GOVERNMENT CONTRACTING 3
Thepresident wants to reduce the cost-reimbursement contracts as a wayof reducing wasteful utilization of public resources. Through the useof cost-reimbursement contracting, the government has incurredincreased costs of the contracts awarded, unlike the expectedreduction of costs. Through the reduction of these contracts, thegovernment will save billions of dollars for the taxpayers (Cibinicet al, 2006). This is because the cost-reimbursement type ofcontracts creates risks of spending the taxpayer money in aninefficient and wasteful manner.
TheFirm Fixed type contracts are preferred because they are efficient inperformance and utilization of public resources. They are preferredbecause they reduce the public expenditure an save the countrybillions of shillings compared to other types of contracts (CCHIncorporated, 2007). The risk of wastage of resources associated withthe Firm Fixed type contracts is low because they have a higher levelof responsibility on the side of the contracted firms.
Underthe cost-reimbursement contract, the government accepts greater riskthan the contracted company. This is because the contract givesallowance for increasing the price paid to contractors as per thechanges in the economy (CCH Incorporated, 2007). Under the Firm Fixedtype contract, the greater risk is accepted by the contracted companythan the government. This is because the price of the contract cannotbe adjusted for economic situations or changes. The price is fixedand agreed by the government and the contractors.
Competitionis favored over single sourcing because it enables identification oflow-cost and effective contractors. At the same time, competitionleads to efficiency as contractors compete to prove their ability andgain trust of the government (Cibinic et al, 2006). Moreover,competition gives an equal chance to all the contractors to competefor the government contracts.
Cibinic,J., Nash, R.C., & Nagle, J.F. (2006). Administrationof Government Contracts.Chicago,IL: CCHIncorporated
CCHIncorporated, 2007. GovernmentContracts Reference Book.Chicago,IL: CCHIncorporated