Institutional framework and federal acquisitions in government contracting

¶ … Federal Government has increased its presence in many ways in the last decade and has supplied much of the economy with its own purchases. These government acquisitions are important because they represent the collective buying power of the American people. The purpose of this essay is to examine the system of regulation that supplies the rules to government purchase entitled the Federal Acquisition Regulation (FAR). To demonstrate the practical usage of this regulation this essay will use four different types of contracts and investigate the details of these rules creating effective, efficient and accountable acquisition planning.

Fixed Price Contracts

The FAR's Subpart 16.2 supplies the necessary information about these types of purchases. According to the text, " Fixed-price types of contracts provide for a firm price or, in appropriate cases, an adjustable price. Fixed-price contracts providing for an adjustable price may include a ceiling price, a target price (including target cost), or both. Unless otherwise specified in the contract, the ceiling price or target price is subject to adjustment only by operation of contract clauses providing for equitable adjustment or other revision of the contract price under stated circumstances. The contracting officer shall use firm-fixed-price or fixed-price with economic price adjustment contracts when acquiring commercial items."

These types of contracts are useful in acquiring many services because it places much risk upon the contractor to meet the standards presented in this type of agreement. It also ensures that the contractor performs effectively and "imposes a minimum administrative burden upon the contracting parties."

Cost Reimbursement Contracts

Subpart 16.3 of the FAR provides the necessary rules and guidance on cost-reimbursement contracts. These types of contracts supplies the contractor for costs after they are completed. Estimates are used however for effective and efficient planning purposes. A ceiling is presented to the contractor to give that organization some boundaries of operation as well. These contracts are useful in situations where some uncertainty is involved and cannot be exacted.

Time and Materials Contracts

These time and materials types of contracts are used when " it is not possible at the time of placing the contract to estimate accurately the extent or duration of the work or to anticipate costs with any reasonable degree of confidence. " Due to these time constraints, contractors are usually monitored and watched by the government agency making the contract and fixed hourly rates will be decided upon in order to prevent abuse and maintain a system of efficiency. The FAR lists all the definitions in subchapter 16.6 necessary for contractors to work under these types of contracts.