Advantages of hybrid contracts for small business federal government competition

¶ … hybrid contract to the small-Business owner, and why the government is likely to choose you in the sealed-bidding process.

The hybrid contract contains the combination of both fixed-price and cost-reimbursable contracts. To understand the hybrid contract, therefore, one has to understand these other two types:

Fixed-price -- a contract that defines a fixed total price for a clearly defined scope and piece of work. Bonuses may also be included as well as other incentives. Vendors working for fixed-price contracts are legally held to complete their work at stated proscriptions with financial implications if they fail.

cost-reimbursable contracts -- this is a contract that involves payments / reimbursements to the vendor for all costs involved in the business and act of producing product / giving service as well as a fee that goes for vendor profit. Such contracts may also include financial incentive clauses that state that vendor wins or loses a certain amount of money if he exceeds or goes below his expectations.

The hybrid contract is best for small businesses since it combines the advantages of both types of contracts in one.

The fixed price component assures the vendor that his stated price will be paid come what may otherwise client bears legal implications.

The cost-reimbursable contract also enables small business to include all peripheral costs that are involved with producing the service / product.

The hybrid contract is also frequently used for staff changes, acquiring experts, and/or bringing in outside support when the statement of the work calling for quick work or instant results is not sufficiently precise.(pm student.com)

• Describe the nature of government contracting, including authority, responsibilities, and legal considerations

Business is conducted through contracting agents called contracting officers. There are 3 Officers each of whom handles a different job:

a. The procurement Contracting officer contracts the hire and terminates the hire when contractor defaults

b. The Administrative Contracting officer administers the contract

c. The Termination Contracting Officer terminates contract when government decides to do so.

Sometimes, the same officer does all three jobs.

The government too has rights that a commercial business does not have, for instance to unilaterally revise the contract when it wishes to do so. It can also impose an external audit. However this, since expensive, is usually not done on any small businesses which the government may decide to contract.

Government contracting works according to two main laws:

1. Federal Acquisition Streamlining Act of 1994 (FASA)

2. The Federal Acquisition Reform Act of 1996 (FARA)

Both of which regulate the process and mandate the details of contracting including how the government should pay and for which type of businesses

All minutia of the contracting are operated according to the Federal Acquisition Regulation, commonly known as "the FAR." This is the contracting rule book which contains all clauses and conventions of the contracting process

According to the Business Owner's Toolkit:

The FAR is divided into 53 parts, each part dealing with a separate aspect of the acquisition process. The first six parts deal with general government acquisition matters and the next six parts deal with aspects of acquisition planning. The rest of the FAR deals with other topics, such as simplified acquisition threshold (formerly known as small purchases), large dollar value buys, labor laws, contract administration, applicable clauses and forms.

3. Determine how a small business could benefit from the use of micro-purchases at the local navy base.

The government is ready to do business with businesses that prove they are responsible and competent. They are willing to give anyone a chance. By the small business repeatedly purchasing small amounts of goods from the local navy base and paying on time to strike connections with a department of the government, thereby effectively networking for itself and showing that it is a potentially competent and reliable resource.

The government wants to contract with people that it can trust. It doesn't want to take chances. It also wants to do so in a competitive way. By knowing that it is dealing with a qualified, competent source that will ask for reasonable prices, the government is more likely to contract this small business than it is an unknown.

• Explain the government acquisition process using sealed bidding, negotiations, and alternative contracting methods