Ruhling Manufacturing Company Essay -- Business Management

1. Why might negotiation be favored over competitive bidding in certain procurement situations? Based on the textbook and my understanding, whenever there are negotiations between a procurer and a supplier regarding a competitive bidding, the first thing that might be favored is the scope of the project, meaning both will sit down and discuss the entire project prior the work begins. Meanwhile, during the negotiations, evaluation criteria should be clear, and stated and defined. As the evaluation is based on the criteria stated and the procurer can request or ask the supplier’s opinions on certain specifications and where things can be improved. There are two characteristics to be considered when negotiating over competitive bidding: a) Must be flexible and allow changes to make and specify the designs of the projects. b) Knowledge is very important because if a project is based or awarded on competitive bidding then a contractor may not know the information about possible design flaws, submit a low bid, and recoup profits when changes are required. 2. Considerations of Epsilon's alternative proposal: a. What is the applicability of a requirements contract from Ruhling’s point of view? Assume that Epsilon will still make a profit resulting from economics of long runs and learning curves From Ruhling's point of views, the applicable of a requirements contract are both legal and mutually satisfactory, as long as performance is met and buyer's requirements exist, it gives certain protection against price increases, and the possibility of a market predictable. b. Assuming Ruhling is now interested in a requirements contract, how should Ruhling proceed with the bidding/award process? Ruhling should start a ... ...anged innumerable times over the project's life. Continual rework and time delays had hampered progress. Bolger had reported design errors that necessitated the refitting of complex equipment and rework of the aluminum welding. Materials requirements included the use of welded aluminum. Bolger normally employed only steel welders; aluminum welders were in short supply and impatient during work stoppages. The Bolger contract was cost based plus a fixed fee. A particularly disturbing problem was Bolger's cost reporting system. Bolger contract negotiators waited for up to three weeks for cost data. Works Cited http://www.fns.usda.gov/tn/Resources/equip08.pdf http://faculty.haas.berkeley.edu/stadelis/aucvsneg07_15_07.pdf http://www.nextlevelpurchasing.com/articles/dual-source.html http://corpslakes.usace.army.mil/employees/omcontracts/pdfs/section12.pdf