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.
Contracts management 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:
(1) 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; and subcontracts.
(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.
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 (4) scalability.
SM is a domain name and service mark of John ("Johnny") E. Miller