Purchasing & Vendor Management response wk5

Caleb

HYDROSUB’S UNFLOATABLE AMPHIBIOUS ASSAULT VEHICLE

3. What can Kathleen Johnson do now to ensure completion of the project and prevent further

problems?

In order to ensure that the project is completed by the required end date, Kathleen needs to do the following:

-He needs to conduct a collaborative discussion with those of decision-making authority on when the project is to be completed as well as the finality in concern with the design of the prototype.

-The renegotiation clause brings up a great concern. If there is a possibility to amend this clause then that would create a more suitable outcome for Hydrosub’s. The case study mentions, “due to in-house capacity problems” that they were awarded the contract. If the issues that are arising internally are causing a delay in completion of the prototype then that is an issue that they are responsible for and a renegotiation should not be warranted.

-I would recommend a continuous validation of work and cost control to be monitored at least on a weekly basis. This way that Hyrdrosub can get validation of the progress of the prototype and the contract that is binding.

4. How should Hydrosub’s staff have prepared for negotiations with suppliers on this contract?

-A more direct budget for the contract instead of declaring a “zero concern for cost.” This would have made the cost analysis of the entire manufacturing more transparent and most likely would have required more regular communication in concern of the finances involved.

-When conducting the contract, they should have mandated a specific amount of modifications to be allowed. This would have given Bolger their left and right lateral limits of what they could do and what they could not do. It’s no different than when a person takes their car in for an oil change and they change the windshield wiper blades without consulting the owner first. Then you get a free set of blades.

BACK BAY UNIVERSITY

1. What arguments are there in favor of a formal salvage program at Back Bay University?

-With a formal salvage program there will be identified requirements on how the program will be ran. Instead of each department salvaging equipment in their own manner it can now be centralized and will most likely create a more streamlined process. Additionally, the profits received from the salvaged equipment could allow for different departments to get better support with items and programs that they are having difficulties with getting funding for currently. This could be a more beneficial overall program for the university as a whole and could draw more participation from departments that may not be aware that this practice is being conducted.

2. What arguments are there in opposition to such a program?

-The most apparent argument is that the equipment being sold actually belongs to the university as a whole and not too each individual department. Therefore, if the department wants to salvage equipment then they need to have approval from the university head level in order to conduct that sale. The biggest argument is that of if the equipment has to be handled in a certain manner due the type of equipment it is, x-ray machine, then does the sale of that equipment create any possible hazard for the buyer or liability for the university. A great example is that in the military, there is a lot of testing equipment that once is acquired by a unit it can never be transferred to another. The purpose of this is to have control of this equipment to prevent a surplus of unused equipment of vital importance. Therefore, when a unit finds no need for this equipment, it has to be disposed of properly.

DF

Case: Hydosubs Unfloatable Amphibious Assault Vehicle

Question 1: Who is responsible for the poor performance of the Bolger contract?

First and formost the government is responsible for the poor performance of the contract and it’s overall inefficiency. With the cost plus fix fee contract there should have been language in the contract for the delivery of the prototype. I agree that changes can be added through different design phases but that needs to be done through various process with requests for variance or even engineering change proposals. Each of those require levels of approval before you simply renegotiate a contract modification. Bolger has some responsibility as they are poorly performing and not reporting accurate numbers. However, the government has gotten into a real mess.

Question 3: What can Kathleen Johnson do to ensure completion of the project and prevent further delay?

In this instance I believe she needs to assemble the teams. The government and Bolger need to be on the same page for a true negotiation and contract fix. It’s obvious the design is not final, thus proposals would be flawed for the overall work. The scope of the project must be tightened. In addition a contract mod should be accomplished to remove any stray language. The cost plus fixed fee should be assessed based on what has been delivered. The fact that the government is also concerned with competing for design insinuates there could be additional companies competing in design. There has to be a very careful negotiation as to not give competitve advantage to any one company.

Case Back Bay University

Question 1: What arguements are there in favor of a formal salvage program at Back Bay University?

The main arguement I see is chain of custody and fiscal responsibility. Being as that the university is procurring items with a fiscal budget and there are known consumables mixed with nonconsumables with a potential useful life on them, there is a need to know what is being under and over utilized. Chain of custody will help to ensure items are not being black marketed for individual profit. The fiscal responsiblity will also help to ensure that items are not being over or under procurred. Establishing a link of what items are sold and how that money is used can also help with budgeting transparency.

Question 3: Assume that a salvage program is to be implemented. Which department at the university should be responsible for it? Why?

In my opinion it starts with the Ms Davis and the Supply Department. She is currently the authority over the budget. So, she is the head of the chain of custody. Within each supported department, I would assume there is a property custodian or a manager for the facilites. These would be the liasons for all procurement requests and head up the sale of any property that needs to be gotten rid of. This would help to complete the loop holes and ensure proper custody is maintained and also that any monies that are made get properly reported.

NFP

HYDROSUB’S UNFLOATABLE AMPHIBIOUS ASSAULT VEHICLE

1. Who is responsible for the poor performance of the Bolger contract?

Primarily, the design team of Hydrosub is responsible for poor performance of Bolger Contract. Knowing the fact that every design changes will require renegotiations of contract and a lot of rework, the Hydrosub team should have frozen the design, right at the start of the project, with the collaboration of Bolger team. This way rework & renegotiation time & cost would have been saved. Also, the team at Bolger is also responsible for poor performance of the contract because of their huge inefficiency in handling cost data which hampered renegotiations. This has been highlighted by the fact that out of 4 weeks that is being asked for completion of AAV, 2 weeks are for contract negotiations only.

3. What can Kathleen Johnson do now to ensure completion of the project and prevent further problems?

Kathleen Johnson needs to take the following steps in order to ensure the project completion and prevent further problems:

· He needs to call a joint meeting of Bolger team and Hydrosub design team, the outcome of which will be a final design for the prototype.

· Amendment of contract, if possible, to remove the renegotiation clause.

· Weekly review of project progress & cost impact together with Bolger team & Hydrosub team.

BACK BAY UNIVERSITY

1. What arguments are there in favor of a formal salvage program at Back Bay University?

· Arguments in favor of a formal salvage program:

· Maximize the value of surplus or used goods due to proper policy in place

· Proper assessment of goods will take place before discarding as surplus or no useful life

· An organized and proper use of the proceeds received from the sale of surplus items

· Prevent principal-agent conflict as people will not tend to discard goods due to their own benefits

4. Develop an implementation plan for such a salvage program.

As a part of implementation program, a formal policy is prepared and conveyed to all the departments, wings and functions. It includes:

· Informing the department well in advance regarding the surplus items

· Necessary facilities to be made available by the department to procure the surplus goods

· Either organize a bidding for the scrap items or make a network with salvage agencies

· Call them for inspection and valuation

· Finally, negotiate and sell the goods

· Use the proceeds for objectives identified by the university management