When setting up a bid, what important steps would you initiate and regard as the most important to assure your bid was competitive? Select a business in your community and provide an example.
When evaluating the different forms of fixed-price contracting, determine the single most significant form that you believe would benefit the small-business owner the most. Explain why. (Be sure to respond to at least one of your classmates’ posts. The post is attached below.)
To ensure a bid was competitive, the contractor should have a thorough understanding of the description, specifications, and work requirements outlined in the proposal. The contractor should then devise a plan to address the tasks associated with performing the requirements. The plan should include detailed cost estimates that support each task. For example, if a company was bidding on a contract to do landscaping at the local VA, their plan and cost estimates should include the costs for mowing, weeding, pruning, planting, labor, materials such as fertilizer, weed control products, and any other costs associated with lawn care / maintenance. The cost estimates should be supported by my market data or previous contract awards.
Although the fixed-price incentive contracts seem to be a little more complex in nature, it encourages and rewards the contractor for doing well in their performance of executing the contract. Unlike the fixed-price contract where the contractor assumes all the cost risks – the government shares in the cost excesses up to the negotiated ceiling price. However, the lion’s share of the cost obligations still belongs with the contractor and any cost beyond the ceiling price is borne solely by the contractor. Also, unlike the fixed-price contract, the fixed price incentive contract allows for negotiations on the target cost, target profit, ceiling price, and profit-sharing formula. While the government does share some of the cost risks, it also shares in the profits if the contract is completed under the projected costs. While this type of contract has a greater administrative burden, if executed successfully by providing the government with quality performance, coupled with committed cost control measures, this type of contract can be beneficial for a small business.
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