Federal Contracting Activities and Contract Types


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A contract is a formal, informal, oral, or written agreement that is made and signed between two parties concerned. For different parties to get involved, they must fulfill various requirements. Part of these requirements is that the parties must have the capacity to take part in the contract, they must consider the terms, they must accept an offer, must be legal before the law, and that the terms and conditions must be understood. Contractors within the government have access to contracts and are the only people who can enter into a contract. There are various types of these federal procurements, which may include general service administration, commercial items, simplified acquisition, sealed bidding, and emergency acquisition, as well as negotiated contracts. Some of these contracts include fixed price, agreement, indefinite delivery, and letter contracts (National Contract Management Association (U.S.), 1989).

In ensuring that all the agencies get their supplies and materials, the government has to give out contracts. These contracts have been recorded to evolve rapidly over the years. When identifying the different types of contract, there is a burden involved and risk suffered by the contractor, the government, and those who provide the supply. The firm fixed method is one of the contracting types used and employed by the government. This contract type assumes all the possible risks that may arise and the price of the product in question remains fixed despite the cost that the supplier will incur (Kelleher & Abernathy, 2010). There are other various types of contracts, which are used like the technology development. These contract types consume significant amount of the state’s resources.

 The firm fixed contract is one interesting contract mostly issued by the government. This contract has a fixed price agreed by both parties, regardless of the cost incurred and paid by those who supply the commodity. The contractor to this contract has to finish every detail despite any challenges incurred. No adjustments are allowed after the deal has been set. This contract is full of risks, which the contractor has to face amidst the profit and loss they will incur. It is within the contractor’s responsibility to come up with a control program to limit the budget set to bring out effective results. A fixed-price contract is achieved when there are competitively high prices in the market. The uncertainties witnessed from performances also put these contracts in place (Kelleher & Abernathy, 2010).

There are various agencies that win contracts today. Part of these agencies includes the federal protective services, which belong to the US Department of Defense. This agency has been given the task of managing the security issues in the country, as it has been credited with providing the best services in relation to security. This agency oversees the security of the people and various buildings that it has been assigned to. This agency has employed about 15,000 guards who ensure the security of all the properties under its jurisdiction. This agency is credited with this contract, as it is the best agency that provides security to all designated properties. The department that deals with homeland security in the US has given this agency full mandate, as it has performed exceedingly well over the past few years. This contract came into force after the government had passed the law that urged the security department to lease contracts to all privately owned agencies.

 The protection of state buildings and citizens was passed as a law in the year 1948. The state provided that uniformed guards would get the chance to be employed to attend to matters that pertained to security. These guards were given and had almost the same privileges that the sheriffs enjoyed. They even had the power to enact the laws as stated. The country representatives decided to appoint the federal agencies to deal with such matters. However, it did not last long; in the year 1949, the federal agency was abolished and the general administration service was set up. This service was given the mandate to address the matters concerning with security.

In the year 1961, the state urged the service to appoint uninformed guards, who would help monitor matters like conducting of investigation. In such a way, the agency could solve the rising security concerns. The federal service was later born in 1971. This service was set as a branch of the general administration, and it had to ensure it upheld security. This service was later transferred to the department that was responsible for homeland security. This service agency was also given the mandate to protect anything that was under the subject of the federal government, including buildings, people, and the ground.

This agency has, however, secured various contracts. It has been awarded the contract of providing security to anything that is under the provisions of the federal government. This contract is all about the agency providing maximum security to the building, people, and also the ground that is under the federal government. This agency has been given the legal rights to ensure the safety of people and buildings and even to carry firearms when at work. This agency has also been mandated to make arrests without an arrest warrant, if the person is caught in the act of committing the crime. This agency is also credited with undertaking investigations that involve any property that they are in charge of.

This agency has been branded one of the most expensive, as the state allocates a huge portion of the budget towards the promotion of security. The 15,000 guards employed have to be equipped with the latest machines and materials. This fact proves that the federal services spend generously on promoting security. This agency has, however, been issued with a cost reimbursement contract, which involves the cost agreement that proves to be adjustable. This involves other incentives, which include awards and other things which are provided by the government. This type of contract was chosen over the other, because the government had to be sure that all the citizens were safe.

This type of contract, however, involves full analysis by the government. There are typically some costs involved, but the government has to do the formal analysis of the credibility of the agency in terms of security and how it handles matters under the stipulated legal laws. The government has to offer an award to the agency if they perform according to the expectations of the government. The agency has to provide evidence to other agency about how they conduct their work. The contract of the federal service is based on performance. The agency must attain the stipulated performance and attain an effective and efficient management. This type of contract, however, is terminated by the government at any time even before the contract ends in case there is the need for this action.

 For any contractor who enters into an agreement, they must be ready for consequences. These consequences are the risks that are involved in the agreement, which may lead to profits and loss. The contractor has to be ready for these risks, which can be either direct or indirect costs for the contractor. Before authorization of any contract, the government must perform an audit, which will prove the credibility of the agency to undertake a contract. Direct costs are the costs that can be and are identified together with what comes as the final product. The direct cost that the agency incurred includes the bidding cost, which is borne when the organization is fighting to win the tender. These costs also include the proposal costs, which are incurred by the agencies that are fighting to win a contract. Another direct cost includes the cost incurred while studying and doing research on the organization. This research involves everything the state requires the agency to do. Education and training was another direct cost that the agency would also incur. The guards were entitled to special education and training to ensure they were able to provide the best security measures as stipulated by the contract (United States, 2012).

Indirect costs are the costs that are not directly attached to the final product. Part of the indirect cost that the agency incurred included the security of all the people and building, as required by the federal government. This indirect cost is visible, as each individual has the right to do anything bearing in mind that their security is enhanced. All these costs that the agency is identified with are direct costs. The main direct cost involves the provision of security. This is the main aspect that the contract specified and that the agency wanted to provide (National Contract Management Association (U.S.), 1989).

The other indirect cost that the agency incurred was the one of purchasing machines and materials. For the agency to conduct its legal operations, it had to acquire the necessary materials. These materials included the agency uniform worn by all their employees. The agency also was required that all its employees had weapons. Part of these weapons included guns, which were a mandatory piece of equipment that all the guards were expected to have. Special clothing that should protect them from various hazards, like bullets, was a necessity. Supervision was another indirect cost incurred by the agency.


For organizations willing to enter into a contract, they must be able to bear the consequences. Attainment of the contract is a very complex process, which each organization must put in place. The government must ensure that it does thorough investigation before any authorization of the contract.

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