In federal contracting, there are three key transitions that affect the overall conduct of the contract. One of the three is internal to the company, and takes place when companies must hire, reallocate, or shift personnel and resources to fulfill the requirements of the new contract. Since this transition depends so much on the specifics of a given company, it will not be addressed in this article. But the article does focus on the other two transitions, which are the change from old contract to new, and the change from old contractor to new contractor.
The first transition we discuss is what occurs when a contract ends and a new one begins, but the contractor remains the same. This could result from the incumbent winning a re-competition of the requirement after the current contract has run its course, or the action could have been non-competitive, and the follow-on contract was merely negotiated with the incumbent. Regardless, the contractor must ensure full and timely completion of the previous contract’s requirements while devoting sufficient resources, manpower and administration to get the new contract started off well. Occasionally, the statement of work and performance schedule are the exact same, but in most instances, lessons have been learned and requirements have been modified during the contract, so that the follow-on features some degree of change from the previous. Oftentimes, the two contracts overlap by a month or so, to allow for the changeover to happen smoothly, so it can happen that the contractor can be managing two efforts for a brief period.
Similarly, the government must oversee the transition between contracts, including phase-out of the previous requirements and phase-in of the new requirements. So, the government personnel must manage the completion and closeout of the previous contract while simultaneously managing the kick-off of the new contract. The critical factor in this period is the correct accounting of funds expenditures; since the two contracts involve different lines of accounting, it is critical that both the contractor and the government personnel know which tasks are being completed and paid for under which contract. It would be very messy if the funds were to be inadvertently crossed during this transition. In addition, there are probably a lot of administrative tasks to complete and re-establish, such as personnel badging, paperwork, and the like. All in all, this period makes for a confusing and chaotic time until the old contract is completely closed out and both teams can focus solely on the new effort.
The second critical transition compounds the confusion and chaos, because it involves two contractors and their staffs, as the incumbent must move out of the workspace and the new winner must move in. Moreover, the incumbent’s personnel may be in a huge state of flux, as individual employees may be released or depart voluntarily to seek new jobs. Having been notified that their company did not win the re-compete effort, a good percentage of the workforce may not be able to transition to the new contract, so will be either moved to a new contract with the incumbent, or simply left jobless. Understandably, this makes for a certain unease and anxiety about the transition, and it is natural to expect these feelings to affect their performance in the final stages of the contract. Alternatively, some employees may be hired on by the new contractor, which creates a similar administrative mess for the accountants and fund managers. In addition to ensuring the two contracts’ work efforts remain separate, the fund managers must ensure that employees and companies’ payments and disbursements are not being mixed up.
The transition between contractors may also involve transfer of property (government-furnished equipment, or GFE), and similar work-related changes, as well as the administration changeover discussed previously. Eventually, the issues get resolved as the old contract expires, but again, the transition period makes for an exciting, tumultuous period for both contractors and for the government. To get a better understanding of these transitions, I suggest the following Contracting Officer Podcast episodes: 038 – The Follow-on Contract (http://www.contractingofficerpodcast.com/podcasts/038-what-is-a-follow-on-contract), 123 – The Wrap-up Zone (http://www.contractingofficerpodcast.com/podcasts/123-the-wrap-up-zone), and 130 – Contract Closeout (http://www.contractingofficerpodcast.com/podcasts/130-contract-closeout).
In summary, to be effective government contractors, companies must plan for and successfully manage their transitions into and out of contracts, especially when transitioning with other contractors after a re-compete action.