al., 2012).
Politics can affect the contracting/procurement process; therefore, government
contracting organizations provide extra attention to the consequences of political pressure
on contract administration (Diggs & Roman, 2012). Yang and VanLandingham (2012)
observed an increase in the number of politically influenced government contracting
arrangements in the past decade. The government contracts awarded depends on how
politically active the business is (Yang & VanLandingham, 2012). Despite the
government contracting reforms, suppliers continue to win contracts based on their
political contributions (Witko, 2011). Detecting improper behaviors when administering
government contracts may be difficult; however, government authorities enacted laws and
controls to prevent unethical behaviors in government contracting (Acquisition Central,
2014). The contract design influences various factors related to awarding the contract to a
supplier.
Contract Design
Government contracting employees might attempt to create government contracts
based on government contracting guidelines. Government outsourcing is an essential
delivery replacement to improve the effectiveness and flexibility benefits for private and
public companies (Van Milligen, 2012). The can stakeholders influence government
organizations to operate effectively and efficiently (Van Milligen, 2012). Government
contracting organizations assess the task of determining what companies can best offer
products and services, and what contract design will be most useful to assign.
In identifying the factors that affect contract design choices, it is necessary to
understand government contract design (Kim & Brown, 2012). Contract type and length
of the performance can affect contract design decisions (Amey, 2012). Contract type
refers to how the supplier reimburses the government contracting organization
(Acquisition Central, 2014). The contract type option determines the contract design
elements such as effectiveness of contract spending (Amey, 2012; Lamothe & Lamothe,
2012). Government contracting employees execute government contracts through
contract implementation and design. Government contracting employees use contract
design to maintain the affiliation with suppliers and government contracting organizations
(SBA, 2014). Government contracts offer valued components in the delivery of goods
and services (Malatesta & Smith, 2012b). There are two contract types in government
contracting, fixed-price and cost-reimbursement (Bumgarner &
Newswander, 2012). The goods or service procured determines the contract type.
To understand what effect a contract has on government contracting employees’
procurement of goods and services, government contracting employee must know the
difference between each government contract type. Despite the type of government
contract, government contracting employees must follow the guidelines published in the
FAR and other government contracting regulations. As stated in FAR part 16, fixed-price
contracts are non-negotiable, non-adjustable and offer maximum risk and full
responsibility for all contract costs to the supplier (Acquisition Central, 2014). When
negotiating a fixed-price contract, the supplier agrees to adhere to the contract
requirements of a fixed-price and delivery within a specified time-frame (Malatesta &
Smith, 2012b).
Using a firm-fixed price contract is possible if the government obtains the price
for goods or services in advance (Malatesta & Smith, 2012b). When servicing a
fixedprice contract, private companies receive fewer profits (Cribb, 2011). Offering
fixedprice contracts to suppliers incentivizes the supplier to deliver quality outcomes to
government contracting organizations. Vendors offering lower prices receive fixed-price
contracts (Maser & Thompson, 2013). From 1993 through 2008, defense contracting
doubled from $200 billion to $400 billion (Roberts, 2010). It is unclear why during the
same time-frame, government contracting employees reduced the number of fixed-price
contracts used and replaced them with cost-reimbursement contracts (Roberts, 2010).
Government contracting organizations and suppliers negotiates cost-reimbursement
contracts based on estimates of cost for goods or services (Acquisition Central, 2014).
Cost reimbursement contracts ensure suppliers that the government will reimburse
the Supplier all reasonable cost occurred while executing the contract (Acquisition
Central, 2014). Government contracting organizations discourage employees from using
cost-reimbursement contracts due to the potential excessive cost to the government
(Bumgarner & Newswander, 2012). In 2009, Congress passed the American Recovery
and Reinvestment Act (ARRA). The ARRA provided that the federal government
organization communicate a preference for using fixed-price contracts instead of
costreimbursement contracts (Honek, Azar, & Menassa, 2012; Orndoff & Papkov, 2012).
The Office of Management and Budget issued guidance to government contracting
organizations regarding the use of cost-reimbursement contracts (OMB, 2003).
Fixedprice contracts offered to suppliers may be beneficial to the government contracting
organizations because government contracting employees can control costs associated
with fixed-price contracts. Although cost-reimbursement contracts provide extreme
benefits to suppliers, cost-reimbursement contracts can offer high cost and low value to
the government.
Effective contract liability exists when government contracting agencies
understand the prerequisites of contracting guidelines (Malatesta & Smith, 2012a).
Government contracting organizations can ensure suppliers’ responsibility for
implementation of contract requirements (Malatesta & Smith, 2012a). Government
contracting organizations use different contract designs (Kim & Brown, 2012). The
category of a contract comprises decision-making since the contract affects service and
performance (Kim & Brown, 2012). A government contract design reduces transaction
costs associated with delivering services (Lumineau, Frechet, & Puthod, 2011). The
design of each government contracts ensures best value to the government organization
and customer.
Political and economic external forces may affect government contracting
employees to go outside the scope of the contract; therefore, providing opportunities for
circumventing of the legal parameters (Johnston & Girth, 2012). When delivering
contracts, competition is expected (Lamothe & Lamothe, 2012). Competition offers a
level of cost control and provides quality delivery of goods and services. The length of a
government contract may influence contract performance.
Government contract period is an agreed time to deliver goods or services to
government contracting customers (Acquisition Central, 2014). Three elements of
contract length exist in government contracting: spot market transactions, long-term
measures, and contracts that specify a base period such as extending contracts for
additional periods of time (Amey, 2012). Government contracting organizations prefer
short-term contracts since a short-term contract reduces the risk to both the government
contracting organizations and suppliers (Mols, 2010). Amey (2012) assessed that
government contracting organizations use long-term contracts if uncertainty exists
regarding the outcome of a contract.
The value of the contract results from the contract type and extent (Malatesta &
Smith, 2012b). Fixed-price contracts determine the value ex-ante while
costreimbursement contracts determine the value ex-post (Acquisition Central, 2014).
Government contracting organizations can organize each contract to add length and value
(Malatesta & Smith, 2012b). If the production of the goods or service is easy, the contract
period is shorter. However, if difficulties occur with implementation of the goods and
services, the government may extend the agreement to account for unknown factors
(Acquisition Central, 2014). Government contracting employees must create government
contracts to reduce production costs, reduce transaction costs, offer a profit to the
supplier, and provide the government with quality goods and services. Different
government contracting organizations experience with administering specific contracts
and suppliers who provide the goods and services as specified in each contract.
Standards, Guidelines, Compliance, and Regulations
Detailing the standards and guidelines that govern government contracting is
essential to government contracting employees understanding the requirements for
conducting their jobs ethically. Public service ethics requires that companies establish
clear guidelines that conform to a changing global economic request for ethical standards
(Adams & Balfour, 2010). The Small Business Administration established guidelines that
provide adequate assistance to small businesses competing for government contracts
(Johnston & Girth, 2012). Organizational standards should govern the company’s ethical
values (Noordegraaf, 2011). Government contracting employees’ lack of adherence to an
organization’s standard operating procedures may be routine (Sinocruz, Hildebrand,
Neuman, & Branaghan, 2011). Sinocruz et al. (2011) maintained that inconsistencies in
establishing standard operating procedures might be a contributing factor to employees’
inconstancy.
Understanding how ethical guidelines affect private companies may help
government contracting employees to understand the importance of government rules. In
an effort to understand how guidelines affect organizational standards, Ailon (2012) and
Zhong (2011) looked at ethical decision making in large organizations such as ENRON.
Although Enron established ethical standards, employees regularly engaged in unethical
behaviors (Zhong, 2011). Unethical behaviors in Enron affected both individuals and
stakeholders (Ailon, 2012). Kumar (2014) considered standard operating procedures
(SOPs), and the impact that vague guidelines might have on management processes.
SOPs provide guidelines for employees to ensure proper completion of the job
(Manghani, 2011). An organization’s standards of conduct should contain the company’s
ethical guidelines and values (Griffith, Connelly, & Thiel, 2011). An organization’s
compliance plan should incorporate ethics (Rowe & Kellam, 2011). U.S. federal
regulations 5 CFR 2635-Standards of Conduct for Employees of the Executive Branch,
41 USC 423-Procurement Integrity Act, and FAR-Federal Acquisition Regulations
provide guidelines regarding government contracting personnel ethical behavior
(Government Printing Office, 2011).
Revisiting government contracting compliance and regulations is necessary due to
continued unethical behaviors by government contracting employees while administering
government contracts (U.S. GAO, 2009). Not all government contracting employees are
dishonest; however, to demonstrate ethical behavior when administering government
contracts, employees must recuse themselves from instances that may indicate unethical
behaviors (Acquisition Central, 2014; Clark, 2011). In case government contracting
employees encounter instances of unethical behaviors, knowing what and why
government contracting rules exist may help employees in their ethical decision-making.
Conforming to compliance and regulations can be difficult if no guidance occurs
(Adams & Balfour, 2010). Within the context of the government contracting, compliance
with FAR regulations exists. Due to continued unethical behaviors, the FAR Council
established new ethics laws that required the creation of written codes of business ethics
(Johnson, Feng, Stizabee, & Jernigan, 2013). Government contracting ethics required
augmentation (U.S. GAO, 2009). Compliance violations required the restructuring of the
government contracting regulations (Johnson et al., 2013).
FAR regulation echoes the government contracting compliance rules (Cohn,
2011). Re-engineered subsections of the FAR clarify areas of the original law that seem
confusing or unclear (Mukhopadhyay, 2011). Timely disclosures of unethical
observations in some government contracting organizations remained a problem (U.S.
GAO, 2009). Under Title 48 of the U.S. code of regulations, FAR part 3 prescribes
policies and guidelines for avoiding inappropriate business practices and personal
conflicts of interest when administering government contracts (Acquisition Central,
2014). Organizations may allow the government contracting employees to report
unethical behaviors without fear of reprisal (Cassematis & Wortley, 2013). If the
government contracting employees act unethically when administering government
contracts, the employee may damage the public trust.
FAR Part 3 provides ethics and compliance rules and requirements for individuals
doing government contracting business (Acquisition Central, 2014). The Competition in
Contracting Act (CICA) allows the U.S. GAO to disclose full and thorough
decisionmaking requirement in the government contracting (Maser, Subbotin, &
Thompson, 2010). Government contracting rules and regulations provide tools that may
exclude government contracting employees from behaving unethically (U.S. GAO,
2009). Congress established additional guidelines and regulations to assist government
contracting employees when administering government contracts.
In seeking to understand the impact that corporations and political proponents
have on the distribution of government contracts, Kidalov and Snider (2011) studied
political impact on contract performance. Politics can affect contracting decisions;
therefore, the need exists to establish legal frameworks for contract delivery (Kidalov &
Snider, 2011). There should be separation of politics, economic, and government
contracting (Witko, 2011). Bromberg (2014) looked at why certain contractors received
awards based on their political connections. Witko (2011) assessed that politics influences
the dissemination of government contracts.
Private companies seek to determine the awarding of government contracts by
contributing to political campaigns (Witko, 2011). With increased financial support that
an organization contributes to political campaigns, chance increases that the organization
may receive a government contract (Bromberg, 2014). Political influences might be
harmful to the contracting process (Jing, 2012). Zaidi et al. (2012) added to the body of
knowledge by exploring the impact that politics has on government contracting
employees working in overseas locations. Political control attributed to misuse and
incompetence of contract performance (Zaidi et al., 2012).
Politics can affect the contracting/procurement process; therefore, government
contracting organizations provide extra attention to the consequences of political pressure
on contract administration (Diggs & Roman, 2012). Yang and VanLandingham (2012)
observed an increase in the number of politically influenced government contracting
arrangements in the past decade. The government contracts awarded depends on how
politically active the business is (Yang & VanLandingham, 2012). Despite the
government contracting reforms, suppliers continue to win contracts based on their
political contributions (Witko, 2011). Detecting improper behaviors when administering
government contracts may be difficult; however, government authorities enacted laws and
controls to prevent unethical behaviors in government contracting (Acquisition Central,
2014). The contract design influences various factors related to awarding the contract to a
supplier.
Contract Design
Government contracting employees might attempt to create government contracts
based on government contracting guidelines. Government outsourcing is an essential
delivery replacement to improve the effectiveness and flexibility benefits for private and
public companies (Van Milligen, 2012). The can stakeholders influence government
organizations to operate effectively and efficiently (Van Milligen, 2012). Government
contracting organizations assess the task of determining what companies can best offer
products and services, and what contract design will be most useful to assign.
In identifying the factors that affect contract design choices, it is necessary to
understand government contract design (Kim & Brown, 2012). Contract type and length
of the performance can affect contract design decisions (Amey, 2012). Contract type
refers to how the supplier reimburses the government contracting organization
(Acquisition Central, 2014). The contract type option determines the contract design
elements such as effectiveness of contract spending (Amey, 2012; Lamothe & Lamothe,
2012). Government contracting employees execute government contracts through
contract implementation and design. Government contracting employees use contract
design to maintain the affiliation with suppliers and government contracting organizations
(SBA, 2014). Government contracts offer valued components in the delivery of goods
and services (Malatesta & Smith, 2012b). There are two contract types in government
contracting, fixed-price and cost-reimbursement (Bumgarner &
Newswander, 2012). The goods or service procured determines the contract type.
To understand what effect a contract has on government contracting employees’
procurement of goods and services, government contracting employee must know the
difference between each government contract type. Despite the type of government
contract, government contracting employees must follow the guidelines published in the
FAR and other government contracting regulations. As stated in FAR part 16, fixed-price
contracts are non-negotiable, non-adjustable and offer maximum risk and full
responsibility for all contract costs to the supplier (Acquisition Central, 2014). When
negotiating a fixed-price contract, the supplier agrees to adhere to the contract
requirements of a fixed-price and delivery within a specified time-frame (Malatesta &
Smith, 2012b).
Using a firm-fixed price contract is possible if the government obtains the price
for goods or services in advance (Malatesta & Smith, 2012b). When servicing a
fixedprice contract, private companies receive fewer profits (Cribb, 2011). Offering
fixedprice contracts to suppliers incentivizes the supplier to deliver quality outcomes to
government contracting organizations. Vendors offering lower prices receive fixed-price
contracts (Maser & Thompson, 2013). From 1993 through 2008, defense contracting
doubled from $200 billion to $400 billion (Roberts, 2010). It is unclear why during the
same time-frame, government contracting employees reduced the number of fixed-price
contracts used and replaced them with cost-reimbursement contracts (Roberts, 2010).
Government contracting organizations and suppliers negotiates cost-reimbursement
contracts based on estimates of cost for goods or services (Acquisition Central, 2014).
Cost reimbursement contracts ensure suppliers that the government will reimburse
the Supplier all reasonable cost occurred while executing the contract (Acquisition
Central, 2014). Government contracting organizations discourage employees from using
cost-reimbursement contracts due to the potential excessive cost to the government
(Bumgarner & Newswander, 2012). In 2009, Congress passed the American Recovery
and Reinvestment Act (ARRA). The ARRA provided that the federal government
organization communicate a preference for using fixed-price contracts instead of
costreimbursement contracts (Honek, Azar, & Menassa, 2012; Orndoff & Papkov, 2012).
The Office of Management and Budget issued guidance to government contracting
organizations regarding the use of cost-reimbursement contracts (OMB, 2003).
Fixedprice contracts offered to suppliers may be beneficial to the government contracting
organizations because government contracting employees can control costs associated
with fixed-price contracts. Although cost-reimbursement contracts provide extreme
benefits to suppliers, cost-reimbursement contracts can offer high cost and low value to
the government.
Effective contract liability exists when government contracting agencies
understand the prerequisites of contracting guidelines (Malatesta & Smith, 2012a).
Government contracting organizations can ensure suppliers’ responsibility for
implementation of contract requirements (Malatesta & Smith, 2012a). Government
contracting organizations use different contract designs (Kim & Brown, 2012). The
category of a contract comprises decision-making since the contract affects service and
performance (Kim & Brown, 2012). A government contract design reduces transaction
costs associated with delivering services (Lumineau, Frechet, & Puthod, 2011). The
design of each government contracts ensures best value to the government organization
and customer.
Political and economic external forces may affect government contracting
employees to go outside the scope of the contract; therefore, providing opportunities for
circumventing of the legal parameters (Johnston & Girth, 2012). When delivering
contracts, competition is expected (Lamothe & Lamothe, 2012). Competition offers a
level of cost control and provides quality delivery of goods and services. The length of a
government contract may influence contract performance.
Government contract period is an agreed time to deliver goods or services to
government contracting customers (Acquisition Central, 2014). Three elements of
contract length exist in government contracting: spot market transactions, long-term
measures, and contracts that specify a base period such as extending contracts for
additional periods of time (Amey, 2012). Government contracting organizations prefer
short-term contracts since a short-term contract reduces the risk to both the government
contracting organizations and suppliers (Mols, 2010). Amey (2012) assessed that
government contracting organizations use long-term contracts if uncertainty exists
regarding the outcome of a contract.
The value of the contract results from the contract type and extent (Malatesta &
Smith, 2012b). Fixed-price contracts determine the value ex-ante while
costreimbursement contracts determine the value ex-post (Acquisition Central, 2014).
Government contracting organizations can organize each contract to add length and value
(Malatesta & Smith, 2012b). If the production of the goods or service is easy, the contract
period is shorter. However, if difficulties occur with implementation of the goods and
services, the government may extend the agreement to account for unknown factors
(Acquisition Central, 2014). Government contracting employees must create government
contracts to reduce production costs, reduce transaction costs, offer a profit to the
supplier, and provide the government with quality goods and services. Different
government contracting organizations experience with administering specific contracts
and suppliers who provide the goods and services as specified in each contract.
Standards, Guidelines, Compliance, and Regulations
Detailing the standards and guidelines that govern government contracting is
essential to government contracting employees understanding the requirements for
conducting their jobs ethically. Public service ethics requires that companies establish
clear guidelines that conform to a changing global economic request for ethical standards
(Adams & Balfour, 2010). The Small Business Administration established guidelines that
provide adequate assistance to small businesses competing for government contracts
(Johnston & Girth, 2012). Organizational standards should govern the company’s ethical
values (Noordegraaf, 2011). Government contracting employees’ lack of adherence to an
organization’s standard operating procedures may be routine (Sinocruz, Hildebrand,
Neuman, & Branaghan, 2011). Sinocruz et al. (2011) maintained that inconsistencies in
establishing standard operating procedures might be a contributing factor to employees’
inconstancy.
Understanding how ethical guidelines affect private companies may help
government contracting employees to understand the importance of government rules. In
an effort to understand how guidelines affect organizational standards, Ailon (2012) and
Zhong (2011) looked at ethical decision making in large organizations such as ENRON.
Although Enron established ethical standards, employees regularly engaged in unethical
behaviors (Zhong, 2011). Unethical behaviors in Enron affected both individuals and
stakeholders (Ailon, 2012). Kumar (2014) considered standard operating procedures
(SOPs), and the impact that vague guidelines might have on management processes.
SOPs provide guidelines for employees to ensure proper completion of the job
(Manghani, 2011). An organization’s standards of conduct should contain the company’s
ethical guidelines and values (Griffith, Connelly, & Thiel, 2011). An organization’s
compliance plan should incorporate ethics (Rowe & Kellam, 2011). U.S. federal
regulations 5 CFR 2635-Standards of Conduct for Employees of the Executive Branch,
41 USC 423-Procurement Integrity Act, and FAR-Federal Acquisition Regulations
provide guidelines regarding government contracting personnel ethical behavior
(Government Printing Office, 2011).
Revisiting government contracting compliance and regulations is necessary due to
continued unethical behaviors by government contracting employees while administering
government contracts (U.S. GAO, 2009). Not all government contracting employees are
dishonest; however, to demonstrate ethical behavior when administering government
contracts, employees must recuse themselves from instances that may indicate unethical
behaviors (Acquisition Central, 2014; Clark, 2011). In case government contracting
employees encounter instances of unethical behaviors, knowing what and why
government contracting rules exist may help employees in their ethical decision-making.
Conforming to compliance and regulations can be difficult if no guidance occurs
(Adams & Balfour, 2010). Within the context of the government contracting, compliance
with FAR regulations exists. Due to continued unethical behaviors, the FAR Council
established new ethics laws that required the creation of written codes of business ethics
(Johnson, Feng, Stizabee, & Jernigan, 2013). Government contracting ethics required
augmentation (U.S. GAO, 2009). Compliance violations required the restructuring of the
government contracting regulations (Johnson et al., 2013).
FAR regulation echoes the government contracting compliance rules (Cohn,
2011). Re-engineered subsections of the FAR clarify areas of the original law that seem
confusing or unclear (Mukhopadhyay, 2011). Timely disclosures of unethical
observations in some government contracting organizations remained a problem (U.S.
GAO, 2009). Under Title 48 of the U.S. code of regulations, FAR part 3 prescribes
policies and guidelines for avoiding inappropriate business practices and personal
conflicts of interest when administering government contracts (Acquisition Central,
2014). Organizations may allow the government contracting employees to report
unethical behaviors without fear of reprisal (Cassematis & Wortley, 2013). If the
government contracting employees act unethically when administering government
contracts, the employee may damage the public trust.
FAR Part 3 provides ethics and compliance rules and requirements for individuals
doing government contracting business (Acquisition Central, 2014). The Competition in
Contracting Act (CICA) allows the U.S. GAO to disclose full and thorough
decisionmaking requirement in the government contracting (Maser, Subbotin, &
Thompson, 2010). Government contracting rules and regulations provide tools that may
exclude government contracting employees from behaving unethically (U.S. GAO,
2009). Congress established additional guidelines and regulations to assist government
contracting employees when administering government contracts.
In seeking to understand the impact that corporations and political proponents
have on the distribution of government contracts, Kidalov and Snider (2011) studied
political impact on contract performance. Politics can affect contracting decisions;
therefore, the need exists to establish legal frameworks for contract delivery (Kidalov &
Snider, 2011). There should be separation of politics, economic, and government
contracting (Witko, 2011). Bromberg (2014) looked at why certain contractors received
awards based on their political connections. Witko (2011) assessed that politics influences
the dissemination of government contracts.
Private companies seek to determine the awarding of government contracts by
contributing to political campaigns (Witko, 2011). With increased financial support that
an organization contributes to political campaigns, chance increases that the organization
may receive a government contract (Bromberg, 2014). Political influences might be
harmful to the contracting process (Jing, 2012). Zaidi et al. (2012) added to the body of
knowledge by exploring the impact that politics has on government contracting
employees working in overseas locations. Political control attributed to misuse and
incompetence of contract performance (Zaidi et al., 2012).
Politics can affect the contracting/procurement process; therefore, government
contracting organizations provide extra attention to the consequences of political pressure
on contract administration (Diggs & Roman, 2012). Yang and VanLandingham (2012)
observed an increase in the number of politically influenced government contracting
arrangements in the past decade. The government contracts awarded depends on how
politically active the business is (Yang & VanLandingham, 2012). Despite the
government contracting reforms, suppliers continue to win contracts based on their
political contributions (Witko, 2011). Detecting improper behaviors when administering
government contracts may be difficult; however, government authorities enacted laws and
controls to prevent unethical behaviors in government contracting (Acquisition Central,
2014). The contract design influences various factors related to awarding the contract to a
supplier.
Contract Design
Government contracting employees might attempt to create government contracts
based on government contracting guidelines. Government outsourcing is an essential
delivery replacement to improve the effectiveness and flexibility benefits for private and
public companies (Van Milligen, 2012). The can stakeholders influence government
organizations to operate effectively and efficiently (Van Milligen, 2012). Government
contracting organizations assess the task of determining what companies can best offer
products and services, and what contract design will be most useful to assign.
In identifying the factors that affect contract design choices, it is necessary to
understand government contract design (Kim & Brown, 2012). Contract type and length
of the performance can affect contract design decisions (Amey, 2012). Contract type
refers to how the supplier reimburses the government contracting organization
(Acquisition Central, 2014). The contract type option determines the contract design
elements such as effectiveness of contract spending (Amey, 2012; Lamothe & Lamothe,
2012). Government contracting employees execute government contracts through
contract implementation and design. Government contracting employees use contract
design to maintain the affiliation with suppliers and government contracting organizations
(SBA, 2014). Government contracts offer valued components in the delivery of goods
and services (Malatesta & Smith, 2012b). There are two contract types in government
contracting, fixed-price and cost-reimbursement (Bumgarner &
Newswander, 2012). The goods or service procured determines the contract type.
To understand what effect a contract has on government contracting employees’
procurement of goods and services, government contracting employee must know the
difference between each government contract type. Despite the type of government
contract, government contracting employees must follow the guidelines published in the
FAR and other government contracting regulations. As stated in FAR part 16, fixed-price
contracts are non-negotiable, non-adjustable and offer maximum risk and full
responsibility for all contract costs to the supplier (Acquisition Central, 2014). When
negotiating a fixed-price contract, the supplier agrees to adhere to the contract
requirements of a fixed-price and delivery within a specified time-frame (Malatesta &
Smith, 2012b).
Using a firm-fixed price contract is possible if the government obtains the price
for goods or services in advance (Malatesta & Smith, 2012b). When servicing a
fixedprice contract, private companies receive fewer profits (Cribb, 2011). Offering
fixedprice contracts to suppliers incentivizes the supplier to deliver quality outcomes to
government contracting organizations. Vendors offering lower prices receive fixed-price
contracts (Maser & Thompson, 2013). From 1993 through 2008, defense contracting
doubled from $200 billion to $400 billion (Roberts, 2010). It is unclear why during the
same time-frame, government contracting employees reduced the number of fixed-price
contracts used and replaced them with cost-reimbursement contracts (Roberts, 2010).
Government contracting organizations and suppliers negotiates cost-reimbursement
contracts based on estimates of cost for goods or services (Acquisition Central, 2014).
Cost reimbursement contracts ensure suppliers that the government will reimburse
the Supplier all reasonable cost occurred while executing the contract (Acquisition
Central, 2014). Government contracting organizations discourage employees from using
cost-reimbursement contracts due to the potential excessive cost to the government
(Bumgarner & Newswander, 2012). In 2009, Congress passed the American Recovery
and Reinvestment Act (ARRA). The ARRA provided that the federal government
organization communicate a preference for using fixed-price contracts instead of
costreimbursement contracts (Honek, Azar, & Menassa, 2012; Orndoff & Papkov, 2012).
The Office of Management and Budget issued guidance to government contracting
organizations regarding the use of cost-reimbursement contracts (OMB, 2003).
Fixedprice contracts offered to suppliers may be beneficial to the government contracting
organizations because government contracting employees can control costs associated
with fixed-price contracts. Although cost-reimbursement contracts provide extreme
benefits to suppliers, cost-reimbursement contracts can offer high cost and low value to
the government.
Effective contract liability exists when government contracting agencies
understand the prerequisites of contracting guidelines (Malatesta & Smith, 2012a).
Government contracting organizations can ensure suppliers’ responsibility for
implementation of contract requirements (Malatesta & Smith, 2012a). Government
contracting organizations use different contract designs (Kim & Brown, 2012). The
category of a contract comprises decision-making since the contract affects service and
performance (Kim & Brown, 2012). A government contract design reduces transaction
costs associated with delivering services (Lumineau, Frechet, & Puthod, 2011). The
design of each government contracts ensures best value to the government organization
and customer.
Political and economic external forces may affect government contracting
employees to go outside the scope of the contract; therefore, providing opportunities for
circumventing of the legal parameters (Johnston & Girth, 2012). When delivering
contracts, competition is expected (Lamothe & Lamothe, 2012). Competition offers a
level of cost control and provides quality delivery of goods and services. The length of a
government contract may influence contract performance.
Government contract period is an agreed time to deliver goods or services to
government contracting customers (Acquisition Central, 2014). Three elements of
contract length exist in government contracting: spot market transactions, long-term
measures, and contracts that specify a base period such as extending contracts for
additional periods of time (Amey, 2012). Government contracting organizations prefer
short-term contracts since a short-term contract reduces the risk to both the government
contracting organizations and suppliers (Mols, 2010). Amey (2012) assessed that
government contracting organizations use long-term contracts if uncertainty exists
regarding the outcome of a contract.
The value of the contract results from the contract type and extent (Malatesta &
Smith, 2012b). Fixed-price contracts determine the value ex-ante while
costreimbursement contracts determine the value ex-post (Acquisition Central, 2014).
Government contracting organizations can organize each contract to add length and value
(Malatesta & Smith, 2012b). If the production of the goods or service is easy, the contract
period is shorter. However, if difficulties occur with implementation of the goods and
services, the government may extend the agreement to account for unknown factors
(Acquisition Central, 2014). Government contracting employees must create government
contracts to reduce production costs, reduce transaction costs, offer a profit to the
supplier, and provide the government with quality goods and services. Different
government contracting organizations experience with administering specific contracts
and suppliers who provide the goods and services as specified in each contract.
Standards, Guidelines, Compliance, and Regulations
Detailing the standards and guidelines that govern government contracting is
essential to government contracting employees understanding the requirements for
conducting their jobs ethically. Public service ethics requires that companies establish
clear guidelines that conform to a changing global economic request for ethical standards
(Adams & Balfour, 2010). The Small Business Administration established guidelines that
provide adequate assistance to small businesses competing for government contracts
(Johnston & Girth, 2012). Organizational standards should govern the company’s ethical
values (Noordegraaf, 2011). Government contracting employees’ lack of adherence to an
organization’s standard operating procedures may be routine (Sinocruz, Hildebrand,
Neuman, & Branaghan, 2011). Sinocruz et al. (2011) maintained that inconsistencies in
establishing standard operating procedures might be a contributing factor to employees’
inconstancy.
Understanding how ethical guidelines affect private companies may help
government contracting employees to understand the importance of government rules. In
an effort to understand how guidelines affect organizational standards, Ailon (2012) and
Zhong (2011) looked at ethical decision making in large organizations such as ENRON.
Although Enron established ethical standards, employees regularly engaged in unethical
behaviors (Zhong, 2011). Unethical behaviors in Enron affected both individuals and
stakeholders (Ailon, 2012). Kumar (2014) considered standard operating procedures
(SOPs), and the impact that vague guidelines might have on management processes.
SOPs provide guidelines for employees to ensure proper completion of the job
(Manghani, 2011). An organization’s standards of conduct should contain the company’s
ethical guidelines and values (Griffith, Connelly, & Thiel, 2011). An organization’s
compliance plan should incorporate ethics (Rowe & Kellam, 2011). U.S. federal
regulations 5 CFR 2635-Standards of Conduct for Employees of the Executive Branch,
41 USC 423-Procurement Integrity Act, and FAR-Federal Acquisition Regulations
provide guidelines regarding government contracting personnel ethical behavior
(Government Printing Office, 2011).
Revisiting government contracting compliance and regulations is necessary due to
continued unethical behaviors by government contracting employees while administering
government contracts (U.S. GAO, 2009). Not all government contracting employees are
dishonest; however, to demonstrate ethical behavior when administering government
contracts, employees must recuse themselves from instances that may indicate unethical
behaviors (Acquisition Central, 2014; Clark, 2011). In case government contracting
employees encounter instances of unethical behaviors, knowing what and why
government contracting rules exist may help employees in their ethical decision-making.
Conforming to compliance and regulations can be difficult if no guidance occurs
(Adams & Balfour, 2010). Within the context of the government contracting, compliance
with FAR regulations exists. Due to continued unethical behaviors, the FAR Council
established new ethics laws that required the creation of written codes of business ethics
(Johnson, Feng, Stizabee, & Jernigan, 2013). Government contracting ethics required
augmentation (U.S. GAO, 2009). Compliance violations required the restructuring of the
government contracting regulations (Johnson et al., 2013).
FAR regulation echoes the government contracting compliance rules (Cohn,
2011). Re-engineered subsections of the FAR clarify areas of the original law that seem
confusing or unclear (Mukhopadhyay, 2011). Timely disclosures of unethical
observations in some government contracting organizations remained a problem (U.S.
GAO, 2009). Under Title 48 of the U.S. code of regulations, FAR part 3 prescribes
policies and guidelines for avoiding inappropriate business practices and personal
conflicts of interest when administering government contracts (Acquisition Central,
2014). Organizations may allow the government contracting employees to report
unethical behaviors without fear of reprisal (Cassematis & Wortley, 2013). If the
government contracting employees act unethically when administering government
contracts, the employee may damage the public trust.
FAR Part 3 provides ethics and compliance rules and requirements for individuals
doing government contracting business (Acquisition Central, 2014). The Competition in
Contracting Act (CICA) allows the U.S. GAO to disclose full and thorough
decisionmaking requirement in the government contracting (Maser, Subbotin, &
Thompson, 2010). Government contracting rules and regulations provide tools that may
exclude government contracting employees from behaving unethically (U.S. GAO,
2009). Congress established additional guidelines and regulations to assist government
contracting employees when administering government contracts.
