Expert answer:Need Business and Finance help with BUS 315 Cost a
Answer & Explanation:”Fixed Price –vs- Cost-Reimbursement” Please respond to the following:Compare and contrast the fixed-price and cost-reimbursement for the VectorCal navigation system. Determine which type of costing mechanism best serves VectorCal’s needs. Provide a rationale for your response.From the e-Activity, compare and contrast the characteristics of the federal contact project that you researched with the contract used during the VectorCal scenario. Specify which characteristics you believe to be the most and least important for any project, and justify your rationale for each.Week 2 e-ActivityResearch on the Internet to find at least one (1) project where either a fixed-price or cost-reimbursement contract was successfully used in a federal contract. Study the characteristics of the project that may have influenced the use of that particular contract type. Be prepared to discuss your results.bus315_week_2_scenario_script_8_27_13.docx
bus315_week_2_scenario_script_8_27_13.docx
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Slide #
BUS315 Week 2 Scenario Script: Contracting Methods and Contract Types:
Pricing Implications
Scene/Interaction
Narration
Slide 1
Scene 1
Semi-large building
(VectorCal) and have avatar
inserted to represent her
entering the building
Slide 2
Scene 2
Dominic: Good morning Sally!
Introduction to the week
Welcome back!
Takes place in Dominic’s
office
How was your first week at VectorCal?
Sally: Well hello Dominic. . . Last week was
fantastic! I can’t believe how much I learned in
one week at this position.
Dominic: Great because this week you are going
to be working with Melissa Mason our
Department Head for Government Contracting to
talk about contracting methods, sealed bidding,
and government contract types.
Please follow me!
Dominic leads Sally down the
hallway to Melissa’s office
Sally: Sounds good! Let’s go!
Slide 3
Dominic: Sally, I would like to introduce you to
Melissa again, you met during our introduction
Melissa’s office to go over key conference last week. As I said before you will
concepts related to government be working with her this week on a special
project involving a government contract.
contracting
Scene 3
Dominic: Melissa this is Sally, you two met last
week briefly.
I would like you to show Sally what you and this
department do to make sure we are following all
of the U.S. government and military regulations
for conducting business.
Melissa: I’m excited to get started Dominic! I
would very much enjoy showing Sally what we
do here in the Government Contracting Office.
Melissa: Sally, please follow me and let’s get
started.
Slide 4
Melissa: So where should we start at? I think a
good place to start is with the information
Melissa’s office to go over key Dominic gave you. What did Dominic cover
concepts related to government with you?
contracting
Sally: Well, last week I spent a lot of time with
Dominic as he covered a lot of what you all do
here at VectorCal.
Scene 4
Melissa: Great! Can you tell me a little bit about
what you know about government contracting?
Sally: Sure thing! I remember when I was in
school we learned that the federal acquisition
regulations have two acceptable procedures for
obtaining competitive prices. I’m pretty sure the
first procedure dealt with sealed bidding. I
recall this is a process by which government
needs are made known by a solicitation called an
Invitation for Bids. I also know that sealed
bidding is used when the government contracting
officer decides that adequate price competition
exists and that the specification or statement of
work is well enough defined to enable offers to
bid on a fixed-price basis.
Melissa: That is a great start! You have properly
identified one of our first procedures. We will
now move on to the second procedure we may
utilize. But, first do you have any questions?
Sally: I actually do have one question. I noticed
that VectorCal doesn’t really have that much
competition for its products, especially inside the
country, so which approach does the government
use with your company?
Melissa: That is a very good question and I will
explain this operation to you now. The second
acceptable procedure for obtaining competitive
prices is referred to as competitive proposals.
This is a process by which the government needs
are made known by a solicitation called a
Request for Quotation or a Request for
Proposals. Here at VectorCal, weare the only
company already producing the navigation
system for General Atomics, the company that
produces the Predator C Avenger. As a result of
this, we have already achieved a good set of cost
cutting strategies on a large scale through the
buying practices for the materials needed to build
our systems.
Sally: That definitely adds some clarity now!
Melissa: The process doesn’t end there though!
Next,my department had to see which of the five
categories of contract types is being used by the
government. These five categories are important
to identify and consist of the following:
Fixed-price contracts;
Cost-reimbursement contracts;
Incentive contracts;
Indefinite-delivery contracts; and
Time-and materials contracts.
We will look at the first two
categories,thusfixed-price and costreimbursement contracts. The other three
categories are special modifications of either
fixed-price contracts or cost-reimbursement
contracts. We can take a closer look at these
three other categories next time you are rotating
in my department.
Sally: That sounds good to me! I’m excited to
explore these concepts further!
Melissa: That’s great! Let’s get started, Sally
what do you know about these contract types?
Slide 5
Sally: Well I know that in fixed-price contracts,
the costs of performance can be predicted with
Melissa’s office to go over key great accuracy. Firm-fixed price contracts places
concepts related to government the total cost risk on the contractor. The person
whobids or proposes to a firm a fixed price to do
contracting
work is guaranteeing to deliver the work to meet
the requirements for that amount of money. I
think that when the government accepts the offer,
it is obligated to pay that amount of money and
the contractor is similarly obligated to deliver or
perform the work for that fixed price. Is this
correct?
Scene 5
Melissa: You are very correct with your
explanation. When determining the cost of our
materials, the direct and indirect expensesfor the
future was something the CEO was not
comfortable with.
Sally: What about cost reimbursement contracts
which are almost always awarded as the result of
negotiations? I know that cost-reimbursement
contracts provide for payment of the
contractor’s allowable incurred costs to the
extent prescribed in the contract. Aren’t these
contracts used when the costs of performing the
contract work cannot be predicted with high
accuracy at the time of signing the contract?
Melissa: That is a very excellent point and an
even better question! Keep in mind that cost
reimbursement contracts establish an estimate of
total costs for purposes of obligating funds and
stating a ceiling that the contractor must not
exceed except at its own risk. This also means
that the government is carrying all, or essentially
all of the cost risk in a cost-reimbursement
contract.
Sally: That makes a lot of sense now! I guess I
knew more about these conceptsthanI originally
thought! Melissa, what method does VectorCal
use?
Melissa: Well, it really depends on the contract.
For example, if the contract calls for a fixed fee,
the government must pay that fee. So in this case
VectorCal would be using a fixed-price contract.
Sally: Thank you for sharing that with me, I can
see why the identification of categories is an
important task.
Melissa: I sense that you have a good foundation
for the many tasks that my office does to support
the company.
Let’s continue our discussion with something
new.
Slide 6
Scene 6
Melissa: Sally, Have you ever heard of the
Simplified Acquisition Procedures?
Melissa’s office to go over key
concepts related to government Sally: I think I remember a little about this
concept from one of my classes. Doesn’t
contracting
Simplified Acquisition Procedures apply to
purchases below the small purchaselimitation; I
recall this as being one hundred thousand dollars
for all agencies?
Melissa: You are doing great! What else do you
recall?
Sally: I’m pretty sure these procedures do not
apply to ordering from Federal Supply Schedules
or delivering orders placed against existing
contracts. I also know that the small purchase
and simplified purchase procedures emphasize
simplicity and minimal administrative costs. I
remember that oral solicitations are normally
used, although very simple written quotations
may be used under certain circumstances.
Melissa: Right you are! Great job Sally! Where
did you attend school at again? I’m shocked
because most of our new employees don’t
usually know nearly as much as you do.
Sally: I attended Strayer University of course!
Melissa: Wow Strayer really educates and
prepares their students for successful careers! I
need to look into this school and see if they offer
an online program I can enroll a couple of my
employees into.
Melissa: Sally, I would now like for you to go
through some interactive training materials to
help build upon some key concepts from today’s
lesson.
Slide 7
Scene 7
Tab interaction that will have
audio for each tab.
Users will click each item and
be greeting with images and
narration.
Simplified acquisitions are theprocedures
applied to purchases below the small purchase
limitation, which is presently one hundred
thousand dollars for all agencies. These
procedures do not apply to ordering from Federal
Supply Schedules or to delivery orders placed
against existing contracts. The small purchase
and simplified purchase procedures also
emphasize simplicity and minimal administrative
costs.
Cost reimbursement contracts arecontracts that
provide for payments of the contractor’s
allowable incurred costs to the extent prescribed
in the contract. These contracts are used when
the costs of performing the contract work cannot
be predicted with high accuracy at the time of
signing the contract. A cost reimbursement
contract also establishes an estimate of total costs
for purposes of obligating funds and stating a
ceiling that the contractor must not exceed
except at its own risk.
Fixed-price contractsplace the total cost risk on
the contractor. The offer who bids or proposes a
firm a fixed price to do work is guaranteeing to
deliver the work to meet requirements for that
amount of money.
Sealed Bidding is the activity of preparing an
acquisition request that describes its needs and
cites funds for the acquisition. The upcoming
acquisition is publicized through distribution to
prospective bidders and posted in public places.
The price that was bid on by each offer becomes
publicly known once the bids are opened. Sealed
bidding always leads to a firm-fixed-price
contract or fixed-price with economic adjustment
contract.
Slide 8
Scene 7
Check Your Understanding
Match correct category:
1) Simplified acquisition
2) Cost reimbursement
3) Fixed-price
4) Sealed Bidding
The on the right hand side
place –” Procedure”
“Contract”
1 & 2 are procedures; 2 & 3
are contracts
Slide 9
Scene 9
Melissa: Great job going through the training
materials Sally!
Conference room with Melissa
to go over the week’s key
points.
Let’s now summarize what we discussed this
week.
First, we covered the two acceptable procedures
for obtaining competitive prices. We learned that
the first such procedure is sealed bidding, which
is used when the contracting officer decides that
adequate price competition exists. We also
discovered that government needs are made
known by a solicitation called an Invitation for
Bids. Later we noted that sealed bidding leads to
a firm fixed-price or firm fixed-price with
economic adjustment contract.
Sally, what do you remember about
competitiveproposals?
Sally: Well, we learned thatcompetitive
proposals are the second acceptable procedure
for obtaining competitive prices. Government
needs are made known by a solicitation called a
Request for Quotation or a Request for
Proposals.
Melissa: Very good Sally. Later, we
discussedcost reimbursement contracts and
learned that these contracts are always awarded
as the result of negotiations. These contracts are
used when the costs of performing the contract
work cannot be predicted with high accuracy at
the time of signing the contract. We alsosaw that
the government is carrying all, or essentially all,
the cost risk in a cost-reimbursement contract.
And of course, we also looked at simplified
acquisition procedures, which apply to purchases
below one hundred thousand dollars. I was very
impressed that you already knew brief
information about simplified acquisition
procedures. We learned that for such
acquisitions, the contracting officer has broad
discretion in determining price reasonableness,
but this determination can only be based on some
form of price analysis.
Sally: Thanks for the review Melissa!
I felt that I learned a lot during my time with you
this week. I also feel that I really expanded my
knowledge on government contracting and
actually knew a lot more about this subject thanI
thought.
Melissa:It has been a pleasure working with you
this week Sally. I look forward to working with
you again and showing you other key aspects of
my department.
Until then, don’t forget to complete your weekly
discussion questions based on your learning
experiences this week.
Have a good rest of the day and I will see you
soon!
Sally: Thanks Melissa and I truly appreciate all
the time you have spent with me! You really
opened my eyes to what you’re department does
and how it operates.
Melissa: It was my pleasure! Take care now!
…
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