IACCM - International Association for Contract & Commercial Management Contracting Excellence Magazine

Contracting Excellence Magazine - Dec 2012


What is the Role of a Contract Manager?

On a typical day, about 100 people connect to the Commitment Matters blog because they have done a web search on 'the role of a contract manager'. Should we be worried that so many people seem anxious or uncertain about their role?

Is it just that they want affirmation, or perhaps to benchmark, or are they being asked to describe what they do? In many cases, it may be driven by executive questions – which are sometimes positive and sometimes negative. And of course there are some who are not contract managers and are either considering a career change or perhaps wanting to challenge the role that is being performed in their organization.

Before we get concerned about this apparent uncertainty, it is worth remembering that almost everyone – no matter what function they perform – is assailed by similar questions right now. It isn't just the volatility of markets; it is more fundamental than that. Business organization itself is being challenged to adapt to a far different world, where agility is key to survival. Within this context, the management of risk and opportunity has become critical to success.

Contracts and contract managers lie at the heart of the problem and of the solution. They can either be a negative and reactionary force, constraining change through clinging to outdated rules and procedures. Or they can be dynamic enablers of the new and emerging world, through challenging old policies and practices and bringing judgment and innovation to commercial and contracting process.

It is these twin forces that are increasingly evident in the discussions I have with executive management.

The contrast is stark: some see contract managers as the problem and a hang-over from the past, while others see them as representing a core competence for the future. Therefore in some places the challenge is to grow skills and contribution, while in others it has become a battle for survival.

In this environment, the fact that so many are seeking advice on their role is not surprising.



Most readers of Contracting Excellence know TIM CUMMINS as the CEO of IACCM, a non-profit organization which he founded in 1999. Like many practitioners in contract negotiation and management, he stumbled into this role, having come from a background in Corporate Finance. His early involvement as a Commercial Manager was in the automotive industry. In 1985, IBM recruited him to join a small team focused on 'business terms improvement' and to develop internal bid and negotiation capabilities. Within the UK, he rapidly moved to European HQ in Paris, and then he joined Corporate Marketing in IBM's corporate headquarters in Armonk, NY.

A student of History, a lover of politics and social development, a fascination for communication and writing has equipped Tim to use these tremendous experiences as opportunities to learn and offer what he hopes to be helpful insights on the evolution of business organization, motivation and management.

He comments, 'And in the process, I have had the chance to meet many wonderful people and to build a tremendous, dedicated team at IACCM. We inspire each other – and collectively, we hope to inspire the world, because high quality contracting and negotiation practices really do make a difference!'


Supplier Relationship Management (SRM) Webinar: A Step Closer To Mutual Benefit

State of Flux Report!  In its fourth annual report on Supplier Relationship Management, State of Flux once more partnered with IACCM and on this occasion gathered both buy-side and sell-side views of its effectiveness.  According to the report, more organizations are developing stronger collaborative relationships and broadening their engagement with suppliers to focus on strategic dialogue where the discussion is more about the future than the past. Webinar Feb 5 - IACCM Research & Thought-leadership!   IACCM members can hear more about these findings and debate the State of Flux and IACCM perspectives in a webinar February 5th, 2013. To register, click on the link and participate either for the live session or receive a recorded version: https://www.iaccm.com/events/register/?id=1523  

Encouraging mutual benefit!

The input – representing almost 350 companies globally - included data from 125 suppliers. This paints an encouraging picture of how - when done well - SRM is starting to deliver mutual benefit. It also indicates that suppliers are well aligned to SRM programs. The more effort that is put in, the more they notice it.

State of Flux Chairman Alan Day makes four observations:

  • Despite tough economic times, the focus on SRM continues to grow with leaders enjoying more benefits and return on their efforts than ever.
  • We have not yet achieved the right balance in training our people. We need to put a much greater emphasis on investing in behavioral skills development whilst maintaining levels of competence in the traditional areas of negotiation and commercial skills.
  • Investment in technology to support SRM is modest and is a key enabler to driving your SRM program.
  • Discussions with suppliers throughout this year's study have shown that suppliers are completely aligned to buyer programs – the more effort you put in, the more they notice it.


Many IACCM members may question how pervasive the influence of SRM has become, particularly in terms of attitudes to negotiation, the unrelenting focus on price and risk allocation, and continued weaknesses in performance management. On the buy-side, many still struggle with questions over where SRM belongs and how to obtain management support and investment.

Sign up for the webinar!

To register, click on the link on or before February 5th, 2013 and participate either in the live session or receive a recorded version:


A Fast Online Dispute Resolution Program to Resolve Small Manufacturer-Supplier Disputes: Using the ODR M-S Program

Online dispute resolution (ODR) could be the wave of the future for many kinds of disputes, especially recurring small disputes between manufacturers and suppliers. This article looks at the rules and issues relating to the AAA/ICDR ODR Program for domestic and international disputes between manufacturers and suppliers. and the successful results of the pilot program.


Manufacturers and suppliers are repeatedly involved in conflicts with each other that turn on a few essential questions of fact, such as what was ordered and what was delivered. These claims tend to be too small to resolve efficiently and cost-effectively in court or in regular commercial arbitration proceedings. For this reason, the parties need a streamlined alternative way to rapidly conclude these disputes without jeopardizing their business relationship. In 2010, the American Arbitration Association (AAA) international division, the International Centre for Dispute Resolution (ICDR) introduced a completely online, paperless, two-step online dispute resolution (ODR) program to resolve these disputes in 66 days or less. The process, which involved online negotiation, and then, if the case did not settle, online arbitration, was designed as a pi lot program for an Italian manufacturer. In the first year of the pilot program, all 18 cases filed by the manufacturer were re solved. Five concluded by an award in online arbitration and 12 settled. One case was withdrawn. The dispute resolution process took 54.1 days on average.

Cost Control
The ODR M-S Program has been designed to control the cost of dispute resolution. A single claim cost $500 to resolve by online negotiation. If the online negotiation is unsuccessful and the case proceeds to online arbitration, it costs $1,500. The program allows a limited amount of aggregation of claims for an ad ditional fee. The cost is subject to allocation either by the parties in the negotiated settlement or by the arbitrator in the online award.

A Pilot Program No More
Given the success of the pilot program, the AAA and ICDR have decided to offer the ODR M-S Program as a regular service that manufacturers and suppliers, both domestic and international, can elect to use.

This article provides an overview of the governing rules in the ODR Protocol for Manu facturer/Sup plier Dis - putes (ODR M-S Protocol) and how both online processes work. It also discusses special issues of concern in inter - national online arbitration— having a grounded place of arbitration and a widely en - forceable award. Fi nally, it suggests contract language for manufacturers and suppliers that wish to use ODR M-S Program.

Governing Rules
The ODR M-S Program is governed by the Protocol for Manufacturer-Supplier Disputes. In an international arbitration handled under this program, the ICDR Inter national Ar bitration Rules apply, but the protocol prevails in the event of a conflict. If the arbitration is domestic, the AAA Commer cial Arbitration Rules apply to the extent not in conflict with the protocol.

The following procedures are governed by the protocol.

Filing Claims, Defenses and Counterclaims
All claims, defenses, and counterclaims are filed online in a paperless process. The claim ant initiates the online process by completing a Notice of Arbi tration Form and uploading it via the AAA on line portal called AAA WebFile, together with the documents it wants to introduce in evidence.

There is an initial filing fee payable by the claim - ant via wire transfer in the amount of $500.

For claims that are so small in size that even ODR may not be attractive from a cost perspective, the claimant is allowed to aggregate claims arising out of three different contracts against the same respondent, if these two conditions are met: first, the total amount of the aggregated claims does not exceed $10,000, and second, the party filing the aggregated claims advances $300 in arbitrator fees for each additional contract referenced in the Notice of Arbitration.

Once the filing is completed, and the claimant has paid the filing fee, the Notice of Arbi tration is e-mailed to the re spondent with an invitation to upload a statement of defense via AAA Web File, along with any counterclaim it may have against the claimant.

The respondent has 12 days to respond with a statement of defense and counterclaim, but even if it fails to do so, all claims are deemed denied. If the respondent does respond, the claimant is automatically notified by e-mail that new documents have been up - loaded in the case, which can be read online. The claimant has 12 days from receipt to file a statement of defense to a counterclaim via AAA WebFile.

The Online Processes

Online Negotiation via Double-Blind Bidding
The online negotiation begins 12 days after the filing of the case, even if the respondent decides not to participate in the process. If a counterclaim is filed, the online negotiation be - gins 24 days after the filing of the case. The negotiation period lasts 12 days.

The online negotiation uses “double blind bidding,” a custom-made online system created by Cybersettle, with which the AAA has a strategic alliance. The ICDR case manager guides the parties through the blind-bidding process, which works as follows.

The claimant submits three online settlement demands at one time in descending order of value (in other words, the first demand is the highest, the second demand is lower and the third is the lowest sum the claimant is willing to accept). The respondent is invited to submit three online offers at one time in ascending order (i.e., the first offer is the lowest, the second is higher, and the third is the highest offer the respondent is willing to make).

The online system considers each demand and each offer to be a “bid” and it pairs the claimant's bids with the corresponding respondent's bid in the order in which they were made, with each pair being considered a round of bidding. Neither party knows what the other had bid. The system then compares the bids in each round against each other (e.g., round one compares the claimant's highest demand with the respondent's lowest offer, and so forth).

If in any round the claimant's bid is equal to or less than the respondent's bid the case settles automatically. All bids remain confidential, whether the case settles or not. If the case settles within the 12-day period for the online negotiation, the initial administrative fee shall be divided equally between the parties, unless they have agreed otherwise.

Online Arbitration
If the dispute does not settle within the 12 days allotted for the online negotiation, it proceeds to online arbitration once the claimant has advanced the $1,000 arbitrator/administrative fee. Then a sole arbitrator is appointed from a special panel. The parties are notified of the appointment and any arbitrator's disclosures of potential conflicts of interest via e-mail. The arbitrator's appointment may be challenged only within 48 hours. The AAA or ICDR will determine the outcome of any arbitrator challenge, depending on whether the case is domestic or international.

Absent party agreement, the arbitrator determines the language of the arbitration.

There is no information exchange and no evidentiary hearing in the online arbitration. The arbitrator decides the case solely on the basis of the documents the parties submitted online via AAA WebFile. The arbitrator is “to consider the pertinent facts and circumstances and be guided by the terms and conditions of this contract.” But “if a solution is not found in the terms of this contract, the arbitrator shall apply the Governing Law of the Contract.”

The award, which is final and binding on the parties, is to be issued via AAA WebFile. The arbitrator is required to state the reasons for the award and allocate the costs of the entire process between the parties. The deadline for issuing the award is 30 days after appointment. How - ever, the ODR M-S Protocol provides that issuing a late award “shall not constitute a basis for challenging the award.”

The features described above combine to provide a highly streamlined process, one that is easy to use, inexpensive, and extremely suitable for small, straightforward cases.

Special Issues Involving International Online Arbitration

Place of Arbitration
When arbitration takes place in cyberspace, there is no hearing location in the classical sense, and the parties and the arbitrator often reside in three different places, even in different countries. So the question is, where is the seat of arbitration?

Every arbitration proceeding, even one that is truly transnational in nature and takes place online, needs a place of arbitration. One reason is that the place of arbitration determines the procedural law of the arbitration (i.e. the lex arbitri), which might govern the validity of the arbitration agreement. Furthermore, national courts of the place of arbitration usually have jurisdiction to support the arbitration (e.g. through hearing applications for interim measures or for the exchange of information in aid of arbitration), and they alone have jurisdiction to confirm or set aside the final award. If there were no place of arbitration, doubts could arise as to whether the award would be enforceable under the United Nations Convention on the Recognition and En - force ment of Foreign Arbitral Awards (New York Convention), since Article I requires the award to be made in “a state other than the state where recognition and enforcement are sought.”

In view of these requirements, when the arbitration is international in nature, the ICDR en - sures that each online arbitration has a place of arbitration. The ODR M-S Protocol used in the pilot program made Florence, Italy the hearing locale. The ICDR encourages other parties that employ the ODR M-S Program to state the desired place of arbitration in their arbitration agreement. If they do not do so, and a dispute arises, and they are unable to agree on the place of arbitration, the ICDR will initially determine that location according to Article 13(1) of the ICDR International Arbitration Rules and the arbitral tribunal will later finally determine the lex arbitri.

Other Enforcement Issues
The rules governing the ODR M-S Program are designed to ensure that any international award resulting from the online arbitration process will satisfy other requirements of the New York Convention so as to be enforceable.

First, Article II's requirement that an arbitration agreement be in writing will be satisfied by the parties' written agreement containing an arbitration clause incorporating the ODR M-S Protocol.

Second, Article IV's requirement that the party seeking to enforce an award supply a duly certified copy of the award should not be a problem because, even though the award is issued in digital form, upon request from a party, the ICDR can provide a certified copy of the award via regular mail.

Article V(1)(b) of the New York Convention provides that recognition and enforcement may be refused if a party against whom the award is invoked was unable to present its case. U.S. courts have found that a tribunal must give the parties the opportunity to be heard at a meaningful time and in a meaningful manner. Courts have generally interpreted this rule to require arbitrators to provide the parties with a hearing on the evidence. However, the New York Con - vention allows parties to waive their rights both to a hearing and generous time limits. The parties' agreement to use the ODR M-S Protocol should constitute such a waiver.

Furthermore, the ODR process involves a decision based only on documents, which is not only common in international commercial arbitration, 32 it is expressly allowed by many arbitration rules and statutes, including Article 24(1) of the Model Law on International Commercial Arbitration United Nations Commission on International Trade Law.

How to Elect the ODR M-S Program

A manufacturer or supplier that would like to use the online program described above should first contact the AAA or ICDR, depending on whether their agreement would be considered domestic or international. It should also specify in the arbitration provisions that they have agreed to apply the ODR M-S Protocol.

The parties will have to make a decision as to the type of disputes they want to be handled under the protocol and which disputes should be addressed under regular arbitration procedures.

Here is a sample clause that calls for the ODR M-S Protocol to apply to disputes below a certain dollar value:

Any controversy or claim arising out of or relating to this contract, or the breach thereof, shall be determined by arbitration administered by the [International Centre for Dispute Resolution/American Arbitration Association] in accordance with its International Arbitra - tion Rules/Commercial Arbitration Rules]. In the event the total amount in dispute is below $50,000, the Online Protocol for Manufacturer/Supplier Disputes then in effect shall apply and the forementioned arbitration rules shall apply only to the extent not in conflict with said protocol.

Alternatively, the following clause could be used. It gives discretion to future claimant to decide whether to file the claim using the ODR M-S Protocol or regular arbitration rules.

Any controversy or claim arising out of or relating to this contract, or the breach thereof, shall be determined by arbitration administered by the [International Cen - tre for Dispute Resolution/American Arbitration Association]. A claimant may submit a claim under (1) the ICDR International Arbitration Rules, or (2) the AAA Commercial Arbitration Rules, or (3) the Online Protocol for Manufacturer/Supplier Disputes then in effect, supplemented by the rules described in subparagraph (1) or (2) above, to the extent not in conflict with this protocol.

This language allows the future claimant to take into consideration the amount in dispute as well as the complexity of the factual and legal issues.


The advantages of a paperless ODR program are clear. It is fast and economical. No one has to travel. All that is needed is a de - vice to send and receive electronic communication.34 Manufac turers and suppliers that want an online settlement or award within 66 days can agree to use the innovative ODR M-S Protocol. There is no doubt that it fills a gap in the range of dispute resolution services offered.


Reprinted by permission of the American Arbitration Association (AAA) originating from the Dispute Resolution Journal, published by Juris Publishing, 71 New Street, Huntington, NY 11743 USA.
Contact Mark Appel, Senior Vice President, International Centre for Dispute Resolution, AppelM@adr.org or visit www.icdr.org


Should I stay or should I go now? Managing your career in uncertain times

The economic downturn has eroded employee confidence and caused many of us to remain in safe jobs rather than move on to progress our careers. Is that the right call? A forward-thinking analyst, Simon Rowley, raises a few reasons you might want to consider a better future for the coming year!

As a recruiter of commercial directors and commercial managers, the one question I have been asked more than any other over the last eleven years has been “How's the market?”. In the heddy days of 2004 to 2008 when all the lines on the graphs pointed upwards, sales pipelines were burgeoning and confidence sky-high, the answers were “very buoyant”… “lots of good opportunities out there”… “a shortage of good candidates”.

At that time, it was common for candidates to have two very good offers, sometimes three. Demand for permanent candidates was so strong that employers routinely used interim commercial resources pending permanent hires.

These days, you don't need a Masters in Economics to realise that supply and demand has now changed!

Governments have cut costs. Sales pipelines have been much harder to forecast. And employee confidence is low. Most organisations have absorbed headcount through attrition. These market conditions are broadly comparable to the housing market where sales are too low. Inertia results. Decline has led to it being an employer's market.

Employees' lack of confidence has kept commercial managers in roles they would undoubtedly have left in better times for the longest periods I have seen since 2001-2002 with the downturn that followed 9/11, with individuals preferring job security over career progression.

However, considering the reality of the risk, does it really make sense to stay in that safe role?

Commercial managers are, by nature, self-financing, particularly these days given the weighting towards post contract activity, where a contract change or claim is regularly worth ten times the individual's salary. Factor in the number of commercial managers made redundant in the last four years. Yes there is a number, but as a percentage of the commercial population it is a small number. My guess is that far fewer commercial redundancies have taken place compared to other job functions, because commercial skills are so critical to winning and delivering business. Where downsizing has occurred, the trigger has often been company A acquiring company B, as opposed to a cull of “expendable” commercial resource.

For most organisations cutting commercial headcount cuts into the muscle, not the fat!

Have you stopped growing and risking your career?

What then for the aspirational commercial manager? The reality is that staying in a role where you have stopped learning and developing for a prolonged period of time is more of a risk to your career than moving to a progressive role in a new company. In the unlikely event that that role is made redundant, you will have invested in yourself and you will be stronger for the move you have made.

With signs of an improving market a number of people will be weighing up their options as we head into the New Year.

Ask yourself. Should you stay or should you go?


Simon Rowley is Director of Rowley Bateman, a UK based recruiter of commercial directors and commercial managers. After qualifying as a barrister, Simon moved into Executive Recruitment in1999. A past speaker at several IACCM events, Simon's favourite answer to the question, “So how's the market?” is “Good people are always in demand!”

Rowley Bateman Ltd is a company registered in England & Wales with company number 7470224 Registered office: 33, Greek Street, Stockport, SK3 8AX.


Insurance concerns for the cleantech sector

The growth of clean technology is explosive. The U.S. government injects billions of dollars into the market to support demand. For example, the American Recovery and Reinvestment Act of 2009 includes more than $100 billion for the cleantech industry and several states require cleantech policies. In the private sector, global venture capital in the cleantech area 'has increased from $500 million in 2001 to nearly $8 billion in 2010.'

By Alba Allessandro

Their unique nature means cleantech companies need to carefully consider their risk of exposure and uninsured loss and carefully tailor the necessary insurance products. The appropriate insurance depends on the cleantech operation - biofuels, carbon, solar, water, wind, green building, fuel cells, batteries, renewable energy, energy efficiency, and other alternative energy and sustainable technologies. Generally speaking, the types of risks to avoid include property and casualty, environmental liability, intellectual property, and financial injury. For example, environmental liability losses for a pollution claim can be incurred through torts (e.g., negligence, intentional torts, or strict liability), contractual obligations (e.g., a general contractor agrees to hold harmless and indemnify a project owner for a claim that arises if an employee of a subcontractor at the project is injured as a result of breathing ammonia), or violations of statutes (e.g., Comprehensive Environmental Response, Compensation, and Liability Act, Clean Water Act, Clean Air Act, Toxic Substance Control Act, Oil Pollution Act, and Resource Conservation and Recovery Act). Having the proper insurance in place is important to limit these types of risks.

Types of Policies for a Cleantech Company to Consider

Reliance on one type of policy is risky because gaps in coverage exist. A standard general liability policy does not cover all losses or damages. Cleantech companies need to either negotiate special endorsements or purchase specialized policies. The types of policies that should be considered include:

  • Property liability
  • Controlled master policy (if company has international exposure)
  • Environmental
  • Errors & omissions
  • Technology errors & omissions
  • Commercial general liability
  • Professional liability (D&O)
  • Pollution liability
  • Intellectual property
  • Workers' compensation
  • Crime
  • Excess casualty
  • Umbrella
  • Auto
  • Cargo
  • Ocean marine
  • Business interruption

Some factors to consider when purchasing a policy are the size of the company, revenue, potential for global exposure, and the types of risks associated with the cleantech operation. An insured can purchase a policy independently or negotiate a hybrid policy to accommodate the special risks unique to that company.

Cleantech companies are more likely to require some of these coverages than other companies. For example, intellectual property is essential to the industry. Intellectual property (IP) insurance coverage can protect businesses in case of copyright, trademark, or patent infringement claims. There are two general types of IP insurance. The first is a more typical defense policy, and it protects you if you are sued for infringement. A second type, which may be appropriate in certain fields, is called a 'pursuit' policy, and it will help pay legal expenses incurred to sue an alleged infringer.

Potential Coverage Issues

Once the insurance is purchased, a cleantech company must be mindful of its duties and obligations under the policy. For example, an insured must evaluate whether there is an obligation to disclose to the carrier prior claims or lawsuits in the application form. What constitutes prior knowledge? What knowledge, risks, or defects in the product constitute knowledge of circumstances that could lead to a claim? When does a company's risk manager need to report a potential claim? How soon does a company need to report to the carrier? The answers to these and other coverage questions are fact-specific to each claim but must be considered.


The importance of cleantech insurance coverage is undeniable. To avoid the risk of out-of-pocket expenses for uninsured loss, a company must be proactive and purchase insurance coverage and then meet its duties and obligations under the policy.


©2012 Hodgson Russ LLP. Attorney advertising. Reprinted with permission.  For further review, click on the Hodgson Russ LLP Clean and Green Law blog at www.cleanandgreenlaw.com.


Alba Allessandro is a Partner at Hodgson Russ Attorneys LLP. She concentrates her practice on insurance coverage matters, with a focus on directors and officers liability. Her advice to clients on a multitude of insurance issues include application of insuring agreements, policy exclusions, rescission, and allocation.

Ms. Alessandro represents leading insurers in complex securities and derivative litigation against Fortune 500 companies and their executives, requiring her attendance at mediations across the country. For her clients, Ms. Alessandro devises unique solutions and complex strategies to achieve resolution of claims.

Prior to joining Hodgson Russ, Ms. Alessandro worked with several of the country's leading insurance defense firms.


New Editorial Board Member

Welcome to Grant Collingsworth, our latest member of IACCM’s Editorial Board (EB).  The EB oversees the content of Contracting Excellence, IACCM’s online magazine. 

Grant Collingsworth is the General Counsel of SciQuest, Inc. (Nasdaq: SQI), a leading provider of cloud-based business automation solutions for spend management.  He oversees all legal and compliance matters for the company, including securities law compliance and transaction matters. Grant's career path of over 20 years spans mergers and acquisitions, securities, corporate finance and legal project management. He has extensive experience with companies executing growth strategies through acquisitions, as well as companies in numerous initial and secondary public offerings and other corporate finance transactions. Grant received a J.D. from Emory University’s School of Law.



2013 Editorial Board

Maia Arraiza-Monteux, Program Manager, Dupont, US
Guillaume Bernard, Contract and Claims Manager, Schneider Electric, France
Flora Cabean, Sr Contracts Analyst, VF Corporation, US
Stephen Davis, Senior Commercial Manager, Logica, UK
Famil Garayev, Category Specialist, BP Canada Energy Group ULC, Canada
Rene Franz Henschel, Associate Professor, Aarhus University, Denmark
Melissa Jansen, Contract Management, Accenture, South Africa
George Neid, Manager, Program Contracts, Raytheon, US
Fayola Yeboah, Contracts Officer, Cobham, UK
Grant Collingsworth, General Counsel, SciQuest, US



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