Buy Lines: You can't manage a contract if its objectives aren't clear

Steve Charles

No contract can save a bad business relationship.

But contracts can destroy a good business relationship. This was one of the key points I took away from the National Contract Management Association's World Congress: "Prime Time: Contract Management at the Core of the Enterprise."

Don Peterson, chairman and CEO of Avaya Inc., in his keynote address, described how Avaya turned itself around by restructuring its business and labor relationships based on a commitment to mutual prosperity.

He believes that the complexity of these relationships, typically operating on a global scale, has forced contract formation and management front and center.

"Everything in business is now a partnership," he said.

The challenge is creating contracts that reflect new ways of working together instead of contracts formed by tried and true boilerplate, or in the case of the federal contracting, Federal Acquisition Regulation clauses written decades ago when the world was a simpler place.

A recurring theme at the conference was that a business and its customer should focus first on defining the business objective.

Unless and until the business objective is clearly defined and accepted by all parties, there is no point in negotiating terms and conditions.

Come to think of it, this is exactly the premise of performance-based contracting: The buyer develops a set of objectives with the level of precision necessary for the seller to be able to commit to fulfilling those objectives. This is not about FAR clauses, it's about being specific.

Here in the world of federal contracting, Congress has mandated that this year, 2005, 50 percent of contracts are to be performance-based; by 2011, the goal is 80 percent.

At the current pace, we won't make this year's goal, even though many contracts and task orders being counted as performance-based are really time-and-materials or labor-hour contract engagements.

Despite continued training and leadership from organizations like the NCMA, our acquisition workforce still has much to learn about how to effectively translate the mission objectives of our program managers into contracting documents.

In fairness, the program side needs to carry its part by articulating requirements more specifically, and fully representing the details relevant to performance in its acquisition plans, market surveys and requirements documents.

This is truly a multi-discipline profession. This is why the Office of Federal Procurement Policy, in a recent policy letter, expanded the definition of the acquisition workforce to include people on the program side -- so they, too, would be required to receive training in acquisition.

Federal contract management can take five to 10 years to master, but we expect people right out of school to understand complex technical processes, intellectual property licensing arrangements, teaming and subcontractor relationships.

On top of that, there are new outsourcing models that even those of us with 20 years experience need to study constantly to fully understand.

The answer is not adding more clauses to the FAR but teaching the next generation of the acquisition workforce to use the process to define the business objectives of a program's mission.

They need to use unambiguous terms to define results and take into account the risks carried by all the parties involved. The result should be a commitment to success for everyone involved and transparency of the process for the taxpayer.

Big job? You bet.

Steve Charles is cofounder of immixGroup, a government business-consulting company in McLean, Va. He welcomes your comments at Steve_Charles@immixgroup.com.

Reader Comments

Please post your comments here. Comments are moderated, so they may not appear immediately after submitting. We will not post comments that we consider abusive or off-topic.

Please type the letters/numbers you see above

What is your e-mail address?

My e-mail address is:

Do you have a password?

Forgot your password? Click here
close
SEARCH
contracts DB

Trending

  • Dive into our Contract Award database

    In an exclusive for WT Insider members, we are collecting all of the contract awards we cover into a database that you can sort by contractor, agency, value and other parameters. You can also download it into a spreadsheet. Read More

  • Is SBA MIA on contractor fraud? Nick Wakeman

    Editor Nick Wakeman explores the puzzle of why SBA has been so silent on the latest contractor fraud scandal when it has been so quick to act in other cases. Read More

Webcasts

  • How Do You Support the Project Lifecycle?

    How do best-in-class project-based companies create and actively mature successful organizations? They find the right mix of people, processes and tools that enable them to effectively manage the project lifecycle. REGISTER for this webinar to hear how properly managing the cycle of capture, bid, accounting, execution, IPM and analysis will allow you to better manage your programs to stay on scope, schedule and budget. Learn More!

  • Sequestration, LPTA and the Top 100

    Join Washington Technology’s Editor-in-Chief Nick Wakeman as he analyzes the annual Top 100 list and reveals critical insights into how market trends have impacted its composition. You'll learn what movements of individual companies means and how the market overall is being impacted by the current budget environment, how the Top 100 rankings reflect the major trends in the market today and how the biggest companies in the market are adapting to today’s competitive environment. Learn More!