Procurement Essay

Pricing strategy: When bidding for the government contracts, the A&D companies have to assess and anticipate how other competitors will respond to the Request for Proposal (RFP), which contains the details of the technical and non-technical requirements. In the lowest price, technically acceptable or LPTA contract, companies bid as lowest price as possible while maintaining the acceptable profit margin threshold for their operations. In order to determine the lowest price point that qualifies a company to win the contract and produces the highest profit as possible at the same time, not only does a company has to know its own profitable price point, it has to also anticipating how low other companies will bid the contract. For example, Company A has been trying to break into cybersecurity space in the past few years. However, it hasn’t been successfully in any of the previous bids. Contract XYZ is a large cybersecurity contract that will allow Company A to start gaining recognition as a prime

Zakheim and Kadish explain two decades ago, there were more than twenty prime contractors competing for defense contracts while today the government relies on just six contractors to build its defense systems. Zakheim and Kadish state, “The system largely forgoes competition on price, delivery and performance and replaces it with a kind of “design bureau” competition”. The report explains that firms such as Boeing and Lockheed Martin have operated in collaboration on several projects such as the Air Force’s next generation bomber (Zakheim & Kadish, 2008). Collaboration of this nature suggests cooperative equilibrium between the firms to enhance their mutual payoff of outbidding competitors. With the defense market on the downturn pending major budget cuts over the next several years, more collaboration strategies are possible for firms to remain competitive. The existing procurement system encourages bargaining among the government and bidding firms. When budgets are allocated generously, demand is high and firms can set their prices higher. Budget cuts decrease demand and increase bargaining between buyer and seller. Security Industry reports budget deficits subject contracts to greater

First, the top solution is not to enter into a single source procurement situation in the first place. It is very important for the public procurement there is no charge of corruption can be levied at either party, government or organization should rigorously review their purchasing strategies to ensure that this does not happen.

A basic definition for the procurement is “the way the building is realised” and “involves assembling and organising the skills and services of a team of construction professionals”. (the Construction Round Table, 1995). More precisely, the construction industry describes procurement as “a system that establishes the roles and relationships which make up a project organisation”; hence the overall organisation and communication structure for the management, administration and control of a project is established by the procurement system. (D.C.H Coles, 2010)

This paper will explore how Sealed Bidding and Competitive proposals compare against each other. In order to compare them one must understand how, when and why each topic is used. The primary source of federal procurement information and guidance is the Federal Acquisition Regulation, which consists of Parts 1-53 of Title 48 of the Code of Federal Regulations (CFR). FAR parts 14 and 15 explains in full detail Sealed Bidding and Competitive Proposals. This paper like the federal government will rely heavily on the FAR as a source document to help explain the details of this topic.

The procurement life cycle can be made up into 13 key stages. The stages I am going to follow the CIPS stages of procurement and supply management. (Cips.org, 2017)

This fact is stated plainly and directly even in the FAR itself, where it is written, “Agencies are encouraged to promote early exchange of information about future acquisitions.” Exchanges are beneficial to all parties involved in the acquisition process, and there are a number of reasons why such exchanges are beneficial. As the regulations explain at FAR 15.201(b), some of these benefits include an improved understanding of the Government’s requirements for the potential suppliers, and also an improved understanding of a potential supplier’s capabilities by the Government. Additionally, exchanges between Government and potential suppliers can help the Government firm up or finalize their acquisition plan and source selection strategy for a particular procurement by enabling them to determine things such as, “proposed contract type, terms and conditions, and acquisition planning schedules,” as well as, “the feasibility of the requirement, including performance requirements, statements of work, and data requirements.”

Once I have a clear Statement of work and the previous vendors are interested in bidding; I will compete this procurement to the best practices of government procurement are achieves.

Procurement management is the processes to purchase or acquire the products, services or results needed from outside the project team to perform the work. Project Procurement Management involves not just purchasing products, services or results, but also ensuring that those that are purchased are right for the project, meets standards and is based on project requirements. This life cycle includes tracking from order through deployment and completing with invoice reconciliation.

Procurement by public entities is guided by primary law principles of transparency, equal treatment and non-discrimination, procurement laws sets up an extensive legal framework regarding the procurement of work, supply and service contracts. There are two main reasons for the use of specific procedures i.e. why contracting authorities do not just negotiate or simply buy from the closest supplier. First, it provides for more public accountability and therefore less cases of corruption practices. Additionally, tendering procedures aim to ensure the best value for money by making it necessary for suppliers to act highly competitive. As a result, market mechanisms will help in facilitating the best possible practices. In situations where market mechanisms are not effective, tender procedures might lose their effectiveness as well. If for example there is lack of competition due to certain complexities or as a result of lower bidder interest, negotiations with just one or two suppliers may be the most efficient manner to handle the process. Therefore, we discuss the inherent advantages and disadvantages of sealed bidding and contracting by negotiation as procedural frameworks for tendering.

Procurement intends to explore supply market opportunities and to implement resourcing strategies that deliver the best possible supply outcome to the organization, its stakeholders and clients (Kidd, 2005). Therefore, construction procurement exists to purchase a construction project as requirement of firms or organizational entities to achieve its goals. However, the choice to use external resources is the part of firms’ decision-making

However, in the case of the DHS and NASA there must be additional elements that are carefully examined to include: lessons learned from previous contracts and each agency will set specific producers as to who oversees the process. This means that there are different thresholds established that are required for receiving these contracts. As a result, each of these government agencies will have varying standards for meeting these objectives. The below table is illustrating these guidelines for each department. ("Acquisition Planning," 2011)

Competition in government contracting is fierce. How do professionals mitigate or handle the Problems with Accountability and Transparency in Soliciting and Awarding Government Contracts? With the increasing occurrences of fraud cases, employers are tasked with scrutinizing and thoroughly screening new hires in the procurement profession. Individual’s selected for these positions are expected to have an array of skills and experiences that qualify them for the job. The daily task and job scope of the procurement professional has and will continue to increase as lean management continues to grow in popularity.

An important goal of any procurement process is to increase competition which is correlated to value for money. By increasing competition, goods and services are likely to be obtained at the best price. A plurality of independent parties participating in the process thus makes it possible to arrive at an economically prudent cost since purely market forces determine price (More efficiency). Corruption and Collusion as a social canker and illegality reduces competition and thereby value for money. Hence, all major procurement players frown on any appearance of corruption and collusion in the procurement process.

The current procurement framework perceives the significance of ‘transparency, competitiveness, fairness and the need to promote a sense of integrity in the system to secure best value for money’ . E-bidding was initially launched in the States of Kerala, Karnataka, Madhya Pradesh, Andhra Pradesh by Directorate General of Supplies and Disposal. After the success of e-bidding in the above States, e-bidding was launched even at the Central Government Level. In fact, a national program for opening e-bids was launched under National e-governance Plan for rate contracts. The above program was launched to promote electric technology in tendering. In addition to the above, the Central Vigilance Committee laid down e-procurement guidelines in 2009, in which a single platform for all procurement agencies was recommended.