Week 3: Legal Aspects in Purchasing and Supply Chain Management

QUESTION

Week 3: Legal Aspects in Purchasing and Supply Chain Management

Based on your experience or readings, discuss the differences between the Uniform Commercial Code in the private sector and the Federal Acquisition Regulations (FAR) and Model Procurement Code in the public sector, as they affect the exercise of the Purchasing and Supply Management function. To what extent does the FAR affect the implementation of Supply Chain Management in the federal public sector? Discuss the collaboration between the Purchasing and Supply Management Department and the Legal Department to ensure that the buying organization complies with all applicable legal and/or regulatory requirements affecting the development of purchasing- related documents and execution of contract-related provisions.

NOTE: Your response should include comments and/or observations relative to each of the items associated with this week’s discussion topic. You can divide your response into paragraphs – one each for each item. Moreover, your initial response should address each of these items. Subsequent responses can constitute a commentary on your classmates’ comments/observations on any one or all items. Although no specific length or size of each item is required, your response to each item should focus on the salient points or key aspects corresponding to the nature of each item. Activity: Review outside and supplemental readings

ANSWER

Legal Regulations affecting Purchasing and Supply Chain Management

Legal Regulations’ Influence on Purchasing and Supply Management

The uniform commercial code in the private sector refers to several consistent acts combined into a law to control sales and other business activities in the US. This rule helps achieve uniformity in commercial laws between various states, and only deals with personal property. It enables flexibility and allows transactions between merchants to involve exceptions from the common law (White, Summers, 2010). The Federal Acquisitions Regulations seek to unify policies and procedures for the acquisition of goods by executive agencies in the public sector. Administrative bodies are allowed to enter into business contracts with the public, represented by an officer, and tied to an agreed on a budget. Model procurement code, instituted by The American Bar Association, provides for an office mandated to enter contracts also a centralized authority to conduct procurement. The law controls bidding, procurement in the public sector, price changes and regulations, contract adjustments, property disposal, resolution of contractual disputes (Szypszak, 2011).

Differences exist between the two codes, for instance, according to the Federal Acquisitions Regulations, Commercial purchases not conducted by the government have to be inspected by use of a method or formula implemented by the purchases’ contractor, with the government having an exclusive right to inspect those goods before they are accepted. According to the Uniform Commercial Code, a buyer of goods has the right to check them before paying for the goods, at any time he finds comfortable and in a reasonable way. This will affect purchases and supply management because they shall have to arrange for goods inspection and avail the documents to the government, in the case of FAR (Szypszak, 2011). Another major difference is, according to the UCC, when goods are rejected, the seller or provider shoulders the cost of their inspection, unlike in the FAR. Also, while FAR allows the government to change a contract unilaterally, allowing for adjustment of price and schedule, UCC does not give the buyer any allowance for unilateral change a contract.

Change orders normally have serious implications for Purchase and Supply Chain Management decisions. According to FAR, when any dispute arises, and the contractor makes a claim, the government will give a change order, and the Contract Disputes Act stipulations will be used to resolve the issue. However, in UCC, when disputes arise, damages will be paid, or traditional litigation conducted to resolve the issue (Thai, Drabkin, 2007). Purchasing and supply management departments, therefore, familiarise themselves with the regulations of FAR while carrying out public contracts or contracts with the government, and the UCC regulations to control contracts and dealings in the private sector. This ensures that minimal disputes arise and that business dealings are carried out in the right way, stipulated by the law.

References

White, J., & Summers, R. (2010). White and Summers’ Uniform Commercial Code, 6^th (Hornbook Series). West Academic.

Szypszak, C. (2011). Understanding Law for Public Administration. Jones & Bartlett Publishers.

Thai, K. V., & Drabkin, D. A. (2007). 7 US federal government procurement. Public Procurement: International Cases and Commentary, 89.