For a long time and successfully again via drone navigation, VectorCal came into being decades ago, when suppliers were small and competition was poor, serving the government and its agency, the private sector and citizens even for security reasons. In those few companies whose dealing with most clients has proved to be good, it is also counted. One of the key factors behind their success, although the company could not enjoy this taste of success for a more prolonged time, was why this decline came? Over time, due to the penetration of various companies and their disability (as a result of using a poor forecasting method), VectorCal has been thrown out of track to break even with growing demand from customers. As the words go, “the customer is always right,” VectorCal seems to have nowhere to go.
My company initially aims to serve the consumers locally and then in the foreseeable future, will fare on the international horizon. As aforementioned, the market for drones had expanded at a high pace due to insecurities rising at an alarming rate. My company was determined to create more demonstrative and uncontaminated drones, which they did successfully. However, establishing a sense of success only based on making more friendly drones was incompatible. No one can dispatch that several successful firms were operating in drone making business, way before we joined the market. On the other hand, ignoring the gaps, these old firms provided would have been a fool’s act; hence, my company’s launching that had been as successful as any other established firm. Lastly on of the most appreciating aspect of the company’s technology advancement was launched in the market recently and the response they received was spectacular, which also earned them one of the government contracts; this advanced technology is a drone in size of a bug and is more effective and efficient than the large Unmanned Aerial Vehicles (UAVs).
Contract for VectorCal
In 2011 VectorCal won the government contract as a result of uproar for drone use in Northeast Florida, which resulted from producing more jobs. Even before getting the deal, this company had hired an extra pair of hands to overcome their one of the lowest point – loe production of drones. Their one of the successful drone by the name of TechPri was launched in the market in 2003. This drone was initially fabricated for the US army but had been exported on an international level for some time in Canada, India and Israel. It was reported that the VectorCal had beat others firm and secured the contract worth of $5.5 to manufacture 40 small uncrewed aerial vehicles and 11ground control stations for the American army. Furthermore, the cost incurred for manufacturing the drone and supplying the control station was around $18,000. Nonetheless, this was not the first time the US army had extended their approval to the firm regarding TechPri, since the military hired this same technology regarding the Afghanistan drone attacks.
The most significant reason behind US government granting this contract to VectorCal was that they had done business with them before, and they had used the same drones (TechPri). For the US army, the previous arrangement was very successful, as the company was able to keep the contract terms promising and intact. As VectorCal was seen saying that “The contract attained its mission, we enabled the army to locate bad guys and saved lives” the degree of readiness the army had for VectorCal can be calculated quickly. Nonetheless, the only reason for awarding the contract was not a previously profitable business; instead, TechPri drones weighed no more than 2 pounds. With the assistance of a single soldier, the monitoring device could be carried out in the field. Similarly, the drone’s quick deployment aided the soldiers into amalgamating information into the battlefield without throwing any hindrance.
The Contract for My Company
As MyCompany have no great years to back up their technologies, this firm was still able to snare one of the signed contracts from the US army recently in 2011. As mentioned above, one of the most significant technologies was introduced by MyCompany, which was in the form of the evolution of a drone into small bugs. The contract extended to the firm included the American army technicians and soldiers’ training, which induced the manufacturing of the bugs and its operating procedures. As innovation and development is always welcomed in the US army, MyCompany had a low chance of losing this contract. As per the prediction, My company won the deal worth $18.8 million for three years, meaning it will be concluded in the current year. These bugs named reapers are deadly and ferocious since they can run for 11miles per hour and can latch on a windowsill, too (Shanker et al. 2011). This long term contract is a very plus point for the My company image, as they are new in the field and yet could win such a significant and extended warranty.
To examine the reason behind this granting of contract, studies and research has shown that where the large drones had been effective in doing their jobs, there the handling and manufacturing of these technologies has become a nuisance and a wastage; therefore the American army is ready to invest heavily in those company who are willing and able to adapt to new changes and can provide the country with low cost and highly efficient drones (Pescovits et al. 2010). In light of this research, it was no surprise that the government chose My company for this contract.
Types of Contract for VectorCal and MyCompany
The contract type is crucial for the performance of the contractor under a contract. Furthermore, it provides the contractor with the contract’s legalities and boundaries and under which circumstances the agreement will remain or dissolved. Fixed price, expense recovery and labor-hour/time and material arrangements are the agreements that would be eligible for all parties (Meredith et al. 2003).
The first contract, the fixed price contract, forces the provider to effectively and efficiently conduct the contract to supply the services and products according to the agreement. This form of contract is most useful when the contract relates to supplies and services that can be easily calculated (Meredith et al., 2003). Therefore, as the defence department of government is drawing contract for the firm specialising in drone navigation supplies, the production can be measured in quantity as well quality, making this contract eligible for both the firms.
The second contract is cost reimbursement; here, the payment of all the sustained cost should be within the cost standard and should not be obtrusive. Thus these costs should be within the already decided boundary and what is mentioned in the contract. Not only this, the agreement will ensure that the contractor is putting his best effort into the work and most importantly, the government will be immensely benefited from this contract as it will put less burden on them, financially. Hence, as this contract leaves little space for the contractor to reveal uncertainties and if by chance, there is an economic recession, then the government wouldn’t be held responsible for the extra costs incurred.
The last contract that would be signed between the firm and government will be of labour-hour, time and material warranty. In this particular contract, the government will sign over fixed prices for the cost incurred, such as buying material and paying labours. Since both firms are involved in the manufacturing sector, they both have to pay for the material, wages, and another cost, making them eligible for such a contract.
VectorCal and MyCompany Direct and Indirect Cost
The direct and indirect cost for both firms will be similar due to their operating nature. Direct cost mostly relates to those directly linked to drone navigation technologies; however, the indirect ones are indirectly associated with these technologies’ manufacturing. Moving to the direct cost, these include raw material, labour and technology costs. Since, raw materials mostly consist of iron, steel, magnets and wires; the firm will be able to acquire such sources within America easily evading any extra cost that would have been wasted on searching for these materials. However, the low number of competitors will ensure that they would have to buy these materials at a high price. Next is the labour cost; this will include paying wages to engineers, experts, technician and workers of the research and development department. Finally, we approach the technological costs, it is essential for the contractor to employ best quality technological gadgets such as sensors, camera, a computing system, image and video processing and Wi-Fi communications, because of higher the qualities of technological devices, the better the chance of satisfying the contract and producing successful navigation system.
The indirect costs for both the firms include security, factory insurance and fuel expenses. As the contract is made with the government, safety, and discretion automatically spring up. The company would have to pay for extra and adequate protection so that their essential material and formulas cannot be stolen or cheated. Then there is the factory insurance expense since the drones’ production will be on a large scale and colossal factory space would be allocated, so insurance expense is unavoidable. Last is the fuel expense, as the drones can be functional only if fuel is present. Hence, testing the system would require a fair amount of energy.
The data for both direct and indirect cost incurred by the firm will be crucial, as the government will examine it to weigh up their decision. Usually, the firm with low direct cost are preferred, as the immediate expenses cannot be avoided, but indirect one can certainly be reduced.
According to the whole report and based on data, the company should award the contract to MyCompany. Along with their innovation in drone navigation technology such as reaper drone of bugs’ size, this firm has also won a previous agreement with the firm for a more significant period. The machine they use is more comfortable to handle and successful in producing a more satisfying result. Furthermore, as the firm is new and loaded with heavy investment, it is more likely to have a quality and upgraded system than the VectorCal.
- Meredith, M. (2003). Contracts and types. Communication of ACM, 41-47.
- Pescovitz, D. (2010). Small Unmanned Aerial Systems and the National Air Space: How the US Government Can Spur DIY Drone Innovation. Occasional Papers in Science and Technology Policy.
- Shanker, E. B. (2011). War evolves with drones, some tiny as bugs. New York Times.