Contract Management is a broad term, because it involves so many diverse functions: performance reporting, quality assurance reporting, contract modifications, Engineering Change Proposals (or ECPs), invoicing and payments, shipping, inspecting, and accepting products, evaluating performance of services, and eventually the conclusion and close-out of the contract. And there are more aspects, such as compliance reporting for various government regulations, the variety of business systems, accounting, and purchasing systems that must be established and maintained to retain government approval. In short, Contract Management covers everything once the contract is signed, from kick-off to completion and closeout. It is understandable that many view Contract Management (CM) as a rather intimidating endeavor.
However, there is a simple concept that may put CM in perspective and provide some small comfort and relief when a contractor faces this daunting task. Wen boiled down to its essentials, CM is really just “negotiations.” In many cases, the negotiations are a formality, since the cost, schedule and performance standards have already been agreed to and the discussion is merely a confirmation of said standards, whether it is an invoice, or a quality report, or a notice of shipment. In other cases, when adjustments are necessary, then the details must be negotiated between the contractor and the Contracting Officer. For instance, a delayed shipment technically violates the terms and conditions of the contract. But if the contractor is proactive and gives advance notice to the CO and offers assurances that the problem has been resolved and there will be no future delays, then the CO may be sufficiently satisfied in accepting the late shipment without penalty. Therefore, the contractor has successfully negotiated an approved schedule adjustment without going through the formal modification process.
Let’s look closer at the CM phase of a given procurement, also known as “post-award”. Once the contract is signed, the contractor is encouraged to meet with, or at least contact, the CO to confirm the expectations of the contract. Areas to discuss include reviewing the Performance Work Statement (PWS) or Statement of Work (SOW); whatever reports are required, typically shown in a matrix format; review the Quality Assurance Surveillance Plan (QASP) as necessary; confirm the required submittals and deliverables; and so on. All of these elements should be thoroughly discussed to clarify any misperceptions or ambiguities. Even after contract award, there may be confusion or vague descriptions that need to be resolved through open communication. Contractors should ensure that they thoroughly understand all of the requirements, because honesty up front sets the stage for trust and cooperation when real problems arise.
In cases when the contractor’s pre-award concept of the requirement turns out to be significantly different from the Contracting Officer’s perspective on the requirement, post-award orientation becomes a negotiation as both parties come to terms on what the details of the performance will include. There will be little room for negotiation in the broader aspects of cost, schedule and performance, but there might be substantial latitude in ‘how’ the contractor completes the requirement. So a contractor’s costs and levels of effort can be refined through this post-award orientation that involves negotiations. And in cases where the contractor’s pre-award concept is radically different from the actual requirement, formal renegotiation of the contract’s cost, schedule, and/or performance may be necessary. So whether routine or out of the ordinary, and whether formal or informal, the contractor’s post-award performance and CM revolves around negotiations.
The ideal for post-award CM and negotiations looks something like this: open communications between the CO and the contractor, mutual understanding between the CO and the contractor, and continued goodwill between both parties. These features help to identify problems before they occur so they can be prevented or avoided. They also foster a growing understanding and shared respect that facilitates anticipation of emerging issues, and a common perception of the contractual requirements. Contractors get to know the CO’s position and processes, and they know these functions so well that they can complete tasks early without being asked or reminded, and can perform properly the first time without requiring re-work or corrective action. And proactive, excellent performance builds a bank of goodwill that can help mitigate mistakes or setbacks that typically arise later in the period of performance.
Here is some advice for a contractor new to the subject of CM. Contracting Officers think in terms of cost, schedule and performance – if you do not already think in those terms, you should learn to at least consider those elements in every situation. Any issue or problem will be viewed through that lens, so if you adopt the same perspective, then at least you and the Contracting Officer will share common understanding of the implications. Also, it is advisable to get to know what is most important to the CO at any given time, because during the procurement life cycle, the priorities change. Costs will always be an important factor, but at certain milestones, the price tag will be less important than delivery date or quality of product. If you know the CO’s priority at that time, you can structure your position and proposed solution to meet that priority.
One final point – help the Contracting Officer’s Representative do his job. Know what his requirements, tasks, and purposes are, and then structure your effort to help him accomplish those objectives. He will be the person you interact with the most and his input will be vital to the CO and that person’s general impression of you and your company. Making the COR’s job easy will gain you a valuable ally in future CM activities, including the negotiations discussed previously.
In closing, many of the broad range of CM functions involve negotiations, whether simple communications with the CO or more formal “give and take” interactions that result in a contract modification. If you look at Contract Administration from this perspective, the drudgery of the tasks may be less imposing and the benefit of such interactions can be fully realized.