Contract Management is a core business activity of Federal Government Contractors. Everything revolves around it.
However, when you survey the GovCon market, you find that only a small portion of GovCon organizations are using formal contract management systems to manage this information and the work. Most GovCon organizations get by doing things “manually” using information worker tools like Excel, File Shares/SharePoint/Dropbox, and Email. This way of working is not productive and comes with the risk of things falling through the cracks.
At a point, usually when the organization needs to grow, scale and control risk they will look for formal contract management systems. The challenge is that GovCon has unique contract management needs that are not commonly supported by general commercial contract management systems.
In this article, we’ll examine the Top 5 Unique Needs of GovCon and discuss how these needs differ from general commercial systems. It should help you prioritize your requirements as you look to invest in buying a system or building a system from scratch.
1. Federal, Customer-Facing and Complex Contracts
GovCon Contract Managers are totally focused on the Federal Government contract. This is the customer-facing side of contracts. Typically, contract managers in GovCon are not engaged in the standard “buy-side” of contracts, like classic vendor purchasing. This is a focus of many general commercial systems.
In addition, Federal Government contracts are primarily complex contracts. While you might have some simple, transactional sales contracts, the majority of the work is focused on managing the more complex, multi-year contracts. And, these contracts are unusually complex (see items 2-4 below).
2. Compliance to Government Regulations & Requirements
They are contracts with the Federal Government. As such, you need to understand, track and manage to the various regulations (FARS, DFARS, ITARs, etc.) and requirements (Contract Deliverables, Subcontractor Management, Audit and Compliance standards). This means that your contract management system must be designed to support tracking of this information and driving the work through alerts and notifications to stay compliant.
3. Living & Breathing Contracts – Importance of Contract Modifications
GovCon customer contracts are living, breathing and changing “animals”. They are usually not static. They are affected by changes in law and statute. They are constantly changing and evolving to meet customer needs. So, an important aspect is to capture these changes in the form of Contract Modifications. Each is important. So, a GovCon system should track Contract Modifications as “Tier 1” objects. This means that each is trackable separately with their own information and tracking of approvals and activities. This way you can always go back and drill into the details about a single Contract Modification of a contract. Most general commercial systems don’t have support for contract modifications at this level.
4. Subcontractors & Sub-contracts – related to customer contracts
Most general commercial systems support buy-side contracts (vendor-facing) and/or sell-side contracts (customer-facing). Subcontractors in GovCon serve a unique role. They are in a hybrid position. On one hand they are separate and independent from the customer contract. In that sense they are like a “buy-side” vendor. On the other hand, each contract with them also relates to a sell-side government contract (or opportunity). And, requirements of the government customer contract flow down into the sub-contract.
A GovCon-oriented system should recognize this “hybrid” role. Subcontractors and sub-contracts should be separate from the customer facing contract but closely related – “separate but related”. You need to be able to track subcontractors, their people, contracts such as NDA, Teaming Agreements, Delivery Orders, and sub-contract modifications. And, the sub-contracts need to be related to the customer contracts.
5. Many people need to access contracts and you need extra control
In the general commercial market, a contract management system may only be used by a few people in legal or contracts that are managing the end contracts. But, in GovCon, the customer facing contracts are core to the business. They are used constantly by people across the organization including business development, capture, proposal management, legal, finance, administration, HR, security, program management, executives and of course contracts. This drives a few specific needs.
First, access cost. Lots of people need access. Most general commercial software is licensed by user. This puts an artificial constraint on the usefulness of the system because of the cost of users having access. This model is self-defeating and GovCon organizations need different licensing models such as perpetual licenses that are not user driven.
Second, control. If you have a structured system and you do want to provide people with access, you need to control it. So, your formal system should support role-based mechanisms to control who has access to what information and what the individual can do as a person or within a role.
See what a solution for GovCon looks like
R3 provides business solutions specifically for Federal Government Contractors. One is our solution for Contract Management. It is specifically designed to meet GovCon needs including the Top 5 needs listed above.
To see it in action, watch the video below. You can learn more about this GovCon solution by visiting the R3 Contract Management product page.