How can I respond to the following peer post while asking a question as well?

Good Evening Class-

With most of us having ties to the military we have all heard or used the saying "it went to the lowest bidder". That is normally said after something breaks, doesn't work, or when we find out construction won't be completed until well past our time.

Why does the President want to reduce Cost-reimbursement contracts? He wants to reduce them because those contracts allow flexibility for the contractor to misuse funds. The misuse of funds hurt the American tax payer. These contracts can cost the government more money than expected because it gives the contractor flexibility to reimbursed for things that might not have been needed and can cause the project to take longer than normal.

Why is it preferred to use a Firm Fixed type contract? A firm fixed contract allows for no wiggle room or flexibility for the contractor. The entire price of the project is agreed upon before the contract begins. This doesn't allow for the contractor to purchase more expensive items or parts to complete the project.

Who accepts the greater risk under each type of contract? On a Cost-reimbursement contract the government takes on most of the risk. The contractor can make changes or part upgrades during the contract and the government is obligated to reimburse them. With a Firm-fixed contract the contractor assumes most of the risk. This is because the price is agreed upon when the contract is signed. Any deviation in costs from the contract is the responsibility of the contractor and not the government.

Why is competition favored over sole source? I kind of alluded to this question earlier when talking about the lowest bidder. Competition is favored due to sole sourcing because a competition will drive the price down that the government will have to pay. If you have multiple companies bidding on one contract those companies will lower their price to make sure that they get the contract. If two people can do the same job you are going to hire the one that is willing to do it for less. This is something everyone deals with on a daily basis. This can offer the best financial outcome for the government, however you also get what you pay for. Sometimes the government can sacrifice quantity for quality.