Bid for Training in Procurement Skills Best Contracting Practices for Business Unit 1 Building

Document Sample
Bid for Training in Procurement Skills Best Contracting Practices for Business Unit 1 Building Powered By Docstoc
					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

What Are                               • Unleashing Buying and Selling
Winning                                  Power
Doing?                                 • Changing Buying and Selling
                                       • Developing an Integrated Supply
                                       • Learning & Applying Best Practices
                                         & e-Tools from Industry Leaders

          Reference Text – World Class Contracting, By Gregory A. Garrett, CCH 2001, pg. 2
New Supply Environment – The World We Live In

                        Supply Drivers                                New Supply
                                                            + New product and service providers
                     • Emergence of Internet

                                                            + Wider range of products and services
                     • Growth of Automated Sales Tools
                     • Use of Enterprise Resource           + More modular products and services
                       Planning (ERP) Software
                     • Growth of e-procurement Software     + Improved price/performance
                       and Contract Management              + Accelerated pace of change
                       Enterprise Software                  Cons
                                                            -More complexity

                 •   Relaxed barriers to entry              - Higher cost of integration

                 •   Increased pricing flexibility
                 •   Pro-entrant incentives                 - Less reliability
                 •   Mandatory wholesale of unbundled
                                                            - 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
          • 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:                        e-procurement:
                          Managed per Transaction                  Managed by Exception
    Online product                                          Personalized views; named
                      Search large catalogs
          selection                                         shopping carts

        Requisition   One to 12 levels of manual            Transactions automatically
          approval    approval                              approved based on rules

                      Fax, e-mail, EDI direct to
                                                            Order is sent through a supplier
  P.O. Transmission   supplier; supplier retypes the
          Payment     Dependent on three-way match          Immediate; based on shipment
      authoirzation   of P.O. with invoice and receipts     notice
                                                            Continuous; integrated in real
                      Sporadic; not linked to supplier
           Analysis                                         time; drives optimization of

                      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
Founding Members                               Trading Partners
 BAE Systems                                        Large OEM’s
   Martin                                                Airlines

                                                      Tier 1 –3
   Raytheon                                           Suppliers

Boeing’s Forum Pass – Virtual Collaborative Workspace
                                                                     Partner A
How Forum Pass Fits                                                                         Contracts
                                                    Via Forum Pass               Design      PM

                                                  https                              MFG
                                                                                  Virtual    ACCTG



   Mtgs.                                                               https
                      ACCTG                       https                          Design      PM


                                                                                  Virtual    ACCTG
                                                                     Partner B
             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
                                                         Supplier A

   DOD                      Shared Workspace
                                                                      Supplier B


                      • Project Management
                      • Document Management
                                                      Supplier C
                      • Product Data/Change Control
                      • Virtual Meetings


Learning & Applying Best Practices & e-tools from Industry Leaders

                                                  Bill Gate’s New Rules
      Microsoft                     1.    Insist that communication flow through e-mail
      Bill Gate’s                   2.    Study sales data online to share insights easily
      New Rules                     3.    Shift knowledge workers into high level
    for e-Business
                                    4.    Use digital tools to create virtual teams
                                    5.    Convert every paper process to a digital
                                    6.    Use digital tools to eliminate single-task
                                    7.    Create digital feedback loop
                                    8.    Use digital systems to route customer
                                          complaints immediately
                                    9.    Use digital communication to redefine
                                    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
                                   • Hormel Foods has recently completed the
   Case                              installation of Oracle’s Internet Procurement at all
                                     of its 50 locations. Employees at all of these sites
   Study                             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
                                   • 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
                                 • In June 1999, the Missiles and Fire Control
 Case                              Division of Lockheed Martin located in Dallas,
 Study                             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
                               • Qwest, formerly, US WEST, Interprise Networking
  Case                           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,
                               • 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
       Reference Text, pg. 9     requires little time to set-up and no training. All
                                 you need to use VSN is a browser and web access.
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
Common Action:

    Advantages   Disadvantages   Executive Actions
Building Successful Partnerships in the e-Business Age

      • 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
              (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
Understanding How to Manage Expectations
                                            The Managing Expectations Process

            Ask                                                  Align                                 Fulfill

       Clarify                                            Control                                Meet or Exceed
       Expectations                                       Expectations                           Expectations

       Listen                      Understand                Negotiate               Agree              Communicate

                                                      • Compare Expectations to              • Meet with customer
• Surface explicit & Implicit                          reality
 expectations                                                                                • Obtain agreement that
                                                      • Resolve Gaps                           expectations were met
• Surface Assumptions
                                                      • Communicate differences              • Identify gaps
                                                      • Re-set expectations
                                                      • Set realistic expectations

           Adapted from:
                                                      • Document acceptance
           ―Managing Expectations‖                      criteria                             Reference Text, pg. 13
           by Dorothy Kirk, PM Network, August 2000
Honoring Commitments: Lessons Learned
                                Successful Partnerships
                                Simple Actions Checklist
  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

                                                             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
     Learn from mistakes openly communicate Lessons Learned
     Celebrate joint successes
     Document and share best practices

                                                             Reference Text, pg. 14
Partnership Ingredients

Three                              • 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.
The Successful Partnership Pyramid



                                               Four Common Actions

                                              Managing Expectations
                                            and Honoring Commitments

                                              Partnership Agreement(s)

                                             Partnership Ingredients
                                                      Customer-base               Chemistry

                                   Customer Need/Desires = Business Partnership

          Reference Text, pg. 16
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
Unit 3: Government Contracting and
        Commercial Contracting
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      Contract      Seller     Contract   Subcontractor(s)

     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
            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
     Projects: That must be managed by people
      from both the buyer’s and seller’s
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
  Performance: How effectively the goods and services
   are bought and sold
  Price: What determines a reasonable price? How do
   terms and conditions affect price?
                                              cost, and
Contract Management Process
Buyer’s and seller’s steps
                                   Phase 1: Preaward

                1. Procurement                          2. Solicitation
   Buyer                                                                                   3. Solicitation
                    Planning                               Planning

                                 Make-or-buy decision

                  1. Presales                        2. Bid/no-bid                       3. Bid or Proposal
                    Activity                        Decision making                          Preparation

                                                                          Bid decision

              Phase 2: Award                                         Phase 3: Postaward

                                                                                             6. Contract
                  4. Source                                  5. Contract
    Buyer                         Contract       Award                                       Closeout or
                  Selection                                 Administration

                 4. Contract                                                                 6. Contract
                                                             5. Contract
     Seller     Negotiation &     Contract       Award                                       Closeout or
                 Formation                                                                   Termination

                                                                                                Reference Text, pg. 20
 Government (Public) Contracting and Commercial (Private)

Similarities   * (Similar – CM Process)
 Include:        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
         – Reasonable empowerment (Autonomy to act is
         – Opportunities to apply innovative judgment (strive to
           improve the deal).
         – Continuous learning for growth (no other useful
      • 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
       • 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.              6. Integrity/ethical standards.
         2.   Decision making                 7. Education.
         3.   Problem-solving ability         8. Human/interpersonal
         4.   Negotiation skills.                relations.
         5.   Customer service (external).    9. 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
       – 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/

    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
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
        – 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
What is There About Contract Management That Makes it So

     • 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
         – 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
      • 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
      • 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
    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
     • 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

                  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
      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
     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
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.
Executive Oversight of Contract Statusing

    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 Development of Contract Management

   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 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
  • 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
   • 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
Contract Management Process - Buyer’s and Seller’s steps

                                           Phase 1: Preaward

                   1. Procurement                               2. Solicitation
    Buyer                                                                                          3. Solicitation
                       Planning                                    Planning

                                         Make-or-buy decision

                      1. Presales                            2. Bid/no-bid                       3. Bid or Proposal
                        Activity                            Decision making                          Preparation

                                                                                  Bid decision

             Phase 2: Award                                             Phase 3: Postaward

                                                                                                 6. Contract
                   4. Source                                     5. Contract
   Buyer                              Contract      Award                                        Closeout or
                   Selection                                    Administration

                 4. Contract                                                                     6. Contract
                                                                 5. Contract
   Seller       Negotiation &         Contract      Award                                        Closeout or
                 Formation                                                                       Termination

             Reference Text, pg. 79
Contract Management Process: Preaward Phase

  Buyer’s steps

1. Procurement        2. Solicitation
                                          3. Solicitation
   planning              planning
Procurement Planning

      Is the process of identifying which buyer needs can be
       best met by procuring products or services outside the
      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              • Make-or-buy analysis      • Procurement
• Product description          • Expert judgment             management plan
• Procurement resources        • Contract type selection   • Statement of work
• Market conditions            • Opportunity and Risk
• Other planning output          Management Process
• Constraints                  • Contract terms and
• Assumptions

              Reference Text
Solicitation Planning

 • Involves preparing the documents needed to support the

        Input                            Tools & Techniques           Output

• Procurement                       • Standard forms          • Procurement
  management plan                   • Expert judgment           documents
• Statement of work                                           • Evaluation criteria
• Other procurement                                           • Statement of work
  planning output                                               updates

                Reference Text, pg. 86

     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                       • Bidder conferences      • Solicitation that
  documents                         • Advertising               leads to the
• Qualified seller lists                                        submission of bids
                                                                or proposals

                Reference Text, pg. 88
Contract Management Process: Preaward Phase

  Seller’s steps

                      2. Bid/no-bid           3. Bid or
  1. Presales
                         decision                proposal
                         making                 preparation
Presales Activity

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

         Input                         Tools & Techniques           Output

• Customer                        • Proactive sales         • Potential and existing
   Identification                   management                customer lists
• Determination of                • Market research         • Customer-focused
  customer needs                  • Competitive analysis      sales plan
• Evaluation of                                             • Competitive analysis
  competitors                                                 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                      • Opportunity and        • Bid/no-bid decision
• Buyer-specific                      Risk Management        • Justification document
  information                         process                  for bid/no-bid
• Competitive analysis              • Opportunity and Risk     decision
  report                              Management (ORM)
• Seller’s strategic
  objectives and plans

                 Adapted from Reference Text, pg. 93
Bid or Proposal Preparation

         Input                            Tools & Techniques           Output

• Solicitation                       • Compliance matrix       • Bid or proposal
• Analysis of                        • Standard terms and      • Supporting
  solicitation                         conditions                documentation
• Competitive analysis               • Past proposals          • Oral presentation
  report                             • Lessons-learned
• Past proposals                        database
                                     • Executive summary

                 Reference Text, pg. 95
Pre-Award Phase – Best Practices (Buyer)

        Best Practices                             Observed   Extent of Application
  Decide what products, services, or                          Inconsistent
  solutions you need. (Use of off-
  the-shelf products or services)
  Conduct market research and                                 Widespread
  benchmarking of industry
  Develop a solicitation that clearly                         Limited – but growing
  and concisely communicates your
  needs in terms of performance
  Use of risk management process                              Inconsistent

  Create Standard Terms and                                   Widespread
  Conditions (Ts and Cs)
  Develop Qualified Seller’s Lists                            Widespread

  Use draft solicitations to obtain                           Widespread
  seller’s feedback
  Conduct Seller’s conferences to                             Inconsistent
  address solicitation concerns

                  Adapted from Reference Text, pg. 97
Pre-Award Phase – Best Practices (Seller)
             Best Practices                             Observed          Extent of Application
  Identify potential customers early                               Widespread

  Evaluate competitors and create a                                Inconsistent
  competitive analysis report
  Conduct proactive sales mgmt.                                    Widespread
  Know & Influence customer needs
  Conduct market research and                                      Widespread
  benchmarking of industry
  Develop customer-focused sales                                   Inconsistent
  Apply an Opportunity and Risk                                    Inconsistent
  Management process
  Develop and use a proposal lessons                               Limited
  learned database
  Provide oral presentations of                                    Limited

  Conduct proposal reviews before                                  Widespread
  Develop and use a Proposal                                       Inconsistent
  Requirements Compliance Matrix
                   Adapted from Reference Text, pg. 97 - 98
Unit 6: The Award Phase
        & Best Practices
Contract Management Process - Buyer’s and Seller’s steps
                                           Phase 1: Preaward

                   1. Procurement                               2. Solicitation
    Buyer                                                                                          3. Solicitation
                       Planning                                    Planning

                                         Make-or-buy decision

                     1. Presales                             2. Bid/no-bid                       3. Bid or Proposal
                       Activity                             Decision making                          Preparation

                                                                                  Bid decision

              Phase 2: Award                                            Phase 3: Postaward

                                                                                                 6. Contract
                  4. Source                                      5. Contract
    Buyer                           Contract       Award                                         Closeout or
                  Selection                                     Administration

                 4. Contract                                                                     6. Contract
                                                                 5. Contract
    Seller      Negotiation &       Contract       Award                                         Closeout or
                 Formation                                                                       Termination

               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

          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

         Input                          Tools & Techniques           Output

• Proposals                       • Contract negotiation     • Contract
• Evaluation criteria             • Weighting system
• Evaluation standards            • Screening system
• Organizational                  • Independent estimates

              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                   • Contract negotiation    • Contract
 • Bid or proposal                  process                     or
 • Buyer’s source                 • Highly skilled          • Walk away
   selection process                negotiators
 • Seller’s past                  • Market and industry
   performance                      practices
 • Previous contracts             • Legal review
 • Competitive analysis

             Reference Text, pg. 142
Contract Negotiation: A Complex Activity for Both Buyers and

     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


                      Adapted from Reference Text: pg. 145
Phase 1: Prenegotiation Planning (10-Step Process)

                                                    Step 4
 Step 1 Prepare       Step 2        Step 3                           Step 5
yourself and your    Know the     Know the big                      Prioritize
      team          other party     picture                         objectives

                                                                      Step 10
                                                     Step 9
                                                                    Develop a
    Step 6            Step 7         Step 8       Select your
                                                                     solid and
    Create          Select fair    Examine          strategy,
                                                                  approved team
    options         standards     alternatives    tactics, and
The Importance of Price

                  Customer                                Technology
                  Obligations                               (R&D)

       Type of                                                        Services
       contract                                Price

              Miscellaneous                               Ts and Cs


             Adapted from Reference Text: pg. 147
The Importance of Terms and Conditions

                                                            Inspection and
                     And so on
                                          Ts and Cs:
   Obligations                            Cost, Risk,
                                          and Value


           Exchange rate                                    Guarantees
                                            and liability

             Adapted from Reference Text: pg. 148
Phase 2: Conducting Negotiations

     Step 1         Step 2         Step 3            Step 4        Step 5
 Determine who    Prepare the     Use and        Introduce the   Set the right
  has authority    facilities     agenda              team           tone

                    Step 7         Step 8                          Step 10
     Step 6                                         Step 9
                  Focus on      Use strategy,                     Document
   Exchange                                         Make
                  objectives     tactics, and                    agreement or
  information                                    counteroffers
                  (interests)   countertactics                    walk away
Tactics and Countertactics I (Buyer vs. Seller)

     Tactics                                           Countertactics
      Attacks (hot buttons)                            Disclose the attack
           Personal insults                            Strike back
           Emotional reactions                         Give in
           Professional insults
                                                        Break off
                                                        Explore alternatives

      Tricks                                           Know the truth
           False data                                       Have the right data
           No authority to negotiate                        Establish in writing who has authority
                                                        Escalate

                Adapted from Reference Text: pg. 149
Tactics and Countertactics II (Buyer vs. Seller)

     Tactics                     Countertactics
      Arbitrary deadlines        Agree with deadline
                                  Counter the offer with compromise
                                  Refuse to change schedule

      Limited availability       Coordinate schedules in advance
                                  Counter with your limited availability
                                  Be flexible
                                  Escalate
Tactics and Countertactics III (Buyer vs. Seller)

     Tactics                                    Countertactics
      Third-party scapegoat                     Escalate to third party
           Real approval required               Compromise
           Pretend such approval is required

      Giveaways                                 Disclose them as giveaways
                                                 Exchange giveaways
Tactics and Countertactics IV (Buyer vs. Seller)

     Tactics                        Countertactics
      Good guy – bad guy            Counter with bad guy – good guy
                                     Escalate

      Prolonging the negotiation    Take a break or have a caucus
                                     Maintain silence
Tactics and Countertactics V (Buyer vs. Seller)

     Tactics                       Countertactics
      Delays                       Start on time
           Submission of data      Claim limited availability
           Start of negotiation    Leave or create greater delays
           Return from breaks

                                    Keep things on track
      Diversions
                                         Refocus team
           Questions
                                         No phones in room
           Telephone calls
                                         No interruptions
           Faxes
           Personal breaks
                                    Take a break
Tactics and Countertactics VI (Buyer vs. Seller)

     Tactics                           Countertactics
      Stonewall                        Give in
           Take it or leave it!
           I shall not move!           Say ―Yes, and...‖

                                        Walk away

                                        Escalate

      End-of-quarter or end-of-year    Settle in next quarter or next year
       negotiation pressure
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                        Inconsistent
                objectively measurable incentives
                Create a proper balance of incentives              Inconsistent
                – cost, schedule, & quality
                Make incentives challenging yet                    Inconsistent
                Use a combination of incentives                    Limited
                objectively and subjectively
                Consider using socio-economic                      Limited
                Tie on-time delivery to cost and/or                Limited
                quality performance criteria
                Avoid rewarding sellers for minimal                Widespread
Text, Pgs.      Use a combination of positive and                  Inconsistent
                negative incentives
                Include incentives for early                       Widespread
                Ensure all incentives have limits                  Inconsistent
Phase 3: Postnegotiation Actions

    Step 1           Step 2          Step 3                               Step 5              Step 6
                                                      Step 4
   Prepare       Send minutes     Offer to write                         Prepare          Obtain required
                                                    Prepare the
  negotiation     to the other       up the                         negotiation results    reviews and
   minutes            party         contract                            summary             approvals

     Step 7          Step 8                          Step 10
                                      Step 9                           Contract
 Send contract   Provide copies                      Prepare                                  Contract
                                   Document                          Administration
  to the other   of contract to                      contract                               closeout or
                                    lessons                            Contract
    party for       affected                       administration                           termination
                                     learned                        Implementation
   signature     organizations                         plan
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              Inconsistent
            lead the contract negotiation process
            Select your negotiation strategy,                    Inconsistent
            tactics, and countertactics
            Use an agenda during contract                        Widespread
            Do not be too predictable in your                    Inconsistent
from        Develop an approved negotiation                      Widespread
Reference   plan
Text, pg.
            Conduct mock negotiations                            Widespread
            Document your agreements                             Widespread
            throughout the process
            Understand everything affects price                  Inconsistent

            Tailor Ts & Cs to the deal                           Widespread
            Know what is negotiable and what is                  Widespread
            Know when to walk away                               Inconsistent
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

                                          Phase 1: Preaward

                 1. Procurement                              2. Solicitation
    Buyer                                                                                       3. Solicitation
                     Planning                                   Planning

                                      Make-or-buy decision

                   1. Presales                             2. Bid/no-bid                      3. Bid or Proposal
                     Activity                             Decision making                         Preparation

                                                                               Bid decision

             Phase 2: Award                                            Phase 3: Postaward

                                                                                                6. Contract
                 4. Source                                     5. Contract
   Buyer                            Contract      Award                                         Closeout or
                 Selection                                    Administration

                4. Contract                                                                     6. Contract
                                                               5. Contract
   Seller      Negotiation &        Contract      Award                                         Closeout or
                Formation                                                                       Termination

                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
Contract Management Process: Postaward Phase – Contract

         Input                         Tools & Techniques           Output

• Contract                        • Contract analysis and    • Documentation
• Work results                       planning                • Contract changes
• Change requests                 • Preperformance           • Payment
                                    conference               • Completion of work
• Invoices and payments
                                  • Performance measuring
• Other tasks
                                    and reporting. Payment
• Contract                          system
                                  • Change control system
                                  • Dispute management

             Reference Text, pg. 159
Key Contract Administration Policies for Buyers and Sellers

        Compliance with terms and conditions
        Effective internal and external communication and
        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
      Contractual relationships are dynamic
      Communication is essential for effective responses to
      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
      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

                       Contrac t
                     Requirem ent s

            1.1                      1.2
         Technical              Adm inistrativ e
       requirem ent s           requirem ent s

           1.1.1                    1.2.1
           Specifications           Paym ent
           W ork statem ent         1.2.2
           1.1.3                    m anagem ent
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)
Records and Documentation

       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
Contract Change Management

Change Management Actions

        Changes modify contract requirements, terms, and
        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
Buyer’s and seller’s steps
 Contract closeout involves both product verification and
  administrative closeout
         Input                          Tools & Techniques           Output

• Completion of work              • Compliance verification   • Product or service
• Contract                        • Contract                    completion
  documentation                     documentation             • Acceptance and final
        or                        • Contract closeout           payment
• Termination notice                checklist                 • Contract closeout or
                                  • Termination                 termination documents
                                                              • Documented lessons

              Reference Text, pg. 182
Sample Contract Closeout Checklist

                              Sample Contract Closeout Checklist
                                                                             Yes   N/A   No
 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
 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.
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                              Limited
   Assign a Contract Administration                               Inconsistent
   Comply with Contract Ts and Cs                                 Inconsistent

   Control contract changes via                                   Inconsistent
   contract change process
   Resolve Claims & Disputes                                      Widespread
   Develop a Contract Work                                        Widespread
   Breakdown Structure
   Manage the invoice and payments                                Widespread
   Enforce Contract Ts and Cs                                     Inconsistent
   Develop and Implement Contract                                 Inconsistent
   Admin policies & guidelines

                  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                           Widespread
   affected organizations
   Maintain a conformed copy of the                                Inconsistent
   Document communications                                         Inconsistent

   Prepare & distribute meeting                                    Widespread
   Clarify team members roles and                                  Widespread
   Provide leadership support                                      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?

Shared By:
Description: Bid for Training in Procurement Skills document sample