Week_5_Responses **michael smith**
RonRob44
fc_week_5_responses.docxLearning Activity #1
Part of this week's reading requirement is DoD guide on creating a competitive environment. With the advent of the FAR in the mid-1980s Sealed Bidding, once the preferred Federal Acquisition method, has fallen out of favor and is seldom used. But it remains part of the FAR and is allowable. What are some of the advantages of Sealed Bidding over other acquisition methods?
Response 1:
Part of this week's reading requirement is DoD guide on creating a competitive environment. With the advent of the FAR in the mid-1980s Sealed Bidding, once the preferred Federal Acquisition method, has fallen out of favor and is seldom used. But it remains part of the FAR and is allowable. What are some of the advantages of Sealed Bidding over other acquisition methods?
I would think that in appropriate situations, the acquisition method of Sealed Bidding would be a transparent and cost effective option in comparison to other methods. That is, only in situations that do not require a transition into negotiation with bidders after all the bids have been received and evaluated. In that case, it may have been more time effective to start with a process that uses negotiations from the beginning. Doing some digging for when it is appropriate to used Sealed Bidding, I can across eBidSystems website that has a procurement blog. There I found an interesting article titled Sealed Bidding: When Does it Make Sense? (Schmidt, 2014). The author, Tim Schmidt discusses the criteria outlined in the Federal Acquisition Regulation (FAR) for use of Sealed Bidding, but he also expounds on real world situations that one should consider using Sealed Bidding to prevent unnecessary chaos or unusual acquisition practices. He also discusses examples of risk factors that should be considered when deciding to use Sealed Bidding or not, such as; mega-bids, emerging markets, decentralized procurement, and commodity procurements.
Response 2:
Sealed bidding is one of the three major federal procurement procedures, the other two being Simplified Acquisition (FAR 13) and Contracting by Negotiation (FAR 15). Sealed bidding satisfies all Competition in Contracting Act (CICA) requirements. (ACQuipedia, 2017) Sealed bidding is when the contractor omits the estimate/bid for the project without an auction style award by allowing all participants to know the other contractors bid/estimate.
Learning Activity #2
Part of the reading included different contract types. Select a contract type and discuss the pros and cons of its use.
Response 1:
Incentive contracts are designed to obtain specific objectives in an acquisition. According to FAR, subpart 16.401, those objectives are:
· Establishing reasonable and attainable targets that are clearly communicated to the contractor
· Including incentive arrangements that are designed to motivate contractor efforts that may be generally overlooked and to discourage inefficiencies
There are various type of incentives that a contract can be based on, it can be for performance, delivery or cost just to name a few.
The advantages to incentive based contracts is that a goal is provided with a specific delivered outcome to the provider if they meet the expectations outlined in the contract. It can encourage more efficiencies from the providers/contractor. Contractors are paid based on how they handle their schedule, costs and performance.
That being said, these can also be subject to interpretation whereas what is written out in the contract may be interpreted differently depending on who is reviewing the language. It can be extremely time consuming to administer this type of contract, the incentives created may not necessarily be related to cost or performance and it provides opportunities for contractors to get paid for things they may not have necessarily earned.
Per the FAR par 16.202-1 Firm-Fixed price is defined as “A contract provides for a price that is not subject to any adjustment on the basis of the contractor’s cost experience in performing the contract. This contract type places upon the contractor maximum risk and full responsibility for all costs and resulting profit or loss. It provides maximum incentive for the contractor to control costs and perform effectively and imposes a minimum administrative burden upon the contracting parties. The contracting officer may use a firm-fixed-price contract in conjunction with an award-fee incentive (see 16.404 ) and performance or delivery incentives (see 16.402-2 and 16.402-3 ) when the award fee or incentive is based solely on factors other than cost. The contract type remains firm-fixed-price when used with these incentives.
A benefits of Firm-Fixed price (FFP) contracts is that they are very low risk type contracts for the Government. This is due to the fact that the Government pays for a service/supply and not the man hours it takes to come to that service or supply. Additionally, FFP contracts are low maintenance contracts. Once the contract is award there is not much effort needed on the Government’s part to maintain the contract until the service or supply is delivered/done (Dillard). The main disadvantage of a FFP contract is its inability to be changed without a contract modification needed. Say a contract was wrote for the preventative maintenance of a machine. Once the contractor got the machine open he noticed that a part was broken. Well if that part was not covered under preventative maintenance the Government would have to either create a whole new contract to repair that part or modify the existing contract to include the repair. But the contractor would still have to come out on another day to do that repair because he could not just go ahead and fix it due to not being contracted for it.
