When people or business deal with contracting as a means of Procurement for their company, there may be issues regarding who the company will deal with. Procurement Management conducted correctly can be a valuable tool when combating this problem.
The United States Government is a larger institution that relies on contractors to take care of many of the logistics necessary to keep our government running smoothly. Our government does not have the manpower or equipment and supplies to build its own buildings or streets, so it has independent companies bid on contracts for this work. This method of business has been so successful that it has move most of its product procurement needs to this type of business. Unfortunately this type of business has to be regulated. It would be unfair to all of the companies trying to win a contract from the government if the same contractor was chosen time and time again.
In order to be fair during the bidding process the Government has established guidelines when selecting a contractor. These guidelines include the hiring of minority owned companies which include female owned companies. The company has to have established Equal Opportunity hiring policies and must not have a history of unfair treatment of employees. Another thing the Government must do when selecting a contractor is it must spread the wealth among the contractors. This assures that all contractors and their companies are fairly treated when being considered for a contract. The possibility is good that the smaller, minority owned companies will eventually be chosen to work on a contract. Now all we have to do is make sure that the person that awards the contract is also fair and impartial, and not influenced by outside parties. This presents a new crop of issues that we have to look out for in our attempt to be fair.
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One of the issues that a company will have to deal with is who will be awarded the contract to provide services to a larger company. In the United States Government there are many companies competing to win contracts. Some of these companies use lobbyists to try and influence a politician to turn contracted work in their favor. In San Antonio, Kelly Air Force Base was selected for closure in 1996. The government decided to give the land back to the city and let them do whatever they wanted to do with the land and property. City officials offered to attempt to contract the property out for the benefit of the city and the United States Government by opening the property to a contractor for Government aircraft maintenance. Many lobbyists attempted to influence the city to choose their company and various city officials were accused of taking bribes and accepting favors. Eventually the contract was won by Boeing, but not before many people were accused of unethical practices.
The lobbyist may not even be used, it could be a mole of sorts. There have been documented cases where companies competing for a contract have been known to place people in an awarding company in order to befriend a person in charge of awarding contracts. Though these tactics are considered to be dirty tactics, they are used. Of course this can be considered an ethical issue because it is an unfair advantage to the company that plays by the rules. If a company has the money to hire a lobbyist, smaller companies can be forced into bankruptcy by larger companies that use these tactics.
Another issue is the good ol’ boy system. Using this system the company with the inside information can usually win a contract. The person who is awarding the contract might know a contractor who provides the specific service that is sought after. Maybe a friend or relative, it really does not matter because in the good ol’ boy system the winner of the contract is going to be predetermined. The bidding process will just be a formality at this point in order to make it seem like a fair process. Just recently in San Antonio, city officials were accused of awarding contracts to the same company unfairly. The company in question was awarded contracts for street and building repair without other companies being considered. This led to the accusations of unfair business practices and led to the dismissal of several city officials.
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The issue of child labor is an issue that the United States Government had to contend with while it was looking for contractors to meet the demand for the Beret. The Army was looking in the United States for a contractor to fill the order for a million Berets and no one could fill it without sub-contracting to overseas manufacturers. This was a problem for the United States. They would have to get a contractor that was willing to ensure that the smaller companies were not using children under the age of 16 to make the Berets. Had the Government not done this, any subcontractor would have been at liberty to employ underage children to produce the order of Berets and a big ruckus would have occurred in our nation due to this issue. Countries in the east such as China and Taiwan, middle-eastern countries such as Pakistan and India were all considered as subcontractors for this job. But these countries had a reputation for using hundreds of children under the age of sixteen for their labor. Knowing where the United States Government stands on this issue the contractor had to pick the subcontractors carefully or risk not ever winning a government contract again, thus losing him millions of dollars.
This would also be true if the chosen contractor had been a business accused of having a large number of Equal Opportunity violations. The Government has to ensure that a company winning a contract is in compliance with our Governments Equal Opportunity policies. How would it look for the government who tries to have the strictest EO policies to hire a company who violates the same rules it enforces?
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In order to combat these type of problems the government has put many guidelines in place. These guidelines are designed to make it a fair process when a contractor is being sought after. One method used is the policy forbidding a sole vendor. This policy works because no one company is allowed to do all of the contracting work for the United States Government. The policy makes it possible for the Government to be “fair” when choosing a contractor. There is an exception though, in cases where the contractor or vendor is the last providing the service for the Government. In this case there is obviously no choice but to use the single contractor.
The points system is also used when choosing a contractor. In this system the contractors are given points for their past work, potential for completing future contracts, number of minorities and women, and past compliance with other government policies. Here the contractors are chosen not by most number of points or lowest bidder, but by the company with the best average number of points between all of the bidders. This system also works because it assures the procurement manager that they are not hiring the lowest bidder which has been known to sometimes not been able to complete the contract or, the highest bidder which is not saving the government any money.
There are other ways the government has used to save money. The one I have talked about today are just a few but the most common. In a continuing effort to be fair in the market place the government has needed to step up and take these types of measures. This effort has made it possible for the United States Government to not only get more bang for its buck, but to be fair in its effort to spread the wealth between our nations companies.