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Plan to Succeed: the importance of contract management

It is commonly joked about that once a contract is signed, the contract is thrown into the bottom desk drawer and only retrieved if there is a major dispute between the parties.

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Enterprise
20 July 2022
Alexandra Holland and Bodie D’Orazio
3 minutes

There has been a recent focus by the ANAO on contract management practices. We don’t believe contract management should only begin once a contract is drafted and is on foot. Contract management should be an active process that commences right at the start of a procurement.

It is commonly joked about that once a contract is signed, the contract is thrown into the bottom desk drawer and only retrieved if there is a major dispute between the parties. While this is a dangerous approach for many reasons, the ANAO has over the years highlighted that government departments need to be proactive in their plans for contract management, and be cognisant of contract management matters, such as performance management, from the outset of the procurement process.

Performance management is key to delivering value for money and involves ensuring that goods or services are delivered as required under the contract. The ANAO has also recommended that when contracting for the delivery of services, competitive pressure should be applied when establishing performance expectations, and how these will relate to contractual payments. This can be achieved by setting out expected performance management systems and standards in the approach to market documentation, or by asking respondents to set out their proposals to inform a comparative evaluation.  This should be done at the outset of the procurement process as this is when government departments have the greatest negotiating power on matters like performance management. Leaving this to be negotiated once in contract makes it much more difficult to obtain the same results as if it were negotiated pre-contract award, given departments have less leverage to introduce regimes into a contract that affect supplier performance expectations or profits.

 

What value can we offer? 

We don’t just offer a template contract or review a contract to provide a red pen mark up for a back and forth commenting cycle, or provide you with a extensively caveated sign-off letter. We partner with you and work as part of your team for a required duration, in order to develop the full contract suite together. We do this to ensure that when you are ready to release your contract as part of an approach to market you have a smooth sign off process, and industry are able to provide clear responses about their ability to meet the draft contract obligations, thereby making your evaluation and negotiation processes much more efficient. To do this we embed ourselves as part of your project team to provide strategic commercial advice throughout the contract development phase and beyond. We identify risk, mitigation strategies and provide fit for purpose services which are pragmatic and efficient.

 

What contract development and drafting services can we provide?

We have extensive experience in strategic contract development and drafting, using both the Commonwealth Contracting Suite and department templates, and uplifting those templates to ensure they are fit for the purpose of the particular procurement.

This can involve bespoke drafting to many parts of the contract, including:

  • IP regimes
  • insurances
  • indemnities, damages, risk and liability
  • warranties
  • delivery and performance obligations
  • defects

We can also work with you during the strategic planning phase to determine the best contracting structure to achieve your desired outcomes and goals. We have extensive experience in drafting bespoke arrangements such as strategic head agreements with suppliers to set up long term partnership relationships and collaboration deeds requiring suppliers to work together to deliver services.

We can provide support to project teams to draft more technical parts of the contract, such as statements of requirements and statements of work to ensure they align with the rest of the contract, and are written in a way that is legally defensible and will ensure the supplier is legally obligated to deliver your requirements. Our contracts are drafted to ensure that all mandatory Commonwealth Contract clauses are included, and we will work with your policy, legal or program areas to ensure that those clauses work as intended for each contract.

 

What other support can we provide outside of the contract development and drafting process?

We are able to assist you to conduct and draft defensible liability risk assessments to inform the insurance and liability regimes in your contracts. These risk assessments ensure your risk is covered and your agency is not exposed to contingent liabilities.

We also have extensive experience preparing teams for negotiation and conducting commercial negotiations and providing commercial support during parts of more technical negotiations.

We are able to assist you through all of the steps that are necessary in order to get you into contract.

 

Capability uplift of your team

By embedding ourselves as part of your team we are able to ensure we are sharing and transferring our knowledge throughout the entire process in order to uplift the capability of your team, rather than working in isolation and handing you a finished product at the conclusion of our engagement.

As the contract is being developed we will ensure your team understands the obligations within the contract and the processes the contract sets up. That way they are ready to manage the contract well before it is in place. We will however ensure this is all captured in a contract management plan, to ensure our knowledge is properly transferred and that corporate knowledge is not lost upon our departure, or upon departure of anyone in your team. Contract management plans are useful tools for managing risks to the success of the contract, and for ensuring that what is negotiated as value for money is achieved.

We do not make contract management plans overly burdensome. Contract management plans should be consistent with the department’s overarching contract management framework, and at a minimum, should set out key contacts, communication management, milestones, requirements for contract deliverables, processes for verifying the delivery of goods or services before payments are made, and performance of specific obligations. They should also set out the processes that are to be followed if contractual obligations are not met (e.g. missed delivery deadlines). We will ensure any contract management plans are written in plain English and contain useful and easy to follow information, processes and practices.

It is imperative that departments consistently and actively manage contracts in accordance with approved contract management plans, which should be in accordance with the contract terms. This ensures that supplier performance is satisfactory, stakeholders are well informed, and all contract requirements are met, thereby ensuring that the contract delivers the anticipated value for money. It will also ensure that processes set out in the contract are followed, which minimises the risk of departments incurring liability, or unintentionally waiving or varying rights under the contract.

 

How you can engage us

We can be engaged for this work under the ‘Procurement Methodologies & Contracting Options & Tender Development’ under Defence Support Services (DSS) Panel (Standing Offer Number SON3485107).

We can work with you to develop a quote, which may comprise fixed price deliverables for contract development and time and materials (with a not-to-exceed cap) for general commercial support outside of contract development work.

 

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