Assignment 5: Long-Term Relationship

Assignment 5: Long-Term Relationship

Our company is able to take an idea from concept phase to full production within a very short window due to the use of the robotics in our machinery department. With this ability, we have decided to expand our already large business by competing for government contracts. With our very unique products and quick turnaround time, we feel secure in our success in acquiring a government contract. However, this is a new arena for us and before we jump in with both feet, we would like to take the time to brush-up on the ins and outs of government contracts as they are different from our current contracting process. We are currently studying the process of the long-term relationship and impacts of government contracts. Learning the impact that government contracts can have on our business is very important and being able to make adjustments in our current practices now will help us further down the road. For us to get a good grasp on the long-term relationship and impact of government contracts, we will take a look at some of the different approaches to contract financing and their impacts on our company; determine which contract financing approach would be the best suited for our organization; the policies our organization will need in place due to the Defense Contract Audit Agency; and the approaches we will need due to the government’s need for quality.

Assess how the different approaches to contract financing can impact the company.

There are a few different approaches to contract financing. The government can provide financing through government guarantee loans, advance payments, and progress payments. Each can affect our company in different ways.

Government guarantee loans “are essentially the same as conventional loans made by private financial institutions, except that the guaranteeing agency is obligated, on demand of the lender, to purchase a stated percentage of the loan and to share any losses in the amount of...