1 1 subcontract management & administration breakout session # 205 name: the federal market...

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Subcontract Management & Administration

Breakout Session # 205

Name: The Federal Market Group Daniel M. Jacobs, CPCM, CMC Chairman/CEO

www.fmg-ltd.com

Date: Monday, July 19

Time: 2:30 – 3:45

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Session Objectives:

Provide a Proven Proactive, Problem Avoidance Approach to


© The Federal Market Group

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WHAT IS A SUBCONTRACT?WHAT IS A SUBCONTRACT?

• Broadly Defined . . . Any Contract or Agreement To Perform

Work or Provide Material in Support of A Prime Contract.

• Far Part 44.101 . . . Any Contract (Including Purchase Orders)

by a Subcontractor (I.E.. Supplier, Distributor, Vendor, or

Firm) to Furnish Supplies or Services for Performance of a

Prime Contract or a Subcontract.


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Old Government Business Paradigm:

ZERO DEFECT - RISK AVERSION

New Government Business Paradigm:

RISK MANAGEMENT!

CURRENT BUSINESS ENVIRONMENT


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• The Government’s Role is to Hold a Prime Accountable for the Performance of its Subs.

• The Principle of “Privity of Contract” : the Government has no Relationship (Unless it is set forth) with a Prime’s Subs.

• How Does the Government Demonstrate Interest in Subcontract Management Practices?

1) Pre-award Surveys.2) Advance Notifications/Consent-to

Determinations.3) Periodic Contractor Purchasing System Reviews.4) Reviews of Purchasing/Contracting Procedures

and Manuals.


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Privity (Contractual Relationship) exists only between the Buyer & Seller - Privity does not exist between Buyer and the Seller’s Subcontractors

PRIVITY

BUYER

SELLER

SUBS

NO!NO!

YES

YES


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1. The Prime Contractor Rules

2. The Prime Contract is a Federal Procurement Contract

3. The Subcontract is a Commercial Contract

4. Their are very few mandatory flow down clauses

5. Primes tend to flow down all Federal Procurement Clauses

6. The Subcontractor has no legal standing with the government

7. The government is very concerned about how primes manage subcontracts

8. The government can partially terminate a contract

9. No one reads the contract

10. Most contracts (prime and sub) fail because they do not properly plan and

in particular, they fail to baseline the contract from the outset

11. Primes and subs must perform as partners, with the sub totally integrated into

the effort -- a seamless solution.

12. Prime and subcontractor must be a high-performance team!

FACTS

0F

LIFE

60-80%Of U.S.

Procurement $are Spent On Subs


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Take a Proactive, Problem Avoidance Approach

Establish a Community of Practice and Hold People

Accountable


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SIX STEPS TO CREATING A SUBCONTRACT MANAGEMENT COMMUNITY OF PRACTICE

STEP 1 – Standardize Subcontract Management Body of Knowledge and the Subcontract Procurement Process

STEP 2 – Establish Subcontract Manager/Subcontract Administrator Performance Standards and Formally Appoint Technical Representatives from Using Organizations

STEP 3 – Establish Internal Certification, Train Personnel and Hold Them Accountable

STEP 4 – Create Community of Practice (PM, Contracts, Finance, HR, Quality/Safety, Subcontracts) – Breakdown the Stovepipes

STEP 5 – Establish and Maintain a Toolbox of Checklists and Performance Support Tools

STEP 6 – Institutionalize Succession Planning & Mentoring


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STEP 1 – Standardize Subcontract Management Body of Knowledge and the Subcontract Procurement Process


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SUBCONTRACT MANAGEMENTBODY O F KNOWLEDGE (SCMBOK)

1.0Contracts

2.0Regulatory/

StatutoryFoundation

4.0Subcontract

Process

5.0Subcontract

Administration

6.0ContingencyContracting

1.1 Formation Of Contracts1.2 Types of Contracts1.3 Federal Procurement Contracts1.4 Subcontracts/ Commercial Contracts1.5 International Subcontracts1.6 Contract Pricing1.7 Negotiations1.8 Ethics & Integrity

3.0Program

Management

7.0Policies

& Procedures

2.1 Federal Procurement Law2.2 Federal Acquisition Regulation System2.3 Uniform Commercial Code (UCC)2.4 Cost Accounting Standards (CAS)2.5 Intellectual Property Rights2.6 International Procurement Law2.7 Disputes/Claims2.8 Standards of Conduct

3.1 Integration3.2 Scope Mgmt.3.3 Schedule Mgmt.3.4 Cost Mgmt.3.5 Quality Mgmt.3.6 HR Mgmt.3.7 Risk Mgmt.3.8 Comm. Mgmt.3.9 Procurement Mgmt.

4.1 Planning4.2 Solicitation4.3 Evaluation & Award4.4 Subcontract Administration

5.1 Assignment5.2 System Compliance5.3 Performance Monitoring5.4 Change Mgmt.5.5 Disputes/Claims5.6 Closeout5.7 Subcontract Files & Documentation

6.1 Contracting Methods and Instruments 62 Funding Considerations6.3 Administration of Contingency Contracts6.4 Ethics & Integrity6.5 Other Considerations

7.1 Operating System7.2 Subcontracting Policies7.3 Performance Support Tools & Techniques7.4 Standards of Conduct


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SUBCONTRACT PROCUREMENT PROCESS

PROCUREMENT PLANNING SOLICITATION SELECTION AND AWARD

RequirementDetermination

RequirementSpecification

RequirementAuthorization

Solicitation Evaluation Negotiation Selection Award

CONTRACT MANAGEMENT and ADMINISTRATION

AssignmentSystem

CompliancePerformanceMeasurement

ContractModification

Completion & Payment

Closeout


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SUBCONTRACT PLANNING – A CRITICAL PHASE

Best practices clearly indicate that the most critical phase of the Subcontracting Process is the Planning Phase

Cost overruns, schedule delays, technical failures, regulatory and statutory noncompliance, product substitution, legal disputes, termination, claims, and customer dissatisfaction are but a few of the results of poor planning. It is important to accurately and thoroughly define your requirements early, then communicate them to all the players throughout the entire Subcontracting Process – from requirements determination to closeout.

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STEP 2 – Establish Subcontract Manager/ Subcontract Administrator Performance Standards and Formally Appoint Technical Representatives from Using Organizations

STEP 3 – Establish Internal Certification Program, Train Personnel and Hold Them Accountable


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FORMALIZE ASSIGNMENT PROCESS

The Subcontract Manager’s Technical Representatives (TR) perform critical acquisition and technical functions, and SCMs rely on them to ensure that subcontracts are managed properly to meet mission needs.

It is essential that the TR Letter of Appointment clearly set forth the responsibilities and what the TR can and cannot do.

Sample TR Responsibilities:1. Read the subcontract and be thoroughly familiar with company and Subcontractor obligations set forth in that document.2. Develop and execute a Subcontract Quality Assurance Surveillance Plan (QASP). Review subcontractor Quality Control procedures.3. Monitor subcontractor performance and document acceptance of deliverables.4. Verify subcontractor invoice amounts against actual performance.5. Validate subcontractor requests for change orders.6. Facilitate contract closeout.7. Not authorized to modify the subcontract.

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STEP 4 – Create Community of Practice(PM, Contracts, Finance, HR, Quality/Safety, Subcontracts) – Breakdown the Stovepipes

STEP 5 – Establish and Maintain a Toolbox of Checklists and Performance Support Tools

STEP 6 – Institutionalize Succession Planning & Mentoring


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CONTRACT

Requirements&

Objectives

WORK BREAKDOWNSTRUCTURE (WBS)

What must be done?

RESOURCES

Resources Requirements?

MOST EFFECTIVEORGANIZATION (MEO)

Who?

Work andResource Plan

When?Where?

BUDGET

How Much? How is it Going?

Metrics?

SCHEDULE

Deliverables?

Metrics?

Costs?

REPORTS

Sequence?

Risks?

Materials FacilitiesEquipment Data

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THE SURVEILLANCE PLANTHE SURVEILLANCE PLAN

The Surveillance Plan is a proven performance support tool. It sets forth the Prime’s plan to monitor subcontractor compliance with contract provisions. It identifies the critical work processes, the delivery schedule, deliverables, costs for the effort and assists in identifying the risks inherent in the contract performance. Best practices clearly indicate that proper planning, selection of a reputable subcontractor, and appropriate oversight of subcontractor performance, will most likely result in best value for your organization and the USG.

You should rely upon the subcontractor for Quality Control – your responsibility is Quality Assurance!

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SUBCONTRACTING IN TODAY’S ENVIRONMENT

1. Primes and Subs must place more emphasis on planning and processes

2. Past Performance is a mandatory source selection evaluation factor

3. Customer focus is essential

4. Primes and subs must perform as a high-performance team

5. Strategic Partnering is good business

6. Validate your partner’s management processes and capability to succeed in government contracting

7. Management of government contracts must be proactive (not reactive)

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Daniel M. Jacobs, CPCM, CMCChairman/CEO, The Federal Market GroupRecognized as one of the nation’s leading authorities on public contracting,

Daniel M. Jacobs is Chairman/CEO of The Federal Market Group (FMG), a veteran owned company, that includes Government Business Solutions

(GBS), Federal Market Publishing (FMP), and The Federal Market Institute (FMI), Washington, D. C. based organizations providing professional training,

research, publishing and consulting services to government and industry in public

contracts management. FMG also includes The EuroMarket Group based in Brussels, Belgium and FMG Middle East in Tel Aviv.

He is a Fellow, past National President (1987-88), recipient of The Charles A. Dana Distinguished Service Award, the Honorary Life Member Award and a member of the Executive Advisory Council of the National Contract Management Association (NCMA). He is Chairman Emeritus, Board of Trustees, of the non-profit foundation, Contract Management Institute (CMI) and Chairman, Board of Advisors of Excel Institute. He is a member of the Project Management Institute (PMI), a member of the Institute of Management Consultants (IMC), a member of the Professional Services Council (PSC) and he is a Life Member of The American Legion.

Mr. Jacobs holds a bachelors degree from North Carolina Wesleyan College, a Masters in Government Contracts from George Washington University School of Government and Business Administration. He has completed additional graduate work in engineering, business and contracts at Old Dominion University, The College of William and Mary and George Washington University. In addition, through examination, he earned the designation of Certified Professional Contracts Manager (CPCM) and Certified Management Consultant (CMC). He served three years active duty with the U. S. Army and attained the rank of Captain.

Mr. Jacobs is the subject-matter-expert for the General Services Administration Federal Acquisition Institute (GSA/FAI) government-wide training program on Source Selection and is a consultant to the President’s Committee for Purchases From People Who Are Blind Or Severely Disabled. He is a recipient of the “Hammer Award” for contributions to the National Partnership for Reinventing Government (NPR). He is co-director of training for the FAI FAC-C VA Intern Development Program and adjunct faculty at the George Mason University School of Public Policy.Widely published, he co-authored the acclaimed series of contracts-business perspective articles on the Strategic Defense Initiative (SDI) appearing in Contract Management magazine. He is principal author of Building a Contract: Solicitations/Bids and Proposals - A Team Effort?, NCMA, 1990. He is the author of, Federal Government Contracting: The System/The Process, FMP, 1989; The Integrated Project/Team (IPT), FMP, 2000; The Desktop Reference Guide for Contract Management, FMP, 2001 and The Art of the Possible: Create and Organization with No Limitations, FMP/Amazon.com, 2010.

1 1 subcontract management & administration breakout session # 205 name: the federal market...

Documents

federal market group

federal procurement

risk management

federal market group

commercial contract

federal procurement

prime contractor rules

buyer seller privity