t considers the t people in Historically Underutilized Business Zones (HUBZones). The main idea of the realization of this program was to find a solution to small and “asking” businesses, putting their interests as its main agenda, and working towards empowerment of the same (Regulation, n.d) Now any business/firm that seeks to tie around HUBZone and as per HUBZone Act (FAR 19.5)., must meet the following:
- It Must be a small business
- 51% owned by U.S citizens
- Principle office be located in a HUBZone
- And finally, the workforce and to be specific, 35%, must be residents of a HUBZone.
So, why would Henry Watkins Flooring Inc. qualify under the basic concepts of the HUBZone Set-Aside Procedures? Firstly, this firm is owned by a U.S citizen, and to be precise, it 100% owned by a U.S citizen. This firm has had a capital $40000 to operate on indicating that it is significantly small and growing. However, this does not deprive it off its ability to provide quality and desirable services.
Secondly. Henry Watkins Flooring Inc. is situated in a HUBZone with two thirds of its employees/labor living in a HUBZone. This is a small business, implying that the labor is not highly paid for, the workforce is low, and the company is growing. That said, Henry Watkins Flooring Inc. stands to qualify under the basic concepts of the HUBZone Set-Aside Procedures.
Some businesses will go for any contact, one year or a multiyear. While both contract will benefit any party awarded, to me, Henry Watkins Flooring Inc. getting a multiyear contract is the best thing. Our competitor and as advised by a close and reliable source, intends to submit a one-year contract. This means that Henry Watkins Flooring Inc. will have to submit a contract that has a far good content. Now, this contract being multiyear, would benefit both the navy and my business in the following ways;
Firstly, there is creation of consistency (Utgoff, & Thaler, 1999). What do I mean? Any brand of service will want an ample time to strive for a degree of consistency. One-year contract may not offer this time. now this is beneficial to Henry Watkins Flooring Inc. on the other hand, the Navy is to benefit from getting the same service from the same service provider over a long period of time. I want to acknowledge that this has bot advantages and disadvantages but, for a firm that takes it services seriously and one that want to maintain its reputable name like Henry Watkins Flooring Inc. won’t take a long contract as a chance to offer a poor service.
Secondly, the results will build after every year. this goes by the assumption that my business has no intention of offering a poor service whatsoever. A multiyear contract offers the awarded party a chance to continue bettering their services day in day out, it is an opportunity to improve themselves (benefit to the business) and a chance for the Navy to get a better service (benefit to the Navy). If the contract is a one-year, the awarded party may not have a chance to know how best The Navy wants their service offered hence no chance for improvement. This hurts both parties.
Thirdly, a bank of a valuable service is created. As earlier stated, a multiyear contract provides the service providing firm with an opportunity to build its services firm. With time, Henry Watkins flooring Inc. will boast of good services hence attracting more clients which will be an advantage. On the other hand, and on the receiving side, the Navy will benefit from high quality services from an experienced firm.
Finally, research. Everybody and at one point does research. Henry Watkins Flooring Inc. benefits by having a chance to respond to its previous findings of research. I mean, this could be a chance to hone and improve. On the other hand, the Navy has its chance to get improved services.
Following all the above said information, a time and material type of contract is the best in my opinion. Recall, unlike my competitor, Henry Watkins Flooring Inc. goes for a multiyear contract, this means that the time frame can’t be defined. It also favors the services providers more than the receiver. Additionally, when using these contracts, the following could be negotiated;
- Labor rates
- Material and mark up. on material rates, these contracts add between 13-15%
- Not to exceed (the time and material not to exceed)
This type of contract is more friendly compared to a fixed price or a cost reimbursement contract (Rubin, 1999). Take a fixed price contract for example, this contract allows almost ‘zero’ negotiations. Henry Watkins Flooring Inc. is a small business that has not yet reached the heights of offering non-negotiable services.
To promote the firm and wellbeing of the business, Henry Watkins Flooring Inc. seeks to provide performance incentives. Firms have a different way of putting the motivation theory into action. Now, among the many incentives instituted by companies is the performance incentive. This ties pay with performance giving the employees a chance to show their ability to support the wellbeing and progress of the business. It ensures that the hardworking individuals are identified recognized and rewarded. Henry Watkins Flooring Inc. will use this to promote and seek its progress from being a small business to a larger service provider. I mean, if the firm can use this methodology and turn down the rest, it could be more effective and stand a better chance to thrive.
Henry Watkins bids proposal should be a cost proposal. Normally, this is a part of a more comprehensive proposal. In our case, Henry Watkins Flooring Inc. has to bid for a multiyear contract where it will seek hone and improve its services.
There are very many advantages that comes with being awarded a Navy contract. However, there are shortcomings. This explains the reason as to why private firms like Henry Watkins Flooring Inc. should have a diverse base of customers (Brown & Potoski, 2003). While I’m not undermining the effort toward the bidding process, the risks are somehow worrying.
- VERY Specific compliance requirements: this factor puts Henry Watkins Flooring Inc. at a risk of investing money and time at the outset of making sure that all the specific requirements are met. Remember, the navy being a government organization, has to be accountable to the citizens or the tax payers. This means that they have to be very strict on the requirements and considering that some are unnecessary, the service provider could be at a disadvantage.
- Reimbursements of costs: Now while my business is bound to incur a lot of costs in the course of fulfilling its contract with the navy, and assuming the costs are legit, the navy might disregard them indicating that they might be unreasonable or out of scope. One reason for reimbursement costs is to make the outcome of the contract appealing. If the costs are not compensated, it means that the service provider may not be at a good position to offer a quality service. One of the main reason that the proposed multiyear contract will thrive is offering a quality service. This is impossible if the reimbursement costs are not covered.
- Intellectual property rights. In the course of delivering the contract, you may have to share your data input or even technical data which the navy could turn to the competitor.
- Dealing with government employees. Unlike the private employees, government employees have their own way of doing things. This said some of your acts could reflect an act of bribing or luring them to some kind of employment. This said, interaction between the contractor and the government employees which could benefit the process of provision is hurt. Henry Watkins Flooring Inc. needs cooperation from all corners in order to deliver the best of services to the navy. Once this is denied, the effectiveness of my business could be compromised.
- Bidding processes. The Navy and like other government organizations have a special bidding process. This means that even if the contract is awarded, the beneficiary still fears that another party may appeal that the right procedure was never followed.
Regulation, F. A. Small Business Programs: Historically Underutilized Business Zone
Utgoff, K. P., & Thaler, D. (1999). The Economics of Multiyear Contracting (No. CNA-PP-345).
CENTER FOR NAVAL ANALYSES ALEXANDRIA VA MARINE CORPS OPERATIONS ANALYSIS GROUP.
Rubin, E. L. (1999). Types of Contracts, Interventions of Law. Wayne L. Rev., 45, 1903.
Brown, T. L., & Potoski, M. (2003). Managing contract performance: A transaction costs
approach. Journal of Policy analysis and Management, 22(2), 275-297.