The first Company I chose for this assignment is called VectorCal which has been specializing in offering Information Technology services for more than a decade. The company has been ranked as one of the best in Information Technology. VectorCal has joined hands with other excelling companies in the industry since its establishment to foster its competitiveness and produce quality products. The organization’s reputation and its sensitivity to environmental conservation made it very competitive when applying for contracts. The Company boasts of active management in its ranks that have enabled it to sustain the proceeds over the years, which is its core objective
The second Company I chose is Dronnet which deals with Information Technology. The organization takes advantage of the advanced technology to find a solution to contemporary issues facing the community. Dronnet is a startup company which was established four years ago. The company has increased to the extent of giving other competitors a run for their money in the bidding of government contracts. The organization is run by a pool of information technology experts of numbering around twenty who form a strong synergy. Dronnet has managed to employ several entrepreneurs and local nationals, and therefore it has contributed to the economic development in its country of residence.
The organization has embraced a culture that advocates for accountability and transparency within its organizational structure. This system has produced active managers who follow a methodology that enable the company to operate efficiently and seamlessly to achieve cost-effective management. Therefore, the attribute of this company together with its functional leadership has earned its excellent reputation and success. The products it produces have gained acceptance from the consumers because of their cost-friendly nature.
Recent Major Contracts Awarded to Both Companies
The latest contract that VectorCal won from the government was made in half a year ago which was about installing Closed Circuit Television cameras in the major cities of the United States. Many companies had shown their interests in the projects, and so several bids were placed before the government. The process of awarding the contract followed due procedures which made it very competitive. The vectorCal firm, being the most experienced company in surveillance technologies qualified for the award of the deal. The added advantage that VectorCal had is that it had been awarded several other contracts in the past which were of the same nature and it had proved its capability and reliability in carrying out big government projects.
Dronnet Technological Company in the recent past had applied for a competitive tanker contract in the federal government which it was awarded having qualified for it. The agreement was so beneficial to the Dronnet that it was going to enhance its objective in eradicating the rampant unemployment among the youth. The cost of procuring the tankers for the military base and the income that accrue from the project played a significant role in the agreement.
The executive management of the Dronnet devised expansive and most vigorous advertisement that was aimed at marketing the Company and give it a competitive advantage over others. As such, their struggle came to fruition when the Company beat its competitors in the industry to win such a lucrative project from the federal government. Dronnet owns a NextGen tanker burns fuel at a rate less than the optimum, and therefore it is fuel-efficient and cost-effective. This property enabled Dronnet to be considered above other interested companies. The level of bureaucracy and publicity of the contract ensured that the deal was corruption free.
Types of Contracts for which the companies might be Eligible
There are three bases under which the federal government can award contracts that include cost reimbursement, fixed price, and time material. Cost reimbursement considers several factors during the process of doing the project like actual overhead costs. In this case, the government will be required to incur the overhead costs above the price that was agreed earlier. Fixed price contract is paid on a flat basis where the government pays the similar amount that was decided on no matter the changes in the cost of execution. Thus, the contracting company bears the burden of loss at the completion of the project.
The time and material contract is the most significant basis for awarding contracts. In this agreement, the contract specifies the overhead costs that include labor cost, and material cost which remains constant throughout contract execution. So in this case, costs are calculated on fluctuating basis. However, adjustments are put into consideration to take care of the inflation rates of materials. From a keen analysis of the three criteria of awarding contracts, it is cogent to say that the two companies, Dronnet and VectorCal, should be awarded based on the fixed-price category. The justification is that before any government assigns the contract, it analyzes the interested firms and detailed evaluation of the cost with which each organization is willing to execute the given project (United States, 2012).
A firm is supposed to carry out a sensitivity analysis to arrive at the break-even cost before presenting their bids to avoid losses. Besides, the federal government has given a particular value of the contract in advance. Hence, any firm that is likely to bid a price higher than the one set will be responsible for the extra costs. Also, the government’s budget for the work is critical in pricing the tender. Therefore, Dronnet and VectorCal can qualify for the federal government’s fixed-price agreements.
Direct and Indirect Costs the Companies Incurred
Direct costs can be defined as the costs that can be traced directly to a particular cost object. These costs are mostly referred to as variable cost, for instance, direct labor and direct material. Indirect value, on the other hand, refers to the costs that are not directly attributable to the cost object. The indirect costs have two classes which include variable and fixed cost. The costs of security, administration, salaries, and distribution are examples of the indirect costs.
For the federal government to adequately award the tender to the best firm, it must consider the various costs that each company would incur in the execution of the project. For instance, the Dronnet organization in its application had included the costs of equipment, raw materials, labor and the operating system as direct costs. For the indirect price, the firm proposed the cost of administration, wages, rent, electricity, and distribution. In like manner, VectorCal had similar costs.
When the two organizations are examined, it is found out that have same features in the categories of both indirect and direct cost, and also few differences can be singled out. However, a company needs to critically analyze the specific aspects of the incurred cost by individual firms to enable the organization to test its cost management, its strategic plans its mode of executing the projects (Stanberry, 2009). This will allow the company that is offering the tender to award the contract to the firm that is very efficient in cost management. When due process is followed when dealing with fixed-price contracts, it will ensure that no extra cost over and above the tender cost is expensed.
The Company that should be awarded the Contract
Going by analysis done on the two firms, Dronnet should win the tender by the Drone Navigation Technologies. The history and reputation of the company as being cost effective and has a management system that ensures efficiency in the handling of resources are the main factors that put it in a better position compared to VectorCal. An evaluation that is based on the components of direct cost indicates that Dronnet has a better model of management against that of VectorCal. The project proposal that was submitted by Dronnet puts into account crucial issues like accountability which aid in circumventing the contingent risks when executing the project (United States, 2010).
Also, Dronnet is a company that has significantly invested in technological education and training since many arising problems relating to security and management within the society are best solved using technology. The company in the past has worked on government projects that earned government’s trust after it showcased its skills and its robust methodology of carrying out the job diligently. The organization structure of the firm is a proof of its capacity to deal with lucrative contracts with minimal difficulties.
References
Stanberry, S. A. (2009). Federal contracting made easy. Vienna, VA: Management Concepts, Inc.
United States. (2010). Federal contracting: Assessments and citations of federal labor law violations by selected federal contractors : report to congressional requesters. Washington, D.C.: U.S. Govt. Accountability Office.
United States. (2012). Government contracting: Federal efforts to assist small minority owned businesses : report to congressional requesters.
