Examine two (2) reasons why your business would qualify under the basic concepts of the HUBZone Set-Aside Procedures. Provide a rationale for your response.
The business will qualify under HUBZone Set-Aside Procedures since it can be categorized as a small business under the SBA standards. The business is also exclusively owned and controlled by American Citizens, Indian Tribes, and Community Development Corporations. Lastly, over 35% of the people employed by the business reside in a HEBZone(Feldman, 2013).
Analyze the primary way(s) in which a multiyear contract would benefit both the Navy and your business.
A multiyear contract is any contract that requires over one fiscal year to complete. In other words, a multilayered contract’s performance must extend past the current fiscal year. Such contracts have a number of advantages and disadvantages for both the Navy and the small business. Some of the advantages include:
A multiyear contracting may reduce expenses associated with the contract. This form of contracts allows the business to amortize nonrecurring initial costs over the contract’s life span as compared to recovering them within the first year, which would be the case in non-multiyear contracts. Since other contracts do not guarantee future contracts, contractors usually want to recover all the start up costs within the first year thus increasing unit prices.
A multiyear contract can potentially enhance the quality of products and services delivered. Multiyear contracts reduce business uncertainties, which would enable the business to maintain a steady workforce. This would be an advantage to both the navy and the business(Feldman, 2013). Finally, a multiyear contract tends to increase competition between contractors by enabling small businesses to compete in an environment where initial start up costs would otherwise hinder them from competing with larger concerns. This not only helps the business compete fairly with large farms but also increases Navy’s chances of getting a good contractor at a reasonable price (James, 1963).
Determine whether your bid proposal should be based on a fixed-price, a cost-reimbursement, or a time-and-materials type of contract. Provide a rationale for your response.
Selecting the best contract type is largely a matter of negotiating and it requires the application of healthy judgment. Negotiating the type of contract is closely related to negotiating prices and thus they should be deliberated together. The main aim is to negotiate a contract type and estimated cost that will lead to equitable contractor risk and thus give the contractor the greatest possible incentive for professional and cost-effective performance.
Contract selection is founded on ambiguity of scope, allocation of risk, requisite for foreseeable costs, and the impact of meeting preset milestone dates. The contract should be a fixed-price contract. This type of contract was selected since it is suitable for long projects that run for years. A fixed-price contract best exploits the fundamental profit motive of any business and is ideal when the risk involved is either marginal or predictable with a reasonable certainty.
A fixed-price contract is generally an agreement between the project organization and an entity that will provide the service or product sought after at a fixed price that has been agreed upon, in this case the entity will be our business. A fixed contract normally specifies the product or service quality, the project’s duration, and the cost of delivering the goods or services. There are several types of fixed price contracts. When the scope of work is precise, clear and unlikely to change, the type of fixed price contract used allows for predictable costs. The obligation for managing the project and ensuring that all project’s needs are met is placed on the contractor.
Fixed-price contracts require the availability of at least two or more suppliers that have the qualifications and performance histories that assure the needs of the project can be met. The other requirement is a scope of work that is most likely not going to change. Developing a clear scope of work based on good information, creating a list of highly qualified bidders, and developing a clear contract that reflects that scope of work are critical aspects of a good fixed-priced contract.
Determine the category of incentives that you are willing to offer (i.e., cost, schedule, or performance). Provide a rationale for your response.
Performance incentives are usually considered when dealing with specific products or specific elements of the servicer’s performance. These incentives are designed to relate the fee charged to outcomes achieved when compared to specific targets.
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