Home Security, Essay Example

Q1. Why does the President want to reduce Cost-reimbursement contracts?

A1. With cost-reimbursement contracts builders are paid for justifiable costs incurred during a contract with another. Fixed price contracts require builders to “eat overruns”. The President wants to go to fixed contracts so that money can be saved and spent elsewhere. He believes the building contractors charge enormous rates and prices and sometimes keep the extras while charging them to the government. He is right on wanting to reduce cost-reimbursement contracts and go to fixed contracts only.

Q2. Why is it preferred to use a Firm Fixed type contract?

A2. It is the preferable contract because it cannot be changed or overhauled or stipulations cannot be added without the signed consent of the other party. With the other contract if the contractor does the work he can in addition to the signed contract request wages and fees for the extra work done on case law that applies to “work already in progress is work done”.

Q3. Who accepts the greatest risk under each type of contract?

A3. The government accepts the greatest risks on cost-reimbursement contracts and the contractor accepts the greatest risk on the fixed rate contract.

Q4. Why is competition favored over sole source?

A4. Competition of course is favored over sole source because competition creates lower prices and choices of which to make. Without choices a company would become a conglomerate or have authoritarian rule. This would be non-democratic.

Reference

Homeland Security. (n.d.). Homeland Security Presidential Directive 12: Policy for a Common Identification Standard for Federal Employees and Contractors. Retrieved November 13, 2013, from https://www.dhs.gov/homeland-security-presidential-directive-12