Small Business: Trade Contracts and Micro-Purchases Essay

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Advantages of the hybrid contract to the small-business owner

A contract that is comprised of at least two contracts is known as a hybrid contract. The most common types of contracts are cost-plus contracts, fixed-price contracts, performance-based contracts, among other types of contracts. There are other types of contracts, but they may differ based on the context in which they are applied. A hybrid contract has several benefits for a small business owner.

For instance, the small business owner can qualify for multiple types of contracts. The hybrid contract will increase the chances of the small business owner securing a contract. In case the government is offering a fixed price contract and a performance-based contract, then a hybrid contractor can qualify for both of them and the chances of being chosen are higher compared to bidding for a single contract (Jarnagin, 2008).

A bidding process that is sealed is characterized by bids being closed up in envelopes, such that the bidders are not aware of the amount that their competitors have placed. All those who are bidding submit their bids in a glued envelop to the auctioneer. Only the highest bidder is chosen. This system reduces the chances of a small business owner winning the bid considering that the small business owner is limited in terms of financial strength.

Small business owners do not have enough money, thus they may not be able to table high bids compared to the big business owners. However, I believe I stand a better chance of getting the bid as a hybrid contractor. I can also strive to table a high bid to further boost my chances and believe the government will select my bid.

How a small business could benefit from the use of micro-purchases at the local navy base

The local navy base operates under government procurements. Most of the government procurement transactions are normally micro-purchases in that they are normally acquisitions of goods that are of low cost. In such purchases, there are few or no soliciting competitiveness quotations. However, the contracting officer will have to determine whether the prices are reasonable or not (Office of the Federal Register (US), 2011).

The officer will only give the bid when the price is considered reasonable. All those who have applied and qualified for the supplies will be equitably given the purchases. One of the reasons why the government prefers this type of purchase is that it reduces administrative payments. The streamlined payment procedures are also reduced. Small businesses benefit from these types of purchases in that their chances of doing business with the government increase substantially. Small businesses do not have to spend a lot of money in bidding for such purchases. Therefore, their operating costs are reduced considerably.

Moreover, they are placed in a better position to make relatively high profits. The major aim of micro-purchases in government administration is to promote small businesses. Therefore, the federal agencies or the administration officers are urged to consider giving top priority to the small businesses. Another benefit that small businesses get is that they have a better chance to grow and develop in their operations as they can make good profits by spending a relatively little amount of money on the purchases.

References

Jarnagin, B. D. (2008). 2009 U.S. Master GAAP Guide. Chicago, IL: CCH.

Office of the Federal Register (US). (2011). Federal Acquisition Regulations System, Revised as of October 1, 2010. Washington, D.C.: Government Printing Office.

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"Small Business: Trade Contracts and Micro-Purchases." IvyPanda, 17 Feb. 2021, ivypanda.com/essays/small-business-trade-contracts-and-micro-purchases/.

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IvyPanda. 2021. "Small Business: Trade Contracts and Micro-Purchases." February 17, 2021. https://ivypanda.com/essays/small-business-trade-contracts-and-micro-purchases/.

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