WHAT IS CONTRACTS MANAGEMENT?
Contracts are the one of the most important aspects
of a business or other entity. The contract establishes the applicable warranty, indemnifications, limitation
of liability, scope of work, schedule, period of performance, terms and conditions, prices, requirements, references,
specifications, assumptions, service levels, tasks, deliverables, reporting, and other provisions governing a contractual
relationship. Today, many companies and other entities are requiring proactive contracts management for improved
contractual visibility, efficiency, economics, risk minimization, control, and operational performance.
Contracts management (according to CMBOK 3rd Edition) is the process of managing contracts, deliverables,
deadlines, and contracts terms and conditions while ensuring customer satisfaction. It does not end when the contract
is awarded. Contracts management is a mature profession, but still growing. It covers pre-award, award, and post-award. CMBOK
3rd Edition indicates (to some extent) that contracts management also includes certain specialized knowledge
areas (R&D, A&E/Construction, IT, Major Systems, Services, International, State/Local, Supply Chain, PBA,
Government Property, Security, Environmental, FMS) and certain business areas (Management, Marketing, Financial
Analysis, Accounting, Budgeting, Economics, Leadership).
NCMA describes “Contracts Management”
as follows: Contracts management is a profession that includes many positions along the buying
and selling chain, including jobs within the federal government, industry, commercial businesses, academia, and
more. Contracts management professionals strive to: (1) Manage customer and supplier expectations and relationships,
(2) Control risk and cost, and (3) Contribute to organizational success. Contracts
management integrates a broad set of business disciplines and involves working closely with all areas and departments
within an organization.
Contracts management involves the proactive management of
a wide variety of commercial, international, government, collaborative, consortial, relationship, and other agreements
in accordance with best practices, applicable entity policies and procedures, compliance programs, applicable
laws, and the other requirements of the parties. It generally encompasses contract planning, contract designing,
contract drafting, contract negotiation, contract modification, contract administration, use of best practices,
contract close-out, contract assessment, lessons learned activities, and other similar items.
can help to improve contractual performance, reduce contractual risk, improve customer/provider satisfaction, and
enhance the contractual economics for the following types of entities: (1) sellers of products; (2) purchasers
of products; (3) services providers; (4) purchasers of services; (5) licensors or licensees of software,
technology, and processes; and (6) the parties to other types of agreements.
For example, here are just some of the types of contracts that are appropriate for professional
contract management by reviewing, analyzing, red-lining, planning, designing, drafting, executing, amending,
administering, applying best practices, closing-out, terminating, and assessing/score-carding:
For the Seller - - One-way & bilateral NDAs; teaming agreements; binding & non-binding letters of
intent; memorandums of agreement/understanding; joint cooperation agreements; strategic alliance agreements, partnering
agreements; services agreements; consulting agreements; environmental services agreements, business
process outsourcing agreements; IT outsourcing agreements; products agreements; master agreements with
individual work orders; statements of work; seller's terms & conditions of sale; assignment agreements;
(2) For the Buyer - - One-way & bilateral NDAs; teaming agreements; binding &
non-binding letters of intent; memorandums of agreement/understanding, joint cooperation agreements; strategic alliance
agreements; partnering agreements, services agreements; consulting agreements; products agreements; master agreements
with individual work orders; statements of work; buyer's terms & conditions of purchase; assignment
agreements; subcontracts; sourcing documents; requests for information/quotes/proposals; and preferred provider
(3) For the [Software] Licensor - - One-way & bilateral NDAs; beta
test agreements; evaluation agreements; end user agreements; shrink wrap/click wrap agreements; pure reseller
agreements; integrator agreements; value added reseller agreements; OEM agreements; ASP/SaaS agreements; support
agreements; maintenance agreements; training agreements; software consulting services agreements; lease of a license
agreements; source code license agreements; escrow agreements; technology transfer agreements; and patent/know-how licenses.
For the [Software] Licensee - - One-way & bilateral NDAs; beta test agreements; evaluation agreements;
end user agreements; shrink wrap/click wrap agreements; pure reseller agreements; integrator agreements; value
added reseller agreements; OEM agreements; ASP/SaaS agreements; support agreements; maintenance agreements; training
agreements; software consulting services agreements; lease of a license agreements; source code license agreements;
escrow agreements; technology transfer agreements; and patent/know-how licenses.
(5) Any other type of Agreement.
Effective contracts management needs to have the following
four foundational aspects: (1) centralized storage; (2) controlled access; (3) automated notifications; and
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