After the award: How to make contracts deliver

Note: This post is co-authored by Tim Cooke, CEO of ASI Government, and Dan Chenok, executive director of the IBM Center for the Business of Government.

Recently, the Professional Services Council’s Outcomes-Oriented Acquisition Working Group Chair Tim Cooke joined with me, IBM Center for the Business of Government Executive Director Dan Chenok, and the National Academy of Public Administration to convene a roundtable on post-award contract performance. It was the second on this subject (see here for a summary of first roundtable), and the first to include industry program managers.

As in the first session, senior agency procurement officials and contracting officer’s representatives (CORs) also participated. We are grateful to all who joined in this non-attribution session; their observations are insightful, as are their recommendations for the contracting, IT, and program management communities.

Our first roundtable focused on CORs and their role serving as the eyes and ears for program customers and contracting officers on post-award contract performance. This second gathering focused on the post-award relationship between the government and contractors.

If, as a participant observed, “all the value from contracting comes after the contract is awarded,” then the contract performance relationship between the government and its suppliers is paramount.

Like acquisition, contract performance is a team sport, so collaboration, communication and trust characterize the best post-contract relationships, participants agreed.

And good communication rests first on government coming to agreement on the outcomes it seeks to buy. Then the requirements must capture them, solicitations clearly state them and bid evaluation factors reflect them.

Spending upfront time in an acquisition to craft excellent requirements makes for a better description of the outcome sought, and thereby better metrics for measuring whether it is being achieved. Sound metrics tied to outcomes and results are key to post-award management of contract performance, participants said.

A call for collaboration

Participants said collaboration should be part of the job for contracting officers and CORs, as well as contractors, and it should begin with market research and continue as appropriate throughout the process (for example, to address questions or seek comments on draft RFPs). Early conversation can help government program and procurement reps understand what’s truly being sought, and interaction with industry can reveal both the options available in the market and opportunities for innovation.

Strict specifications and stipulations aren’t needed when both government and contractors mutually understand, agree on and accept contract performance metrics, one attendee observed: “When there is a healthy relationship, stipulated details are not needed.”

In addition to well-crafted requirements, collaboration also rests on trust on both sides. But that isn’t always easy to establish, participants observed. One route to trust is transparency to enable industry and government to better understand one another’s operations, challenges, incentives and disincentives.

Teaching CORs to communicate

Once a contract is awarded, successful communication takes many forms. For example, attendees advised buyers not to hesitate to pick up the phone and call a contractor when problems first surface, rather than waiting to ding the company on the past performance form.

They acknowledged that such interactions require soft skills from procurement professionals and can make for uncomfortable conversations. Participants suggested added training in these areas to give contracting officers and CORs the confidence to more readily and directly engage with contractor personnel, from the delivery level to the executive level.

But the onus isn’t only on government to prevent contract performance from deteriorating. Good companies take the initiative to monitor contracts internally to ensure objectives are being met.

Above all, trust

Trust among buyers and sellers can be developed throughout the acquisition lifecycle, starting at the pre-award stage. Participants cited the Homeland Security Department’s reverse industry days as an effective transparency-building tool. At these sessions, DHS invites industry to share ideas and barriers to understanding with hundreds of members of the agency’s acquisition corps. Our report from the first roundtable recommended that all agencies adopt reverse industry days as a valuable training tool for CORs.

Such activities can establish a foundation for mutual trust in communication and information exchange post-award – contributing to candid and constructive feedback for unsuccessful bidders and to honest dialogue in delivery with the winning contractor.

Following an award, rewarding and incentivizing exceptional contract delivery is another driver of successful contract management and outcomes, participants said. For example, the government should make greater use of payments tied to schedule, where suppliers get paid more for beating the contract schedule. Of course, this requires both sides to collaborate on setting and monitoring objective measures as part of pre-award as well as post-award management.

Both Minneapolis and Los Angeles have successfully used payment incentives for early completion of bridge/highway repair work after natural disasters, so there is evidence and precedents to support the approach.

Government also should employ nonmonetary incentives, participants said. Contractors are motivated by profit, but also by contributing to mission accomplishment and by the satisfaction of doing a good job for their client. Examples of such incentives include written or verbal commendations for strong performance by senior agency officials, as well as sharing positive feedback from beneficiaries of the program being supported by the contract (such as from survivors of a disaster who receive assistance to rebuild their lives).

Approaches to improve performance-based contract management post-award can originate with suppliers as well. This is especially likely when the government establishes interactive communication channels that promote discussion of buyer satisfaction and align government and contractor incentives to suggest better ways of doing business. Both buyer and seller can bring forward ideas for potential implementation around new performance metrics, innovative ways to structure incentives toward achieving those metrics, and frameworks to reward results and ensure accountability.

Additional recommendations

Participants also offered a number of other suggestions to improve contract management.

• Government executives should meet with their industry counterparts to keep performance on track during contracts with key suppliers and strategic deals providing mission-essential support or products.
• The government should hold supplier relationship summits with strategic contractors to share goals and strategy and solicit feedback.
• Joint strategic business planning meetings with strategic suppliers can provide opportunities to discuss potential roadblocks to collaboration, activities and resources required and relevant market trends. Meetings should include a process for capturing supplier ideas and innovations, briefing relevant stakeholders and assessing the innovations for commercial suitability.
• Contract management should include operational business and program reviews between individuals responsible for day-to-day management of the government-supplier relationship to review progress on joint initiatives, performance, and risks.

These recommendations make sense in any organization, and their effective implementation can help address a heightened desire to make contracts deliver in the new administration.