CONTRACT ADMINISTRATION:
The Good, the Bad, the Ugly.
Reel ‘em in!
Contract Administration
Definition
Following the award of a contract, the management
actions that must be taken to assure full compliance with
all of the terms and conditions contained within the
contract document, including price. Action steps that
assure that the contractor is in full compliance with the
entire contract.
Contract administration activities include payment,
monitoring of progress, inspection and acceptance, quality
assurance, monitoring and surveillance, modifications,
negotiations, contract closeout, and other activities.
Focus
FOCUS
The focus of contract administration is to obtain the
supplies and services outlined in the contract, of the
best quality, within a specific time frame and, most
importantly, within budget. As such, contract
administration serves as the primary part of the
procurement process that assures that the contract
is successfully executed.
Level
LEVEL
The level of contract administration required
depends on the various factors associated with
contracts. These include the nature of the
work, complexity of the contract and the
experience level of the personnel involved in
the contract.
Award
AWARD
Once the contract is awarded, the process of
contract administration is initiated with an
orientation, a kick-off meeting, a conference, a
welcome letter or some form of official
communication. This is to ensure both parties
have a clear understanding of the contract
requirements.
Objectives of Contract
Administration
Satisfy the entity’s requirements
Ensure on-time delivery
Protect the entity’s financial interest
Characteristics of a Good Contract
Administrator
KEEP PROCUREMENT IN THE LOOP
Impartial and objective
Know the contract inside and out inclusive of
responsibilities, deliverables, milestones, payment
schedules
Gives clear and convincing direction
Shows respect and builds trust in the relationship
Timely decisions
Characteristics of a Good Contract
Administrator
Effectively communicates orally and in writing
Analytical v. Emotional
Minimizes changes/modifications
Proactive communicator – keeps lines of
communications open throughout contract
completion
Document, document, document
Communication
Ongoing Communication is imperative for success.
Emails, Meetings, Written correspondence, Telephone
All communications should be concise, without tone,
and accurate. The contract administrator is the voice
most heard by the contractor/consultant.
All communication should be professional, positive and
neutral.
AVOID YOU!
Contractor Types
There are three types of contractors typically
managed by the contract administrator, each
requiring a differing level of management.
NEW
INCUMBENT
OUTSOURCED
New Contractors
Kickoff meetings to set expectations and review
statement of work (SOW) for clear understanding
Request ongoing dialogue – good or bad - feedback is
important to keep open the line of communication
Typically requires closer monitoring
Up front monitoring will serve as a pay back over time
Incumbent Contractors
Typically less monitoring
Contract administration is less intensive
Past performance is proven to show a better
understanding of statement of work/scope of
services, however, changes in staff may require
additional communication
Be aware of having a “too relaxed” approach, this
may lead to misuse, fraud or abuse – Don’t get too
comfortable with INCUMBENTS!
Outsourced Contractors
KICKOFF MEETING A MUST!
Requires more management – much more complex
relationship
Politically sensitive – ensure the scope of services is clear
and concise, set clear expectations
Monitor performance through reporting and assure
transparency in documentation
Requires more involvement with procurement staff
typically – be aware of requirements and don’t wait too
long to involve all parties to assure compliance
VENDOR COMPLIANCE
DOCUMENT PERFORMANCE
Get procurement involved as soon as a problem occurs
Ensure timely inspections/check ins
It is often that a contractor is not even aware of a
perceived issue because it has clearly not been brought to
their attention. Your procurement professional uses
methods to assure that a contractor is aware of non-
compliance and your contractual terms should clearly
state the method by which a contractor will be notified of
deficiencies or be found in default.
Compliance/Performance
Provide clear and concise direction to the contractor when
delays/deficiencies occur using facts supported by the
SOW/Contract.
Allow ample time for contractors to respond and resolve
issues. Getting rid of a “perceived” troublesome
contractor may be more costly to all parties, rather than
attempting to provide direction to get the project back on
track. AVOID OPINIONS – STICK TO THE FACTS!
Assure the contract has requirements in place to protect
the entity – Performance Bonds, Liquidated Damages
Painting Contract Scenario Handout
MAKE IT WORTH THE TIME YOU
SPENT PUTTING IT ALL TOGETHER
The best investment you can make in your contract is
assuring that all parties are clear on the content!
You have spent many hours soliciting the
goods/services so don’t let a failure to communicate
the content, expectations, deliverables and outcome
to both the administrator and contactor be your
downfall.
Tips for Successful Contract
Administration
Develop and implement a project management
process to ensure delivery and flawless execution
Comply with contract terms and conditions
Maintain effective communications
Manage contract changes with a proactive change
management process
Resolve disputes promptly
Tips Continued
Use negotiation or arbitration, NOT LITIGATION, to
resolve disputes
Conduct kick-off or pre-performance meetings
Measure Monitor and track performance
Manage the invoice and payment process
Report on progress internally and externally
Tips Continued
Follow up on corrective actions
Determine who can negotiate contract changes
Provide copies of contracts to all parties (contractor,
contract administrator, using department, risk
management, accounting, consultant)
Understand the effects of change on cost, schedule
and quality
Tips Continued
DOCUMENT ALL COMMUNICATION
Prepare internal and external meeting minutes with
confirmation of receipt and understanding
Prepare contract closeout
Ensure completion of work
Document lessons learned and share with your team
DOCUMENT, DOCUMENT, DOCUMENT!
Einstein is reported to have said:
“Insanity is dong the same thing over
and over and expecting different
results.” People ignore lessons
learned because their project may be
slightly different, but projects are
very similar in many aspects.
Sample Policy
Department: Purchasing Policy Number:
Subject: Contract Administration Supersedes:
Date Issued:
I. INTRODUCTION
This policy sets forth guidelines for the administration of contracts to ensure that vendors’ and
using departments’/schools’ performance is in accordance with the terms and conditions of
contracts. County policies and procedures require goods and services to be furnished, received,
invoiced and paid in accordance with the contract.
II. DEFINITIONS
Contract Administration – the management of all actions that must be taken to ensure
compliance with the terms of the contract after the award of the contract.
III. PROCEDURES
A. Using Departments/Schools
1. After award of a contract, using departments/schools are responsible for contract
administration to ensure that the vendor fulfills the obligations of the contract.
2. Using departments/schools must ensure that procedures exist to ensure effective
contract administration, e.g., inspection and acceptance/rejection of goods or
services, scheduling and monitoring of project progress, approval of invoices,
and requests for modifications and change orders.
3. Report specific instances to the Purchasing Department, as they occur, of a
vendor’s failure to perform through the use of an Incident Report/Report of
Performance form. Incident reports are necessary in order for the Purchasing
Department to develop vendor history, evaluate performance, and when
required, to take appropriate and timely action.
4. For requirements contracts, which specifically contain renewal clauses, using
departments/schools will be required to complete a Contract Renewal Notice
providing information and authorizing the Purchasing Department to negotiate
renewal of the contract.
B. Purchasing Department
1. Assist using departments/schools, as required, with contract administration to
ensure that the vendor fulfills the obligations of the contract.
2. Provide using departments/schools with contract documents outlining terms and
conditions of the contract, e.g., pricing, delivery or performance schedule,
commodity or service type.
3. In exceptional or extenuating circumstances, approve/negotiate an extension of
an existing contract. The County may extend a contract up to, but not to exceed,
180 days following the last term of renewal.
4. Respond to using departments/schools reports of complaints and/or
discrepancies on vendor performance. Issue written notification to a vendor
placing them on notice that they have failed to meet the contract requirements,
provide the vendor a period of time to correct the deficiency, and place the
vendor on notice as to the consequences for failure to take the required
corrective actions.
Sample Incident Report Form
INCIDENT REPORT/REPORT OF PERFORMANCE
Upon receiving a good or service that is not in compliance with the contract or purchase order, please
complete this form and forward to the Purchasing Department.
Information Only Purchasing Action Needed
VENDOR NAME:
COMMODITY/SERVICE:
CONTRACT/P.O. NUMBER: REPORT DATE:
NAME OF INDIVIDUAL FILING REPORT:
TITLE/DEPARTMENT: TELEPHONE:
Check the category(s) for which this report is submitted:
Poor Quality Goods Frequent Backorders Poor Workmanship
Substituted Goods Slow Call Backs Late Response to Service Call
Goods Not Identified No Call Backs No Response to Service Call
Shipment of Used Goods Freight Charged Dangerous Work Habits
Incorrect Delivery Invoices Incorrect Unauthorized Work
Late Delivery Rudeness of Vendor Other
Please elaborate as to how the goods or services are unacceptable:
Purchasing Investigations, Follow-up and results:
Purchasing Staff assigned to investigate:
Has complaint been resolved? Yes No
Date of Purchasing Action:
DON’T LET YOUR CONTRACT FAIL, REEL ‘EM IN AND CATCH
IT BEFORE IT’S TOO LATE!
QUESTIONS
COMMENTS
DISCUSSION
