Respuesta :
The management section of the proposal obtained by Paul provides supporting evidence that Welton knowingly manipulated the contract in their favor.
- Welton stressed their ongoing connection with the Navy and mentioned that they had previously completed nearly comparable tasks for them using a team of individuals who had worked on previous contracts. If such were the case, then why did it take them six months to construct their manufacturing and procurement strategies, especially since similar plans for other contracts were created in less time? Furthermore, one should undoubtedly question Welton's motivation for requesting an incentive-based contract. The case study stated that while the Navy was interested in their contractor's choice, Welton was adamant on changing the contract type. In order to fulfill the contract one quarter earlier than expected, Welton took advantage of the incentive-based contract by investing an additional $5 million in labor. According to the 90%-10% share agreement, Welton received a $6 million incentive for the early delivery but the labor cost overrun of $5 million only resulted in a $500,000 fine.
- Although it appears exceedingly doubtful, there may be sufficient evidence for the Navy to recover some of the incentive bonus. It is ultimately the Navy's fault for agreeing to a fixed-price-incentive-fee contract and anticipating that Welton would not abuse the terms of the agreement. They may have questioned Welton's motivations at various stages throughout the project and changed direction if needed. For example, towards the end of the first quarter, when Welton was meant to be creating their production plans, they were spending more than twice as much on labor as planned. The cost overruns would have been an alert if the Navy had been keeping an eye on their purchase orders and expense reports. The proposal's management section lends credence to the Navy's concerns that Welton deliberately finished the task in less time to get the incentive. Both parties must have been truthful in their assessments and contract talks, according to the contract's Truth of Negotiations provision. In court, Welton would have to provide evidence as to why they anticipated this job would take so much longer than the other, comparable projects they had already finished. In a potentially drawn-out legal battle, the Navy must demonstrate that Welton utilized improper pricing tactics to boost company profits. The argument that Welton intended to con the Navy from the beginning should be supported by the fact that Welton began billing labor charges at a rate that was around 62% higher each month.
- The Navy for signing an incentive contract and failing to check on the project's condition while it was ongoing, as well as the Welton Company for failing to provide accurate estimates during negotiations, make it difficult to make a judgment because both parties share responsibility. It is the responsibility of the Navy to prove that Welton purposefully supplied estimations that were not supported by the available historical evidence and instead promoted their own individual objectives. It would be challenging for the top management at Welton, who signed the "Truth of Negotiations" paper, to deny on evidence that they had not intended from the start to finish on time and get the reward.
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