Section Five: Contract Management
5.1 Key Information
5.1.1 Contract Management Phase Process Flow
The Contract Management phase of the procurement lifecycle is defined as the process of monitoring and tracking contracts and the associated vendors to be certain requirements are delivered, terms and conditions are being met, vendor invoices are correct, and payments to vendors are being made in a timely manner.
The following are the major steps in the process flow for the Contract Management phase:
5.1.2 Contract / Project Kickoff Meeting
Depending on the size, complexity, level of work to be performed and the level of coordination required, it is a best practice to hold a kick-off meeting prior to beginning performance. The kick-off meeting is a method to formally notify all project team members, the contractor, and stakeholders that the project has begun and ensure everyone has a common understanding of the project requirements and each party’s roles and responsibilities. This is an ideal time to discuss how the parties will interact and exchange information, how change will be managed during the performance of the contract, and a process for issue identification, notification and resolution. Many of the contract and project management concepts discussed below are subjects that can inform the agenda of a kick-off meeting. The nature of the meeting should be guided by the nature and complexity of the work but should address not only the agencies needs and requirements but also provide key information for contractors, for example, the payment process.
5.2 Develop Contract Administration Plan (CAP)
The Contract Administration Plan (CAP) defines how the contract will be administered. The CAP provides a mechanism to reconcile the various contract documents and the order of precedence into a management tool that can be used to focus and govern implementation activities.
The plan itself will vary based on the complexity, risk, and scope along with the requirements of each contract. In many cases a CAP should only be developed for high-risk or highly complex procurements. The frame of the plan should focus on the Who, What, When, Where, and How of contract administration. CAPs generally address a common set of topics, with particular emphasis on process, output and outcome. In government contract management, there may be less emphasis on the “process” the contractor uses to achieve the goals of the contract than of the achievement of the expected outputs and outcomes.
While Contract Administration Plans generally share a similar structure, the inclusion of each topic into the CAP should be chosen based on necessity rather than out of formality. Contract Administration Plan topics may include:
- Project description
- Period of performance
- Schedule, critical milestones and/or delivery dates
- Critical path tasks and deliverables
- Roles and responsibilities
- Data and reporting
- Inspection and acceptance
- Personnel requirements
- Warranty provisions
- Watch list items
- Special terms and conditions
- Process for managing change and issue resolution
5.3 Contract And Vendor Management
Contract management and oversight is not solely the responsibility of a single individual, but is instead a team effort, including; program, procurement and contract management professionals at the agency. The Contract Administrator is the government person designated to manage the various facets of contracts to ensure the contractor’s total performance is in accordance with the contractual commitments and obligations to the purchasing agency are fulfilled.
The Contract Administrator is the primary person handling the daily administration of the performance-related aspects of the contract and documenting actions related to the contract. However, to fully manage a contract requires assistance at times from others to address issues that may arise during contract performance. For example, the Contract Administrator may identify the need to make a change to the contract. To accomplish this, the Contract Administrator will require the assistance of an agency Procurement Officer to formally execute a change to the contract.
The Contract Administrator is responsible for ensuring the contract is performed in accordance with the contract requirements, all contractual obligations are being met, and the vendor is in compliance with the contract terms and conditions.
5.3.1 Contract Monitoring
Contract monitoring is the process of identifying and tracking key aspects of the contract to ensure active management of the contract to successful completion, maximizing performance and minimizing risks in the process. The seven steps to effective contract monitoring include:
- Gathering the contract and all pertinent contract documents
- Deciding what to monitor
- Deciding how it will be monitored
- Deciding who will monitor
- Gather information/data for monitoring
- Analyze information/data for monitoring
- Act in cases of non-compliance
The key is to work through the seven steps and build a repetitive process for actively monitoring and managing the contract.
A simple contract log can be a useful tool in managing current contracts and planning future procurements. Failure to maintain such a contract log results in lapsing contracts, contractors working at risk, and potential violations of the procurement code.
For Executive Branch:
Department Heads shall develop and maintain a Contract Log for all Department active contracts. In accordance with HRS §103D-212, Collection of Data Concerning Public Procurement, Department Contract Logs shall be submitted to the Executive Branch Chief Procurement Officer (CPO) on a biannual basis for statistical purposes. While Departments may use their own format, at a minimum, Contract Logs must contain, and follow, the mandatory requirements set forth in the sample log. Submittals shall be signed by the Head of Purchasing Agency and transmitted electronically to [email protected] biannually on the following dates:
- No later than August 10, and
- No later than January 10.
5.3.2 Vendor Relations
A good State-vendor relationship is a partnership that should be viewed as a win-win situation over the long run. A vendor who is treated with courtesy, honesty, and fairness will deliver a quality product at the best price, will provide good service, and will be responsive to emergency situations and special requests when they arise.
The following are some basic guidelines to utilize in interactions with vendors to ensure successful vendor relations:
- Know the contract.
- Set expectations early.
- Be fair, honest and ethical.
- Be reasonable.
- Build relationships.
- Communicate regularly.
- Document everything.
- Pay promptly.