Contract Administration Best Practices
March 20, 2020
While an abundance of thought leadership exists on federal pre-award procurement actions, the equally important contract administration side of the house frequently does not attract the same attention. Post-award contract administration is crucial to the success of not only the contract, but also the relationship between an Agency and its Contractor. This article examines the challenges and best practices associated with contract administration.
Contract Administration: An Overview
Contract administration encompasses all activities in a contract’s post-award – from contract closeout to the government’s acceptance of the supplies or services. This phase requires an understanding of the contract’s major components, cognizance of delivery dates, disbursement dates and amounts (i.e., payment), terms and conditions, and end dates.
For a Contracting Officer Representative (COR), contract administration comprises a majority of his or her day-to-day responsibilities. As a primary aspect of contract administration is oversight, the COR plays a central role in determining whether or not a Contractor is meeting requisite quality levels as well as performing tasks on time and within budget. Contract administration can vary in complexity, based on the size and scope of the contract, and the contract’s audit requirements.
There are common pitfalls associated with post-award contract administration, but many preventative actions to mitigate the associated risks. They largely occur due to poor contract management, and almost always result in increased costs to the Government and to the Contractors.
Outdated or insufficient records – often overlooked – can increase training costs for new personnel and increase the likelihood for inadequate contract administration. Unsafe and poorly maintained goods and services can result in not only increased overall costs, but can also result in penalties and restrictions on future competition as well. The risks of poor contract administration are severe, which is why it is essential to exercise best practices throughout a contract’s entire lifecycle.
Best Practices – Avoiding the Common Pitfalls and Ensuring Contract Success
There are several key steps that CORs can take to enable successful contract execution as well as ensure successful follow-on contracts.
Conduct Kick-Off Meetings
Kick-off meetings lay the groundwork for Contractor and Government expectations. It is here that key stakeholders establish the communication procedures and expectations for the contract. Attendees can include contracting personnel, administrators, customers, and suppliers – all of whom affect how successful or unsuccessful a contract will be going forward.
Establish Good Communication Channels
Communication in the kick-off meeting is key – but so is communication throughout the life of the contract. Regular check-ins with the Contractor can lead to early identification of problems and prevent any risks before they become an issue. An open dialogue between the CORs and Contractor can be the foundation for formulating risk mitigation strategies as well as identifying and continuing successes, rather than talk of curing issues or circumstances of termination.
The Contractor providing on-time deliverables is a key aspect of the contract; therefore, monitoring the submission of the deliverables and overall performance is a key role performed by the COR. It is essential that the COR is well versed in their contract and able to clarify any remaining questions.
In-progress reviews are an effective contract monitoring tool CORs can require when preparing a requirement package, which will assess performance through the regular interaction with the Contractor to discuss the current state of the contract performance and identify risks. Additionally, priorities can be revisited in reviews and compared against contract schedules.
Maintain Thorough Records
Federal Acquisition Regulation (FAR) 4.7 and 4.8 prescribe requirements for establishing, maintaining, and disposing of contract files by both Contractors and the Government. These records can include books, documents, accounting procedures, and other data. Regardless of the medium in which data is stored, records should include supporting evidence to satisfy contract negotiation, administration, and audit requirements.
Contract administration involves all personnel who touch the Contract – including Contracting Officers, Contract Specialists, CORs, and Project Managers – each of whom requires an understanding of the contract expectations and a clear demarcation of roles and responsibilities. Effective training of personnel allows for clarity on any potential ambiguities and establishes limits of authority for all personnel involved. Additionally, effective training helps ensure all parties understand the mission throughout the contract lifecycle, especially when terms and conditions or personnel change.
Prepare for the Future
While contract administration entails the time between contract award and contract close-out or termination, it also requires planning for the future. Contracts can become assets over time if administrators take steps to prepare for the future. Proactivity can result in:
- Cost savings
- More efficient delivery/execution
- Reliable data and metrics
- Reduced likelihood of future failure
CORs play a vital role in documenting the contract throughout its lifecycle from financial data and performance data to service levels. Keeping proper documentation cannot be emphasized enough when talking about ensuring successful contract performance and adequate preparation for the future.
All good things must come to an end, including federal government contracts. Prior to termination, CORs should ensure the Contractor has met all obligations and deliverables, verify if the contract (including option years) is indeed expired, receive a transition out plan, ensure proper Contractor execution of transition-out plans, determine outstanding payments, claims, and/or resolve disputes, complete a performance evaluation, confirm that all furnished property has been returned to the all appropriate parties, and communicate with the Contractor that the contract is complete. CORs should ensure all documents are included in the contract file upon end of contract.
Communication is Key
The major takeaway from this article is the importance of communication, and the role it plays in regard to contract administration. From quarterly meetings to daily communication to efficient document storage and accessibility – communication is a major factor that drives contract success. And having a successful contract is not the only goal in contract administration, but planning for the future is as well. And to achieve these two goals, CORs, the Contracting Office, and Contractors must communicate effectively and stay concordant regarding contractual expectations and performance.