Effective contract management is crucial for success in the complex world of government contracting. To shed light on the intricacies of this process, we sat down with Karen Long, President & Founder of Streamline Government Contracts, LLC, and a seasoned Federal Government Contracts Consultant. Karen brings experience and expertise in contract compliance, financial analysis, and contract processes. In this interview, she shares her insights on various aspects of contract management, from pre-award negotiations to effective contract reporting.

What Successful Government Contract Management Takes

On Navigating Pre-Award Challenges

Question: Thanks for joining us today, Karen. My first question is: pre-award contract management often involves negotiating various agreements such as Non-Disclosure Agreements (NDAs) and Teaming Agreements. Can you share some common pitfalls in these negotiations and how government contractors can effectively navigate them to ensure a smooth proposal process?

Karen: Assuming the NDA is mutual, which it should be, I would focus most of one’s attention on the Teaming Agreement. In my opinion, the Subcontractor has the more difficult task, so I will focus on five pitfalls from the Subcontractor’s perspective.

• Many Subcontractors do not read the Agreement in its entirety. Check for contradictory language throughout the Agreement. For example, in Exhibit A (Scope of Work), the Agreement may commit to workshare. However, in the body of the Agreement, there may be language that creates a loophole in Prime Contractor commitments. Therefore it is imporant to focus on the entire Agreement, not just Exhibit A.
• Prime Contractors may also want to renegotiate the price after the award. To prevent this, I like to include language such as “The price (or labor rates) approved by the Prime before Proposal Submission shall be incorporated into the Subcontract unless mutually agreed to in writing by both parties.”
• The Subcontractor must remember that generally, when the Subcontract is fully executed, the Teaming Agreement is terminated. This means that it is important that the terms and conditions negotiated in the Teaming Agreement are incorporated into the Subcontract. Otherwise, the Teaming Agreement, and the time it took to negotiate, becomes irrelevant.
• Subcontractors often want the Prime Contractor to provide 49% of revenue (or whatever percentage). The truth is that the Prime Contractor’s award is most likely not going to hit an exact split of 51%/49% of revenue (or whatever percentage.) I recommend incorporating language such as “a minimum of 45% (or fill in the number) with a target of 49%.” The key is to list a “minimum” so that it does not vary too drastically.
• Often, the way workshare is measured is not specified. The most common methods are revenue, Full-Time Employees (FTEs), or hours. If workshare is determined by the number of FTEs, recognize the possibility for disparities. For example, if there are 20 employees on a contract and the Subcontractor has 40%, the Prime Contractor may give the Subcontractor 8 positions, but not all positions are created equal. Some positions create more revenue and/or profitability.

These are a few pitfalls. The overarching answer is that “language matters.”

Ensuring Accuracy in Contract Execution

Question: Accurate contract execution post-award is critical for project success. What steps do you recommend contractors take upon contract award to set the team up for successful execution?

Karen: From a Contract perspective, there are helpful processes for setting up a team that will ensure successful execution.

• The most important step would be to review the Prime Contract thoroughly. Too often companies rush to sign the contract award document(s) in order to quickly return it to the Contracting Officer (CO) without a thorough review. It is easier to get corrections done prior to signature rather than after—when a modification is required. Bonus: The CO will likely be relieved and thankful that she/he does not have additional work associated with a modification.
• The Contracts Department should complete a contracts brief. Executing a contract takes the ENTIRE TEAM (Technical, Accounting, HR/Recruiting, Contracts). At Streamline, we include all aspects of the contract – Contract Reporting Requirements, Miscellaneous Contract Notes, HR/Recruiting Contract Notes, abbreviated Statement of Work Points of Contacts (POCs), Period of Performance, Place of Performance, Invoicing Information, Deliverables, Ceiling, Funding, Workforce (if applicable), etc. Our version of the contract brief generally takes about 4-7 hours to complete. Needless to say, it is extremely comprehensive and meant as a working document for all Departments.
• Hold an Internal Kick-Off and review key points of the Contracts Brief in order to successfully manage the program and manage expectations going forward. Solicit answers to any of your questions from the Government.
• Participate in the Government Kick-Off, if one is available to you. Ask what it takes to get an “Exceptional” Rating on the CPARS.
• The Contracts Department should report monthly to the ENTIRE TEAM (see above) on contract activity, comments, and recommendations.
• Once the Contracts Department report is received, the ENTIRE TEAM (see above) should meet to discuss successes, concerns, and issues.

Being proactive is (at least half) the answer to executing effectively.

Effective Cost Management Strategies

Question: Managing costs within price restraints is key to service contracts. What strategies do you suggest for contractors to effectively review and manage costs throughout the contract lifecycle to avoid budget overruns?

Karen: I recommend completing an Estimate at Completion (EAC) for Firm Fixed Price (FFP) and Time and Materials (T&M) contracts quarterly or semi-annually, depending on the contract size. The larger the contract, the more frequently the exercise should be performed.

For FFP contracts, as an overall summary, the company should evaluate the cost-to-date versus the percentage- of -completion. The lower the cost and the higher the percentage of completion, the more profitable. It is also helpful to compare the numbers to the proposal calculations. In addition– and many companies forget about this part—compare the indirect rates bid versus current indirect rates (or projected indirect rates by the end of the year).

For T&M contracts, the company should review (1) the projected funding that will be utilized and (2) the difference in profitability from the proposal. For the projected funding utilized, make a forecast and include employees’ planned Paid Time Off (PTO). If the company projects either a surplus or deficit, make appropriate changes. For a difference in profitability, compare the indirect rates bid versus current indirect rates (or projected indirect rates by the end of the year). In addition, compare the staff salaries bid versus staff currently performing on the contract. There could be a significant difference, especially if there has been a lot of turnover.

On Reviewing and Negotiating Subcontracts

Question: Reviewing and negotiating Subcontracts is a critical aspect of contract management. What strategies do you suggest for effectively negotiating Subcontracts to ensure favorable terms?

Karen: As I mentioned earlier, I will focus my answer on Subcontractors because Prime Contractors have more control over the relationship (i.e., terms and conditions) and, therefore, the easier task.

• Get input from your various departments as necessary. Ask the Accounting Department about the invoice due date and required/desired payment terms. Are they reasonable and feasible? As silly as this may sound, sometimes Prime and Subcontractors have strained relationships because the Subcontractor is not able to deliver the invoice by the date specified (and agreed to) in the Subcontract. If there are background check requirements, ask the HR Department (or Security Department) to weigh in on their processes and reporting procedures. Inquire with the Technical Team to review the Statement of Work.
• The Subcontract is only about the current contract, which should be specified. There should be no commitments for a potential re-compete or follow-on work outside of the contract described in the Agreement.
• As mentioned earlier, ensure that any terms and conditions (e.g., workshare) negotiated in the Teaming Agreement are accurately and completely stated in the Subcontract. (See Question #1 for more details.)
• Try to negotiate a “Termination for Convenience” clause so that it specifically relates only to when the Government terminates the Prime Contract or that portion of the contract that relates to the Subcontractor Scope of Work. A Subcontractor does not want the Prime Contractor to have the ability to arbitrarily terminate the Subcontract for their convenience.
• If one of your/the Subcontractor’s employees leaves the company, the Subcontractor should have the ability to backfill the vacatedd position. Another key is to ensure that there is sufficient time to find the next qualified candidate. The HR/Recruiting Department should weigh in when reviewing/negotiating the Subcontract.

After the Subcontract is negotiated, ensure that the entire Team (PM/Technical Team, Accounting, HR, Contracts) understands the key components, especially those that affect them most.

On Effective Contract Reporting

Question: Contract reporting, such as manpower and service contract reporting, is vital for compliance and performance tracking. What are the key elements of an effective contract reporting system, and how can contractors consistently ensure they meet all reporting requirements?

Karen: At Streamline, we do this in two ways: We record any type of Contract Reporting requirements on the Contracts Brief. See question #2 for more details. We also provide our Clients with an Executive Monthly Status Report which includes any Contract Reporting requirements throughout the year, in addition to monthly Contract Activity, Comments, and Recommendations. We also proactively project the next 30-45 days in an effort to anticipate the needs for future success of the program.

Contract management in the government sector requires meticulous attention to detail and a deep understanding of legal and operational aspects. Karen’s insights provide valuable guidance for government contractors looking to enhance their federal contract management practices. By addressing common challenges and implementing best practices, contractors can achieve greater compliance, efficiency, and project success. We thank Karen for sharing her expertise and look forward to seeing how her advice helps shape better contract management strategies in the industry.

Karen Long, with over twenty years of contract management experience, is the President and founder of Streamline Government Contracts, a leading provider of contract management services for small—to medium-sized businesses. Streamline’s focus is on helping companies manage contracts more effectively and profitably while enhancing their reputation in the government contracting industry and with federal government partners. To get in touch with Karen visit/email/call: www.streamlinegovcon.com І [email protected] І 240-644-5314

iQuasar LLC, established in 2004, has been providing Government Contractors with the services they need to succeed, including but not limited to Proposal Development, Cleared Recruitment and Staffing, GSA MAS Schedule Services, and Government Contracting Consulting. Contact us today to learn more about how we can help you take your business to the next level.

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