As cost-plus contracts grow, president says no.Cost reimbursable contracts accounted for the largest share of federal work in 2007, according to according to prep. 1. As stated or indicated by; on the authority of: according to historians. 2. In keeping with: according to instructions. 3. a survey of contractors by the consulting firm Noun 1. consulting firm - a firm of experts providing professional advice to an organization for a fee consulting company business firm, firm, house - the members of a business organization that owns or operates one or more establishments; "he worked for a Grant Thornton. Service contractors reported receiving 45% of their revenue from cost reimbursable contracts, up from 28% three years earlier. But that contract type is now under attack. Congress last year ordered federal agencies to minimize the use of such contracts. In a position paper during his campaign, President Obama also called for limits on cost-plus contracts Cost-plus contract A contract in which the selling price is based on the total cost of production plus a fixed percentage or fixed amount. . "These contracts are vulnerable to waste because they provide no incentive to control costs," the paper said. "It is difficult to equate the high use of cost reimbursable contracts with the notion that the government is attempting to use more commercial processes to streamline federal procurement," Grant Thornton commented. "The commercial environment normally uses fixed price or time and material contracts while the government continues to maximize the use of cost reimbursable contracts." An additional 39% of revenues came from time and materials labor and materials (time and materials) n. what some builders or repair people contract to provide and be paid for, rather than a fixed price or a percentage of the costs. contracts, which have also drawn criticism because they pose additional risk of increased costs. The Defense Department has ordered its contracting officers A US military officer or civilian employee who has a valid appointment as a contracting officer under the provisions of the Federal Acquisition Regulation. The individual has the authority to enter into and administer contracts and determinations as well as findings about such contracts. to use T&M contracts only when "no other contract type is suitable." Just 20% of contractor revenues were derived from fixed-price contracts. Grant Thornton surveyed 120 government contractors A government contractor is a private company that produces goods or services under contract for the government. Often the terms of the contract specify cost plus – i.e., the contractor gets paid for its costs, plus a specified profit margin. of all sizes, primarily in the professional services (job) professional services - A department of a supplier providing consultancy and programming manpower for the supplier's products. field, about their financial results for fiscal 2007. Thirty-nine percent of the companies responding reported profits in the range of 6% to 10% of revenues. Almost one-third said their profit rate was 5% or less. Contractors said the level of executive compensation was the most frequent issue raised by government auditors. Labor rates and consultant costs were next most-likely to be challenged by auditors. The companies reported employee pay raises averaged 3.5% to 4% in 2007, unchanged from the year before. |
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