Best Contracting

Practices for Business

Unit 1:

Building Successful

Partnerships in the

e-Business

Age – The Executive’s

Role

Building Successful Partnerships – Four

Common Actions

• Unleashing Buying and
Selling
Power

• Changing Buying and
Selling
Processes

• Developing an Integrated
Supply
Chain

• Learning & Applying Best
Practices
& e-Tools from Industry
Leaders

What Are
Winning
Organizations
Doing?

Reference Text – World Class Contracting, By Gregory A. Garrett,
CCH 2001, pg. 2

New Supply Environment – The World We Live

• Relaxed barriers to entry
• Increased pricing flexibility
• Pro-entrant incentives
• Mandatory wholesale of

unbundled
elements

Supply Drivers

New Supply

Environment

•

Emergence of Internet

architecture
• Growth of Automated Sales Tools
• Use of Enterprise Resource
Planning (ERP) Software
• Growth of e-procurement Software
and Contract Management
Enterprise Software

Pros

+ New product and service

providers

+ Wider range of products and

services

+ More modular products and

services

+ Improved price/performance

+ Accelerated pace of change

Cons

-More complexity

- Higher cost of integration

- Less reliability

- Accelerated pace of change

- Rapid Obsolescence

Increased Range of Services and

Product Choices for End Users

Unleashing Buying & Selling Power

• Use of electronic catalogs, self-service
internet
sales, Net marketplaces, etc.

• Use of e-sales and e-procurement tools
has
caused a revolution in the roles &
responsibilities
of:

• Sales managers/account executives
• Procurement managers/purchasing
agents

• Contracts managers/contract
administrators

• Fewer people with broader
responsibilities requiring
more education, training, and business
skills to
propose, negotiate, and administer
complex
innovative deals and partnerships

Changing Buying & Selling Processes

Maximizing e-procurement Success

Procurement Today:

Managed per Transaction

e-procurement:

Managed by Exception

Online product

selection

Search large catalogs

Personalized views; named

shopping carts

Requisition

approval

One to 12 levels of manual

approval

Transactions automatically

approved based on rules

P.O. Transmission

Fax, e-mail, EDI direct to

supplier; supplier retypes the

order

Order is sent through a supplier

clearinghouse

Payment

authoirzation

Dependent on three-way match

of P.O. with invoice and receipts

Immediate; based on shipment

notice

Analysis

Sporadic; not linked to supplier

performance

Continuous; integrated in real

time; drives optimization of

process

Source: Forrester Research, Inc

Reference Text,
pg. 5

Developing an Integrated Supply Chain

• Integrated - means providing
Enterprise
Resource Planning (ERP) to ERP, core
business
transaction functionality to all
participants

• Going beyond Supply Chain
Management to
the integration of databases between
companies

• Today - large trade exchanges, built

cooperatively by industry participants
are
changing the nature of business

• More companies are creating shared
virtual
workspaces, with appropriate
security and
access measures.

Trade Exchange – Example: Exostar

Exostar’s
Mission:

To become the standard e-business platform for
everyone in the Aerospace & Defense industry

EXOSTA
R

Founding
Members

BAE
Systems

Boeing

Lockheed

Martin

Raytheon

Rolls-Royce

Trading
Partners

Large
OEM’s

Government

Buyers

Airline

Tier 1 –3

Suppliers

Service

Providers

Boeing’s Forum Pass – Virtual Collaborative

Workspace

How Forum Pass Fits

Contrac

Design

MFG

Virtual

Mtgs.

ACCTG

Check-

out/Check-

in Via

Forum Pass

Contrac

Design

MFG

Virtual

Mtgs.

ACCTG

Partner
A

Contrac

Design

MFG

Virtual

Mtgs.

ACCTG

Partner
B

https

http

https

Logos obtained from Boeing website

Example: Boeing ForumPass

 ForumPass offers a collaboration solution
to address
the challenges of integrated project teams
 Supports creation of dynamic,
opportunistic project
teams, independent of computing support
 Provides a common workspace that fosters
innovation
 Breaks down barriers to collaboration



Process and schedule visibility

 Immediate notification of changes
 Visualization via Computer-Aided Design (CAD)

 Balances security with access to key collaboration partners

ForumPass Key Capabilities

• Project Management and
Administration

• Document and Data Management
• Online Meetings
• Visualization and Mark-up
• Workflow
• Subscription-based notifications
• Security and access control

Goal: Establish a Common Collaboration

Workspace

• Project Management

• Document Management

• Product Data/Change
Control

• Virtual Meetings

DOD

Boein
g

Firewa
ll

Shared Workspace

Firewa
ll

Supplier
A

Firewa
ll

Supplier
B

Firewa
ll

Supplier
C

Firewa
ll

Learning & Applying Best Practices & e-tools from

Industry Leaders

Microsoft

Bill Gate’s

New Rules

for e-Business

Bill Gate’s New Rules

Insist that communication flow through e-mail

Study sales data online to share insights easily

Shift knowledge workers into high level
thinking

Use digital tools to create virtual teams

Convert every paper process to a digital
process

Use digital tools to eliminate single-task
jobs

Create digital feedback loop

Use digital systems to route customer
complaints immediately

Use digital communication to redefine
boundaries

10.

Transform every business process into
just-in-time delivery

11.

Use digital delivery to eliminate middleman

12.

Use digital tools to help customers solve
problems for themselves

Reference Text,
pg. 7

Hormel Foods: Best Practices with Oracle

Internet Procurement e-tool

Case

Study

• Hormel Foods has recently completed
the
installation of Oracle’s Internet
Procurement at all
of its 50 locations. Employees at all of
these sites
are now able to create purchasing
requisitions for
non production items and have them
automatically
routed for approval, as well as track
and access
information on a real-time basis

• Self-guiding on-line catalogs allow
workers to
search for goods and services from
approved
suppliers

• Most of the savings associated with the
implementation of Oracle Internet
Procurement
is as a result of Hormel’s procurement
personnel
no longer having to spend considerable
amounts
of time dealing with routine purchases

Reference Text,
pg. 8

Lockheed Martin: Best Practices with SAP

Business to Business (B2B) e-tool

Case

Study

• In June 1999, the Missiles and Fire Control

Division of Lockheed Martin located in
Dallas,
TX selected the Business to Business
(B2B)
Procurement system developed by SAP to
replace an out-dated paper-based indirect
procurement process.

• Lockheed Martin leveraged the
capabilities of
the SAP business workflow component to
implement consistent business rules to
ensure
user’s purchases were appropriate, priced
within
limits, and ordered from approved
suppliers.

• As a result of SAP’s focus and rapid
implementation,
ease-of-use, and flexibility Lockheed
Martin was
able to control the use of their indirect
procurement
expenses achieving dramatic cost
reductions.

Reference Text,
pg. 8

Qwest: Best Practices with V-Source e-tool

Case

Study

• Qwest, formerly, US WEST, Interprise
Networking
Services recently selected Vsource, Inc. of
Ventura,
California, a provider of a “pure-play”
Internet
e-procurement solution called Virtual
Source
Network (VSN).

• Vsource charges $100 per seat for each
password
and small per-line transaction fees for
purchase
orders and Request-for-Quotations (RFQs).

Customers who want VSN to tie into their
existing
back-end systems can do that through the
Business Ware Middleware solution from
Vsource
partner Vitra Technology, Inc., of
Sunnyvale,
California.

• Depending upon a company’s current
internal
procurement processing costs and the
volume of
transactions VSN can save buyer’s
hundreds,
thousands, or millions of dollars each year.
VSN
requires little time to set-up and no
training. All
you need to use VSN is a browser and web
access.

Reference Text,
pg. 9

Exercise 1 – Building Successful Partnerships

• Divide into teams of 3 – 4 people
• Select one of the four common actions
that winning
companies are taking to build Successful
Partnerships

• Conduct a 15 – 20 minute Brainstorming
session,
discussing and listing the advantages and

disadvantages of the selected action and
what actions
you as executives should take to
maximize success.

• Present your findings to the class (Be
Brief 3 – 5
minutes)

Common Action:

Advantages

Disadvantages

Executive

Actions

Building Successful Partnerships in the e-

Business Age

Summary

•

The power of e-Business has been unleashed by

the advent of
new communication technologies and the the
Need for Speed!

• However, to achieve high performance results,
year over year,
companies must form successful partnerships
based upon trust

• Winning organizations are taking Four Common
Actions to
build Successful Partnerships:

(1)

Unleashing Corporate Buying & Selling

Power
(2) Changing Buying & Selling Processes
(3) Developing an Integrated Supply Chain
(4) Learning and Applying the Best
Practices & e-tools from Industry

Leaders

Unit 2:

Building Trust:

Managing

Expectations and

Honoring

Commitments

Understanding How to Manage Expectations

Ask

Align

Fulfill

Clarify
Expectation
s

Control
Expectation
s

Meet or
Exceed
Expectations

Listen

Understand

Negotiate

Agree

Communic
ate

•

Surface explicit &

Implicit
expectations

• Surface Assumptions

•

Compare

Expectations to
reality

• Resolve Gaps

• Communicate
differences

• Re-set expectations

• Set realistic
expectations

• Document
acceptance
criteria

•

Meet with customer

• Obtain agreement
that
expectations were
met

• Identify gaps

Adapted from:
“Managing Expectations”
by Dorothy Kirk, PM Network, August
2000

The Managing Expectations Process

Reference Text, pg.
13

Honoring Commitments: Lessons Learned

 Listen to the customer
 Understand the customers needs vs. desires
 State the obvious
 Be Accessible
 Return phone calls, vmails, & emails in a timely manner
 Provide regular communication on contract, program, partnership
status
 Develop a project plan for every deal (Scope of Work (SOW),
Integrated
Schedule, Work Breakdown Structure (WBS), Responsibility
Assignment
Matrix (RAM), and acceptance criteria)
 Develop Risk Management Plan
 Disclose problems early and mitigate negative impacts
 Back up all verbal agreements and conversations in written documents

Successful Partnerships

Simple Actions Checklist

Reference Text, pg. 14

Honoring Commitments: Lessons Learned

 Develop a changes management process
 Provide frequent communication via multiple-media
 Be prepared to deliver both good and bad news at multiple
levels, both
internally and with customers
 Be flexible, develop alternatives
 Set challenging but achievable objectives
 Demonstrate passion to honoring commitments
 Recognize that trust is the most important thing in a
successful business
relationship
 Learn from mistakes openly communicate Lessons Learned
 Celebrate joint successes
 Document and share best practices

Reference Text, pg. 14

Partnership Ingredients

Three
Major
Ingredie
nts

• Complementary
Strength

• Common Customer-
base

• Chemistry

Discuss Examples of

Partnerships based upon

each of the above.

Reference Text,
pg. 15

Successful Partnerships – Key Definitions

Partners:

Two or more People or organizations

working

together toward a mutually beneficial

common

goal with loyalty an a long-term

commitment

to each others success.

Loyal Customer:

A buyer who chooses to do

business with a

particular seller and commits to buy

from that

seller in the future.

Satisfied Customer: A buyer who buys from a
particular seller but

expects to buy from others in the

future.

Customers

Satisfaction/

Loyalty

Successful

Long-Term

Partnerships

Building

Trust

Four Common Actions

Managing Expectations

and Honoring Commitments

Partnership Agreement(s)

Partnership Ingredients

Complementary

Strength

Common

Customer-base

Chemistry

Customer Need/Desires = Business Partnership

Reference Text, pg. 16

The Successful Partnership Pyramid

Exercise 2: Building Trust Q&A

1. On a scale of 1 (Low) to 10 (High), How effective

is your organization/company in building long-
term buyer/seller relationships? Give examples.

2. On a scale of 1 (Low) to 10 (High), How well

does your organization/company manage your
customers expectations? Give examples.

3. On a scale of 1 (Low) to 10 (high), How well

does your organization ensure requirements and
acceptance criteria are aligned, agreed to, and
documented before the contract is signed?

Unit 3:

Government

Contracting and

Commercial

Contracting

Similarities

Contract Management – What Is It?

 A process of planning, forming, and
administering
agreement(s) to buy or sell goods and services
from or to
another party
 The art and science of managing a contractual
agreement(s)
throughout the contracting process

Buyer

Seller

Subcontractor(s

)

Contrac

Contracts

Definition
 An agreement between two or more
(competent)
parties or persons that creates an obligation
to do or
not do a particular thing
 A contract has two aspects:

 Document: Written manifestation of an
agreement
between parties
 Relationship: The personal or
professional
commitment that forms the
understanding between
people who enter into agreements, either
oral or
written

Reference Text,
pg. 19

Contracts Are

 Sources of business: For sellers
 Sources of goods and services:
For buyers
 Risk management tools: For both
buyers and
sellers
 Projects: That must be managed
by people
from both the buyer’s and seller’s
organizations.

Contract Management’s Four “Ps”

 People

 Authority: Who can sign or approve?
 Responsibilities: Who does what?

 Process: The means by which goods and
services are
exchanged
 Performance: How effectively the goods and
services
are bought and sold
 Price: What determines a reasonable price?
How do
terms and conditions affect price?

Quality,

cost,

and

schedul

Contract Management Process

Buyer

1. Procurement

Planning

2. Solicitation

Planning

3. Solicitation

Make-or-buy decision

Seller

1. Presales

Activity

2. Bid/no-bid

Decision making

3. Bid or Proposal

Preparation

Bid decision

Phase 1: Preaward

Buyer

4. Source

Selection

Contract

Award

5. Contract

Administration

6. Contract

Closeout or

Termination

Seller

4. Contract

Negotiation &

Formation

Contract

Award

5. Contract

Administration

6. Contract

Closeout or

Termination

Phase 2: Award

Phase 3: Postaward

Buyer’s and seller’s steps

Reference Text,
pg. 20

Government (Public) Contracting and

Commercial (Private)

Contracting

Similarit

ies

Include

* (Similar – CM Process)
Both follow a similar Contract Management
process.

* (Similar – CM People Skills)
Both require well-trained and educated
people with
broad skills sets (competencies including:
Negotiation
skills, financial skills, legal skills,
interpersonal skills,
communication skills, organizational skills,
leadership
skills, and others.

* (Similar – Performance Requirements)
Both need to focus on delivering and/or
providing
quality products, services, and/or solutions
for their
customers – faster, better, and cheaper.

So What’s the Point – According to W. Gregor

MacFarlan, CPCM

• An immense increase in knowledge workers
and a
decrease in manual workers.

• Contract Management professionals are
knowledge
workers. Individual effectiveness and
collective growth
required:

– Reasonable empowerment (Autonomy to
act is
essential).

– Opportunities to apply innovative
judgment (strive to
improve the deal).

– Continuous learning for growth (no other
useful
option).

• Biggest mistake of our time: treating
knowledge workers
as a cost rather than as an asset.

A Few More Points

• Demographics and work environments relate:

– In millions of cases, the knowledge worker
is not
dependent on a single employer for a
career.

– The knowledge worker’s professional
capabilities
and skills are portable.

– The high likelihood exists for knowledge
workers to
pursue three or four successful growth jobs
over a
career. Many people will be crossing-over
between
either buyer or seller roles and/or
government and
commercial contracting sectors.

So Where Are We Headed?

• Recent research (1999 and 2000) by CMI* and
ISM* relates
for every 100 surveyed contracting/purchasing
professionals
concerning their roles:

• 90 indicate “more time sensitive”
• 85 indicate “more responsibility”
• 85 indicate “more team-oriented”
• 85 indicate “more strategic”
• 60 indicate “less clerical”

• Performance metrics are increasingly tied to
strategic rather
than transactional business measures

The Contract Management Institute (CMI) is the research arm of the National Contract
Management Association (NCMA). The Institute of Supply Management (ISM) was
formerly the National Association of Purchasing Management (NAPM).

Most Recent Research (1)

(Contract Management Institute – 2001)

•Performance Metrics for the Contract
Management
Discipline – a survey.

• Senior contracting/purchasing personnel
• 3,180 surveys distributed; 872 returned – 27
percent response
rate.

• Public sector (35%); private sector-government
(37%);
private sector-non-government (21%);
educational, not-for-
profit, other (7%).

• Three quarters at least 15 years experience;
more than half
over 20 years.

• Education: high school (1%); some college
(10%);
undergraduate degree (33%); masters degree
(46%); post-
graduate degree (9%).

Most Recent Research (2)

(Contract Management Institute – 2001)

• Which metrics are currently used by your
organization to
evaluate personnel?

Top 10 choices:

1. Responsiveness.

6. Human/interpersonal

2. Integrity/ethical standards

relations.

3. Timeliness.

7. Process focus.

4. Written communication. 8. Education.
5. Oral communication.

9. Customer

service (internal).

10. Accountability

Most Recent Research (3)

(Contract Management Institute – 2001)

• Which metrics will be used in the next 3 to 5
years?

Top 10 choices:

1. Business Judgment.

Integrity/ethical standards.

2. Decision making

7. Education.

3. Problem-solving ability

Human/interpersonal

4. Negotiation skills.

relations.

5. Customer service (external).

Responsiveness

10. Communications

Most Recent Research (4)

(Contract Management Institute – 2001)

• Some bottom lines:

– The contract and purchasing management
function is
evolving toward a strategic business
management
focus.

– Performance evaluation metrics
increasingly assess
results not just activity.

– Employees are motivated to perform
when they are
measured about things they have control
over.

– Performance evaluation systems should
be pervasive
across an employee’s career path (i.e.,
recruitment,
hiring, placement, training, evaluation,
promotion,
rewards, and compensation).

Exercise 3: CM Process & Teamwork Q&A

1. Does your organization/company have a well-

defined Contract
Management (CM) process, which is documented,
understood,
and followed by everyone in your
organization/company?

2. What is the role of the Contract Manager in your

organization/
company?

3. What is the Executive’s role in the CM process?

Unit 4:

Contract

Management:

What Executives

should Know

& Do!

What is the

role of the

Executive in

the CM

Process?

Why is Contract Management Important to

Executives?

• In most organizations/companies the success of
winning and
executing contracts will determine the entire future
of the enterprise

– Business opportunities and risks are managed via
the contract

– Growth via changes management and follow-on
contracts

• Contract performance is typically inconsistent

– Some do well, but most do not
– Very team dependent

• Managing contracts is difficult

– Complicated and not well understood
– Requires broad set of management skills
– Poorly implemented internally and externally
– Traditional management incentive structures
usually at variance
with successful contract management

Why is Contract Management Important to

Executives?

•

Contract management teams are often formed of a diverse

temporary group of talented individuals

–

Usually not well trained in contract management

– Little previous experience working together
– Expected to immediately be proficient

•

There is often a negative bias against contract management

–

Personnel are unfamiliar and untrained

– Prior experience with contract management has been
unsuccessful

– Technical personnel typically look down on contract management
and the people that attempt to manage contracts

– It is not uncommon for the very best contract management
techniques to be disliked by the team

– It is sometimes viewed as non-producing overhead
– People often do not want to follow a disciplined and documented
process

What is There About Contract Management That

Makes it So Difficult?

• Requires a broad set of skills

– Business, legal, financial, interpersonal,
leadership,
team building, negotiation, multi-cultural

– Rare to find personnel with this broad
capability

• Contract management is complex and is
difficult to
describe succinctly

– Makes it difficult to convey to others and
install as
a culture

– Personnel believe that it is just
paperwork anyone
can do it

What is There About Contract Management That

Makes it So Difficult? (continued)

• Contract management appears overbearing
to the
uninitiated

– Falsely appears to stifle creativity
– Falsely appears to slow things down
– Falsely appears to be bureaucratic

• It is not uncommon for management to only
give contract
management lip service (Don’t walk the talk)

– Lack of understanding = Lack of support

Why the Complexity of Contract Management Is

An Issue?

•

State of the Art

• Most available models are over-simplified and inadequate
• Henry Fayol’s: Planning, Organizing, Staffing, Directing, Controlling
falls short
in today’s environment

• Many models confuse and intermix sequential activities and on-
going processes

•

Communication – Without a well-defined contract

management process in
place:

• It makes it difficult to convey to the team how the contract will be
managed

• It makes it difficult to communicate with others about the health and
progress of
the contract

•

Execution – A well-defined contract management process is

mandatory
because:

• Continued growth of contracts as a result of increased outsourcing
• It is impossible to install a culture if it can’t be described
• It is difficult to install a culture even if it can be described

Business Conduct Issues What Executives

Should Know & Do at the Outset

 Create a clear vision, mission, and goals.
 Establish lines of authority – who’s in charge of what?
 Create lines of communication – How to get work done!
 Facilitate communication methods and structure – Make
sharing info easy!
 Set expectations of each other – Clarify roles and
responsibilities to
to ensure teamwork!
 Develop escalation processes – When problems arise who
do you contact!
 Ensure employee feedback/performance evaluation process
is regularly
conducted
 Create a shared reward and recognition process
 Create and follow a Code of Conduct

Indicators of Poor Teamwork

• Communication stops
• Information is withheld
• A climate of suspicion and distrust exists
• Counterproductive subgroups and cliques
form

• “Fear-of-Failure” causes individuals to avoid
making
decisions

• Complaining is prevalent

Separateness and distrust prevail

Indicators of Good Teamwork

• Spontaneous, positive interpersonal
interaction

• The collective energy level of the team is
high

• A positive cooperative climate prevails
• Information flows freely between team
members

• No work is considered beyond an
individual’s job
description (If it needs to be done, someone
is doing it)

• Complaining is almost non-existent
• The coffee pot is never left empty for other
team
members

Separateness and distrust prevail

Executive Role in Creating Teamwork

 Be able to communicate your vision and the contracts role in
achieving it.
 Understand stakeholder expectations and conflicts.
 Listen to your team members speak of their teammates and
notice the
vocabulary and mood.

– Encourage respect and business like interaction
among the team members

– Get involved if adversarial relationships emerge.

 Ensure that rewards and incentive structures acknowledge
team performance.
 Look for, and encourage your Contract Managers to provide
evidence of
teamwork with:

– Users
– Customers
– Supporting organizations

Executive Role in Establishing A Common

Contract

Management (CM) Vocabulary and Process

 Understand – and use – the correct CM
terminology yourself.
 Demonstrate your understanding of the CM
process through your
actions.
 Fund and support development of a glossary of
common CM
terminology, used in you industry, organization,
and contracts.
 Produce electronic copies and see to it that all
Team members
have the glossary of CM terms as a resource.
 Insist that all team members faithfully use the
approved CM
process and terminology

One thing said, ten things

understood

Executive Oversight of Contract and Project

Planning

 Ensure that time and money to plan is
provided for.
 Require an internal Contract Kick-off Meeting
to review
the plan.
 Review the contract risks and how they will
be managed.
 Establish Executive Management Milestones
reviews.
 Define the business aspects you need to
review and
approve.
 Set the schedule and measure performance
against it.

Executive Oversight of Opportunity and Risk

Management

 Encourage everyone to identify potential
opportunities
and risks.
 Require that tailoring of procedures and
templates be
accompanied by risk assessment.
 Require and review opportunity and risk
assessments
throughout the contract management
process.
 Require the planning and execution of
approved risk
mitigation and opportunity enhancement
actions.
 Stay cognizant of the high risks and the
progress toward
mitigation.

Executive Commitment to Contract Changes

Management

 Define the changes management process that
must be
used on all contracts.
 Be an advocate of contract changes, as
appropriate.
 Constructively challenge informal contract
changes at your
initial reviews with team members.
 Constructively challenge the effectiveness of
the contract
changes management at program reviews.

Executive Participation in Contract Visibility

Management

 Ensure that corporate information systems
benefit the
teams and provide Contract Managers with
contract-level
information necessary to manager their
contracts.
 Share as much company information as
possible.
 Eliminate barriers to sharing information.
 Create a method for exchange of lessons
learned between
contracts and programs.

 Ensure that all contracts are properly planned.
 Ensure that you receive status on all contracts and
related projects.
 Do not allow activity reports to substitute for status
reports.
 Do not substitute paper optimism for intelligent,
perceptive judgment.
 Verify that the reported status is consistent with
contract results.
 Focus on corrective actions in status meetings.
 Ask how you can help in the corrective action process.
 Be sure that you are not a bottle-neck to required
resources.

Executive Oversight of Contract Statusing

 Ensure your managers have the correct
corporate and
contract management vision.
 Know your managers and their leadership
styles. Provide
training or counseling to correct deficiencies.

Executive Development of Contract

Management

Executive Support of Contract Corrective Action

 Publicize expectations that contracts be
technically
compliant, completed on time, as as much
under budget
as possible.
 Require the use of Action Item Registers to
drive
corrective actions to closure.

Exercise 4: What Executives Should Know &

Do!

•

Individually, review charts all of the previous

charts in this
unit, which contain boxes.

• Place a check in each box, which you consider
yourself and/or your organization/company
executives do
well.

• Count up the number of checked boxes you
have on the
previous charts in this unit.

• Executive Assessment

Excellent:

45 to 50

Good:

39 to 44

Average:

34 to 39

Below Average:

28 to 33

Poor:

27 or below

Why Executive Management Has an Essential

Role In Contract Management

• Contract Management is a complex process, difficult to
install as a
corporate culture.

• Exceptional Contract Managers may institute sound
practices in spite
of the prevailing corporate culture.

• Most Contract Managers will take their guidance from
the prevailing
culture.

• A non-supportive or misinformed Executive
Management will
generally lead to ineffectual Contract Management
practices.

Organizations that routinely execute contracts

successfully usually have a well understood and

practiced Contract Management culture backed

by strong, knowledgeable, Executive Management

Support.

Unit 5:

Pre-Award Phase

& Best Practices

Buyer

4. Source

Selection

Contract

Award

5. Contract

Administration

6. Contract

Closeout or

Termination

Seller

4. Contract

Negotiation &

Formation

Contract

Award

5. Contract

Administration

6. Contract

Closeout or

Termination

Phase 2: Award

Phase 3: Postaward

Buyer

1. Procurement

Planning

2. Solicitation

Planning

3. Solicitation

Make-or-buy decision

Seller

1. Presales

Activity

2. Bid/no-bid

Decision making

3. Bid or Proposal

Preparation

Bid decision

Phase 1: Preaward

Reference Text, pg. 79

Contract Management Process - Buyer’s and

Seller’s steps

Contract Management Process: Preaward

Phase

Buyer’s steps

1. Procurement

planning

2. Solicitation

planning

3. Solicitation

Procurement Planning

 Is the process of identifying which buyer
needs can be
best met by procuring products or services
outside the
organization
 Involves the buyer’s consideration of –

 Whether to procure (make-or-buy
decision)
 How to procure (contracting method)
 What to procure (products and services
needed)
 How much to procure (quantity
desired)
 When to procure (delivery schedule)

Procurement Planning (continued)

Input

Tools &

Techniques

Output

•

Scope statement

• Product

description
• Procurement

resources
• Market

conditions
• Other planning

output
• Constraints
• Assumptions

• Make-or-buy

analysis
• Expert judgment
• Contract type

selection
• Opportunity and

Risk

Management

Process
• Contract terms

and

conditions

• Procurement

management

plan
• Statement of

work

Reference Text

Solicitation Planning

• Involves preparing the documents needed to
support the
solicitation

Input

Tools &

Techniques

Output

•

Procurement

management

plan
• Statement of

work
• Other

procurement

planning output

• Standard forms
• Expert judgment

• Procurement

documents
• Evaluation

criteria
• Statement of

work

updates

Reference Text, pg. 86

Solicitation



Involves obtaining information (bids and

proposals) from
perspective sellers on how project needs can be
met
 Types of solicitations

 Request for proposals (RFP)
 Request for tenders (RFT)
 Request for quotations (RFQ)
 Invitation for bids (IFB)
 Invitation to bid (ITB)

 Types of information-only solicitations

 Request for information (RFI)
 Request for information and qualifications
(RFI&Q)

Solicitation (continued)

Input

Tools &

Techniques

Output

•

Procurement

documents
• Qualified seller

lists

• Bidder

conferences
• Advertising

• Solicitation that

leads to the

submission of

bids

or proposals

Reference Text, pg. 88

Contract Management Process: Preaward

Phase

Seller’s steps

1. Presales

activity

2. Bid/no-bid

decision

making

3. Bid or

proposal

preparation

Presales Activity

• Is the process of early involvement with potential
buyers,
understanding and influencing their needs,
plans, and
expectations

Input

Tools &

Techniques

Output

•

Customer

Identification
• Determination of

customer needs
• Evaluation of

competitors

• Proactive sales

management
• Market research
• Competitive

analysis

• Potential and

existing

customer lists
• Customer-

focused

sales plan
• Competitive

analysis

report

Reference Text, pg. 90

Bid/No-Bid Decision Making

• Is the process of evaluating risks vs.
opportunities and
making an informed and intelligent decision

Input

Tools &

Techniques

Output

•

Solicitation

• Buyer-specific

information
• Competitive

analysis

report
• Seller’s strategic

objectives and

plans

• Opportunity and

Risk Management

process
• Opportunity and

Risk

Management

(ORM)

Model

• Bid/no-bid

decision
• Justification

document

for bid/no-bid

decision

Adapted from Reference Text, pg. 93

Bid or Proposal Preparation

Input

Tools &

Techniques

Output

•

Solicitation

• Analysis of

solicitation
• Competitive

analysis

report
• Past proposals

• Compliance matrix
• Standard terms

and

conditions
• Past proposals
• Lessons-learned

database
• Executive

summary

• Bid or proposal
• Supporting

documentation
• Oral

presentation

Reference Text, pg. 95

Adapted from Reference Text, pg. 97

Pre-Award Phase – Best Practices (Buyer)

Best Practices

Observed

Extent of

Application

Decide what products,
services, or solutions you
need. (Use of off-the-shelf
products or services)

Inconsistent

Conduct market research
and benchmarking of
industry practices

Widespread

Develop a solicitation that
clearly and concisely
communicates your needs
in terms of performance

Limited – but growing

Use of risk management
process

Inconsistent

Create Standard Terms
and Conditions (Ts and Cs)

Widespread

Develop Qualified Seller’s
Lists

Widespread

Use draft solicitations to
obtain seller’s feedback

Widespread

Conduct Seller’s
conferences to address
solicitation concerns

Inconsistent

Adapted from Reference Text, pg. 97 - 98

Pre-Award Phase – Best Practices (Seller)

Best Practices

Observed

Extent of Application

Identify potential customers

early

Widespread

Evaluate competitors and

create a competitive analysis

report

Inconsistent

Conduct proactive sales

mgmt. Know & Influence

customer needs

Widespread

Conduct market research

and benchmarking of

industry

Widespread

Develop customer-focused

sales plans

Inconsistent

Apply an Opportunity and

Risk Management process

Inconsistent

Develop and use a proposal

lessons learned database

Limited

Provide oral presentations of

proposals

Limited

Conduct proposal reviews

before submission

Widespread

Develop and use a Proposal

Requirements Compliance

Matrix

Inconsistent

Unit 6:

The Award Phase

& Best Practices

Contract Management Process - Buyer’s and

Seller’s steps

Buyer

4. Source

Selection

Contract

Award

5. Contract

Administration

6. Contract

Closeout or

Termination

Seller

4. Contract

Negotiation &

Formation

Contract

Award

5. Contract

Administration

6. Contract

Closeout or

Termination

Phase 2: Award

Phase 3: Postaward

Buyer

1. Procurement

Planning

2. Solicitation

Planning

3. Solicitation

Make-or-buy decision

Seller

1. Presales

Activity

2. Bid/no-bid

Decision making

3. Bid or Proposal

Preparation

Bid decision

Phase 1: Preaward

Reference Text, pg. 132

Contract Management Process: Award Phase –

Source Selection

Buyer’s Step
 Source selection is the process of applying
evaluation
criteria to bids or proposals to select a
supplier
 Price may or may not be the primary
determinant
 Other criteria may be used: technical, past
performance,
quality, schedule, reputation, management,
and so on
 A weighting system may be used to select a
source or to
rank all proposals to establish a negotiation
sequence

Contract Management Process: Award Phase –

Source Selection (continued)

 This process may be simple to very
complex
 May involve one person or a large
team
 May use a screening system,
establishing
minimum requirements of
performance

Contract Management Process: Award Phase –

Source Selection (continued)

Input

Tools &

Techniques

Output

•

Proposals

• Evaluation

criteria
• Evaluation

standards
• Organizational

policies

• Contract

negotiation
• Weighting system
• Screening system
• Independent

estimates

• Contract

Reference Text, pg. 133

Source Selection Process

 Process of comparison and decision
 Informational prerequisites

 Knowledge of required goods and
services
 Knowledge of industry
 Knowledge of market practices

 Selection criteria elements

 Attributes of interest
 Standards
 Weights

Contract Management Process: Award Phase –

Contract Negotiation and Formation

Seller’s step
 The process of having your bid or
proposal evaluated
by the buyers, anticipating and
responding to
questions the buyer may have,
negotiating, and
forming a contract between the parties

Contract Management Process: Award Phase –

Contract Negotiation and Formation (continued)

Input

Tools &

Techniques

Output

•

Solicitation

• Bid or proposal
• Buyer’s source

selection process
• Seller’s past

performance
• Previous

contracts
• Competitive

analysis

report

• Contract

negotiation

process
• Highly skilled

negotiators
• Market and

industry

practices
• Legal review

• Contract

or
• Walk away

Reference Text, pg. 142

Contract Negotiation: A Complex Activity for Both

Buyers and Sellers

Successful negotiators must –
 Have the ability to perceive and comprehend
factors
shaping and characterizing the negotiation
 Exhibit behavioral and analytical skills to
diagnose
problems and adapt winning strategies
 Understand their own personalities and
personal ethics
and values
 Know their products and services, desired
terms and
conditions, and pricing strategy

We All Negotiate Every Day

 Personal: Family and friends
 Professional:

 Internal Organization
 External: Buyers and
subcontractors

Question: How well do you
negotiate?

Negotiation Approaches

 Intuitive approach

 Nonstructured
 Informal – not written
 Inconsistent results

 Process approach

 Structured, planned
 Documented actions
 More consistent results

What Is Different About Global and Domestic

Negotiations?

 Political and legal issues
 International monetary factors
 Foreign governments and their
bureaucracies
 Potential instability and sudden change
 Cultural diversity
 Export/Import regulations

Key to a Successful Contract Negotiation

Preparation and planning
 Effective planning
 Negotiation skills
 Effective follow-up documentation

Getting to Yes Means -

 Getting past no
 Getting around “yes, but—”

 Focusing on common interests not
positions
 Use of joint problem solving

 Internally
 Externally

 The right solution is a matter of
perspective –
buyer or seller

Buyer’s Negotiation Objectives (Interests)

 Acquire necessary supplies and services of
the desired
quality, on time, and at the lowest
reasonable price
 Establish and administer a pricing
arrangement that
results in payment of a fair and
reasonable price
 Satisfy needs of the end user (customer)

Seller’s Negotiation Objectives (Interests)

 Profitability (long-term vs. short-
term)
 Market share
 Satisfy needs of the customer

The Contract Negotiation Process: The Risk

Zone

Three

Phase 1: Prenegotiation

Phase 2: Conducting

Phase 3: Postnegotiation Contract

Phases

Planning

Negotiations

Actions

Award

Key

1. Prepare yourself and your team

1. Determine who has authority

1. Prepare negotiation minutes

Steps or

2. Know the other party

2. Prepare the facilities

2. Send mintues ot the other party

actions

3. Know the big picture

3. Use an agenda

3. Offer to write up the contract

4. Identify objectives

4. Introduce the team

4. Prepare the contract

5. Prioritze objectives

5. Set the right tone

5. Prepare negotiation results

6. Create options

6. Exchange information

summary

7. Select fair standards

7. Focus on objectives

6. Obtain required reviews and

8. Examine alternatives

8. Use strategy, tactics, and

approvals using CMS

9. Select your strategy, tactics,

countertactics

7. Send contract to the other party

and countertactics

9. Make counteroffers

for signature

10. Develop a solid and approved

10. Document agreement or know

8. Provide copies of the contract

team negotiation plan

when to walk away

to affected organizations

9. Document lessons learned

10. Prepare contract administration

plan

Adapted from Reference Text: pg. 145

Phase 1: Prenegotiation Planning (10-Step

Process)

Step 1 Prepare

yourself and your

team

Step 2

Know the

other party

Step 3

Know the big

picture

Step 4

Identify

objectives

(interests)

Step 5

Prioritize

objectives

Step 6

Create

options

Step 7

Select fair

standards

Step 8

Examine

alternatives

Step 9

Select your

strategy,

tactics, and

countertactics

Step 10

Develop a

solid and

approved team

negotiation

plan

The Importance of Price

Price

Sched
ule

Technolo

(R&D)

Servic
es

Ts and Cs

Produc
ts

Customer
Obligation
s

Type
of
contra
ct

Miscellaneo
us

Adapted from Reference Text: pg. 147

The Importance of Terms and Conditions

Ts and Cs:
Cost, Risk,
and Value

Payments

Inspection and
acceptance

Financing

Warranties

Taxes

Guarantees

Indemnity
and liability

Exchange rate

Spares

Obligations

Delivery
terms

And so on

Adapted from Reference Text: pg. 148

Phase 2: Conducting Negotiations

Step 1

Determine who

has authority

Step 2

Prepare the

facilities

Step 3

Use and

agenda

Step 4

Introduce the

team

Step 5

Set the right

tone

Step 6

Exchange

information

Step 7

Focus on

objectives

(interests)

Step 8

Use strategy,

tactics, and

countertactics

Step 9

Make

counteroffers

Step 10

Document

agreement or

walk away

Tactics and Countertactics I (Buyer vs. Seller)

Tactics

Countertactics

 Attacks (hot buttons)

 Personal insults
 Emotional reactions
 Professional insults

 Tricks

 False data
 No authority to negotiate

 Disclose the attack
 Strike back
 Give in
 Break off
 Explore alternatives

 Know the truth

 Have the right data
 Establish in writing who has

authority

 Escalate

Adapted from Reference Text: pg. 149

Tactics and Countertactics II (Buyer vs. Seller)

Tactics

Countertactics

 Arbitrary deadlines

 Limited availability

 Agree with deadline
 Counter the offer with compromise

schedule
 Refuse to change schedule

 Coordinate schedules in advance
 Counter with your limited

availability
 Be flexible
 Escalate

Tactics and Countertactics III (Buyer vs. Seller)

Tactics

Countertactics

 Third-party scapegoat

 Real approval required
 Pretend such approval is

required

 Giveaways

 Escalate to third party
 Compromise

 Disclose them as giveaways
 Exchange giveaways

Tactics

Countertactics

 Good guy – bad guy

 Prolonging the negotiation

 Counter with bad guy – good guy
 Escalate

 Take a break or have a caucus
 Maintain silence

Tactics and Countertactics IV (Buyer vs. Seller)

Tactics and Countertactics V (Buyer vs. Seller)

Tactics

Countertactics

 Delays

 Submission of data
 Start of negotiation
 Return from breaks

 Diversions

 Questions
 Telephone calls
 Faxes
 Personal breaks

 Start on time
 Claim limited availability
 Leave or create greater delays

 Keep things on track

 Refocus team
 No phones in room
 No interruptions

 Take a break

Tactics

Countertactics

 Stonewall

 Take it or leave it!
 I shall not move!

 End-of-quarter or end-of-

year

negotiation pressure

 Give in

 Say “Yes, and...”

 Walk away

 Escalate

 Settle in next quarter or next year

Tactics and Countertactics VI (Buyer vs. Seller)

Factors in Selecting Contract Types

 Capability of seller’s accounting system
 Uncertainty in the cost estimate
 Type and complexity of the requirements
 Urgency of the requirement
 Marketplace and competition
 Seller’s technical capability
 Administrative costs to both parties
 Size and amount of the contract

Contract Pricing (Incentives) – Best Practices (Buyer

& Seller)

Best Practices

Observed

Extent of Application

Use performance – based

incentives

Inconsistent

Develop clear, concise, and

objectively measurable

incentives

Inconsistent

Create a proper balance of

incentives – cost, schedule,

& quality

Inconsistent

Make incentives challenging

yet attainable

Inconsistent

Use a combination of

incentives objectively and

subjectively determined

Limited

Consider using socio-

economic incentives

Limited

Tie on-time delivery to cost

and/or quality performance

criteria

Limited

Avoid rewarding sellers for

minimal performance

Widespread

Use a combination of

positive and negative

incentives

Inconsistent

Include incentives for early

payments

Widespread

Ensure all incentives have

limits

Inconsistent

Referenc
e Text,
Pgs.
118-119

Step 1

Prepare

negotiation

minutes

Step 2

Send minutes

to the other

party

Step 3

Offer to write

up the

contract

Step 4

Prepare the

contract

Step 5

Prepare

negotiation results

summary

Step 6

Obtain required

reviews and

approvals

Step 7

Send contract

to the other

party for

signature

Step 8

Provide copies

of contract to

affected

organizations

Step 9

Document

lessons

learned

Step 10
Prepare

contract

administration

plan

Contract

Administration

Contract

Implementation

Contract

closeout or
termination

Phase 3: Postnegotiation Actions

Understanding How Negotiations Work

For about 15 years of my life, I watched
negotiators I was trying to learn from and
finally come to the realization that they did
not know what they were doing. If something
went wrong and I asked, “Well, why did it go
wrong?” they could not tell me. If I asked,
“What did you do right?” they could not tell
me. The insight I got was that no one knew.
You can assemble a group of great people who
have taken part in great negotiations for a
discussion, and they all come up with
completely different reasons for why the
negotiation was successful and how it
worked.

- GERARD I. NIERENBERG

Contract Award Phase – Best Practices (Contract

Negotiation & Formation) (Buyer & Seller)

Best Practices

Observed

Extent of Application

Select and train skilled

negotiators to lead the

contract negotiation process

Inconsistent

Select your negotiation

strategy, tactics, and

countertactics

Inconsistent

Use an agenda during

contract negotiations

Widespread

Do not be too predictable in

your tactics

Inconsistent

Develop an approved

negotiation plan

Widespread

Conduct mock negotiations

Widespread

Document your agreements

throughout the process

Widespread

Understand everything

affects price

Inconsistent

Tailor Ts & Cs to the deal

Widespread

Know what is negotiable and

what is not

Widespread

Know when to walk away

Inconsistent

Adapte
d from
Referen
ce Text,
pg. 155

Exercise 4: Contract Negotiations Q&A

1. When does the negotiation begin?

2. Who is normally the chief negotiator?

3. Are you aware of any executives within your organization

who make
commitments before the contract is negotiated?

Exercise 4: Contract Negotiations Q&A

4. Do you require and review prenegotiation plans and

objectives?

5. Have you ever walked away from a multi-million dollar deal

because
the risks outweighed the benefits?

Unit 7:

Post-Award Phase

& Best Practices

Contract Management Process - Buyer’s and

Seller’s steps

Buyer

1. Procurement

Planning

2. Solicitation

Planning

3. Solicitation

Make-or-buy decision

Seller

1. Presales

Activity

2. Bid/no-bid

Decision making

3. Bid or Proposal

Preparation

Bid decision

Phase 1: Preaward

Buyer

4. Source

Selection

Contract

Award

5. Contract

Administration

6. Contract

Closeout or

Termination

Seller

4. Contract

Negotiation &

Formation

Contract

Award

5. Contract

Administration

6. Contract

Closeout or

Termination

Phase 2: Award

Phase 3: Postaward

Reference Text, pg. 159

Contract Administration

The principal objective of contract
administration for both the buyer and the
seller is to ensure fulfillment of
contractual obligations by all parties to
the contract.

Reference Text, pg. 158

Input

Tools &

Techniques

Output

•

Contract

• Work results
• Change requests
• Invoices and

payments
• Other tasks
• Contract

Administration

policies

• Contract analysis

and

planning
• Preperformance

conference
• Performance

measuring

and reporting.

Payment

system
• Change control

system
• Dispute

management

system

• Documentation
• Contract

changes
• Payment
• Completion of

work

Contract Management Process: Postaward Phase –

Contract Administration

Reference Text, pg. 159

Key Contract Administration Policies for Buyers

and Sellers

 Compliance with terms and conditions
 Effective internal and external
communication and
control
 Effective control of contract changes
 Effective resolution of claims and
disputes

Reasons for Noncompliance

The six great excuses
 I never saw the contract.
 I didn’t have a chance to read the
contract.
 I didn’t understand the contract.
 I thought the contract was wrong.
 That’s not what the contract says!
 What contract?

Need for Communication Between Buyers and

Sellers

 Contracts are relationships
 Relationships are not cast in concrete-they
change with
circumstances
 Contractual relationships are dynamic
 Communication is essential for effective
responses to
change
 Sharing information is necessary, but not
sufficient?

Main Tasks for Buyers and Sellers

 Analyze obligations, assign responsibilities,
and set
performance goals
 Observe, document decisions and events, and
report
performance
 Identify and analyze variances
 Take corrective action
 Follow up
 Manage changes and disputes
 Close out contract

Contract Analysis

 Read all terms and conditions
 Separate into technical and administrative
requirements
 Develop contract work breakdown
structure to at
least three levels
 Identify who is responsible for work
elements

Contract Work Breakdown Structure

1 . 1 . 1
S p e c i fi c a t i o n s

1 . 1 . 2
W

o r k s t a t e m e n t

1 . 1 . 3
S c h e d u l e

1 . 1

T e c h n i c a l

r e q u i r e m e n t s

1 . 2 . 1
P a y m e n t
p r o c e d u r e s

1 . 2 . 2
C h a n g e
m a n a g e m e n t

1 . 2 . 3
D i s p u t e s

1 . 2

A d m i n i s t r a t i v e

r e q u i r e m e n t s

1 . 0

C o n t r a c t

R e q u i r e m e n t s

Setting Goals

 Discuss requirements with affected
managers
 Determine

 Who
 What
 When
 Where
 How

 Seek agreement and/or commitment

Preperformance Conference

 Meeting between buyer and seller
 Held before start of performance
 Review contract terms and conditions
 Establish administrative procedures
 Establish communication protocols
 Keep and distribute meeting minutes

Records and Files for Buyers and Sellers

 Official copy of contract and modifications
 Conformed working copy of contract
 Correspondence file, log or index, and
suspenses
 Telephone log
 Records of deliveries, inspections,
acceptances
 Progress and surveillance reports
 Property administration records
 Invoice and payment records

Progress Reports

 May be oral or written
 Include observations and conclusions of
others
 Present information that is not “real time”
 Afford opportunities for errors:

 Accuracy
 Objectivity
 Honesty
 Timeliness
 Competence of observer

Report Considerations

 Subject Matter
 Contents

 Raw data
 Analyses
 Conclusions
 Combination of above

 Frequency and timing
 Format
 Address(es)

 Main purpose: Reduce reliance on human
memory
 Efforts must be thorough and consistent
 Essential for –

 Proof of performance
 Management of changes
 Proof of claims
 Evidence in case of arbitration or
litigation

Records and Documentation

Contract Change Management

Contra
ct

Change Management Actions

 Changes modify contract requirements,
terms, and
conditions
 They add, delete, or both
 They affect the triple constraints:

 Performance
 Schedule
 Cost

Change Management Actions (continued)

 Modifications are inevitable
 Change provides an opportunity for
additional sales
 Management objectives include –

 Control
 Customer Satisfaction
 Cost recovery
 Schedule adjustment
 Profit

Change Authorization

 Ensure that only authorized
representatives make,
accept, or negotiate contract changes
 Add the appointed representatives to the
contract
 Change orders in writing, when possible
 Confirm oral changes in writing

Notification of Changes

 Notify other party of actions or inactions
that are
changes, such as constructive change
 Notify promptly, in writing
 Provide full description and explanation

Control of Claims and Disputes

 Contract agreements are not perfect
 Misunderstandings are inevitable
 Claims and disputes –

 Are a normal part of contracting
process
 Must not be allowed to disrupt
performance
 Must be resolved promptly and
dispassionately

Resolution of Disputes

 Negotiation, compromise
 Arbitration

 Submission of dispute to disinterested
person or
persons for final decision
 Objective is final disposition in
inexpensive,
expeditious, and less formal manner
 A substitute for litigation

 Litigation

Contract Management Process: Postaward Phase –

Contract Closeout

Buyer’s and seller’s steps
 Contract closeout involves both product
verification and
administrative closeout

Input

Tools &

Techniques

Output

•

Completion of

work
• Contract

documentation

or
• Termination

notice

• Compliance

verification
• Contract

documentation
• Contract closeout

checklist
• Termination

• Product or

service

completion
• Acceptance and

final

payment
• Contract

closeout or

termination

documents
• Documented

lessons

learned

Reference Text, pg. 182

Sample Contract Closeout Checklist

Yes

N/A

1. All products and/or services required have been provided to the buyer.
2. Documentation adequately shows receipt and formal acceptance of
all contract items.
3. No claims or investigations are pending on this contract.
4. Any buyer-furnished property or information was returned to the buyer.
5. All actions related to contract price revisions and changes have been
concluded.
6. All outstanding subcontracting issues have been settled.
7. If a partial or complete termination was involved, action is complete.
8. Any required contract audit is now complete.
9. The final invoice has been submitted and paid.

Sample Contract Closeout Checklist

Types of Terminations

 Termination by mutual agreement
 Termination for cause or default
 Termination for convenience (most
widely used
in government contracting)

Postaward Phase – Best Practices (Buyer & Seller)

Best Practices

Observed

Extent of Application

Read and analyze the

contract

Widespread

Develop a Contract

Administration Plan

Limited

Assign a Contract

Administration Manager

Inconsistent

Comply with Contract Ts and

Inconsistent

Control contract changes via

contract change process

Inconsistent

Resolve Claims & Disputes

promptly

Widespread

Develop a Contract Work

Breakdown Structure

Widespread

Manage the invoice and

payments process

Widespread

Enforce Contract Ts and Cs

Inconsistent

Develop and Implement

Contract Admin policies &

guidelines

Inconsistent

Adapted from Reference Text: pgs. 188-
189

Postaward Phase – Best Practices (Buyer & Seller)

Best Practices

Observed

Extent of Application

Provide copies of the

contract to all affected

organizations

Widespread

Maintain a conformed copy

of the contract

Inconsistent

Document communications

Inconsistent

Prepare & distribute

meeting minutes

Widespread

Clarify team members roles

and responsibilities

Widespread

Provide leadership support

throughout

Inconsistent

Prepare contract close-out

checklists

Widespread

Document Lessons Learned

Inconsistent

Share Best Practices

Widespread

Reward Team Performance

Inconsistent

Adapted from Reference Text: pgs. 188-
189

Exercise 5: The Postaward Phase – Q & A

1. What is the purpose of contract

administration?

2. What are the main tasks of contract

administration?

3. How important is change management to the

success
of your business?

Exercise 5: The Postaward Phase – Q & A

4. How should contract disputes be resolved

between the buyer and the seller?

5. How important is it to enforce the terms and

conditions
of your contracts?

6. How important is it to document and share

lessons
learned and best practices?

A Long-Shot Prediction (Future of Contract Managers) by W.

Gregor MacFarlan

• Contributory and knowledgeable team members
throughout the contract
management process.

• Innovative thinkers for strategic decision making,
business alternatives,
and partnering.

• Useful knowledge of multiple markets and the use of
market research.

• Strong internal and external communication and
facilitation skills.

• Proven skill in using computer-based programs and e-
business media.

• Staying connected through an organization’s digital
nervous system.

• Customer-service attitude and results.
• Concern for quality whatever the assignment.
• Continuous learning through professional certification.

How would you be evaluated today given these
metrics?

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