Federal Contracting Activitities and Contract Types - Article Example

Federal Contracting Activities and Contract Types Federal Contracting Activities and Contract Types VectorCal Company: Serving the government and its concerning department, the private sector and individuals too for security reason, for a long time and successfully too through drone navigation, VectorCal came into being a decades back, when suppliers were few and competition was low. It is also counted in those few firms whose dealing with majority of customers have proven to be successful and one of the major reason behind their success, howbeit this taste of success could not be enjoyed by the firm for a longer period of time, as to why this decline came? With the passage of time it seems that VectorCal has been thrown out of track due to the penetration of different firm and its disability (as a result of using feeble forecasting method) to break even with the consumers increasing demand. As the sayings go ‘the customer is always right’, it seems VectorCal had nowhere to go. MyCompany: Mycompany initially aims to serve the consumers locally and then in foreseeable future, will fare on international horizon. As aforementioned, the market for drones had expanded at a high pace as a result of insecurities arising at an alarming rate, Mycomapny was determined and decided to create more demonstrative and uncontaminated drones, which they did and successfully too. However, establishing a sense of success simply on the basis of making more friendly drones was incompatible, as no one can dispatch the fact that there were several successful firms operating in drone making business, way before we joined the market. On the other hand, ignoring the gaps these old firms were providing would have been a fool’s act; hence, the launching of Mycompany that had been as successful as any other established firm. Lastly on of the most appreciating aspect of the company’s technology advancement was launched in the market recently and the response they received was spectacular, which also earned them one of the government contracts; this advanced technology is a drone in a size of bug and is more effective and efficient than the large Unmanned Aerial Vehicles (UAVs). Contract for VectorCal: In 2011 VectorCal won the government contract as a result of uproar for drone use in Northeast Florida, which in turn was a result of producing more jobs. Even before getting the contract, this company had hired extra pair of hands to overcome their one of the most lacking point – loe production of drones. Their one of the successful drone by the name of TechPri was launched in the market in 2003. This drone was initially fabricated for the use of US army, but had been exported on international level for some time in countries such as Canada, India and Israel. It was reported that the VectorCal had beat others firm and secured the contract worth of $5.5 to manufacture 40 small unmanned aerial vehicles and 11ground control stations for the American army. Furthermore, the cost incurred for the manufacturing of the drone and supplying the control station was around $18,000. Nonetheless, this was not the first time US army had extended their approval to the firm regarding TechPri, since this same technology was hired by the army regarding the Afghanistan drone attacks. The most significant reason behind US government granting this contract to VectorCal was that they had done business with them before and they had used the same drones (TechPri). The result of the previous contract was very satisfactory for the US army, as the firm was able to keep the terms of the contract promising and intact. As VectorCal was seen stating “The contract attained its mission, we enabled the army to locate bad guys and saved lives”, one can easily gauge the level of readiness that army had regarding VectorCal. Nevertheless, a previous successful business was not the only reason for granting the contract; instead TechPri drones weight no more than 2 pounds and the surveillance system could be carried out in the field with the help of a sole soldier. Similarly, the drone’s quick deployment aided the soldiers into amalgamating information into the battlefield without throwing any hindrance. Contract for MyCompany: As MyCompany have no great years to back up their technologies, still this firm was able to snare one of the major contracts from the US army recently in 2011. As it had been mentioned above that one of the greatest technologies was introduced by MyCompany, which was in the form of evolvement of drone into small bugs. The contract extended to the firm included the training of the American army technicians and soldiers, which induced the manufacturing of the bugs and its operating procedures. As innovation and development is always welcomed in US army, MyCompany had low chance of losing this contract. As per prediction, Mycompany won the contract worth of $18.8 million for the time period of three years, meaning it will be concluded in the current year. These bugs named reapers are deadly and ferocious, since they can run for 11miles per hour and can latch on a windowsill too (Shanker et al. 2011). This long term contract is a very plus point for the Mycompany image, as they are new in the field and yet had been able to win such an important and long contract. To examine the reason behind this granting of contract, studies and research has shown that where the large drones had been effective in doing their jobs, there the handling and manufacturing of these technologies has become a nuisance and a wastage; therefore the American army is ready to invest heavily in those company who are willing and able to adopt to new changes and are able to provide the country with low cost and highly efficient drones (Pescovits et al. 2010). In light of this research, it was no surprise that the government chose Mycompany for this contract. Types of Contract for VectorCal and MyCompany: Contract type is crucial for the performance of the contractor under a contract. Furthermore, it provides the contractor with the legalities and boundaries of the contract and under which circumstances will the contract remain or dissolved. The contracts that will be eligible for both the parties are fixed price, cost reimbursement and labour-hour/time and material contracts (Meredith et al. 2003). The first contract that is the fixed price contract compels the contractor to successfully execute the contract and adequately supply the services and good as per agreement. This type of contract is most beneficial when the contract is regarding those supplies and services, which can be measured easily (Meredith et al, 2003). Therefore, as the defence department of government is drawing contract for the firm who specialises in drone navigation supplies, so the production can be measured in quantity as well quality, making this contract eligible for both the firms. Second contract is of cost reimbursement; here the payment of all the sustained cost should be within the cost standard and should not be obtrusive. Thus these costs should be within the already decided boundary and what is mentioned in the contract. Not only this, the contract will ensure that the contractor is putting his best effort into the work and most importantly, government will be particularly benefited from this contract as it will put less burden on them, financially. Hence, as this contract leave little space for the contractor to reveal uncertainties and if by chance there is an economic recession, then government wouldn’t be held responsible for the extra costs incurred. The last contract that would be signed between the firm and government will be of labour-hour, time and material contract. In this particular contract, government will sign over fixed prices for the cost incurred such as buying of material and paying labours. Since, both firm are involved in manufacturing sector, so they both have to pay for the material, wages and other different cost, hence making them eligible for such contract. VectorCal and MyCompany Direct and Indirect Cost: The direct and indirect cost for both the firms will be similar, due to the nature of the business they both are operating. Direct cost mostly relates to those expanses which are directly linked to the drone navigation technologies; however the indirect ones are indirectly related to the manufacturing of these technologies. Moving to the direct cost, these include raw material, labour and technology costs. Since, raw materials mostly consists of iron, steel, magnets and wires, the firm will be able to acquire such sources within America easily evading any extra cost that would have been wasted on searching for these materials. However, the low number of competitors will ensure that they would have to buy these materials at a high price. Next is the labour cost, this will include paying wages to engineers, experts, technician and workers of research and development department. Finally we approach the technological costs, it is essential for the contractor to employ best quality technological gadgets such as sensors, camera, computing system, image and video processing and Wi-Fi communications, because higher the qualities of technological devices, the better the chance of satisfying the contract and producing successful navigation system. The indirect costs for both the firms include security, factory insurance and fuel expenses. As the contract is made with the government, so the issue of security and discretion automatically springs up. The company would have to pay for extra and adequate security so that their essential material and formulas cannot be stolen or cheated. Then there is the factory insurance expense, since that production of the drones will be on large scale and huge factory space would be allocated, so insurance expense is unavoidable. Last is the fuel expense, as the drones can be functional only if fuel is present, hence to test the system would require a good amount of fuel. The data for both direct and indirect cost incurred by the firm will be crucial, as the government will examine it too weigh up their decision and usually the firm with low direct cost are preferred, as they direct expenses cannot be avoided, but indirect one can certainly be reduced. According to the whole report and on the basis of data, the company should award the contract to MyCompany, because along with their innovation in drone navigation technology such as reaper drone of the size of bugs, this firm has also won a previous contract with the firm for a greater period of time and the machine they uses are easier to handle and successful in producing more satisfying result. Furthermore, as the firm is new and loaded with heavy investment, it is more likely they are to produce with quality and upgraded system than the VectorCal. Works Cited Meredith, M. (2003). Contracts and types. Communication of ACM, 41-47. Pescovitz, D. (2010). Small Unmanned Aerial Systems and the National Air Space: How the US Government Can Spur DIY Drone Innovation. Occasional Papers in Science and Technology Policy. Shanker, E. B. (2011). War evolves with drones, some tiny as bugs. New York Times. Read More