The Contract Management (CM) professional of today must work across a growing number of boundaries - function, business, industry, geography and jurisdiction. Managing this complexity is key to our success, providing value to your company and yes, even the industry! This article provides an overview of the many roles and tasks to be performed globally.
By George Neid, Manager Program Contracts, Raytheon
The Contract Management (CM) professional of today must work across a growing number of boundaries – function, business, industry, geography and jurisdiction. Managing this complexity is key to our success, providing value to your company and yes, even the industry!
While the following analysis overviews the many roles and tasks to be performed globally, it is written from the perspective of a US-based professional within the aerospace/defense sector. We believe this influence widely represents the scope that today's Contract Manager must embrace, regardless of industry or country represented.
So, in light of this, what are your challenges and how do you handle them?
Moving through the phases of the contract cycle
As a CM professional of today, you must wear multiple “hats” to perform your job to the best of your ability. The complexity of our workplace and the multitasking generation require a unique skill set for the CM professional. This article offers the IACCM professional ideas and tools to consider at various stages of the proposal/contract cycle
In this phase of the program or proposal -- along with reviewing various laws and regulations of both the buyer's and seller's country -- a CM needs to play the traditional role of lawyer, reviewing Terms & Conditions, Offset/Countertrade and RFP requirements. Additionally the CM who supports the overall strategy discussions during the pursuit can work closely in the following capacities:
During the bid phase/proposal writing stage, the same roles above may apply. But you'll also need to take the lead in drafting the contract to review buyers and perhaps draft an offsets contract. Plus, you'll support the capture/proposal manager by assembling the proposal submission to the ultimate customer.
As CM, you may need to use a contracting service to translate the proposal into another language, depending upon customer requirements. Some countries require a contract to be written in both English and their native language. In addition, you may need to have this version certified by an in-country translator.
As CM, you may need a Power of Attorney (POA) as required by the customer. POA activities may involve coordinating with numerous organizations--local, state and country national offices. In my experience with a Middle East country, I had to ensure that the POA was…
Also, you'll most likely need to deliver the final proposal to the customer, either electronically, by mail, or even in person. Most international buyers not only require multiple copies of the proposal, but also certified translated copies of technical and pricing volumes along with a “bid opening” conducted at the buyer's location. I've attended multiple openings and suggest you have more people attending other than yourself. Local in-country representatives should attend as well.
The CM usually is the lead negotiator on the proposal. The team will be comprised of various disciplines (Program Manager, Finance, Engineering, Configuration/Data Management, Master Scheduler, Quality personnel.) Depending on the complexity of the proposal, you might need more personnel involved in the negotiation process. Example: on the technical side, you may need software, hardware, electrical, mechanical experts, or even firmware engineers.
Another technique used successfully is to conduct mock negotiations with internal company personnel or even an outside consulting firm. This entails setting up various negotiation sessions for the entire proposal covering contract terms, offset requirements, technical offerings, possible alternatives and even different financing scenarios. This is an important step to successful negotiations!
Be sure to query other business units within your company for past negotiations/contracts with the same buyer in the buyer's country. Within the multinational arena, we all deal with this unwritten rule: no excuse for not knowing what other parts of the company are doing in a specific country/region.
The typical CM works with the program team to ensure we are compliant with the terms of the contract. This includes:
Another part of this phase involves change management—working with the program team to avoid “scope creep”. Scope creep is very simply, the buyer requesting -- or even requiring -- the seller to provide additional products or services for free. Interestingly, the buyer may not request this subtle change directly through the CM's office. In my experience, “scope creep” snakes through less formal channels—buyer and seller's engineers, various meetings, etc. where the request is “added.”
The more complicated the product or service being offered, the greater likelihood of scope creep. Consider having a dedicated change manager and change management plan in place on the contract.
Take note too, that during this phase of the program-- there are always further negotiations. We sometimes use the saying “negotiations start after the contract is signed!” Be prepared and plan ahead for these contingencies.
New Phase - Follow On
The follow on effort means keeping the program sold by extending the contract or jointly working with the buyer to incorporate additional scope to the existing contract. A good example might be the buyer contracts the seller for a specific product. The product is to be deployed or installed in the buyer's country after which the two parties agree on a follow-on effort for warranty of the product, including repair. Consider having the seller set up a depot to maintain and repair the product.
At this point, the CM probably reverts to a business development role and supports the program manager to grow the scope of the contract.
ABOUT THE AUTHOR
GEORGE NEID, Manager Program Contracts at Raytheon, is a 34 year Domestic & International Contracts veteran of Raytheon/Hughes Aircraft//L-3 Communications/Honeywell. George is currently assigned to Network Centric Systems and is working a major US Army Acquisition project along with numerous International efforts. His business experience includes not only contracts, but also export/import operations and offset/countertrade management.
As a certified member of IACCM, George serves on IACCM's Editorial Board. He is an active member of the National Contract Management Association (NCMA), Fort Worth Chapter and Society for International American Affairs (Defense Industry Exports Group).