Evaluating Contracts
Aerospace Drones has completed its first contract with Department of Defense (DoD) on time and under budget. Company expansion has increased production capacity. R&D continues to set industry standards for camera stabilization systems.
You have now learned that the Department of Homeland Security (DHS) Science and Technology Directorate (S&T) is seeking to expand their UAS surveillance capabilities. These contracts will require significantly more time to prepare. Once again, you must get to work and prepare a detailed report that addresses the more advanced level of requirements needed for submission.
Instructions
Write a 6–8 page paper in which you:
1. Compare fixed-price contracts and cost-reimbursement contracts in terms of the benefits and drawbacks of each for your business.
2. Analyze at least three opportunities your small business will have compared to large businesses in general.
3. Discuss which elements of cost-reimbursement contracts tend to produce the biggest troubles for your small business. Provide a rationale for your choices.
4. Determine which form of contracting would benefit your business the most among all the forms of contracting described in Chapter 16, including reasons why.
5. Select the most significant form of contracting that would support large companies (for example, Boeing) among all the forms of contracting described in Chapter 16, including reasons for your selection.
6. Develop a plan on how your company would justify the government to award your company the contract when the form of this contracting supports larger companies.
7. Use three sources to support your writing. Choose sources that are credible, relevant, and appropriate. Cite each source listed on your source page at least one time within your assignment. For help with research, writing, and citation, access the library or review library guides
Sample Solution
Contract review and negotiation is a crucial risk management task, but sometimes we must accept terms we do not like for any number of reasons. Perhaps the client refuses to make changes to their form of agreement. Maybe the project is critical to your firm and your operations team is willing to take on the risk. Whatever it is, a lack of input from the risk management department or a similar contract review process should never be the reason your firm accepts poor contractual terms and conditions.
When something goes wrong during project execution, a clear scope of services as well as a reasonable schedule and price, as stipulated in the contract, are your firm’s first defense. In such matters, the risk management department must defer to the expertise of the operations team.
