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Contract Cost and Documentation for the Navy Essay

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Updated: Apr 20th, 2021

The final stage of the contracting process is the most important. It is extremely necessary to assess all the possible risks and the overall economic situation in the country. A company should carefully review the contract clauses to make sure that there are no mistakes that may cause monetary damage or other severe complications for the business. Angeleana Torres Inc. is active under the Historically Underutilized Business Zone (HUBZone) Program.

Currently, there are no more competitors, and the company has won the contract with the Department of Navy. Our company is going to provide the Navy with specialty coating and the application of the coating services. Ruben (2006) states that “the procedure tends to favor the larger and more established contractors” (p. 120). This means that a contract with our company was the best option for the Department of Navy. Angeleana Torres Inc. has gained an advantage over another company because it agreed for less than a 10% margin for provided services which significantly reduces the overall revenue of the bidder, and our company has enormous experience in the market.

However, thanks to the chosen negotiating strategy the company was able to sign two favorable agreements such significant agreement of future cooperation with the Department of Navy. According to another agreement, the Department of Navy is going to provide the company with a particular yearly amount of work. The former competitor has become a sub-contractor of Angeleana Torres Inc. on beneficial terms for our business. Currently, the flooring equipment that belongs to our business is rather outdated. However, there is equipment that is necessary for such jobs available at the Navy base.

Furthermore, the company is going to request the use of such machinery. The company is planning on establishing a long-term partnership with the Department of Navy. It is absolutely important to prepare the final decision on the cost of the contract. Navy has agreed to the previously discussed cost of $294,000. The contract is going to include inspection procedures and quality control methods that are effective and are often used. All of the properties of the materials are going to be inspected by the specialists, and the performance of the workforce is going to be monitored. Such procedures are going to assure you that our company is going to provide the Department of Navy with an excellent service.

It is extremely necessary to determine the payment type that will be appropriate for a business. The Department of Navy offers three types of payment options: performance-based payment, progress payments, and partial ones. Performance-based payment and receiving progress payments are preferred by most of the Government contractors. Performance-based payment option was picked among other options because a Firm-Fixed-Price contract was chosen by Angeleana Torres Inc. This payment type is extremely practical for our company.

Nowadays, this kind of payment is getting extremely popular. Many companies around the world start to make performance-based payment incentives. Our company is going to use GSA SmartPay because it one of the best options when dealing with contracts because it helps to avoid huge amounts of paperwork. The workforce is paid based on the quantity of work done according to tariffs that are set by the company. Numerous bonuses are awarded if workers provide additional service. There are some issues with this payment type. The main problem is that the technology of the flooring process is changing all the time, and such changes are not accounted for.

Because of the price of a contract, there should also be provisions that specify minimum wages and wage rates. A company needs to find the right balance between the quality of the provided service and the amount of time it requires. Maynard (2012) claims that such incentives “are increasingly being used to enhance competitive pressures and induce decision-makers to improve their performance or lose reputation or financial rewards” (p. 10). This means that this payment type may cause some problems for Angeleana Torres Inc. if a company fails to provide the service in time. However, there are also tremendous benefits of such a payment type.

For example, the company is going to receive additional profit if the work is done ahead of schedule. The type of payment of the sub-contractor should also be considered. A sub-contractor should be paid directly or through the third-party upon their request. Both parties need to come to an agreement on which terms payment is going to be made. Sometimes it is relatively hard to monitor performance-based payment adequately (Eldridge & Palmer, 2009). Such issues happen because there are different stages of the whole process of flooring, and necessary knowledge is needed to determine the progress that is being made. Overall, our business is used to performance-based payment, and additional preparation is not required, and the whole process should be relatively easy.

Brand new equipment is always needed to provide a client with the best service in a short amount of time. However, flooring materials that Angeleana Torres Inc. currently owns are dated. Our company is planning on leasing the flooring equipment that the Department of Navy possesses if there are no better options available. Navy owns modern joint saws, grinders, shot blasters, polishers among other necessary flooring equipment. There are numerous advantages to leasing.

The needed equipment is going to be provided in short amounts of time with minimal expenses. Additionally, it increases the buying capabilities of a company. Our business currently does not have the funds to buy new modern equipment, and we have borrowed from JPMorgan Chase. Navy is going to offer a leasing discount if Angeleana Torres Inc. takes full responsibility for the maintenance of the equipment. Schutz and Rezg (2013) state that “compared to the duration of the lease period, the times related to maintenance actions, corrective and preventive are negligible” (p. 594).

This means that maintenance periods should not be overlooked, and a company should pay a lot of attention to this issue. Pinto and Pacheco (2014) claim that “based on an idea that that earnings are originated from the use of an asset, not its ownership, leasing is commonly considered as an alternative method of financing” (p. 96). This means that leasing can be used as a way of extending the partnership between Angeleana Torres Inc. and the Department of Navy.

The technology is always changing, and our company should be ready for those changes. Overall, our company is going to lease the necessary equipment because the Navy offers great terms, and this is the best option in this situation.

Quality control is of the utmost importance when it comes to flooring jobs. Both parties must make sure that the service provided is of the highest quality. A contract partner should have the access to all the needed information. Inspection procedures also help to keep track of the progress that is being made. The company should put a lot of effort into a meeting or even exceeding the expectations of a client. However, the price of the service should always be appropriate.

The equipment needs to be tested beforehand, and it should be calibrated and ready for work. Chemicals that are being used should be frequently tested, and they should meet the standards. Air conditioners should be carefully monitored because any malfunction may cause severe problems that could affect the whole process. Charts are going to be used for some of the processes as another effective quality control method that has proven itself.

The computer software will be used, and it will be extremely helpful for the process of quality control. All of the gathered data is going to be inserted into Microsoft Excel spreadsheets. This will make it easier to process the information in the databases. It is extremely necessary to develop a quality assurance plan. It is a document that contains all the necessary data about the monitoring tasks. It includes a quality control schedule with a list of inspections that are needed to assure that the service is being provided. The service must meet the target quality criteria. Quality control includes analysis of quality of service provided, organization, and implementation of monitoring procedures.

Our company is going to include a standard inspection procedure in our proposal because it has proven to be extremely useful in our previous projects. Our company takes full responsibility for the quality of the service, and it is going to take all the necessary measures to assure that such a service is going to be provided to the Department of Navy. Overall, these quality control methods should help our company to maintain the standard of high-quality service that has been set.

Angeleana Torres Inc. owns a floor coating patent that has helped the company to gain an advantage over its competitor. This kind of specialty service uses unique materials of the highest quality, extremely resistant to water. The whole technology of such a floor coating is patented. The Department of Navy is not going to make any objections that are related to patent infringement. Gaff, Murphy, and Cuomo (2012) state that “the defendant company needs to understand and frame the case’s potential economic and strategic impact on its business” (p. 9).

This means that a company should evaluate the situation before making any decisions that could affect the contract. A company may lose trust in the other party in case of patent infringement objections. However, sometimes it is better to continue cooperation strictly from the economic perspective. Both sides of the contract may lose profit in the event of contract infringement complaints, and a lot of time will be lost in courtrooms.

It is better to avoid any lawsuits from the client, especially if it is a Government agency. It is crucial for The Department of Navy to not abuse its privileges, and our company is going to trust this organization. Both parties are planning on staying loyal because this partnership is extremely beneficial for both sides. Overall, Angeleana Torres Inc. should not be worried about any objections from the side of the Navy.

The process of closing out a contract is of enormous importance for our company. For the contract to be settled, numerous conditions need to be met. Contract administration is responsible for the initiation of the close-out procedure. Our company has chosen the standard closeout method according to Federal Acquisition Regulation. Such a method is the best option in this case because our business does not plan to close this contract as fast as possible.

This procedure is conducted by an office that is specified in the contract. Contract closure is performed by a contracting officer or another responsible who reviews the accomplishment status of administrative actions, whether services have been provided, availability of disputes, and the status of payments. Other Government agencies also have a huge role in the contract closeout process. It should be extremely coordinated, and all the parties should have the access to all the needed information promptly.

There are a few signs of a «physically complete» contract. Both sides need to solve all the issues related to monitoring, all payments should be done, the audit also should be completed, clearance reports are received, termination docket needs to be finalized, and all the materials that are classified must be deposited. Any issues regarding sub-contractor payments also need to be settled. A statement that indicates the completion of a contract should be prepared. According to the Federal Acquisition Regulation, the contract is going to close in six months after evidence of completion was received because a Firm-Fixed Contract with Economic Adjustments was chosen.

It is highly necessary to avoid any actions that would increase the close-out period because it may cause problems for both parties, and may damage the long-term partnership. Manuel (2011) states that “new, current and former government contractors are equally subject to the requirement of responsibility determinations” (p. 3). This means that there is an enormous list of responsibilities that comes with government contracting, and a company should be ready to meet all the requirements. Every single detail of contract closeout should be researched because it a lengthy process and requires massive amounts of knowledge.

In conclusion, Angeleana Torres Inc. has chosen performance-based payments because it is the most fitting option for coating jobs. The cost of the contract is going to be $294,000. Our company is going to lease the floor equipment that belongs to the Department of Navy because our current equipment is dated. A wide range of quality control measures is going to take place according to the quality assurance plan.

The standard inspection procedure is going to be used to assure that the service provided is of high quality. Chorafas (2012) states that “service assurance may be adversely impacted by changes in government policies and regulations” (p. 62).

This means that quality control is closely connected with external factors. The Department of Navy does not have any objections regarding a patent on floor coating that belongs to our company. The standard contract closeout method is going to be used because it is preferred by our business. Angeleana Torres Inc. should be careful about taking unnecessary risks, but our company hopes to provide our client with the best service. Overall, our company hopes for a long-term partnership with the Navy and looks for opportunities for further cooperation.

References

Chorafas, D. N. (2012). Quality control applications. London, United Kingdom: Springer.

Eldridge, C., & Palmer, N. (2009). Performance-based payment: some reflections on the discourse, evidence and unanswered questions. Health Policy and Planning, 24(3), 160-166.

Gaff, B., Murphy, B., & Cuomo, P. (2012). Defending against patent infringement. Computer, 45(4), 9-12.

Manuel, K. (2011). Responsibility determinations under the federal acquisition regulation. Darby, PA: Diane Publishing.

Maynard, A. (2012). The powers and pitfalls of payment for performance. Health Economics, 21(1), 3-12.

Pinto, J. M., & Pacheco L. K. (2014). The economics of structured leasing. Journal of Self-Governance and Management Economics, 2(3), 94-116.

Ruben, B. (2006). Government contracts and contractor behavior. Journal of Business Ethics, 63(2), 119-130.

Schutz, J., & Rezg, N. (2013). Maintenance strategy for leased equipment. Computers & Industrial Engineering, 66(3), 593-600.

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