Contracting with the government and associated agencies is one of the most prestigious opportunities that small business contractors can have. They are exposed to many opportunities that allow faster business growth, increased profitability and increased chances for referrals, and recommendations. However, getting an opportunity to work with the government is one of the hardest challenges that a contractor can face. It is for a reason that the stringent legislation, compliances, and strict legal procedures that the contractor must adhere to before approval. However, the government has initiated various programs that seek to increase the competitiveness of small businesses in federal contracts. This aims to promote innovativeness and development of small businesses increase (McKernan & Chen, 2005). Many tools have been availed to assist small business to build their potential and capability to successful secure jobs in the federal sector. One of the renowned programs dedicated to this is the Historically Underutilized Business Zones (HUBZone) program. It encourages economic development, welfare and growth of employment opportunities to small businesses by easing the access to federal contracting opportunities (US Small Business Administration, 2014). This paper seeks to look into various activities that a business that secures a contract with the navy undertakes.
Business Qualifying under the HUBZone Set-Aside Procedures
For a small business to have increased opportunities of contracting with the federal agencies, it is paramount that it is evaluated, listed, and approved under the HUBZone Program. There are various steps that must be completed, after which the company will have increased competitiveness in the marketplace. In this context, there are various reasons why my business is likely to qualify over the competitor when reviewed under the HUBZone Set-Aside Procedures.
Firstly, there is the fact that my business is submitting proposals for a multiyear contract as compared to a competitor who is submitting a one-year proposal. My business would be preferred and is at a better chance to snatch the contract with the navy. It is for a reason that in such a scenario, there will be no repeated advertisement of tenders, evaluation, and approval of contractors and suppliers. This process is usually expensive, time-consuming and rigorous. As such, the navy would prefer to engage a contractor for more than one year to evade the costs and time wastage during repetitive contractors’ and suppliers’ selection process. When selected under a multiyear contract, then there is a chance to supply to the navy for a continuous five years without repeated selection of suppliers.
Secondly, there is the aspect of incentives. My business is willing to offer incentives to the client, the navy. When the business offers incentives to the navy, it means that the navy will pay less for the products and services offered (US Small Business Administration, 2014). This is coupled with improved service delivery and technical expertise. This influences the navy to buy from the business because incentives act as motivators, which come along with the terms and conditions of the contract.
Benefits of Multiyear Contract to the Navy and the Business
Multiyear contract is associated with many advantages to both the buyer and the contractor. In this context, the navy, the buyer of the services and supplies and the business, which is the contracted supplier are likely to benefit when they engage in multiyear contracts. Multiyear contracts provide security and peace of mind. There are other many benefits accrued from such contracts.
Benefits to the Business
Firstly, there is the ability to make sales forecasts. For instance, the HUBZone program allows multiyear contracts to extend up to five years. Supposing the business and the navy enter into a multiyear contract for up to five years, the business will be able to plan for its future years easily. This is because of the guarantee to contract with the navy, which leads to assurance and certainty about the future. More importantly, multiyear contracts are less likely to be terminated midway. Secondly, the business can forecast its inventories, financial, and products requirements better for the entire period (Gray, Larson & Desai, 2006). When the business is engaged in a multiyear contract, investing in inventories would be wise so as to ensure a continued supply of the contracted services and products throughout the period. Thirdly and finally, multiyear contracts help to save on administrative costs and time. It is for a reason that the business is saved from the tasking duties of sending quotations from time to time. This enables the business to concentrate better on its primary functions.
Benefits to the Client, the Navy
The main benefit that the client derives from the multiyear contracts is savings on administrative costs, time, and effort. When the navy wants to source for supplies and services, the supplier selection process does not need to start from scratch (Gray, Larson & Desai, 2006). In this context, the navy will not need to restart the supplier selection process, but one will just contact the supplier and initiate the supply process. Also, fewer terms and conditions are enforced for governing and implementing the contract. The second benefit concerns better service delivery, quality products, and expertise performance. When the navy sources from one supplier over a long time, it is possible to press the supplier to customize the services and products offered so that the needs of the navy are perfectly fulfilled. This way, the needs of the clients are better met, and future re-buy decisions are likely to be made in favor of the supplier.
The Suitable Type of Contract: Time and Material Type Contract
For a contract between the business and the navy, the most appropriate type of contract to adapt is the Time and Material Type contract. The rationale for this is that when the business is engaged on a multiyear contract, it becomes difficult to forecast the total costs and time for the entire duration accurately. For instance, the cost of materials and supplies in the first year might be lowly prices because of favorable economic conditions. However, changes in the economy may result to doubling and tripling prices in the subsequent years. This implies that costs of service and supplies delivery in the future years may be extremely high for the business to bear. As such, adopting this approach would be appropriate because the terms in this type of contract are not fixed. This creates a room for adjusting the terms to correspond to the current prevailing conditions. This ensures that both parties benefit while minimizing overburden on one party.
The Category of Incentive that the Business is Willing to Offer to the Navy
Incentives are very important in any contract because they motivate the client to acquire the services and supplies from the seller at a subsidized cost. There are various types of incentives such as performance, cost, and schedule incentives among others. In this context, the best suitable for a contract between the navy and the business is the cost incentive. It means the business lowering the costs of products and services through a fee adjustment formula. This type of incentives seeks to motivate the buyer so that he or she can manage costs effectively and buy more of the services and supplies at the same cost, which means more benefits. Although other types of incentives are also suitable, they may not be complete without including a cost incentive. Being quoted in monetary values, there are high chances that the navy will be pleased and intend to source services and supplies from the business more in the future.
Submitting Bids: Technical Proposals
The services that the navy is looking for are floor refinishing services, particularly in ceramic tiles and marble floors. My business being an expert in this field is seeking a contract with the navy. The best way to submit a bid is through a technical proposal, which correspond to the nature of the work. This is concerned with providing all the technical information regarding the project or contract. A technical proposal helps to explain the approach that is to be used in planning and delivering the services. Also referred to as the statement of work, it is a very relevant document that helps to convince the client. This type of proposal is essential because it helps to identify and explain how the work is to be done. Moreover, it helps to convince the client that the business’ qualification in delivering the specified services and works (Gray, Larson & Desai, 2006). When the business submits a technical proposal, it is very likely that the navy will be easily convinced as compared to another bidder who submits a cost or management proposal.
The technical proposal is more valid than cost and management proposals because the navy can also confirm the technical details of the work they want to be performed. A technical proposal focuses on the technical aspects such as technical proficiency, past performance, thought leadership, clarity of approach, and the technical manpower (Weiss & Thurbon, 2006). A business that submits a technical proposal has a better technical advantage. It is for a reason that the selection process is very competitive, and only the providers of the best value are selected. The best value is more than the cost quotations. In many federal agencies, technical proposals are more preferred than price based proposals. High-cost proposals may be selected than low priced proposals because of their superior technical responses. As such, submitting a technical proposal is advantageous because it helps to differentiate the business is stiff supplier selection processes.
Potential Risk Factors after a Successful Contract Award
Whenever a business is awarded a contract, there are various types of risks that emerge and have to be effectively managed if the business is to administer the contract successfully. These risks arise from various sources such as uncertainty, changes in the circumstances and conditions, management performance, contract performance, and stakeholder relationships.
Risks of Uncertainty
The business is subjected to risk due to lack of awareness of the future events and in the course of the project. This may be influenced by shortages and delayed supplies, unforeseen developments, and adverse weather conditions among others (Akintoye & MacLeod, 1997). This may lead to longer durations before the project is completed and lead to extra associated costs.
Risks from Contract Management Capabilities
When the business is awarded a contract, it is likely that the business lacks sufficient expertise, skills, and experience required to manage the contract effectively. Also, the business and its management may fail to recognize the importance attached to effective contract management (Weiss & Thurbon, 2006). As such, the business may underperform and, thus, not meeting the expectations of the client. This can be solved by obtaining advice from experts, recruiting qualified staff, and identifying any drawbacks at the early stages of the contract.
Risks of Poor Contractor Performance
When the business is awarded the contract, it may fail to deliver the requirements on time and may contravene the agreed upon standards. Also, the business may overspend in the contract, thus, leading to costly budgets contrary to the agreement in the contract. Other risk factors include lack of compliance to contract provisions, and involvement is contract frauds (Akintoye & MacLeod, 1997). This can be avoided when the navy and the business understand the roles that they are supposed to play during the contract. More importantly, the navy and the business should engage in regular progress review meetings.
Risks from Changing Circumstances and Conditions
Circumstances are deemed to change especially in multiyear contracts. This type of risk may be due to the lack of flexibility in contract variations. An example is changes in the economic conditions leading to hiking of prices of supplies. The business should keep a record of all likely changes so that they can be traced centrally and acted on in a timely manner.
Risks of Poor Stakeholder Relationships
As a result of poor relationships between the business and the client, there is likely to be poor communication. This means that changes in the expectations of the client may not be well communicated. This consequently leads to conflicts and differences, which affect the mutual relationships and, thus, lower chances for future contracts (Weiss & Thurbon, 2006). This can be avoided by maintaining formal and informal contacts with the client.