Published on: Wednesday 22 July 2009 by Administrator
White House memo states the case for robust Contract Management
On 4 March 2009, US President Barrack Obama signed a White House memorandum that was sent to the Heads of Executive Departments and Agencies on the subject of Government Contracting.
CMD Director Pete Dennis said “this is the first time in living memory such a leader has directly referred to the value of quality Contract Management. In the current economic climate, Contract Management can be one area considered for cut-backs, when in reality, as the memo states now is the time for organisations to promote the use of Contract Management to yield the benefits it can provide. The White House memo echoes the findings of the National Audit Office review of Central government’s management of service contracts from December 2008. At CMD we are starting to see an increase in the number of enquiries we receive and the new assignments we commence despite the economic downturn, including requests for CM training which has also grown recently.”
The full memo is available at http://www.whitehouse.gov/the_press_office/Memorandum-for-the-Heads-of-Executive-Departments-and-Agencies-Subject-Government/ A pertinent quote from it is:
“...it is essential that the Federal Government have the capacity to carry out robust and thorough management and oversight of its contracts in order to achieve programmatic goals, avoid significant overcharges, and curb wasteful spending. A GAO study last year of 95 major defense acquisitions projects found cost overruns of 26 percent, totaling $295 billion over the life of the projects. improved contract oversight could reduce such sums significantly.”
NAO’s review of UK Central government’s management of service contracts (Dec 08) found:
- 97% of Commercial / Procurement Directors considered the quantity & quality of services provided could be improved through better Contract Management (CM) without increasing expenditure
- 67% said better CM could result in reduced expenditure while maintaining the quantity & quality of services
- Suppliers stated there was scope for improved value for money (VFM) through better CM
- Delivery of services, protection against service failure & achievement of VFM were all dependent on effective CM
- Weaknesses in KPI and limited use of financial incentives were commonplace
- Some contracts had taken several years to reach the point where the contract was being managed well in terms of putting in place sufficient resources & appropriate performance measures
- Organisations estimated spend equivalent of 2% of annual contract expenditure on managing service contracts
The NAO’s review of Central government’s management of service contracts is available at http://www.nao.org.uk/publications/0809/central_governments_managemen.aspx
We would be happy to discuss the clear benefits Contract Management can add to your organisation, please feel free to give us a call.
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