Contract preparation: A Complex, involved process
January 2, 2013
Establishing a contract is accomplished by numerous professionals with unique skills working in unison to ensure the government gets the products or services it needs.
"There is no way to capture all the intricacies of the contracting process in an article," said Henry A. Molnar, procurement analyst, Army Contracting Command Operations Group. "This is just a shell of some of the steps, meant as a minimal guide and is in no way remotely all-inclusive to the contracting process."
According to Molnar, the first step in developing a contract is understanding and validating the customer's requirement. Early coordination and collaboration among stakeholders is essential to developing a well-defined requirement. Once the requirement is defined, industry can clearly understand what goods or services the government is procuring.
"After defining the requirement, the acquisition strategy lays out the government's path forward in getting the requirement to contract," he said. "The first steps include determining what type of
contract it is. What competition methodology would be best or are there small business opportunity considerations. These areas are just a few items addressed as part of the acquisition strategy."
By defining everything clearly, Molnar said all parties have a much clearer picture of what to expect as the contract stages progress.
"The desired results of market research and acquisition planning are indications to support going forward with a solicitation to industry for proposals by the contracting officer, or KO," Molnar said. "The solicitation provides instruction on how to make an offer, identifies the government's requirement, and the terms and conditions of the pending contract."
If the need has been defined clearly, interested parties will be able to react and forward a
formal offer that can be accepted, evaluated and compared to other offers as well as the government cost estimate.
"The KO must also consider whether market research indicates that there are sources available to provide the supplies and/or services. In other words, is there an industry base to support the requirement? Other questions the KO should be answering are: What type of contract should be utilized and how much risk is there," he said. "Also, are any external review and approval authorities required or can a small business or mandatory source provide this supply and/or service?"
As each contract is developed, contracting officers must make decisions regarding how vendors will be able to compete for the contract. The contracting officer must consider conditions or constraints that relate to the proposed acquisition.
"Once the pre-planning and any necessary approvals are obtained, the solicitation is released to industry," Molnar said. "Bids or proposals are submitted by industry, evaluated and the contract award is then made to the successful offeror."
Given the scope of the different types of contracts, Molnar said it's difficult to calculate an average time the award process takes from start-to-finish.
"There are many variables that can affect the process time; the two biggest being the type of contract and the type of work to be completed," Molnar said. "The process time for a task order can vary from 25 to 45 days to process once a multiple award-type contract is in place. Complex new highdollar actions can take six months under ideal conditions and possibly years to compete based on the complexity of the requirement."
According to Jason Detko, chief, ACC Contracting, Operations Group, the more complex the contract, the more in-depth knowledge of the Federal Acquisition Regulation the contracting officer needs to have up front.
"The KO does not need to memorize the FAR, but must be able to appropriately research and interpret it to adequately lead the procurement process along," Detko said. "The KO is just one component of a multi-function procurement team of experts and mostly serves as the business advisor to the team facilitating the regulatory requirements to put the contract together. However, the KO is the only government representative authorized to sign any contract."
The authority to obligate money on behalf of the federal government comes from receiving a contracting officer warrant that outlines the dollar thresholds and limits the obligation authority of the contracting officer. Only the KO has the authority to direct the contractor to provide goods or services on behalf of the government as established through the KO warranting process.
"There are strict anti-deficiency laws governing who can obligate the government to ensure we
are not receiving benefit without a properly executed agreement between the government and a
contractor through a written, enforceable contract," Detko said.
In some cases, individuals who are not contracting officers may be held personally liable for payment of any goods or services provided without authority. Molnar said procurement teams are often established to solicit, evaluate and recommend award of the contract.
Participants of the team may include but are not limited to safety specialists, program managers, budget or finance experts, legal counsel, small business specialist and quality control and technical experts.
Other direct or indirect stakeholders and higher-level approval authorities such as the head of the contracting activity or principal assistant responsible for contracting also contribute to the establishment of the contract. Once a contract has been written, bid on and awarded, Detko said government officials monitor its execution to ensure the contracted goods and services are provided.
"The government's job is not over when the contract is awarded. The government must conduct contract administration and perform a variety of actions prior to formal commencement of work through contract closeout," Detko said.
"The KO does a variety of things including providing post-award notifications to unsuccessful firms and conducting debriefings to those unsuccessful offerors, if requested. "The KO must also define administrative oversight of contractor performance to the contracting officer representative or the Defense Contract Management Agency. The KO might host a post-award conference with the successful offeror which would include a detailed review of the contract, including all work to be performed, the final terms and conditions and any discussions related to performance and/or delivery schedule," Detko said.
According to Molnar, contract administration is done to ensure compliance with the contract's terms and conditions as well as documenting and agreeing on any contract modifications.
"Contract administration is the process of systematically and efficiently managing contract execution, minimizing risk and performing analysis for the purpose of maximizing financial and operational performance of the contractor," Molnar said.
Molnar and Detko said contracting is an extremely complex process controlled by myriad statutes, regulations and policies. It is a herculean effort to properly define and articulate requirements to form the foundation of a legally binding contract. Proper stewardship of taxpayer resources is paramount in every contracting situation. Contracting personnel are charged with providing good and services effectively, efficiently, and legally, while operating in an extremely dynamic environment.
"The men and women who execute these requirements on behalf of the Army take their duties and responsibilities seriously. Without properly resourced and trained contracting personnel, there would be no linkage between requirements and the contractors to fulfill those requirements," Detko said.