Government Contracting Discussion

I agree with the previous student statement on principle alone. The more knowledge you have the better off you are to understand things to make an effective decision. When dealing with procurement of good it boils down to the price and cost. Knowing how much a product or service will cost is also compared to well how much should it cost. According to FAR 15.407.4 (2016) the Should the current status on the economy and a look into the contractors work force. Procurement operations in contracting depend all on cost and price of a product or service. The current status on the economy effect the procurement activity because an engine block may not cost the same as the years go by. The cost of labor, manufacturing industry and technology all change and the cost fluctuates due to the economy. Understanding the combine cost that are made up of materials, labor, and manufacturing promotes the ability for the government to effectively negotiate a fair reasonable price for both parties. I also do not agree that tracking bolts and nuts would be tracked the same as an engine block however an engine block contains additional cost for parts unlike a bolt or nut. Yes both may have labor cost but they would differ in the amount of time and manufacturing that goes into it. Basically all cost with an accounting system should be standardized however, there is additional cost that needs to be accounted for in order to make an effective negotiation. The cost accounting system will determine the fixed and variable cost in order to find where to draw the line for negotiating. Cost accounting involves determining fixed and variable costs. Fixed costs are expenses that recur each month regardless of the level of production (, 2016).

Throughout the contracting process, the pre-award period is the most sensitive for the contracting activity and the potential offerors. The procurement integrity act safeguards the integrity of competitive source selection. Following an RFP contracting activitys will be receiving bid proposals from several potential offerors. Potential offerors will also be submitting certified price or cost data, indirect cost and labor rates, proprietary information. This type of information is defined by PIA and 41 U.S. Code 2101 as contractor bid, or proposal information must be safeguarded and not divulged to competing offerors.

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Also, during the per award process, potential offerors might submit requests for information or clarifications related to the RFP. The contracting activity must be sure not to give answers to anyones offeror but instead must provide the same information to all offerors. This usually results in the extension of source selectin schedules for contracting activities to that answer or address all offerors RFIs.

FAR Subpart 14.401 Receipt and safeguarding of bids gives a good example as to what the required internal controls for enforcing PIA in contracting activity.
All bids, including modifications received before the time set for the opening of bids shall be kept secure. The bids shall not be opened or viewed. They shall remain in a locked bid box, a safe, or in a secured, restricted-access electronic bid box. Bids shall be returned to the bidders if the RFP is canceled, necessary precautions to ensure the security of the bid box or safe. Before bid opening, information concerning the identity and number of bids received shall be made available only to Government employees. Such disclosure shall be only on a need to know basis. When bid samples are submitted, they shall be handled with sufficient care to prevent disclosure of characteristics before bid opening FAR 14.401, 2020).


Student 3 (Amy):

As we have cracked open the topic of costs and price/profit further and further the past few weeks, I had considered that the cost details being reported to the government by potential contractors may be considered proprietary or sensitive in the eyes of the contracting company. Insight into those details is not typically privy to just anyone. Granted, when dealing with the government, those details are not shared with just anyone. When potentially entering into a contract with the government, a company has to be prepared to share details they typically would not on the commercial side. If being audited or preparing a cost estimate for the government, a door is opened and the contract company is subject to being reviewed under a microscope. A companys profit data is often considered proprietary. The true manufacturing cost of a product vs the amount the product is sold for is not something companies want published. An example would be an iPhone. Apple does not want the customer base to know how much it costs for a phone to be manufactured because the customer would be less likely to pay higher prices. Apples profit off of each iPhone is much more than a customer is most likely aware and can be damaging to sales if the proprietary information were to get out.

With a price-based acquisition (PBA), the government can leverage cost and profit data against a contract company to work them down to a lower price. Due to this, contract companies would prefer to have some data be proprietary and not shared so openly with the government. However, the government does have the responsibility to ensure taxpayers are getting the most for their money. Having access to cost and profit data allows the government more leverage in getting the best deal.

The government has implemented Cost Accounting Standards (CAS) that may be different from what companies use commercially. CAS provides guidance to contractors so that costs are categorized correctly (ex. rolls of metal that can be utilized in the production of many units vs a single use item contributing to the production of a single unit). When costs are correctly categorized, this then assists the government with uniformity when reviewing costs provided by contractors. Knowing that contractors are accounting for costs (direct vs indirect vs overhead) with the same regard and categorizing materials as directed by the CAS assists with cost uniformity. Once you have that level playing field, risks are lessened and it is easier to make contract proposal decisions. I do agree that tools like CAS and Material Management Accounting Systems (MMAS) do help the government with contract negotiations.


Cook, C. R., Graser, J. C., & Lorrel, M. A. (2005). Price-Based Acquisition: Issues and Challenges for Defense Department Procurement of Weapon Systems. Washington D.C.: Rand Corporation. Retrieved from….

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