Government Agencies Spend a Lot of Time Negotiating Contracts. How Do They Ensure They Get Full Value from Them?

In our last article, we highlighted data from the World Commerce & Contracting 2024 Public Sector Benchmark survey showing that pre-award contracting processes took twice as long for public sector entities to complete than in the private sector.

Today, we turn our attention to post-award: For all the time and effort that goes into crafting and approving contracts, how well does the public sector do in ensuring contract obligations are fulfilled and thereby the contract value is realized?

The Benchmark survey suggests that much work remains on this side of the contract lifecycle as well.

Post-Award Contract Management: A Major Source of Untapped Value

Among all the activities associated with contract management, time spent on post-award contract management doesn’t rank in the top 5, according to the survey.  For example, while 56% of contract managers in the private sector say they measure invoicing accuracy/errors against contracts, only 37% in the public sector say the same.

"While 56% of contract managers in the private sector say they measure invoicing accuracy/errors against contracts, only 37% in the public sector say the same."

To be clear, this doesn’t mean that the public sector isn’t checking their receipts. Increased audits show government agencies are under pressure to demonstrate they are responsibly managing public resources. Instead, what the numbers suggest is that there is not a centralized approach to tracking contract performance, and therefore agencies may be missing an opportunity to drive compliance and address audits in a more systematic, effective, and efficient way.  The report’s authors note, post-award contract management is “most likely to be seen as an administrating activity, focused on individual projects or programs.”

Such disparate contract management can make digitization and improvement efforts difficult to implement, and improvements difficult to measure.

As the authors conclude: “When contract and commercial management are viewed as inter-connected disciplines, they are far better positioned to deliver greater value and performance. These groups are more likely to have performance measures that focus on economic returns and delivery of business outcomes.”

WorldCC is not alone in this assessment. Analysts from across the spectrum recommend a consolidated approach to contract management that incorporates post-signature contract performance.

“Today, most [contract lifecycle management] investment is driven by the desire to transition from a tactical departmental productivity focus to data-oriented, enterprise-wide approaches that capture and digitize critical contract information and make it available in a comprehensive, strategic manner,” MGI Research recently concluded.

Addressing the gap

So how can government agencies go about implementing such a “comprehensive, strategic” approach to contracts?

It’s not all about technology; WorldCC points to resourcing, process improvements focsed on streamlining and simplifying contract management processes, as well as technology improvements that agencies can take to transform how they think about contract performance.

Here are some to consider:

1. Allocating Dedicated Resources:

Establishing teams dedicated to post-award management can ensure focused and continuous oversight of contract performance.

2. Training and Development:

Investing in the training and development of personnel involved in contract management is crucial. This can enhance their skills and knowledge, enabling them to manage contracts more effectively.

3. Implementing Advanced Technologies:

Leveraging digital tools and technologies can streamline post-award processes, improve data management, and provide real-time insights into contract performance.

4. Improving Processes and Systems:

Clear and well-defined processes and systems are essential for effective contract management. "Improving internal processes links to several factors, including the prerequisite for automation and digitization, which are seen as important areas for improvement."

Access the report now

Contracts are the single source of truth for the commitments and obligations between agencies and contractors. Given the significant time and effort spent getting contracts right pre-award, it follows that a centralized effort to improve post-award performance should be a priority for the public sector.

To dig further into the the WorldCC report, access it here.

And to learn more about Icertis’ solutions for Public Sector, visit our solutions page.