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1/18/2022Fundamentals ofContract ManagementTracy Arner, M.Ed., CPA, CPFOtarner@uga.edu1Learning Objectives Define a contract Describe purchasing function and objectives Explain purchasing by competitive bid or proposal Discuss why the terms and conditions, specificationsand requirements are important221
1/18/2022Before A Contract There is “Process” Choosing a contractor can be done in different forms That process, depending on the need and urgency, canbe done via: A Bid Process of procurement for Goods orServices (for the best price) A Sole Source - choosing a contractor under specialcircumstances, for example in the event of anemergency to eliminate time delays or special skill. Public organizations are required to have a formalprocess for Purchasing goods and services33Why have a separate government purchasingfunction? Competition Protection - corruption Open/Public - integrity Value – avoid waste and abusewww.nigp.org442
1/18/2022Purchasing Responsibilities Materials management – movement of materialsthroughout organization Supply chain management – management of anetwork of providers Commodity management – one or more type of goodsor services Supplier management – oversight of various suppliers Contract administration – management of contracts55Functions Staff function: Purchasing researches current market trends, advisesuser departments of new products, then plans andschedules purchases to obtain the best buy Service function: Purchasing performs the buying for the organizationwhich allows the user departments to provide servicesto the taxpayers Line function: Purchasing achieves savings for the government663
1/18/2022Successful Purchasing OperationIt is important that policiesand procedures areestablished that protect thejurisdiction and are followedduring the buying ilityAre established byordinance orregulations884
1/18/2022Purchasing Process: Competitive Sealed Bids andProposalsWhy do we have competitive purchasing? Everything a government entity does is open to publicscrutiny Purchasing competitively ensures the best buy Vendors and contractors have an equal opportunity tocompete The process helps ensure integrity99Purchasing Process: Competitive Sealed Bids Award based on lowest priced responsive (meetsspecifications) and responsible bidder (capable ofperforming) Used when: There are clear specifications Basis of award is price Several bidders who can provide goods/services More than one brand or product Adequate time to formally advertise and solicit bids10105
1/18/2022Purchasing Process: Competitive SealedProposalsCompetitive Sealed Proposals: Used when clear specifications are not available orwhen a service is required i.e. Software and telephone systems, architectural andengineering services Care should be taken to keep the process as objectiveas possible1111Purchasing Process: Competitive Sealed Bids andProposals Preparing Bid Document - SpecificationsCommon Types ofSpecifications Design specs PerformancespecsCombination(most commonlyused)Brand nameAs RequiredTerms & Conditions General – how tosubmit bids,define responsiveand responsiblebidderSpecial – deliveryand installationrequirements Bonds Insurance Pre-BidConferenceQualifiedproducts list12126
1/18/2022Why does it matter? The request for proposal used for obtaining goods orservices will contain terms and conditions,specifications and requirements that will become partof the contract Contract administration will include the responsibilityof ensuring all of these contractual items are metduring the process of obtaining goods or services1313Why does it matter?Match the word with the definitionPurchasingChoosing a contractor underspecial circumstances, forexample in the event of anemergency to eliminate timedelays or special skill.BidA formal plan including the cost toacquire good and services asoutlined in a Request for Proposal(RFP)Sole SourceThe process of procurement forGoods or Services (at the bestprice) by an entity14147
1/18/2022Knowledge Check Match the word with the definition.PurchasingChoosing a contractor underspecial circumstances, forexample in the event of anemergency to eliminate time delaysor special skill.BidA formal plan including the cost toacquire good and services asoutlined in a Request for Proposal(RFP)Sole SourceThe process of procurement forGoods or Services (at the bestprice) by an entity1515Difference between Contract Administrationand Contract Management16168
1/18/2022Learning Objectives Identify the difference between contract administrationand contract management Discuss the stages of contract management structure Recall Best Practices for contract Approval andExecution Identify tips for tracking contract performance Recall the contract closeout process1717What is a Contract? It is a mutually binding legal relationship obligating aperson (Contractor/Seller) to provide supplies orservices to another person (Government/Buyer) whowill provide consideration in exchange for them18189
1/18/2022What is Contract Administration? The management of all actions that must be taken toassure compliance with the terms of the contract afterthe award (NIGP) The work done prior to the award and signing of acontract It focuses on the planning and execution of thecontracts That process includes soliciting a contract partners Request for Proposal – RFP1919What is Contract Administration? Develop Bid or RFP Specifications (Scope of Work) The element of a contract that is most likely to createcontract administration problems is the Scope of Work The Contractor’s ability to interpret the Scope of Workdetermines contract performance.202010
1/18/2022 Professionals responsible for carrying out these tasksare known as Contract Administrators It requires a great deal of strategy and business ECTATIONS2121 Design Specifications: Describes specifics of a good such as dimensions, physicalrequirements, materials, etc. This type of specification gives an government agency controlbecause it determines exactly what the contractor mustprovide. However, it also places an additional burden on the governmentagency to ensure that the specifications are exactly as neededand to inspect or test the item to determine compliance.222211
1/18/2022Contract Administration PlanDefine thescope &deliverablesInclude adetailedtimelinePlan theworkManage thefinancesAnticipatethe risks2323Contract Administration Plan Define the scope & deliverables The first step to ensuring a successful contractingprocess is to clearly lay out expectations, includingthe scope and deliverables.242412
1/18/2022Contract Administration Plan Provide a Timeline The plans should include a detailed timeline accountingfor every important milestone throughout the life of thecontract, including project start and end dates,deadlines for deliverables, and progress updates.2525CONTRACT MANAGEMENT PLAN WITH TIME LINEResponsibleContract medUpdate contract database to include datesCommunicate contract changesManage contract reportingContract management(mandatory)Own contract through life end dateOngoing management of supplyApprove contract variationsContract extensions, renewals or terminationsPerformance delivery(mandatory)Manage operational deliveryOutline expected outcomesLead performance reviewsService quality(if relevant)Check service qualityMaintain specificationsApprove alternate work methodsGovernance framework(if relevant)Contract managementplanReview Committee[Insert other requirements based on opmodel, e.g. reporting a Board]Prepares CMPReviews and approves CMPCommunicates CMPCommunication(optional)Train/communicate with stakeholders aboutcontract and CMPThis Plan contains an area to include the person 'Responsible', 'Accountable', 'Consulted' and 'Informed' for each activity. Fill in the name of the role which corresponds towhether the role is 'Responsible', 'Accountable', 'Consulted' or 'Informed' for the specific RACI activity. Delete any sections that do not apply.262613
1/18/2022Contract Administration Plan Manage finances Everyone involved in the contract administrationprocess should know the financial terms of theagreement, including the value of the contract,payment intervals, and the process to address theneed for any additional expenses (depending on thetype of contract) Using a Purchase Order is a good way to keep trackof expenses and stay within the established budgetof the contract2727Contract Administration Plan Plan the Work The plan should include details about how the contractdeliverables will be executed, including the people who will beworking on each part of the agreement (including both internaland third-party personnel, if applicable). Having a plan for measuring success throughout the life of thecontract will keep both parties aligned and allow for coursecorrection if needed.282814
1/18/2022Contract Administration Plan Anticipate the Risks Every contract comes with risk, but putting plans in place toaccount for those risks can prevent the contract from failing.Outline the most likely risks for each agreement and the stepsthat should be taken in the event those events actuallyhappen. Building in some flexibility for timelines and budgets will allowfor minor, unexpected delays or problems to be taken in strideand prevent the contract (and potentially the relationship)from suffering significantly.2929Contract Administration Plan – Assess Risks Risk assessment is the process for identifying andassessing risks that could affect the achievement ofobjectives Assessing risks in the contracting process helps toreduce the likelihood of any potential breach of acontract There are different types of contract risks namely: Financial Security Reputation Legal303015
1/18/2022Contract Administration Plan – Assess ract Administration Plan – Assess Risks Financial Risk: Inappropriate or inefficient use of publicdollars, a contract termination associated with missed deliverydates or milestones Legal Risk: legal risk could occur from missing contractualobligations, compliance requirements or regulations. It could alsobe a result of improper use or lack of using the right legalclauses, confidentiality disclosures, and other contract disputes Reputation: Negative public opinion, or poor employee morale,and is part of the aftermath of financial, legal, and securityissues. Mitigating this risk is more important than ever becausebad news travels fast in today’s hyper-connected digital worldand can quickly impact your reputation. This, in turn, can impactyour financial performance and the cycle perpetuates.323216
1/18/2022Contract Administration Plan – Assess Risks Security Risk: Security breaches with a contract often result inadditional financial, legal, and brand issues. When managing acontract, security risks exist if contracts are stored in insecurelocations, allowing everyone with contract access to have thesame level of access to sensitive contract data, leavingconfidential contract data unencrypted, and by using email tocommunicate sensitive information Controls must be established to avoid unfettered access toconfidential contract information3333Managing RiskRisks should be assessed as either high, medium, or low High financial risks could be reduced by purchasing aperformance bondHigh legal risks could be reduced by ensuring anattorney reviews all contracts before signature343417
1/18/2022What is Contract Management? Contract Management involves the actions largely taken to awarda contract, perform the tasks and finally close the contract Contract Management occurs in three Phases often guided byRegulatory Compliance3535TA40s6Contract Management StructureGuidingPrinciplesLife CyclePhasesJob TasksCompetenciesDomains363618
1/18/2022Contract Management Structure Guiding Principles: Applies to all phases of thecontract life cycle Life Cycle: Pre-Award, Contract Award, Post- Award Domains: Production of significant contract outcomes Competencies: Process used to produce theexpected outcomes of the domains Job Tasks: Tasks performed to achieve the expectedresults of the competencies3737Guiding PrinciplesContractPrinciplesRoles atoryComplianceCommunication&DocumentationStandard ofConductStaffDynamics383819
1/18/2022Guiding esults from an Offer, Acceptance, Consideration and theintent to execute a legal relationship Apply knowledge from lessons learned in themanagement of current and future contracts Capture, share and document knowledge Identify opportunities for process improvements Apply market research techniques to collect, analyzeand implement market intelligence3939Guiding PrinciplesStandard ofConductStaffDynamics Exhibit behavior that invokes trust andconfidence in the integrity of the contractprocess Be transparent Avoid Conflicts of Interest Conduct meaningful collaboration in order tomake accurate and timely decisions whilesolving contracting issues/problems, whileforming an effective relationship404020
1/18/2022Guiding PrinciplesCommunication &Documentation Communication must: Minimize the effect of personal biases Maximize successful results and facilitatecommunication among parties by using clearly writtendocumentation Keep all documents unambiguous and easy tounderstand Contract Scope/Expectations Risk Management Mitigation Performance Quality and Compliance4141Guiding PrinciplesRoles &Responsibilities/SkillsRegulatoryCompliance The scope of contract management includes: Planning, organizing, and managing contract It includes critical thinking, problem solving,effective communication and is results driven Regulatory Compliance is the applicable laws,codes and regulations, which serves as theguidance that defines the legal parameters bywhich the parties must operate Management of a contract is conducted byprofessionals known as Contract Managers424221
1/18/2022Knowledge Check What is Contract Management?4343Knowledge Check What is Contract Management?Answer: It is a mutually binding legalrelationship obligating a person(Contractor/Seller) to provide supplies orservices to another person (Government/Buyer)who will provide consideration in exchange forthem444422
1/18/2022Knowledge Check What is the difference between ContractManagement and Contract Administration?4545Knowledge Check What is the difference between ContractManagement and Contract Administration?Answer: Contract Management involves theactions largely taken to award a contract,perform the tasks and finally close the contract.While Contract Administration is themanagement of all actions that must be taken toassure compliance with the terms of the contractafter the award (NIGP)464623
1/18/2022Knowledge Check What are the components of the contractmanagement structure?4747Knowledge Check Contract Management Structure are the: Guiding Principles: Applies to all phases of thecontract life cycle Life Cycle: Pre-Award, Contract Award, Post- Award Domains: Production of significant contract outcomes Competencies: Process used to produce theexpected outcomes of the domains Job Tasks: Tasks performed to achieve the expectedresults of the competencies484824
1/18/2022Best Practices for Contract Approval andExecution4949Contract Performance - Competencies Process of determining reasonable contract cost andpricing Conduct contract negotiations Selecting the “Source” and managing potentialdisagreements505025
1/18/2022Contract Performance - CompetenciesContractPricing Examine and evaluate the proposed contract price todetermine if expected contract performance for efficiency andeffectiveness The process of engaging parties regarding contractrequirements to ensure common ground, offer compromises ifthere are differences in price, delivery, quantity and otherContractfactorsNegotiationSelect the“Source” The process of analyzing the contract offer in accordance withthe solicitation to select the best “Source” for the highestcontract performance. In addition, managing the process ofresolving conflict to maintain legal obligations5151Performing the Contract Tasks – Job TasksPrice and Cost Analysis Know contract specifications Evaluate Terms of the contract & the Impact on Risk Determine Reasonable Price/Cost Analysis Document ResultsContract Negotiation Clarification Requests Prepare Respond Document Negotiation Objectives Conduct Discussions525226
1/18/2022Performing the Contract Tasks – Job Tasks Select the “Source” Review compliance of OffersEvaluate Offers, Withdraw OffersConduct and Finalize NegotiationsFinal Offer RevisionPrepare Contract DocumentReview and Approve ContractFinalize Contract AwardNotify the Successful and Unsuccessful OfferorsDebrief the successful OfferorDocument Outcome of Offer Manage Disagreement Respond to Protests and Appeals5353Life Cycle of Contract Management PhasesThree Contract PhasesPreAwardContractAward54PostAward5427
1/18/2022Life Cycle of Contract Management PhasesThree Contract PhasesContractAwardPre-Award Solicitation OfferPost-Award Contractexecution ContractPerformance Close-outContract5555Five Domains of Contract CycleDevelop SolicitationDevelop OfferOutcome:Outcome:SolicitationSuccessful OfferContractPerform ContractOutcome:Outcome:Executed ContractContractPerformance56Close ContractOutcome:Closed Contract5628
1/18/2022Award Phase The Award process is performed by both parties GovernmentContractorEvaluate offersConduct negotiationsSelect the SourceAward the contractDebrief the GovernmentAddress errors orchallenges in the selectionprocess Clarify government queries Participate in negotiations Prepare final offers5757Post-Award Life Cycle Phase Once the “Award” phase of the cycle ends, the PostAward cycle begins In this phase both the Government and Contractormust be actively involved in ensuring satisfactoryperformance and a successful Close-out585829
1/18/2022Post-Award Life Cycle Phase Successful contract management covers the periodfrom the beginning of procurement until after acontract ends. The receipt of goods and services atthe right price, quality, and on time as well as propercompensation of the contractor is the goal of asuccessful procurement. A good contract is a means to an end. Simplyenforcing the contract, however, does not necessarilyresult in a successful relationship with the contractor.Success should instead be measured by theeffectiveness of the program that the contractsupports.5959Post-Award Life Cycle PhaseGovernmentContractor Address issues during the contract Execute Modification Monitor Compliance Make Payments Close-out the contract Ensure contract performance Submit timely invoices Manage contract changes andbring contract to a successfulclose-out606030
1/18/2022Post Award Phase - DomainsPerformContractClose-outcontract Tasks andcompetencies toensure contractperformance Tasks andcompetencies forsuccessful close-out ofthe contract6161Tracking Contract Performance The process of executing contract requirements to ensure quality,service delivery, a seamless relationship while managing thecontractual obligations Developing Specifications – Specify the Need Includes monitoring risks and assessing the impact to contractperformance Ensure compliance Terms and Conditions guided by regulations and statutes Contractual requirements during performance up to close-outor termination626231
1/18/2022Tracking Contract Performance Contractual RiskAre procedures for dispute, breach and change order/modification procedures clearly outlined? Performance RiskIs the definition of government acceptance clearly defined? Price Risk –Do payment terms fit the contract and minimize risk? (progressor milestone payments as applicable, etc.)6363Tracking Contract Performance Proper planning helps in risk assessment, management andmonitoring Contract performance must include a plan to: Confirm expectations Maintain open communication channels Process contract documentation Conduct post-award performance reviews and Assess contract performance646432
1/18/2022Tracking Contract Performance Ensures the proper service delivery for goods and services tomeet the specification, terms, and conditions Planning for performance delivery and monitoring Inspecting and accepting contract performance6565Tracking Contract Performance Design Specification Describe specifics of a good such as dimensions, physicalrequirement, materials etc. Specification gives a government control since it determinesexactly what the contractor must provide It also places an additional burden on the government toensure that specifications are exactly as needed and to inspector test the item to determine compliance666633
1/18/2022Tracking Contract PerformancePerformance Specifications: This type of specification is oriented to results and function The responsibility for method or process becomes theresponsibility of the contractor However, acceptance of goods or services procured throughperformance specifications is the responsibility of the governmentagency which greatly impacts contract administration6767Knowledge Check What are the three phases of a contract?686834
1/18/2022Knowledge Check What are the three phases of a contract?Answer: Pre-Award Contract Post-Award6969Knowledge Check What are the Five Domains of the contractcycle and their Outcomes?707035
1/18/2022Knowledge Check Develop SolicitationSolicitationDevelop OfferSuccessful OfferContractExecuted Contract7171Knowledge Check Perform ContractContract PerformanceClose ContractClosed Contract727236
1/18/2022The Close-out Process7373Contract Close-out Process The domain of both the government and the contractor When the work required under the contract is physicallycomplete, contract close out begins Determine that all that contractual obligations have been met Checklists may be used to ensure that all contract requirementshave been fulfilled including final payments to the contractor.747437
1/18/2022Contract Close-out ProcessThe process of completion, delivery, and acceptance of the contractrequirements in accordance with the terms and conditions of thecontract All performance has been accomplished, Final contractor performance has been evaluated, Final payment has been made, and The contract has been reconciled.7575Contract Analysis The final step in the contract administration process is ContractAnalysis. All documentation contained in the contract file should be reviewedby the entire contract administration team (including the contractor)to determine if any changes to the process should occur. Considerations of new contract development, any issues that aroseduring the contract term and thoughts towards improvement of theprocess should be noted. What went right? What went wrong? To ensure the success of the new contract, incorporate changes intothe new solicitation and update checklists and the ContractAdministration Plan accordingly.767638
1/18/2022Ethics in Contracting Ethics in contracting is a vital part of the contractingprocess, particularly in public procurement/purchasing Conflict of Interest can include: Accepting gifts from vendors Use of government contracts forpersonal use Allowing vendors to pay for meals/entertainmentwww.uppcc.org7777Ethics Violation10 minutesRead gifts-from-companies-sellingvoting-equipmentTalk about the actions of the elections officials787839
1/18/2022Knowledge Test Why is Ethics important in contract management?7979Questions?808040
1/18/202281THANK YOU!41
The management of all actions that must be taken to assure compliance with the terms of the contract after the award (NIGP) The work done prior to the award and signing of a contract It focuses on the planning and execution of the contracts That process includes soliciting a contract partners - Request for Proposal - RFP
