published article - creating a world class contracting organization - jul 2015

56 Contract Management | July 2015

57Contract Management | July 2015


Globally, companies and government

organizations have increased their con-

tracting for goods and services with the

specific intent of focusing more on their

core business and allowing suppliers to do

the “other work.” Competition is growing,

speed to market is critical, and costs must

be reduced, but only those with a solid

understanding of contract management

will achieve ultimate success.

There is power in contract management—

today and tomorrow. All business profes-

sionals, especially executives, must realize

the power of the expectations that have

been created by their organizations’ con-

tract management actions in either buying

or selling products, software, professional

services, or integrated solutions. The busi-

ness deals an organization made several

years ago and how it manages the resulting

contracts and projects dramatically affect

its success and reputation today. Likewise,

the contracts an organization negotiates to-

day and performs tomorrow will significant-

ly affect its profitability and reputation in

the marketplace of the future. Professional

contract management is vital to ensure that

both buyers and sellers perform as expected

and get what they have mutually agreed to

in their contracts.

In this article, we will discuss the seven

steps to create a world-class contracting

organization supporting either the buying

or selling process. The steps required to

optimize an organization’s buying and

selling of products, systems, software,

professional services, and integrated solu-

tions are not conjecture; rather, they are

each proven successful proactive actions

to improve the people, processes, per-

formance, and pricing needed to achieve

high-performance results.

Creating a World-Class Contracting Organization: Seven Steps to SuccessIn both the public and private business sec-

tors, products and services are bought and

sold via contracts. Thus, it is important for

every organization to have a well-educated

and properly staffed, trained, certified,

qualified, efficient, and cost-effective con-

tract management organization. Likewise,

the same is true with all other key business

functional areas, such as sales, human

resources, accounting, information technol-

ogy, marketing, legal, engineering, logistics,

program management, and others. So, what

exactly should organizations do to optimize

their respective contract management

organizations? Based upon our extensive

research and experience, we suggest the

following seven steps to create a world-class

contracting organization:

IMPROVING THE U.S. ACQUISITION WORKFORCE, PART 3 OF 3: CREATING A WORLD-CLASS CONTRACTING ORGANIZATION

In both the public and private business sectors, buyers worldwide are becoming more informed and demanding as they require suppliers or contractors

to assume greater business risks to win the buyer’s valued business; mergers, acquisitions, and longstanding partnerships of former competitors are increasing; and the integration of products, services, and solutions is growing at an exponential rate in business transactions. Thus, contracts are becoming more complicated to plan, negotiate, create, and administer.

Contract Management | July 2015 59

1 | Hire, train, and retain world-class

contract management talent,

2 | Conduct a comprehensive contract

management organizational and work-

force assessment,

3 | Form a contract management office,

4 | Develop a contract management

methodology,

5 | Provide customized contract manage-

ment training to achieve professional

certification,

6 | Integrate contract management disci-

pline enterprise-wide, and

7 | Conduct contract management

performance reviews with rewards for

outstanding performance.

Step 1: Hire, Train, and Retain World-Class Contract Managaement TalentIt is all about the people! Fundamentally, ev-

ery contract management organization is an

internal professional services team, which is

hopefully composed of well-educated, prop-

erly trained, and highly motivated people

who provide expert knowledge and skills to

facilitate the legal, ethical, efficient, and

compliant transactions of products, systems,

professional services, and integrated solu-

tions between buyers and sellers.

Today, most organizations seek to hire

individuals with business, legal, and or

technical formal education and related

business experience to serve as their con-

tract managers, contract administrators,

buyers, purchasing managers, subcontract

managers, or subcontract administrators.

Continuous learning is critical for con-

tract management professionals to stay

abreast of new laws, regulations, emerging

technologies, products, and services that

affect their areas of business responsibili-

ties. Thus, providing appropriate and timely

professional training for contract manage-

ment personnel is essential to their success

and often linked closely to their retention

with the organization. In addition to expert

knowledge of contract management, ana-

lytical skills, strong communication skills,

negotiation skills, integrity, and leadership

skills are critical to the success of contract

management personnel. Further, often

overlooked but of extremely high value

is the ability to understand the needs

and point-of-view of the other side of the


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Federal Publications Seminars1100 13th Street, NWSuite 200Washington, DC 20005 www.fedpubseminars.com

The George Washington UniversityMaster of Science in Government Contracts 2000 H Street, NWBurns Hall 510Washington, DC [email protected]

Management Concepts8230 Leesburg PikeVienna, VA 22182 www.managementconcepts.com

Northwest Procurement Institute, Inc.PO Box 1328Edmonds, WA 98020www.npi-training.com

Old Dominion University5115 Hampton BlvdNorfolk, VA 23529http://dl.odu.edu/ncma

Public Contracting InstitutePO Box 27951Washington, DC 20038www.publiccontractinginstitute.com

Saint Louis University3840 Lindell Blvd.Saint Louis, MO 63108 www.SLUonline.com University of California–Irvine ExtensionIrvine, CA 92697 http://extension.uci.edu/ncma

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transaction. Exchange programs between

government and industry could greatly

enhance the contract management talent

at both sides of the table.

World-class contract management talent

can make a real and significant difference in

the revenue, cost, and or profitability of the

organization; thus, contract management

professionals should be well compensated

and treated as highly valued assets. Coach-

ing, mentoring, and training, combined with

rewarding yet challenging work, often result

in highly motivated personnel who tend to

stay where they are valued, respected, and

appreciated by their team members, peers,

and leadership.

Step 2: Conduct a Comprehensive Contract Management Assessment World-class contracting support is vital

to achieve mission success. Meeting the

challenges of buying and or selling products,

services, and solutions requires a compre-

hensive approach to successfully managing

the contracting organization and the related

contracting workforce. Thus, it is imperative

to conduct both a top-down organizational

contract management capabilities assess-

ment combined with a bottoms-up individual

contract management knowledge assess-

ment. It is important to have an accurate

understanding of where you are in order to

get where you want to be in the future.

Contract Management Organizational Assessment ToolsThe Contract Management Maturity Model

(CMMM) is a proven successful tool to enable

organizations to evaluate and benchmark

their respective contract management

performance. The CMMM provides an evolu-

tionary roadmap for contract management

process capability from ad hoc (immature) to

optimized (mature). See FIGURE 1 above.

The Contract Management Maturity As-

sessment Tool (CMMAT) is the enabler for

an organization to conduct a cost-effective,

top-down organizational assessment. CMMAT

collects and analyzes the data required to

perform the maturity assessment, based

upon survey information provided by the

members of the contracting workforce.1

The results of the top-down contract man-

agement organizational assessment can

provide valuable data and knowledge to the

organization leadership for actionable, tar-

geted process improvement resulting in bet-

ter performance. As discussed in the second

article of this three-part series of articles, the

CMMM and CMMAT have both been widely

used in the U.S. government and industry

for the past 10 years with excellent results.2

Individual Contract (Knowledge) Assessment Tool (iCAT)World-class contract management requires

more than sound processes and policies. A

proficient workforce is paramount—and the

workforce is made up of individual employ-

ees. For industry, addressing and identifying

skills gaps are simply best practices. Within

the U.S. federal government acquisition

workforce, the Government Accountability

Office (GAO) Report GAO-15-223 and numer-

ous other GAO reports have repeatedly

stressed the need for federal agencies to

identify and close skill gaps, specifically

naming contracting as one of the six critical

skill areas that is particularly problematic.

The new Individual Contract Assessment Tool

(iCAT) uses the diagnostic power of individual

knowledge assessments to provide feedback

mapped to targeted learning interventions,

customized to the development needs of

individual employees. This focused feedback

accelerates workforce development by

routing employees to high-impact learning

opportunities. iCAT delivers exceptional

insight to both individuals and leadership,

improving individual learning outcomes and

organizational return on investment.

The “individualized coaching report” reveals

an individual’s unique knowledge strengths,

weaknesses, and benchmark comparisons.

When knowledge gaps are identified, the

report provides direct links to focused, high-

impact learning content. Leadership gains

an equally detailed view when the data of

many individual knowledge assessments

is combined to produce the “workforce

proficiency report,” a strategic view of a

workforce’s overall knowledge strengths

and weaknesses. This can be used to signifi-

cantly improve strategic workforce planning

and resource allocation.

FIGURE 1. THE CONTRACT MANAGEMENT MATURITY MODEL— LEVELS OF MATURITY


Combining Contract Management Organizational Assessment and Contract Management Individual Assessments Creates a Comprehensive Contract Management AssessmentBy combining the CMMM, the CMMAT (i.e.,

CM3), and the new iCAT, the result is a truly

comprehensive assessment of the health

of an organization’s contract management

capabilities and individual knowledge. See

FIGURE 2 above.

Using the CM3 and iCAT allows contract

management leadership, in both govern-

ment and industry, to quickly, cost-effec-

tively, and objectively assess individual and

organizational knowledge and performance

gaps. Once the performance gaps are

identified, leadership can affect change by

focusing on those initiatives such as new

contract management policies, process

changes, customized training, targeted

coaching, etc. with the greatest value and

return on investment for both leadership

and the workforce.

Combing the power of organizational as-

sessments and individual assessments with

targeted training and coaching can deliver

the most comprehensive contract manage-

ment assessment framework ever produced

to affect real performance improvements.

Step 3: Form a Contract Management Office Every organization that manages numerous

complex contracts and subcontracts and

employs numerous contract and subcon-

tract management personnel should have

or form a contract management office

or supply chain management office. The pur-

pose of the contract management office or

supply chain management office is to serve

as the functional center of excellence and

as the home of contract management and

subcontract management:

� Subject matter experts to provide ad-

vice, coaching, and support services to

the contract and subcontract manage-

ment personnel;

� Policies;

� Processes and procedures;

� Tools, templates, and software

applications; and

� Historical documents and best

practices.

Further, the contract management office

leadership should lead the organization.

Every large organization should consider

forming a contract management or supply

chain management leadership council,

with key representatives from every

business unit, department, or geographic

region. The council should be chartered

to provide an enterprise-wide forum for

the contract management community to

foster the growth and development of a

world-class corporate resource. Organiza-

tions with a contract management leader-

ship council have helped foster contract

management attributes by sharing lessons

learned and best practices throughout

their respective enterprise.

Step 4: Develop a Contract Management MethodologyBest-in-class organizations worldwide have

developed customized, process-driven, Web-

based contract management or supply chain

management methodologies, which include:


FIGURE 2. THE COMBINATION OF CM3 AND ICAT PROVIDES A CM ASSESSMENT


� Contract management and supply

chain management life-cycle processes;

� Integrated policies, procedures, and

templates;

� Automated contract document cre-

ation, modification, storage, distribu-

tion, review, and approval; and

� Sample documents, including nondisclo-

sure agreements, teaming agreements,

standard terms and conditions, repre-

sentations, certifications, and contracts.

Some organizations have developed their

contract management methodology on

their own, while many organizations have

purchased or leased contract management,

purchasing, and supply chain manage-

ment commercial-off-the-shelf software

and modified or customized the software

application(s) to meet the specific require-

ments. There are numerous proven-effective

contract management, purchasing, and

supply chain management software applica-

tions and modules available from Microsoft,

SAP, Oracle, Deltek, and others.

Step 5: Provide Customized Contract Management Training to Achieve Professional CertificationToday, very few colleges and universities

have a bachelor’s degree program in con-

tract management, supply chain manage-

ment, or U.S. federal government contract

management. As a result, most contract

management personnel require advanced

and customized training for their unique in-

dustry, especially for those involved in highly

complex and regulated U.S. federal govern-

ment contracts and related subcontracts.

As a result, there is a wide array of master

certificate programs, graduate degree

programs, and specialized courses, seminars,

and webinars available. Some of the leading

providers of U.S. government contract man-

agement education and training include: The

George Washington University, ESI Interna-

tional, Management Concepts Inc., Villanova

University, The Keller Graduate School, The

University of Virginia, University of California

at Los Angeles, GCS International, The Public

Contracting Institute, and NCMA, just to

mention a few.

In addition, the U.S. federal government

has developed its own internal education

and training programs in U.S. government

contract management provided by organiza-

tions such as the following:

� The Federal Acquisition Institute,

� The Defense Acquisition University,

� The Department of Veterans Affairs

Acquisition Academy,

� The U.S. Department of Agriculture

University,

� The U.S. Naval Postgraduate School,

� The Defense Systems Management

College, and

� The Air Force Institute of Technology.

Contract management is principally repre-

sented by three professional associations:

� NCMA, founded in 1959, focuses on U.S.

government contracting and commer-

cial contract management from both

the buying and selling perspectives,

with about 20,000 members worldwide;

� The Institute for Supply Management

(ISM), founded in 1915, which focuses

mainly on commercial purchasing and

supply chain management, with about

40,000 members worldwide; and

� The newest association, the Interna-

tional Association of Contract and

Commercial Management (IACCM),

founded in 1999, with membership

that includes more than 2,000 public-

and private-sector organizations from

over 100 countries

Most NCMA and ISM members are from

within the United States, but each associa-

tion has chapters worldwide. ISM formerly

offered a Certified Purchasing Manager

(CPM) program worldwide, but is no longer

offering this professional credential. Since

2008, ISM offers the Certified Professional

Supply Manager (CPSM) designation, which

requires skills in finance, supplier relation-

ship management, organizational global

strategy, and risk compliance. Those who

want to become a CPSM must have three

years of experience in supply manage-

ment, a bachelor’s degree from a region-

ally accredited institution or international

equivalent, and successfully pass three

CPSM exams, or if he or she is a C.P.M. in

good standing, pass the “bridge exam.”3

IACCM has a well-established Web-based

skills assessment tool and unique set of

professional certification programs. The

certification programs offered by IACCM

are supported by a growing portfolio of

Web-based learning modules, addressing

the needs of both buyers and sellers. The

IAACM “Management Learning Program” is

also unique in its capabilities, combining

each recorded module with a wide array of

texts, research results, and recommended


It is all about the people!



readings. Since IAACM currently has no

chapters, magazines, or journals, it provides

Web-based information transfer via mes-

sage boards, mentoring, member surveys,

and webcasts worldwide. Thus, IACCM effec-

tively provides virtual membership globally

using the power of the Internet. Like NCMA

and ISM, IAACM offers conferences world-

wide and a wide-array of classroom training

for those that want on-site, live programs to

enhance the Web-based materials.4

Education and training in contract manage-

ment, purchasing, and supply chain manage-

ment should be focused on mastering key com-

petencies as embodied in the NCMA Contract

Management Body of Knowledge (CMBOK), the

Federal Acquisition Institute Competencies,

and/or the Federal Acquisition Regulation.

The leading contract management profes-

sional association is NCMA, which offers nu-

merous professional certification programs

in contract management, including:

� The Certified Federal Contracts

Manager (CFCM),

� The Certified Commercial Contracts

Manager (CCCM),

� The Certified Professional Contracts

Manager (CPCM),

� The Industry Certification in Contract

Management—Defense (ICCM-D), and

� The Industry Certification in Contract

Management—Federal (ICCM-F).

While professional education, training, and

certification are necessary, they alone are

not sufficient. Knowledge is good, but the

application of knowledge via demonstrated

skills resulting in improved performance is

best. Thus, contract management education,

training, certification, continual learning,

and performance assessments must all occur

within an organization in order to optimize

contract management performance results.

Step 6: Integrate Contract Management Discipline Enterprise-WideThe premise of an integrated contracted

management discipline is that the multiple

functional areas (e.g., sales, marketing, ac-

counting, legal, engineering, program man-

agement, etc.), and multiple parties (i.e.,

customer, prime contractor, and subcon-

tractors) all need to be unified and focused

on achieving contract and subcontract

requirements, meeting service performance

levels and ensuring legal and regulatory

compliance. Integrating is about all of the

functional areas and parties involved in

large, complex contracts and subcontracts

working together to achieve customer goals.

So, what does it take to integrate contract

management discipline enterprise-wide:

� Create integrated contract teams or

integrated project teams;

� Co-locate contract managers with proj-

ect management team members;

� Apply consistent yet flexible contract

management practices;

� Provide Web-based contract manage-

ment policies, processes, tools, and

templates;

� Ensure contract managers work the

entire contract life-cycle;

� Provide professional contract manage-

ment training enterprise-wide; and



� Empower contract managers to lead the

contract formation, contract negotiation,

contract administration, contract compli-

ance, and contract close-out.

Step 7: Conduct Contract Management Performance Reviews with Rewards for Outstanding PerformanceAs it is in any high-performing team, it is vital to

conduct regular or periodic organizational and

individual performance reviews. Some organiza-

tions refer to these contract management

performance reviews as “health checks,” “team

assessments,” or “benchmarking.” Contract

management organizations should be evalu-

ated both objectively and subjectively against

key performance indicators specific to either

the buying/purchasing perspective and/or the

sales contract perspective. Some of the most

frequently used key performance indicators

for contract management and subcontract

management teams include the following.

Buying/Purchasing Top 10 Key Performance Indicators � Active supplier that accounts for 80

percent of purchase dollars,

� Percentage spend—woman-owned

suppliers,

� Percentage spend—minority-owned

enterprises,

� Percentage spend—strategic alliances,

� Percentage spend—procurement cards,

� Percentage spend—e-auctions,

� Percentage spend—e-commerce,

� Percentage spend—awarded

competitively,

� Percentage of suppliers with 100-

percent on-time delivery, and

� Customer satisfaction survey ratings.

Sales/Contracts Top 10 Key Performance Indicators � Average contract duration;

� Total number of contracts managed;

� Total dollars of contracts managed;

� Total number of customers managed;

� Customer satisfaction ratings, based

upon customer surveys, both internal

and external;

� Percentage of on-time-delivery for all

contract deliverables to customers;

� Percentage of profitability on

contracts managed;

� Percentage of contract renewals;

� Percentage of contract revenue

growth; and

� Dollars of contract revenue growth.

The reality is that all contract management

organizations are dynamic because they

consist of people, processes, pricing, and a

performance culture. Leadership can make

either a positive or negative impact on

an organization’s performance. Turnover

of key personnel can have a significant

impact upon organizational performance.

Likewise, the improvement of processes

and the providing of timely professional

training, coaching, and mentoring can all

make a positive impact upon performance.

Thus, it is critical to the continuous learn-

ing and improvement process that regular

performance reviews be conducted on all

contract and subcontract management per-

sonnel and organizations. The performance

reviews should be focused on objectively

assessing where the individual or group is

today verses where they need to be going

forward, and thus what actions need to be

taken to affect positive change in perfor-

mance results.

It is essential to reward both individuals

and organizations that have achieved

outstanding performance results through a

combination of methods, including verbal

and written praise, promotions, advanced

training, certificates or medals of excellence,

Coaching, mentoring, and training, combined with rewarding yet challenging work, often result in highly motivated personnel who tend to stay where they are valued, respected, and appreciated by their team members, peers, and leadership.

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spot bonuses, salary increases, paid vaca-

tions, etc. It is equally important to help

lesser performers within the organization to

enhance their skills via expanded training,

coaching, and mentoring.

SummaryThe aforementioned seven steps to create

a world-class contracting organization are

both proven proactive best practices and in-

volve the application of some good common

sense. Unfortunately, today, in both U.S.

federal government agencies and within

industry, there is a real and present need

to improve business performance results.

Thus, optimizing the contract and subcon-

tract management workforce and organiza-

tion is vital to ensure legal and regulatory

compliance, cost control, risk management,

profitability, and on-time delivery of quality

products, professional services, and inte-

grated solutions worldwide. CM

ABOUT THE AUTHORS

GREGORY A. GARRETT, CPCM, C.P.M., PMP,

NCMA FELLOW, is a partner at Blue Canopy,

a leading IT and cyber security firm with

its corporate headquarters in Reston, Vir-

ginia. He is a highly respected industry execu-

tive who served as the chief operating officer,

Acquisition Solutions Inc.; and chief compli-

ance officer, vice president of program man-

agement, and vice president of supply chain

management at Lucent Technologies, Inc. He

is an acclaimed public speaker, expert wit-

ness, a best-selling author of 22 published

business books, decorated U.S. Air Force offi-

cer, and an international business consultant

who has advised and taught over 40,000 pro-

fessionals worldwide.

SHIRL G. NELSON, NCMA FELLOW, is cur-

rently the president and chief operating officer

at The Aurelius Group, a service-disabled vet-

eran–owned small business. She is a highly

respected industry executive who served as a

senior principal at Acquisition Solutions Inc.,

and previously as the senior acquisition exec-

utive at the U.S. Department of Commerce.

She is a director with the Procurement Round

Table and the founding co-chair and current

member of the Partnership for Public Service

Strategic Advisors to Government Executives

(SAGE) group for Chief Acquisition Officers.

Send comments about this article to [email protected].

ENDNOTES

1. Both CMMM and CMMAT are discussed in much more detail in the book Contract Management Organizational Assessment Tools, by Gregory A. Garrett and Dr. Rene G. Rendon, published by NCMA In addition, a new Web-based version of both CMMM and CMMAT are available in the new software package called CM3.

2. See Gregory A. Garrett and Dr. Rene G. Rendon, “Improving the U.S. Federal Acquisition Workforce, Part 2 of 3—Contract Management Process Maturity: The Key for Organizational Survival,” Contract Management Magazine (June 2015).

3. To learn more about ISM, go to www.ism.ws.

4. To learn more about IACCM, go to www.iaccm.com.


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published article - creating a world class contracting organization - jul 2015

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