TuContract AdministrationContract management is important because it saves compa

TuContract AdministrationContract management is important because it saves company’s time and effort by assisting in managing obligations in an effective way. For example, it oversees contracts through an established procedure. It enables both government and the contractor to oversee agreements, their terms, transaction components and so on. Moreover, the senior management can make sure that the duties and commitments to the clients are fulfilled. Failure to meet these obligations can result in decreased profit, damaged reputation, and broken relationships. Contract management can provide benefits in terms of business strategies and procedures. Taking company’s hiring plan as an example, it is impossible for a company to know if they can afford a new hire, the number of people they can hire and how billable the new hire is without contract management. Subcontractors are important part of business for many organizations. But it requires contract management to set up procedures to monitor subcontractor’s performance, solve the disagreements and make sure they get paid after they complete all deliverables. Contract management also maximizes financial and operational performance. When it comes to allocating budgets across the organization or making sure to have sufficient cashflows, it relies on the contract manager’s knowledge to make such decisions and projections. Finally, contract management enforces compliance and minimize risk. Effective contract management can ensure the payment terms, work flow and expected performance level defined in a contract are fulfilled. Since all contract activities are routinely tracked, monitored and reported, the risk is significantly reduced. Contract administration involves the planning and development of contracts. The planning process often includes sourcing potential contracting partners, for example via sending out requests for proposal to the potential vendors. In addition, contract administrators work on and negotiate all the major components of the contract such as price, delivery schedules, and performance measurement. Sometime, contract administration and contract management are often used interchangeably. Therefore, in this case contract administration include functions of contract management. According to General Services Administration (GSA), “Contract Administration involves those activities performed by government officials after a contract has been awarded to determine how well the government and the contractor performed to meet the requirements of the contract. It encompasses all dealings between the government and the contractor from the time the contract is awarded until the work has been completed and accepted or the contract terminated, payment has been made, and disputes have been resolved.”There are five techniques that the Contracting Officer (CO) uses in contract administration, especially working with a prime who has subcontractors. First is using Contractor Purchasing System Review (CPSR) to evaluate the prime contractor’s management of the subcontracts. The government’s review procedures are designed to evaluate how the prime contractor selects subcontractors and administers its subcontracts (Feldman, 2020). The CO also includes a clause in certain types of prime contracts requiring the consent of the government to subcontract (Feldman, 2020). Flow-down contract clause is another technique CO uses to exercises control over subcontracts. Flow-down clauses are designed to protect the government’s rights and interests and to others promotes its procurement and socioeconomic policies (Feldman, 2020). CO can also encourage subcontracts with special groups through requirements, such as small disadvantage businesses, women-and veteran-owned small businesses. The last technique is encouraging prime contractors to pay their subcontractors, where due and owning, without delay (Feldman, 2020)The government enforce subcontracting goals with the prime contractor in a procurement through the use of two FAR contract clauses. The first, FAR subpart 19.902 states that any contractor receiving a contract with a value greater than the simplified acquisition threshold must agree in the contract that small business, veteran-owned small business, service-disabled veteran-owned small business, HUBZone small business, small disadvantaged business, and women-owned small business concerns will have the maximum practicable opportunity to participate in contract performance consistent with its efficient performance. The second clause requires prime contractor in contracts that exceed $700,000 (1.5 million for construction contracts involving public facilities) to prepare subcontracting plans detailing the efforts the contractor will take to ensure that small and small disadvantaged businesses, women-and veteran-owned small businesses, and HUBZone small businesses have an equitable opportunity to compete for subcontracts (Feldman, 2020).Subpart 9.6 of the FAR, Contractor Team Arrangements, distinguishes between (1) Two or more companies form a partnership or joint venture to act as a potential prime contractor; or (2) A potential prime contractor agrees with one or more other companies to have them act as its subcontractors under a specified Government contract or acquisition program. Both types of teaming arrangements are typically formed before a prime contractor submits an offer to the government, before submitting an offer. However, they may enter into an arrangement later in the acquisition process, including after contract award. Teaming agreements provide efficiencies for both the government and government contractors because they complement each other’s unique capabilities and offer the Government the best combination of performance, cost, and delivery for the system or product being acquired (FAR, 9.602). The Government will recognize the integrity and validity of contractor team arrangements; provided, the arrangements are identified and company relationships are fully disclosed in an offer or, for arrangements entered into after submission of an offer, before the arrangement becomes effective. The Government will not normally require or encourage the dissolution of contractor team arrangements (FAR, 9.603).ReferencesFeldman, S. (2020). Principles of Government Contracts. West Academic Publishing.www.acquisition.gov/Toomey,E., Foley & Lardner LLP. (2019). Government Contracts: Teaming Agreements and Other Teaming Arrangements. 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.pdfHanks, G. Contract Management Vs. Contract Administration. https://smallbusiness.chron.com/contract-management-vs-contract-administration-75571.htmlNaughter, T. (April 29, 2020). The Difference Between Contract Management and Contract Administration. https://www.contractworks.com/blog/the-difference-between-contract-management-and-contract-administrationAPMG International. Importance of Contract Management. https://ppp-certification.com/ppp-certification-guide/3-importance-contract-managementGSA.Gov. (October 1994). A Guide to Best Practice for Contract Administration Office of Federal Procurement Policy (OFPP). https://www.gsa.gov/cdnstatic/best-practices-contract-administration-ofpp.pdf
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