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Commercial Items and Services: Everything is the Same (Only Different)

Ron Smith, Contracts Director, EADS-North America Tankers. Commercial Items and Services: Everything is the Same (Only Different). Friday, November 21 9:30 – 11:00 am. Terms and Conditions Requirements Definition Pricing. Commercial Contracting differences.

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Commercial Items and Services: Everything is the Same (Only Different)

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  1. Ron Smith, Contracts Director, EADS-North America Tankers Commercial Items and Services: Everything is the Same (Only Different) Friday, November 21 9:30 – 11:00 am

  2. Terms and Conditions Requirements Definition Pricing Commercial Contracting differences

  3. FAR 12 terms (regulated) versus T&C between commercial entities (market driven) Hybrid Contracts: flow down implications in FAR 15 contracts with FAR 12 subcontracts at the lower tiers Prime Contract is Government item (e.g. tank) Bottom tier is a commercial item (e.g. fire extinguisher) Which tier makes the commercial transaction? What FAR requirements flow down to the commercial tiers? FAR 12 government purchases: define “customary”? Terms and Conditions • Difference: • Government regulations drive contract terms • Commercial buyer and seller terms have equal standing

  4. Requirements Definition • Scenario: Laptop weight • Current assets @8lbs • Need RFP reduction to X lbs • Challenge: • RFP requirements Language • Evaluation of commercial offers Requirement @6 lbs Requirement @7 lbs Current assets @8 lbs

  5. 7.6 lbs 6.3 lbs 6.1 lbs 4.3 lbs 5.1 lbs 5.9 lbs 5.8 lbs 8.4 lbs 6.4 lbs Requirements Definition • Questions • Would 7 lb requirement Knock Out Green? (due to price) • Would 6 lb requirement Knock Out Gray? (due to technical) • How will the Government evaluate differences: • 5.8 vs 5.9 vs 6.1 lbs • 5.1 vs5.9 • How does this factor weight against Memory, Processor speed, Price and other factors? • How would this factor be evaluated in FAR 15? Requirement @6 lbs • Difference: • FAR 15 Govt sets reqmt in advance • FAR 12 Govt selects from multiple options Requirement @7 lbs Current assets @8 lbs

  6. Pricing List Price Manufacturer’s Suggested Retail Price (MSRP) Web Price/Sticker Price Discount • Difference: • Cost/Price Analysis seeks finite target on the curve • Commercial pricing seeks range based on market conditions Price Mark-up Corporate ROI Target Marginal Pricing Cost of Goods Sold Quantity

  7. Terms and Conditions Government regulations drive contract terms Commercial buyer and seller terms have equal standing Requirements Definition FAR 15 Government sets requirements in advance FAR 12 Government selects from multiple options Pricing Cost/Price Analysis seeks finite target on the curve Commercial pricing seeks range based on market conditions Summary

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