Government Contracts

“What is this class about,” I thought to myself when I first registered for the Intro to Acquisition and Contract Management Class. Once I attended the class, I quickly realized that Government contracting is a big deal, because this is how the Government procures their goods and services. The U.S. federal government is the leading consumer of goods and services in the world, awarding Billions in contracts every year. There are rules and regulations mandated by Congress that have to be followed when procuring goods and services for the government. The guiding authority used for the acquisition process is called the Federal Acquisition Regulation (FAR). There are also supplemental regulations used depending on the Federal Agency. Two examples
Fixed-price contracts is the Government most favored type of contract. This is where the contractor provide all of the labor and furnishes all the materials for a certain amount of dollars. If the contractor’s estimates are wrong or unforeseen costs causes the contractor to spend more to complete the job, those costs are absorbed by the contractor. It is vital for the contractor to be thorough when bidding for a project because of the potential risk that may result for an inaccurate bid (Feldman, 2016). A good example of a fixed price contract is program support services, or nonprofessional services contracts. The alternative to a fixed price contracts is cost –reimbursement contracts. This type of contract, the contractor agrees to furnish labor and provide the materials for a certain amount of money, plus any additional charges that was incurred during the course of the contract. A great example of a cost reimbursable contracts is NASA’s Space Launch Systems Core Stage Contract. The contract is considered a research and development contract because as the building of the exploration rocket progress the requirements changes. These contracts are usually used when competitive negotiation is the chosen method. Fixed priced contracts and cost reimbursement contracts are vastly differs especially when it comes to risks and
The most commonly used types of fixed price contracts are, firm- fixed- price (FFP), fixed price with economic price adjustment (EPA), fixed price with incentive (FPI), and fixed price with award fee (Feldman, 2016, 2014). FFP contract is used when acquiring commercial items or other supplies and services when there are reasonably definite specifications, and fair and reasonable prices can be established at the outset. The contractor agrees to provide supplies or services to the procuring activity for a specified price. A great example of a firm- fixed price contract would be a company that make copy paper or a company that sells bolts and nuts. These items are commercial items in which sound prices can be developed. FFP is the most favored type of contract for the government. The fixed price EPA is used when the stability of market or labor conditions during an extended period of contract performance is uncertain, and contingencies that would otherwise be included in the contract price can be identified and separately addressed in the contract. Contractor agrees to provide supplies or services to the procuring activity for a specified price that can be adjusted if certain conditions change during performance of the contract. FPI contracts are used for adjusting the contractor’s profit and establishing the final contract price by a formula based on the relationship of