Contract Management becomes top priority for the White House

December 13, 2010

Daniel Gordon, procurement policy administrator at the Office of Management and Budget

Dan Gordon, administrator of the Office of Federal Procurement Policy, has announced a range of initiatives to improve contract management practices between suppliers to the US Government and the way that Government Agencies administer and manage contract performance and obligations.

“Contract Management is front and center in our focus”, Gordon declared at a recent meeting on procurement reform.  Gordon and the Obama administration intend to root out negligent behavior in government acquisition by having agencies better manage the contracts they award.

“A company will no longer get a contract and then never again hear from the agency about the work”, Gordon said.  “Further the government won’t turn a blind eye toward schemes or well-known shady business partnerships”.

There are many examples of poor contract management practices in Government and organizations like the Project on Government Oversight (www.pogo.org) have made a significant impact in raising awareness of the need to not just negotiate contracts with third party suppliers, but also to track performance and monitor compliance to contracted obligations once the contract has been signed.

As contracting becomes more complex and more litigious (a recent study by Fulbright and Jaworski showed that the majority of corporate litigation matters now arise from contract-related disputes), it is crucial to keep track of what has been committed to in a contract.

The old world of throwing more resources at the problem of  contract oversight will not work anymore.  Qualified contract management resources are hard to find and manual tracking of contract milestones and obligations was too error-prone anyway.  What is required is a balance of technology solutions that support the contracting process and human oversight to enforce contracted terms and conditions.

Choosing the right technology solution is critical. Many Finance or ERP based contract database solutions fail to realise that government contracting demands automation and control at every stage of the contracting process from the creation of the contract, through to the tracking of obligations and the tracking of vendor performance. 

Some contract management software solutions, like Dolphin Contract Manager, automatically integrate with the Federal Acquisition Regulations (FAR/DFAR) list and allow government procurement managers to efficiently create contracts and ensure that commitments and obligations are effectively managed once the contract has been executed.

We believe that true transparency in government contracting can only be really achieved when you have total control over your contracts and obligations.  It is time for government agencies to embrace technology solutions to help them to achieve this.



UK coalition government looks to improve contract oversight in public sector

November 20, 2010

One of the first actions of the new coalition government in the UK led by David Cameron in May 2010, was to enact new legislation to compel central and local government organisations to disclose details of all expenditure and contracts worth in excess of GBP 500 (USD 800).

In an environment where contract commitment management has been lax and almost non-existant (the National Audit office claimed that the central government wasted GBP 300 million each year on IT and Telecom contracts alone in 2009), this will prove to be a major challenge for local and central government organisations.

There is much fear at the local government level that this new legislation, aimed at “Labour’s secretive and wasteful contracts regime”, will add significant cost and workload at a time when budgets have are being cut as part of the Government’s austerity measures.

Proper contract oversight is always recommended, but never has there been a greater need in the Public Sector to get a handle on contracts and commitments.  A Freedom of Information search relating to contract search should take a matter of seconds to comply with, if an organisation has proper control over contracted milestones and commitments.  With more and more public services being outsourced (the BBC claims that Capita has gained outsourcing contracts worth in excess of GBP 3 billion in the public sector), it is becoming more and more difficult to adquately manage contract spend and obligations.

Now is the time for public sector organisations in the UK to evaluate the benefits of using technology solutions to manage and control contracts more effectively, so that adequate funds are put aside in the new financial year.  Contract Management software solutions play a key part in an organisation’s governance, audit and compliance regime.  In the public sector, there is a real need to extract more value out of contracts with external suppliers and service providers as budgets and tax revenues decline; as well as the requirement to avoid costly reputational damage when poor contract oversight is exposed through Freedom of Infromation requests or via the media.

Dolphin Contract Manager from Dolphin Software provides best-of-class contract management functionality across the entire contracting process to allow organisations to keep track of supplier performance, contract spend and control over contracted obligations much more effectively than can be achieved through manaual means or managing contracts by spreadsheet.

Download BearingPoint Consulting’s authoritative 2010 Contract Management study from www.dolphin-software.com to assess how contract management software can benefit your organisation.


Managing contract terms and commitments will be critical following the Government spending review

October 17, 2010

The United Kingdom, like many countries, is straddled with an unprecedented level of debt.  The UK’s debt currently stands at over £900 billion ($1.4 trillion), or £33,000 for every person in employment.  In an attempt to bring this national debt down to a manageable level, David Cameron’s government will publish the results of its long-awaited Spending Review on the 20th of October.

The Spending Review will highlight areas where costs can be saved in central government departments and local authorities.  The United Kingdom will join counties like France and Ireland and introduce draconian austerity policies to reduce the national debt.

Much has been reported about Government quangos being abolished, defence cuts that will deliver new aircraft carriers, but with no aircraft and a winter of discontent with public sector workers planning widespread strikes in a move to resist the cuts.

Sir Philip Green’s report that was published last week provides an insight in to some of the areas of government where significant cost can be saved, namely more effective procurement and supplier contract management.

There is no doubt that if you are a department head or a manager in a central government department, local authority, university or hospital, you will be under more pressure than ever before to reduce costs and expenditure.  It is likely that spending cuts will lead to more services being outsourced, which will only lead to greater pressure to manage external service providers even more closely.

Contract Management software solutions should be able to offer significant value here.  Not only do Contract Lifecycle Management solutions help to streamline and control the contracting process with external suppliers, they also provide invaluable tools to make contract oversight and performance something that can be controlled and measured. 

If an outsourcing agreement includes complex obligations and service level agreements (SLAs), these can often be missed or poorly managed.  Solutions, like Dolphin Contract Manager, have been designed to make contract obligations and commitments more visible and better controlled.  A National Audit Office report last year highlighted over £300 million in savings in central government IT contracts alone, through better contract management. 

The British government should absolutely look to cut unnecessary cost from budgets, but it should also look to use technology in a smart way to improve the efficiency and effectiveness of government procurement at the same time.


Sir Philip Green highlights UK government procurement and contract management inefficiencies

October 14, 2010

Sir Philip Green, the billionaire boss of UK retail group Arcadia and Top Shop, has this week announced the results of his study in to UK government procurement.  The conclusions, he says are shocking.   His main conclusion is that the UK government is failing to take advantage of its position as a strong buyer with a top notch credit rating.

Sir Philip said that no business could survive the level of money that was wasted from the GBP 191 billion (USD 305 billion) of spending he reviewed.

The report suggests that billions could be saved by doing simple things like managing supplier contracts and spending more diligently.  “The process is shocking; there is no reporting, there is no accountability”, says Sir Philip.

So is this an issue of better contract management or an issue of management and the fostering of a culture oversight?

In reality, a successful outcome will involve a bit of both.  Contract Management software solutions, like Dolphin Contract Manager, can help to provide greater control over contracted commitments and spending by allowing business managers and procurement professionals to keep track of terms and conditions that were negotiated and agreed in the contract and then capturing performance related data (like obligations tracking, KPI management as well as invoicing and deliverables tracking) against expected behaviour.


Metronet collapse blamed on poor contract management

March 2, 2010

The UK Department for Transport has come under heavy critisism recently following a Public Accounts Committee report that found that the  £410 million ($612 million) collapse of Metronet, an organisation established to oversee the renovation of London Underground’s tracks and stations, was largely due to ‘inadquate’ contract management.

The government entered into three 30-year contacts to improve the tube network in 2003.  But in 2007, two of the contractors – Metronet BCV and Metronet SSL – went into administration, resulting in delays to the renovation programme and losses of between £170m and £410m.

The Department for Transport was particularly singled out for its ‘hands off’ approach to contract management, despite official warnings from the National Audit Office in 2004 that it should manage the Metronet contract more closely.

The report also pointed out that London authorities were unable to provide adequate contract oversight because they did not have timely information about the performance of the Metronet contract.

This situation is likely to be played out more and more in the future as central and local government authorities look to external contractors to provide key services.  It is common for organisations to put all of their effort in to the contract drafting and negotiation stage of the contract process, but not in the proactive management of contract milestones, obligations and commitments after contracts have been agreed to.

Contract Management software solutions like Dolphin Contract Manager, allow key stakeholders to better manage contract milestones, obligations and commitments by providing key stakeholders with timely management information.

Contract Management systems should include the following common features:

  • automated contract authoring
  • legal clause libraries
  • central repository for contracts
  • electronic workflow for internal reviews and approvals
  • obligation and commitment management
  • external workspaces for external party negotiation
  • critial milestone alerts
  • management reports and dashboards

Better contract oversight cannot be achieved using manual means alone and equally, contract management software cannot replace the requirement for contract managers, but together, the discipline of contract management can be made more effective.


Pentagon to withold payments to vendors with poor contract management systems.

January 28, 2010

Business Week Magazine reports this week that the Pentagon is proposing a rule in the Federal Register that will prevent or withold payment to defense contractors where poor contract management and oversight can be identified.

The proposed rule would give the Pentagon the right “to withhold a percentage of payments under certain conditions, when a contractor’s business system contains deficiencies.”

The rule would cover most defense contracts, as well as other contracts that reimburse companies for costs or pay incentive fees for hitting cost and schedule targets, or those that base payments on time, materials or labor hours.

This is seen as a move by US Defense Secretary Robert Gates to tighten up contract oversight practices to reduce contract overspending.

This clearly means that government contractors are going to have to have much greater control over their contract management processes and how they manage Federal Acquisition FAR and DFAR clauses and obligations.  Government contractors should urgently consider the deployment of contract management systems that will help them to streamline their contract processes and provide greater oversight in to contract obligations.  Solutions like Dolphin Contract Manager, provide full contract lifecycle management funcitonality as well as FAR and DFAR clause and Obligation Management.


Contract oversight for US Government contractors in the spotlight.

January 26, 2010

In the latest in a long list of poor contract governance and oversight examples relating to US government contractors, a report will be published early next week by the Special Inspector General for Iraq Reconstruction.

Stuart Bowen, Special Inspector General for Iraq Reconstruction, will strongly criticize the US State Department for failings in contract management and contract oversight in relation to the award of a contract to DynCorp International to provide training services to the Iraqi Police force.  The report suggests that some $2.5 billion has been wasted through poor contract management practices.

It is well known that there is a chronic shortage of qualified contract management personnel in the US Government.  Last year President Obama called for the recruitment of 19,000 new contract managers to improve government contract oversight with external vendors; but technology can also play a part in making government contract management more effective.

US government contracts are governed by a strict set of rules and regulations, called Federal Acquisition Regulations, or FARs.   FARs contain both clauses that need to be included in government contractor agreements (and in some cases, flow down to sub-contractors) as well as guidelines and regulations that need to be adhered to to.

Contract Management software solutions, like Dolphin Contract Manager, facilitate the effective management of FAR (and Department of Defense – DFAR) clauses and regulations through its unique FAR Clause Library and FAR Obligation Management functionality.  When coupled with contract milestone data management and management reports and alerts, contract managers are able to gain much greater visibility and control over contracted commitments and critical milestones.