Base Ethical dilemma teaser. ABC Plastics Co. contracts with NASA to manufacture component parts used in communications satellites. NASA reimburses ABC on the basis of the actual manufacturing costs it incurs, plus a fixed percentage. Prior to being awarded a contract, ABC must submit a bit that details the estimated costs associated with each project. An examination of ABC's job cost sheets reveals that actual costs consistently exceed cost estimates quoted during the bidding process. As a consequence, NASA ends up paying considerably more than the bids ABC submits. An ABC representative was recently quoted as saying, "We really aren't overcharging NASA for the work that we do. The actual costs shown on our job cost sheets seem high only because we are forced to understate our bid estimates in order to be awarded contracts. It's a common practice, and everybody does it. The truth of the matter is companies that quote realistic bid prices are not awarded contracts." Let us assume that it is common practice to purposely underestimate bids in order to win NASA contracts. Is it wrong for ABC to take part in this activity as long as it does not overstate the actual costs it incurs? I need answer the following
Base Ethical dilemma teaser.
ABC Plastics Co. contracts with NASA to manufacture component parts used in communications satellites. NASA reimburses ABC on the basis of the actual manufacturing costs it incurs, plus a fixed percentage. Prior to being awarded a contract, ABC must submit a bit that details the estimated costs associated with each project. An examination of ABC's job cost sheets reveals that actual costs consistently exceed cost estimates quoted during the bidding process. As a consequence, NASA ends up paying considerably more than the bids ABC submits.
An ABC representative was recently quoted as saying, "We really aren't overcharging NASA for the work that we do. The actual costs shown on our job cost sheets seem high only because we are forced to understate our bid estimates in order to be awarded contracts. It's a common practice, and everybody does it. The truth of the matter is companies that quote realistic bid prices are not awarded contracts."
Let us assume that it is common practice to purposely underestimate bids in order to win NASA contracts. Is it wrong for ABC to take part in this activity as long as it does not overstate the actual costs it incurs?
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