Business Finance Homework Help

Reply in 75 words or more

Katlyn,

Contract management is a fundamental business process that manages the creation, implementation, and evaluation of contracts to maximize business performance and minimize risk (Patowarya, 2019). It is critical that businesses have a streamlined contract management process because contracts are legally binding. They determine many things for the project including timelines, the scope of work, warranty provisions, rights, and obligations of both parties. An organization’s contract management is the main driver of their success in a project. If a businesses’ contract management structure is underdeveloped and unorganized, they could face many operational and financial burdens. Effective contract management entails comprehensive analyzation of meeting key milestones within the contract in order to stay on track. Insights from contract management can also help identify areas for improvement to maximize profit and minimize risk. Performance needs to be tracked carefully, and if there is a lack in contract management within an organization, there will most likely be a lack of milestone tracking and cost tracking. 

           Contract administration consists of managing, negotiating, supporting, and executing the contract. Contract administration begins in the contract award stage and continues throughout the life of the contract. The contract administrator typically performs many tasks including ensuring all contractual agreements & payments are actioned, resolve any conflicts & disputes, coordinate tasks with internal team, make fair and reasonable decisions, analyze risks in contract changes, and report the current project status to management. The contracting officer uses several different techniques in contract administration, especially when working with a prime with subcontractors. These techniques include building strong relationships, provide regular progress reports (through reviewing prime & subcontract deliverables), and identifying the customer’s needs for a successful contract. Contracting officers are responsible for ensuring proper performance, ensuring compliance, and safeguarding the interests of the government. They need to continuously provide an oversight of the contract and its progress to ensure success.

           Even though the government does not necessarily have any direct responsibility for the subcontractor and subcontract (because of the lack of privity of contract), the government still has a large measure of control to enforce subcontracting goals. The prime contractor is held responsible for the actions of the subcontractor under the contract. The government enforces subcontracting goals with the prime contractor in the following ways: (1) making it a requirement that the government can review the prime’s purchasing system, (2) requiring the prime to include specific clauses in the subcontract, (3) maintaining the right to approve specific subcontracts, (4) requiring the prime to subcontract to disadvantaged groups, and (5) creating terms that protect the subcontractor of late payment from the prime (Feldman, 2020). Under the contract I work under, the government has required various FAR and HSAR clauses to be flowed down to our subcontractors in our subcontracts (in addition to the mandatory flow down clauses). In the event that there is a conflict between the H-Clauses in our contract and the FAR clauses, the Coast Guard made it a requirement in the subcontract that the H-Clauses in our contract prevail. The Coast Guard has additional rules/specifications that they wanted to include in the contract that pertain to our project.

           A teaming agreement is a written agreement between companies to combine resources to obtain and perform a government contract. Teaming agreements allow for the companies to team up and complement each other’s unique abilities to provide the government with the best combination of performance, cost, and delivery (Toomey, 2019). There are two different types of teaming agreements: (1) agreements that necessitate the award of a subcontract if a prime contract is awarded to the contractor and (2) agreements in effort to negotiate a subcontract if a prime contract is awarded to the contractor. When my company was in the pre-award stage for the U.S. Coast Guard OPC contract, they drafted subcontracts and teaming agreements that outlined the responsibilities, roles, and allocations of work related to the acquisition. The teaming agreements that were in place during the pre-award stage were terminated once we won the government contract and created a subcontract with them.

References

Feldman, S. W. (2020). Principles of government contracts (Seventh). West Academic Publishing. 

Patowarya, J. (2019, January 2). Ultimate Guide to Contract Management: Benefits & Best Practices. Zycus Procurement Blog. https://www.zycus.com/blog/contract-management/contract-management-guide.html. 

Toomey, E. L. (2019, March). Government Contracts: Teaming Agreements and Other Teaming Arrangements. Foley & Lardner LLP. https://www.foley.com/-/media/files/insights/publications/2013/10/government-contracts-teaming-agreements-and-other/files/government-contracts-teaming-agreements-and-other/fileattachment/government-contracts-teaming-agreements-and-other.pdf.