A contract is a written agreement, enforceable by law, between a procuring entity and a supplier, contractor or service provider for the provision of goods, works and services.Contract Administration Basics
Contract administration involves all activities related to the monitoring of suppliers, contractors and service providers’ performance in the fulfillment of their contractual obligations, and to ensure appropriate actions are taken to promptly remedy any deficiencies observed in contract implementation, scope or terms and conditions.
Where does it start?
Preparation for contract administration begins with planning, which should begin during the bidding and selection process. This planning includes the nomination of contract administrators, a strategy for undertaking periodic performance review, the timeframe for certifying performance and acceptance of contract deliverables in order to avoid payment delays, and an understanding of the contract terms and conditions to ensure effective oversight.
Although the actual planning begins during the selection process, contract administration actually starts upon the signing of the contract, which is the point at which the parties to the contract are bound by its terms and conditions.
Who is responsible?
The procuring entity would usually appoint staff members or, preferably a team of qualified individuals, to take the responsibility of administering the contract. It is the responsibility of the Contract Administrator to perform the obligations and duties of the procuring entity specified in the contract and to ensure the suppliers, contractors and service providers implement the contract in accordance with its terms and conditions. Nonetheless, the supplier, contractor or services provider, has the primary responsibility to ensure that the goods, works or services meet the required standards and to advise on the need for any changes as a result of constraints faced during contract implementation.
Where does it end?
Contract Administration generally concludes with a final inspection and acceptance of the goods, works or services prior to the completion date or termination of the contract. The inspection and verification, prior to acceptance, should ensure as a minimum that:
- The correct quantity has been received,
- The goods, works or services meet the technical standards defined in the contract,
- Any variations to the contract are well documented and accounted for,
- The goods, works or services have been delivered or completed on time, or that any
delay has been noted and appropriate actions taken as indicated in the contract, and
- All required manuals or documentation have been received.
How important is it really?
The contract implementation phase is very important because it is where the results of the procurement process are obtained and the requesting entity is in a position to finally receive the expected benefits of their procurement request. Without contract award and effective contract implementation, the objectives for initiating the procurement process cannot be attained. The supplier, contractor or service provider has the responsibility of performing the contract in accordance with its terms and conditions to meet all the technical and quality standards. The procuring entity also has the responsibility of complying with the terms and conditions of the contract; especially the obligation of ensuring payments are made on time.
Does it get the attention it deserves?
Contract administration involves the management of risks. Its basic purpose is to monitor performance to ensure the objectives of the contract are met on time and within the intended budget, and also to detect any deficiencies and find a remedy (including suspension or termination of the contract) before it’s too late.
Good contract administration is crucial to the success of the public contracting process, because it is during this stage that a significant amount of waste and abuse of public funds and corruption in public contracting happens. Most of the focus is placed on the procurement process, which is a comparatively shorter period than contract implementation. The real benefits, however, are obtained after the contract is awarded, so more attention needs to be placed on ensuring the contract is implemented consistent with its terms and conditions. This is not to lessen the importance of the procurement process in getting the contract awarded, but it is only after the contract is awarded that the real value of the entire procurement process is realized.