Contracting and Payment Options - Essay Example

 Contracting and Payment Options Introduction of appropriate payment options The federal government stipulates various payment options that suit different types of contracts. Hence, for the purchase of software applications to the processing of tax returns, it is critical to conduct a comparative study on some of the options. Arguably, the use of “payments under fixed-price research and development contracts” recommends that the contractor should avail the valid purchase documents for the government to remit the payments. The documents include vouchers, invoices, or any other valid payment and purchase model bearing the price stipulated in the time of contracting. Seemingly, payments are availed for the completed part of the contract in a continuous process (FAR 2015). On the other hand, the use of the 2013 “prompt payment” method is applicable to the purchase of the tax processing software. The payment option stipulates that if a contractor completes the assigned task in due date, the government would authorize payments. In the third case, one would opt to apply the “limitation of cost” model of 1984. The method stipulates that the government should make payments in a period of 60 days. Basically, the period ranges from 30 to 90 days. From a critical perspective, the “payments under fixed-price research and development contracts” eases the congestion of payments to different contractors. However, it is risky for the contractor in the event of price fluctuations. On the second account, the “prompt payment” suffices other payment options as the contractor is able to acquire funds on the successful completion of any part of the task. However, the government stipulates the possibility of delayed payments at the event that the contractor fails to honor the contractual agreement. Alternatively, the application of the “limitation of cost” approach is vital for reducing the risks incurred on the government’s side. It is notable that the option enables the government to evaluate the quality of the completed contracts prior to the remittance of payments (FAR 2015). The most appropriate option for the purchase of the tax processing software is the prompt payment option as it would allow the acquisition and implementation of the IRS system. The three elements of the Prompt Payment Act According to “Subpart 32.9-Prompt Payment” of the Federal Constitution, the act stipulates the ideal elements to justify effectiveness in contracts under the prompt payment approach. The first crucial element is that government agencies should effect payments on a timely basis for all products delivered by contractors. For instance, the IRS just like other federal agencies and departments is accorded the mandate to issue payments promptly after receiving services or goods from its contractors. Products such as the software for processing tax returns are critical for the IRS operations; hence, the need for prompt payments. Subsequently, the act stipulates the need for the contractor and the government agency to understand the withstanding penalties at the event of lateness in the delivery of services or payment for the completed tasks (FAR 2015). For example, if the delivery of the software for processing taxes is delayed, then the IRS should impose the ideal penalty. Similarly, the IRS would bear the penalty to the extent that it fails to make payments after the software is delivered on time. Lastly, the act allows federal agencies to accommodate any substantial and economically justifiable discounts from the contractors. In elaborating the case, a government agency such as the IRS will be acting legally if it opts to accept a certain percentage discount on the cost stipulated by the contractor for the tax processing software. The Congress should amend the Prompt Payment Act over time in order to ensure effectiveness in this payment option. For instance, the inclusion of other electronic and updated payment techniques to the existing methods would serve to diversify the model of payment. Arguably, the changes would lead to the inclusion of different types of contracts while eradicating chances that could lead to delays and penalties. Limiting of governments costs through It is prompted through the FAR (Federal Acquisition Review) that the governments address costs as either unallowable or allowable for all its contracts. In order to curb the occurrence of unrealistic costs, the federal government uses four approaches. For instance, the implementation of proposal analysis is an approach that ensures the evaluation and eradication of contracts for the benefit of the contracting parties. Following the application of analysis, any government agency scrutinizes the nature of the contractors’ prices. The intensity of the analysis allows for the agency to identify the genuineness of other fees that are associated with the successful completion of the contract. In the majority cases, government agencies eradicate costs by compiling the pricing and cost data. Subsequently, the data is determined whether realistic or fair (FAR 2015). During the analysis, officers establish reasonable aspects that would balance the impact of the determined costs on the contracting parties. It is significant to understand that the association of the cost analysis approach would yield competitive results with the inclusion of a payment option. Notably, the limitation cost option is influential to the reduction of government as it would allow for the evaluation of the contracting period for every activity. Following cost analysis under the limitation of cost option, the agency, and its contractors would agree on the completion period of the contract and the cost-sharing methods. Under such circumstances, the government is able to receive prompt and timely information on the contract’s progress and whether it would match the ideal schedule. Proposed strategy Critically, the incorporation of limiting costs to the government’s audit rights would serve in the eradication of fallacy in the accounting of financial activities for every fiscal year. Therefore, it would be strategic for the federal government to conduct electronic computation over its agencies’ contracts. For instance, a computation over the IRS contracts would determine the payment options used, the costs incurred, and the discounts allowed. The strategy remains absolute in ensuring that the financial results compiled after every financial year would bear the accurate and unbiased information (Federal Register, 2010). Presumptions are that the government would comprehend dependable results through the electronic commutation of limited costs, a process that would ease the auditing process. Revisions suggested to TINA The Truth in Negotiations Act stipulates the protocol of reviewing and ensuring that cost and pricing data in recorded without drawing negative concerns. However, the act faces challenges in the procurement of technical data and computer software. Ideally, the dynamic changes in the computer generation cause the occurrence of such difficulties, and the TINA becomes vulnerable. Since the act seeks to review and recommend fair for all commodities procured by the government over the different categories of contracts, it is vital for the federal state and its congress to revise it accordingly. In the case of procuring technical data and computer software, the legal bodies should understand that the contractors are vulnerable to the ever-changing prices for the equipment (FAR 2015). Therefore, it is appropriate to repeal the act and enforce an exemption that will allow contractors from these categories to acquire and account for the costs incurred in the purchasing process. Arguably, the changes in technology force government agencies to ensure the installation of an updated platform for the computation and relay of data and information. Such aspects are achievable through the acquisition of updated software. On the second account, the government should include a special clause that would recommend a mandatory submission of data concerning the cost and price fluctuations. The purpose of revising the act with respect to this perspective revolves around the issue of adjusting information for every change in occurrence. The incorporation of the clause to the existing law would suffice in the improvement of prompt computation practices such that every costing and pricing change is assessed and evaluated timely for the issuance of mutual directives (FAR 2015). The two revisions would enhance credibility and trust between the government agencies and contractors. A comparative review of the Buy American Act’s exceptions The act evaluates the different types of foreign supplies that could be accessed by the government or the general public at a given time. Further, the act enforces laws in order to control the foreign contracting practices outside the domestic market of the United States. The act includes exceptions that aim to recommend or restrain economic, political, or socio-cultural benefits. For instance, the act, through subsection 225.872 highlights regulations aimed at controlling the public interests and the decisions that could emerge therein. Arguably, the exception enlists countries whereby the public can access supplies or engage in contracts without facing any legal embargoes from the federal government (Federal Register, 2010). The exceptions dictate the essence of comparing the socio-economic, political, and technological benefits of the foreign supplies to those present in the domestic environment prior to the purchase decision. On another hand, the act provides an exception to the access of supplies for materials that are salient to satisfying a given utility, and are unavailable in the US economy. Through the exception, the act stipulates that individuals and government agencies have the mandate to assess the available offers from the American market, and decide to acquire the required products from the foreign markets to the extent that the home market seems incapacitated (Federal Register, 2010). In conclusion, the two exceptions are vital in the development of a liberal relationship between the United States and other global economies. References FAR. (2015). “Federal Acquisition Regulation (FAR): Payments, 52.232-1.” Acquisition.GOV. Web. https://www.acquisition.gov/sites/default/files/current/far/html/52_232.html FAR. (2015). “Federal Acquisition Review (FAR) Subpart 32.9-Prompt Payment.” Acquisition. GOV . Web. https://www.acquisition.gov/sites/default/files/current/far/html/Subpart%2032_9.html FAR. (2015). “Federal Acquisition Review (FAR) Subpart 532.9-Prompt Payment.” Acquisition.GOV. Web. https://www.acquisition.gov/sites/default/files/current/gsam/html/Part532.html Federal Register. (2010). “Federal Acquisition Regulation: Truth in Negotiations Act (TINA) Interest Calculations.” Federal Register. Web. https://www.federalregister.gov/articles/2010/09/22/2010-23589/federal-acquisition-regulation-tina-interest-calculations FAR. (2015). “Federal Acquisition Regulation (FAR): Buy American Act.” Intelligence legal Information. Web. http://regulations.vlex.com/vid/far-buy-america-nonavailable-articles-22728290 Read More