Michael J. Nappe

1
Michael J. Nappe

• As I see it
• Contract Management at UMDNJ

2
Where we are

• UMDNJ in need of a thorough Contract Management
  Program

3
Current Contract Management at UMDNJ

• Documents all paper based
• No central repository for contracts
• Lack of proper processes and controls
• Inconsistent, manual processes - little or no
  contract management process
  
• Lack of automated compliance reporting
• No Institution wide strategy for Contract
  Management
  

4
Consequence of current Contract Management at
UMDNJ

• Little understanding of supplier relationships
• Impossible to measure and evaluate supplier
  performance
  
• No visibility with suppliers across departments
• Inability to ensure supplier compliance with
  contract terms

All resulting in ineffective negotiation of
agreements and sub-optimal contract terms with
suppliers. Consequentially resulting in poor or
no post agreement management or controls.
5
Whats been lacking

• Contract Principlesthe fundamentals of
  acquisition that all contracting professionals
  must understand, including standards of conduct,
  laws and regulations, socioeconomic programs,
  contract structures, contract finance,
  contracting methods and intellectual property.
• Acquisition Planning and Strategythe process
  through which all activities and events leading
  up to the award of a contract are planned,
  including acquisition planning, acquisition
  methodology, proposal preparation, negotiation,
  source selection, and both pre- and post-award
  protest.
• Contract Administrationmanagement of issues that
  arise during the performance of a contract, such
  as quality assurance, subcontract management,
  change management, and contract closeout or
  termination.
• Specialized Knowledge Areasthat require
  additional specialized knowledge, including
  research and development (RD), architecture,
  engineering, information technology, service and
  international contracting.
• General Businessother disciplines relevant to
  contract management, such as marketing,
  operations management, finance analysis,
  accounting, economics and information science.

6
Where we want to go

• Establish a more efficient Contract Management
  process

7
Getting Started

• What is a contract?
• What are the laws governing public contracts
• What is contract management?
• What are the phases and steps in the contract
  management process for buyers and sellers?
  
• Who is involved in contract management and what
  are their roles?
  
• What are the purposes and benefits of contracts
  to buyers and sellers?
  

8
The Pre-award Phase

• What are the buyer's and seller's tasks during
  the Pre-award phase?
  
• What's involved in a buyers proposal request?
• Whats involved in thorough evaluation of the
  sellers response(s)
  
• Checks and balances methods

9
The Pre-award Phase Buyers' Tasks

• What's involved in the buyer's procurement
  planning.
  
• How do you make a good make-or-buy decision?
• What are the essential elements of a contract?
• What are some important contracting concepts and
  terms?
  
• How is a contract structured?
• How do contracts function as risk management
  tools?
  
• What are the types of statements of work?
• What should a statement of work include?
• What's involved in solicitation planning?
• What are the different types of pricing
  arrangements, when is each appropriate, and what
  risks are associated with each arrangement?
  
• What are the types of contracting methods and
  when is each appropriate?
  
• How does a buyer establish criteria for
  evaluating potential suppliers?
  
• What are the elements of a solicitation and who
  is responsible for each?
  

10
Other pre-award issues

• Confidentiality
• Intellectual Property Rights
• Existing rights
• New Rights
• Dispute Resolution
• Senior staff / Mediation / Arbitration
• Warranties/Indemnity
• An assurance or promise
• Breach Damages
• Indemnity
• Exit Plan ?
• Additional payments ?

• Principal Risks
• Uncertain obligations
• Non-Performance
• No Useful Remedy
• Unlimited Liability
• Mitigation of Risk
• Contract Specifications
• Apportioning Risk
• Post Contract Management

11
The Award Phase

• What are the buyer's and seller's tasks during
  the Award phase?
  
• What's involved in source selection?
• How do you fairly and objectively evaluate vendor
  proposals?
  
• Who has authority to represent the University
  contractually?
  
• What's involved in contract negotiation and
  formation?
  
• How do you plan effectively for a negotiation?
• What's the difference between collaborative and
  competitive negotiations?
  
• What are the characteristics of a good
  negotiator?
  
• What are some common negotiation tactics and
  counter-tactics?
  
• How do you decide whether to close the deal or
  walk away?
  
• What's involved in documenting the negotiation
  and forming the contract?
  

12
The Post-award Phase

• What are the buyer's and seller's tasks during
  the Post-award phase?
  
• What is the basis of contract law?
• What's the difference between civil law and
  common law and how do those differences apply to
  the contracting process?
  
• What factors affect the choice of whether to hire
  people as employees or as independent
  contractors?
  
• What are the legal relationships among
  contractors and subcontractors?
  
• What tasks for the buyer and seller are
  associated with contract administration?
  
• What contract interpretation guidelines are
  applied when the parties to a contract disagree
  about the contract's meaning?
  
• How do you monitor and report the performance of
  a contract?
  
• What's involved in making changes to a contract?
  
  
• What's the difference between a dispute and a
  claim and how do you resolve them?
  
• In what situations can a contract be terminated
  before completion?
  
• What do the buyer and seller need to do in order
  to closeout a completed contract successfully?
  
• How do you develop an effective lessons-learned
  process?
  

13
Audit Controls

• Maintaining an Audit Trail
• It is essential to keep records of dealings with
  suppliers whether written or verbal.
  
• All information should be kept in the contracts
  file held in the procurement section as a hard
  backup of the data contained in the database.
  
• Records will be required for
• Information if problems arise,
• Reviewing meetings and re-negotiations
• Audit purposes
• Planning for any subsequent re-tendering
  processes

14
Completion Reporting

• Completion Reports
• It is good practice at the completion of any
  contract to review and place on record what went
  well and what lessons can be learned for any
  future contracts.
• In the case of high value contracts where the
  contract is of a complex nature i.e.
  
• Consultancy contracts, there should be a formal
  post project assessment covering all key aspects
  of the procurement. This should include the
  following
• The outcome of the project
• The extent to which the expected benefits
  (deliverables) were achieved
  
• The total cost (including full economic cost of
  in-house staff engaged on
  
• the project).

15
Benefits

• Effective contract negotiation and administration
  can ensure project success, speed performance,
  and reduce risks and costs.
  
• Benefits of Contract Management
• The worst way to manage a contract is simply to
  leave it take its course, it will inevitably go
  wrong and leave an incomplete audit trail.
  
• Effective contract management will provide
• Performance to a required standard
• Compliance with the contract conditions
• Give clear and documented records
• Value for money by ensuring that best purchasing
  practice is followed
  
• That all options are considered
• Management and control of change
• Anticipation of any problems

16

• Sincerely,
• Michael J. Nappe