Contract Administration Part 1: People. Processes. and. Best. Practices. BY Gregory A. Garrett

Transcription

1 Contract Administration Part 1: People Processes and Best Practices BY Gregory A. Garrett 52 Contract Management February 2010

2 It is vitally important to have the right people and processes in place to manage the growing number value and complexity of U.S. government contracts. Contract Management February

3 For more than three decades U.S. government reviews assessments and audits conducted by numerous agencies including the Government Accountability Office Office of Management and Budget and the Defense Contract Audit Agency have indicated the real and compelling need for improved postaward contract administration by government and industry. In both the public and private business sectors, contract administration is often an afterthought and is usually insufficiently staffed in both the quality and quantity of resources (contract managers, project managers, technical managers, property managers, supply chain/subcontract managers, etc.). Typically, government and industry focus their time, attention, and key resources on soliciting, proposing, negotiating, and forming the contract simply put, getting the deal. As a result, there are often very limited resources to manage, administer, and closeout the deal. While project management and earned value management have received significant focus and attention in recent years for the valueadded capabilities they can provide, few organizations have paid much attention to post-award contract administration and closeout activities, which are equally vital to business success. In this threepart series of articles, we will focus on the importance of having the right people and processes in place to manage the growing number, value, and complexity of contracts to ensure U.S. government agencies are able to obtain quality products, services, and/or solutions from government prime contractors and subcontractors. 54 Contract Management February 2010

4 Education Partners To increase the depth and breadth of learning opportunities for our members, NCMA has entered into formal partnership with leading training and education providers. Whether your goal is an advanced degree, specialized training courses, or certification, these Charter Education Partners can help. C Contracting Solutions LLC Acquisition Solutions 1655 N. Fort Myer Drive Suite 1000 Arlington, VA American Graduate University 733 N. Dodsworth Avenue Covina, CA Bellevue University 1000 Galvin Road, South Bellevue, NE Centre Consulting 1953 Gallows Road Suite 650 Vienna, VA Certified Contracting Solutions, LLC PO Box Louisville, CO Comprehensive Language Center 2200 Wilson Blvd. Suite 500 Arlington, VA ESI International 901 North Glebe Road Suite 200 Arlington, VA FedBid, Inc Leesburg Pike Suite 602 Vienna, VA Federal Market Group Federal Contracts Training Center 2700 Lake Cook Road Riverwoods, IL Federal Publications Seminars th Street, NW Suite 200 Washington, DC Graduate School, USDA 600 Maryland Avenue, SW Suite 120 Washington, DC Institute for Supply Management PO Box Tempe, AZ Management Concepts 8230 Leesburg Pike Vienna, VA Next Level Purchasing PO Box 901 Moon Township, PA Northwest Procurement Institute, Inc. PO Box 1328 Edmonds, WA Saint Louis University 3322 Olive Street Saint Louis, MO University of California Irvine Extension Irvine, CA University of Tennessee Knoxville Center for Executive Education Villanova University Online c/o University Alliance 9417 Princess Palm Avenue Tampa, FL Contact: CHRIS MARTIN cmartin@networkmediapartners.com BRUCE TACKETT btackett@networkmediapartners.com

5 FIGURE 1. Total amount spent on federal contracts (billions of dollars) Rising healthcare costs, and Economic recovery expenses due to recession. $550 $500 $450 $400 $350 $300 $250 $200 $150 $100 $50 $ Source: Federal Procurement Data Systems, Since the start of the Barack Obama administration, government spending has gone to even higher levels, including the new $787 billion American Recovery and Reinvestment Act (ARRA, Public Law 111-5), which contains over $500 billion in new spending projects at the federal, state, and local levels of government via a combination of grants, loans, and federal contracts on top of the usual $600 billion in spending for the normal acquisition of products, services, and systems by the more than 60 federal government departments, agencies, and commissions. The new ARRA, or stimulus act, spending has had a dramatic impact on the purchasing and contract administration workload in the U.S. Departments of Health and Human Services, Housing and Urban Development, Treasury, Labor, Education, Energy, Transportation, and Environmental Protection Agency to provide for the growing demand for services, economic stimulus, and bailouts of financial institutions. Contract Administration: People and Workload As previously stated, government agencies and prime contractors are highly focused on awarding/receiving contracts and spending money, yet both agencies and prime contractors currently suffer from a shortage of talent to effectively and efficiently manage the massive growth of government spending. Between fiscal years 2000 and 2008, the government s spending had increased from $219 billion to more than $538 billion (see FIGURE 1 above). In addition, the number of transactions or contracts awarded by government agencies during the same period of time had grown from 500,000 transactions to over 7.7 million transactions (see FIGURE 2 to the right). FIGURE Total number of federal contracts (in millions) This tremendous spending growth during the George W. Bush administration was largely the result of numerous converging factors, including: The Global War on Terrorism, 1.5 The creation of the Department of Homeland Security, Significant natural disasters, Demographics aging of the Baby Boomers, Source: Federal Procurement Data Systems, Contract Management February 2010

6 Thus, during the past decade, U.S. government contracts have grown dramatically in: Numbers/quantity up 14 times since fiscal year 2000; Dollar amount/value up three times since fiscal year 2000; and Complexity/integration of hardware, software, and professional services. However, those who are tasked to plan, negotiate, award, manage, administer, deliver/fulfill, and closeout the contracts and related projects from both government and industry have remained relatively the same in quantity. Fortunately, the Obama administration is highly focused on hiring more government employees in numerous career fields, including the federal acquisition workforce. Further, the secretary of defense announced in March 2009 that the Department of Defense plans to hire/obtain more than 20,000 additional acquisition professionals to address the workload over the next five years. However, another problem is that both government and industry lack sufficient practical and cost-effective education and training to keep up with the dramatic increase in the complexity of the government s requirements and increased spending practices. From the government s perspective, the job titles/roles in FIGURE 3 on page 58 are critical to its ability to acquire and manage products, services, and solutions from industry to meet the needs of its respective agencies. During the past decade, many of the people who have performed these vital government acquisition positions have retired, transferred to other positions within government, moved to a position within industry, changed career fields, or some combination thereof. From industry s perspective, the similar job titles/roles in FIGURE 3 are critical to their ability to win and successfully deliver on U.S. government contracts, subcontracts, and related projects. ONLINE ETHICS COURSES Making legally and ethically appropriate decisions is crucial in today s highly scrutinized business environment. Each of our online ethics packages contains a suite of five courses to help you earn your Certificate of Ethics Education. Participants earn five continuing professional education (CPE) hours for completion of the certificate. Cost for each course package: NCMA Members $220 Nonmembers $250 Courses may not be taken separately. Current packages offered include: Introductory Business Ethics Package for Federal Contracting, Advanced Business Ethics Package for Federal Contracting, Both U.S. government agencies and industry have heavily invested in numerous technology based tools to improve their buying and selling, including: Software applications, Hardware platforms, Enterprise resource planning (ERP) systems, and Protection of Intellectual Property Package, Introductory Business Ethics of International Contracting Package, Advanced Business Ethics of International Contracting Package, Corporate Governance Package, and Critical Business Vulnerabilities Package. Other IT-related systems. However, many of these IT- and ERP-related investments have never achieved the promised results. Clearly, the government s buying and industry s selling of commercially available off-the-shelf prod- For more information and to register, visit us online at ethicscourses or call ext Contract Management February

7 ucts and services was tremendously expedited by the expansion of the following: Internet-based business, Electronic data interchange, Electronic funds transfer, Electronic signatures, Electronic sales catalogs, Federal Supply Schedules, Governmentwide acquisition contracts, Blanket purchase agreements, and Indefinite delivery/indefinite quantity contracts. What has been and is still driving the growing amount of money being spent by the government acquiring complex systems, integrated solutions, and professional services? The answer is the combination of numerous converging factors: Increased threat of global terrorism via Afghanistan and Iran; Struggling global and U.S. economy; Continually evolving communication technologies; High integration cost for hardware and software; Increased customer/u.s. citizen demands for services; Less government personnel with needed professional services expertise; Less government technical expertise to develop more detailed/ defined requirements; While a majority of the government s contracts are firm-fixedprice (FFP), and are used to acquire relatively simple commercially available off-the-shelf products and services, they typically comprise less than 60 percent of the dollars spent in some government agencies. Conversely, a minority of government contracts are cost-reimbursement or time-and-materials (T&M) contracts, typically used to acquire highly complex systems, integrated solutions, and a vast array of professional services. Yet, these cost-reimbursement type contracts and T&M type contracts together often account for over 40 percent of the dollars spent in some government agencies. FIGURE 3. Key Government People/Roles Program Manager Systems Engineer Contracting Officer Contracting Officer s Technical Representative Lawyer Cost/Price Analyst Contracts Specialist/Administrator Government Property Manager Budget/Financial Analyst Quality Assurance Specialist Logistics Manager Others Increased reliance on IT platforms, related-hardware, and software applications; and Other factors. Key Industry People/Roles Program Manager Systems Engineer Contracts Manager Subcontract Manager Bid/Proposal/Capture Manager Cost/Price Analyst Contract Administrator Buyers/Purchasing Specialist Logistics/Supply Chain Manager Lawyer Project Control Manager Business Development Manager Account Manager Accountants/Financial Manager Property Manager Why Does the Type of Contract Matter? The answer is simple when an FFP contract is awarded, the government has very low financial risk because the contractor has agreed to perform the contract for a fixed amount of money. If the contractor can adequately perform the work for less, then it makes a higher profit. If, however, it takes the contractor more than the fixed amount to accomplish the work, then the contractor loses money. Thus, government agencies typically perform little contract administration on FFP type contracts because the contractor has the greatest financial risk. Conversely, when a cost-reimbursement contract or a T&M contract is awarded, the government has higher potential financial risk. In the case of cost-reimbursement contracts, the government has agreed that the nature of the work is too difficult to adequately define at the start. Thus, the government is essentially purchasing the contractor s best efforts and promising to reimburse the contractor for all of its allowable, allocable, and reasonable expenses. Depending upon the type of cost-reimbursement contract, there may be an incentive fee, award fee, and/or fixed-fee, which is subject to specific Federal Acquisition Regulation (FAR) limitations. In the case of a T&M contract, the government has agreed that the nature of the professional services is 58 Contract Management February 2010

8 NCMA National Education Seminars Contract Negotiations Upper Chesapeake Chapter February 17, 2010 The Richlin Ballroom Edgewood, Maryland Registrar: Rosalind McFadden or Jenel Fronheiser ; or x561; Georgia-Carolina Chapter March 25, 2010 MOX Services Training Building Aiken, South Carolina Registrar: Gwendolyn Jones ; Cost Estimating and Contract Pricing: Tools, Techniques, and Best Practices Hampton Roads Chapter and the National Office March 18, 2010 Site: TBA Registrar: NCMA ; NEW! Risk Management for Complex U.S. Government Contracts & Projects Vandenberg Chapter and the National Office February 11, 2010 Hotel Mar Monte Santa Barbara, California Registrar: NCMA ; Greenville Chapter February 24, 2010 Fluor Management Center Greenville, South Carolina Registrar: Patrick Carrington Sacramento/Gold Rush Chapter March 11, 2010 Meridian Systems Folsom, California Registrar: Rob Trojan ; Dayton Chapter March 16, 2010 BAE Systems Conference Center Dayton, Ohio Registrar: Carri Miller and Amber Scott Southeast Idaho Chapter March 17, 2010 Site TBA Registrar: Heather Merrill ; Pre-Conference Seminar at the Aerospace and Defense Conference March 24, 2010 The Westin San Diego San Diego, California Registrar: NCMA ; Bluegrass Chapter March 25, 2010 Horseshoe Southern Indiana Elizabeth, Indiana Registrar: Kevin Regenhold ; Tysons Corner Chapter April 6, 2010 Accenture Reston, Virginia Registrar: Eyvette Wright Online registration is available at East Tennessee Chapter April 7, 2010 Doubletree Hotel Oak Ridge, Tennessee Registrar: Linda Stinnett Chicago Chapter April 8, 2010 Holiday Inn Chicago Midway Airport Chicago, Illinois Registrar: Patricia Gibson-Anderson ; Atlanta Chapter April 20, 2010 Baymont Inn Atlanta, Georgia Registrar: Tonya S. Justice Visit us online at or call x425 for a complete listing of seminars in your area. National Contract Management Association National Education Seminars

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10 too difficult to adequately define at the start. Thus, on a T&M contract, the government is purchasing the contractor s best efforts for specific services in specific labor categories, plus related materials. In a T&M contract, the time consists of a fully-loaded wrap-rate (direct cost, indirect cost, general and administrative, fringe, and profit) for each specific labor category on an hourly rate basis. The material consists of the total material costs, plus any related handling costs; but it does not typically include any profit, per FAR prohibition. FIGURE 4. Since cost-reimbursement and T&M contracts place greater financial risk on government agencies, these types of contracts are less preferred. Despite this fact, these types of contracts are and have been for many years the types of contracts upon which the government spends a large amount of money buying systems, services, and integrated solutions. As a result of the dramatic increase in spending, increased number of contracts awarded, growing complexity of contracts and projects, and a shortage of experienced and properly trained government acquisition personnel, government agencies have struggled to provide the necessary contract administration support services and surveillance appropriate to help guide contractors, mitigate risks, and ensure successful programs. Contract Administration Processes Contract administration can be straightforward or complex, depending on the nature and size of the project. Administering a contract entails creating a contract administration plan and then monitoring performance throughout the many, varied activities that can occur during project execution. Key contract administration activities typically include: Post-Award Contract Administration Process Key Inputs Tools and Techniques Desired Outputs Contract Project management discipline Documentation Project plans and schedules Contract analysis and planning Payment Work results Kick-off meeting or pre- Completion of work Contract change requests performance conference Invoices Performance measuring and reporting Payment process Contract change management process Dispute resolution process Supply chain management process Government property management Contract closeout process A contractor getting paid more money for doing more work than was originally agreed upon in the contract is both fair and reasonable. Likewise, if a contractor fails to properly perform the work or fails to comply with the terms and conditions of the deal, there should be an appropriate remedy. Tailored project management and contract administration procedures are essential to ensure both parties know what is expected of them at all times; to avoid unpleasant surprises and reduce risks regarding requirements, costs, or schedule-related issues; and to solve problems quickly when they occur. However, government customers do at times consider contractors who effectively manage their contracts and actively pursue payment for contract changes to be nickel-and-diming them. Some prime contractors will intentionally low-bid or underprice the initial bid in order to get the contract on the off chance that they can make enough follow-on sales to offset the initial loss and create a profitable long-term business relationship. Often, government buyers are so motivated to reduce initial capital expenditures to fit their reduced budgets that they will essentially entice sellers into an initial low bid/buy-in business model. Ensuring compliance with contract terms and conditions; Practicing effective communication and control; Managing contract changes, accounting, invoicing, and payment; Management of government property; Resolving claims and disputes; and Contract closeout actions. Effectively managing the contract scope of work through proven project and contract management best practices is wise and financially prudent for both the government and industry. The government needs to ensure it gets what it paid for and to get it when it needs it. Contractors need to ensure they provide the products and/ or services as and when they agreed to deliver them. Post-award contract administration is the process of ensuring that each party s performance meets contractual requirements. On larger projects with multiple product and service providers, a key aspect of contract administration is managing the interfaces among the various providers. Because of the legal nature of the contractual Contract Management February

11 FIGURE 5. Contract Requirements Matrix Deliverables Description Contract Reference Delivery Date or Services Date Work Breakdown Structure Element Other Reference relationship, the project team must be acutely aware of the legal implications of actions taken when administering the contract. Effective contract administration is critical to effective project management because an organization s failure to fulfill its contractual obligations could have legal consequences. Therefore, someone must observe the performance of contractual obligations. That person is usually the contract manager, contract administrator, or subcontract manager, depending on the organization, who must always be aware of the legal and financial consequences of an action or failure to act, and who must take steps to ensure required actions are taken and prohibited actions are avoided. In a real sense, a contract manager is a project manager, and the principles of project management apply to their work. Each party to the contract appoints a contract manager, contract specialist, contract administrator, or subcontracts manager; job titles vary among those who monitor not only their own organization, but the other party as well to ensure that both parties are keeping their promises. The contract managers must maintain these two perspectives throughout contract performance. The post-award phase of the contract management process (see FIGURE 4 on page 61) includes applying the appropriate contract administration and project management actions to the contractual relationships and integrating the output from these best practices into the general management of the project. Input Input to the post-award phase of the contract management process consists of the following items. Contract The contract document is the primary guide for project execution and administration of the contract. Project Plans and Schedules The project manager shall prepare appropriate plans to ensure the work is properly completed on time, on budget, and meeting contractual requirements. Such planning could include a work breakdown structure, organizational breakdown structure, responsibility assignment matrix, schedules (Gantt charts, milestone charts, project network schedules, etc.), and an earned value management system (EVMS). Plus, the contract manager should develop a contract requirements matrix (see FIGURE 5 above). Work Results The results of performing the requirement will affect contract administration. Contract Change Requests Contract change requests are a common element of most contracts. An effective process for managing contract changes must be in place to ensure that all requests are handled smoothly. Contract changes may include: Amendments, Modifications, Change orders, Supplemental agreements, Add-ons, Up-scopes, or Down-scopes. Contract changes are opportunities either to increase or decrease profitability for the seller. Changes are a necessary aspect of busi- 62 Contract Management February 2010

12 ness for buyers because of changes in their needs. The management of unauthorized contract changes can prove to be very challenging. Invoices An efficient process must be developed for handling invoices throughout contract administration. Few areas cause more concern to sellers than late payment. Buyers can realize savings by developing an efficient and timely payment process because sellers are often willing to give discounts for early payment. Tools and Techniques The following tools and techniques are often used to improve contract administration performance results. Project Management Discipline All work to be performed should be appropriately led, planned, scheduled, coordinated, communicated, tracked, evaluated, reported, and corrected, as necessary, using the basic guidelines of the Project Management Institute s Project Management Body of Knowledge. Contract Analysis and Planning Before contract award, each party should develop a contract administration plan and assign the responsibility of administering the contract to a contract manager. To whom should the job be assigned? A project manager could do double duty as contract manager. However, in most large companies, contract administration is a specialized function, usually performed by someone in the purchasing, contracting, or subcontract management department because doing the job requires special knowledge and training. Contract administration is an element of both contract management and project management. Kick-off Meeting or Pre-performance Conference Before performance begins, both government and industry should meet (via teleconference, videoconference, Web meeting, or face-to-face meeting) to discuss their joint administration of the contract (see FIGURE 6 on page 64). The meeting should be formal, the agenda should be distributed in advance, and minutes should be taken and distributed. Each party should appoint a person who will be its organization s official voice during contract performance. At the meeting, the parties should review the contract terms and conditions and discuss each other s roles. The parties should also establish protocols for written and oral communication and progress measurement and reporting. They should also discuss procedures for managing changes and resolving differences. Government and con- R ECOMMENDED READING Smart Contracting for Local Government Services: Processes and Experience (Privatizing Government: An Interdisciplinary Series) by Kevin Lavery Building a Career in Compliance and Ethics by Joseph E. Murphy and Joshua H. Leet The Contract Negotiation Handbook: An Indispensable Guide for Contract Professionals by Stephen Guth To order these great titles, visit NCMA s Web site, publications/bookstore. By accessing Amazon.com through NCMA s Recommended Reading page and making a purchase, you give NCMA up to 15 percent of referral fees, plus new consumer bonuses! This means more scholarships, seminars, and member services! FEBRUARY Contract Management February

13 FIGURE 6. Pre-performance Conference Checklist Project Name: Prepared by (Print): Customer: Date Prepared: Contract: Contact Telephone/ Complete requirements analysis verify and validate the requirements stated in the contract to ensure that the project, when completed according to the requirement statement, will meet the needs of both parties. Summarize contract requirements complete a contract requirements matrix (see FIGURE 5 on page 62). Establish the project baseline ensure that the baseline and specifications are established. Develop in-scope and out-of-scope listings develop lists of items that the government and contractor consider within and outside the scope of the contract. List the contractor s assumptions about the government s requirements and understanding of the end-user s expectations. Establish a preliminary schedule of meetings between the parties. Inform your team and other affected parties brief the team members who will attend the meeting, ensuring they understand the basic requirements of the contract and the project. Review meeting findings with all affected people in your organization. Document who attended, what was discussed, what was agreed to, and what follow-up actions are required by whom, where, and when. Prepare and send pre-performance conference meeting minutes to the other parties. tractor managers with performance responsibilities should attend the pre-performance conference or at least send a representative. Important subcontractors should also be represented. The meeting should be held shortly after contract award. Performance Measuring and Reporting During contract performance, the project manager, contract manager, and responsible business managers all must observe performance, collect information, and measure actual contract progress. These activities are essential to effective control. The resources devoted to these tasks and the techniques used to perform them will depend on the nature of the contract work, the size and complexity of the contract, and the resources available. On large, complex contracts, the government will often require the contractor to apply an EVMS. Payment Process Every contract must establish an adequate accounting, cost tracking, invoicing, and payment process between the parties. The government agencies and prime contractors must agree to whom invoices should be sent and what information is required. Prime contractors and their subcontractors must submit proper invoices in a timely manner. Government agencies are then required to pay all properly submitted invoices in a prompt manner. Contract Change Management Process As a rule, any party that can make a contract can agree to change it. Changes are usually inevitable in contracts for complex undertakings, such as system design and integration. No one has perfect foresight requirements and circumstances change in unexpected ways and contract terms and conditions must often be changed as a result. Dispute Resolution Process No one should be surprised when, from time to time, contracting parties find themselves in disagreement about the correct interpretation of contract terms and conditions. Such disagreements are typically minor and are resolved without too much difficulty. Occasionally, however, contracting parties may find themselves entangled in a seemingly intractable controversy. Try as they might, they cannot resolve their differences. If the dispute goes unresolved for too long, one or both of the parties may threaten, or even initiate, litigation. Litigation is time consuming, costly, and risky. You can never be entirely sure of its result. Rarely is the outcome a truly satisfactory resolution of a dispute, and it sours business relationships. For these reasons, litigation should be avoided. Thus, it is critical to create a cost-effective dispute resolution process between the parties using negotiation, arbitration, facilitation, or mediation methods. Supply Chain Management Supply chain management represents the ability of government prime contractors to efficiently and cost-effectively manage their subcontractors and vendors, which comprise their selected supply chain. Applying proven-effective supply chain management best practices is vital to improve performance results, including the appropriate flow-down of mandatory government contract clauses. Government Property Management The ability of a prime contractor to effectively perform government property management, pursuant to FAR Part 45, and overcome the numerous challenges to achieve the on-time delivery of quality products, services, and systems, is critical to business success. 64 Contract Management February 2010

14 FIGURE 7. Contract Closeout Checklist Project Name: Prepared by (Print): Customer: Contact Telephone/ 1. yes no 2. yes 3. yes 4. yes 5. yes 6. yes 7. yes 8. yes no no no no no no no Date Prepared: Contract: All products or services required were provided to the buyer. Documentation adequately shows receipt and formal acceptance of all contract items. No claims or investigations are pending on this contract. Any buyer-furnished property or information was returned to the buyer. All actions related to contract price revisions and changes are concluded. All outstanding subcontracting issues are settled. If a partial or complete termination was involved, action is complete. Any required contract audit is now complete. Progress reports, Project diaries, Telephone logs, Photographs, and Videotapes. Payment Sellers want their money as quickly as possible. The government should seek product and service discounts for early payments. Likewise, contractors should improve their accounts receivable management and enforce late payment penalties. Completion of Work This last step is the contractor s actual accomplishment of the government s requirement for products, services, systems, or solutions. Contract Administration Best Practices The following is a checklist for best practices when conducting post-award contract administration: Contract Closeout Process Contract closeout refers to verification that all administrative matters are concluded on a contract that is otherwise physically complete. In other words, the contractor has delivered the required supplies or performed the required services and the government has inspected and accepted the supplies or services (see FIGURE 7 above). Outputs The following output functions result from contract administration: Documentation This is essential to provide proof of performance, management of changes, justification for claims, and evidence in the unlikely event of litigation. The most important documentation is the official copy of the contract, contract modifications, and conformed working copies of the contract. Other important forms of documentation include: External and internal correspondence, Meeting minutes, Develop and implement a project management discipline to ensure on-time delivery and flawless execution. Comply with contract terms and conditions. Develop and implement a contract compliance matrix. Maintain effective communications. Manage contract changes with a proactive change management process. Resolve disputes promptly and dispassionately. Use negotiation or arbitration, not litigation, to resolve disputes. Develop a work breakdown structure to assist in planning and assigning work. Conduct pre-performance conferences or a project kick-off meeting. Contract Management February

15 Measure, monitor, and track performance. Manage the invoice and payment process. Report the progress internally and externally. Identify variances between planned versus actual performance use earned value management. Be sure to follow up on all corrective actions. Appoint authorized people to negotiate contract changes and document the authorized representatives in the contract. Enforce contract terms and conditions. Provide copies of the contract to all affected organizations. Maintain conformed copies of the contract. Understand the effects of change on cost, schedule, and quality. Document all communication use telephone correspondence, faxes, correspondence logs, and s. Prepare internal and external meeting minutes. Prepare contract closeout checklists. Ensure completion of work. Document lessons learned and share them throughout your organization. Communicate, communicate, communicate! Conclusion Contract administration is an important aspect of successful business. Simply said, contract administration is the joint government and contractor actions taken to successfully perform and administer a contractual agreement, including effective changes management and timely contract closeout. The ongoing challenge is maintaining open and effective communication; timely delivery of quality products and services; responsive corrective actions to problems; and compliance with all laws, rules, regulations, and agreed-upon terms and conditions. After the project is successfully completed, proper procedures must be put into place to closeout the contract officially. Of course, the goal of nearly every prime contractor is to capture the government s follow-on business, which is far easier to do if the contract and related project were properly managed by both parties. Remember, achieving a true business partnership between a government agency and a government prime contractor requires dedication and discipline by both parties not just one! Remember, too, the power of precedent. Your organization is always evaluated based on your past performance and the precedents it sets. Your contract administration actions taken years ago affect your organization s reputation today. Likewise, in both government and industry the contract management actions you take today form your organization s reputation for tomorrow. CM About the Author GREGORY A. GARRETT, CPCM, NCMA Fellow, C.P.M., PMP, is the managing director and practice leader of Government Contractor Services, Navigant Consulting, Inc. He is an international educator, best-selling author, highly respected consultant, and is the recipient of numerous national and international business awards. He has authored 16 books and more than 90 published articles. He is also a member of the NCMA Executive Advisory Council. Send comments about this article to cm@ncmahq.org. To discuss this article with your peers online, go to cm0210/garrett and click on Join Discussion. This article is a modified excerpt from the new book Contract Administration: Tools, Techniques, and Best Practices, by Gregory A. Garrett (CCH, Wolters-Kluwer Law & Business, Chicago: 2009). 66 Contract Management February 2010