William McCormick
Mick Fox, chief operating officer for Technomile, has provided his latest feature as a member of Executive Mosaic’s GovCon Expert program.
Previously, GovCon Expert Mick Fox discussed the benefits of contract management discipline for an organization as well as the importance of maturity models in government contracting and the hurdles of adapting to new CLM platform capabilities.
In his latest GovCon Expert feature on Friday, he explored the recent World Contracting & Commerce benchmark report to discuss the use of contract management technology and how companies in the federal marketplace should level up their contracts organization.
You can read Mick Fox’s next GovCon Expert article below:
Leveling Up Your Contracts Organization
By GovCon Expert Mick Fox
According to a recent World Contracting & Commerce benchmark report focused on Aerospace & Defense, this sector is behind most others when it comes to using of contract management technology – “on average, one-fifth less likely to have tools and systems deployed or in process of deployment.” The same study concluded that “existing functionality provided by technology is, for most, extremely limited… often based on rudimentary tools such as Excel spreadsheets.”
A similar benchmark report for the technology sector also characterized its use of contract management technology as “rudimentary.” This data reinforces that there is a significant opportunity for many Contracts organizations within the federal contracting space to mature their contract management program – that is, the processes, technologies, and strategies being employed to manage their organization’s portfolio of government contracts.
In my initial article in this series, I introduced and provided an overview of a Federal Contract Management Maturity Model. This tool helps contracts professionals working in the Aerospace & Defense or GovCon industries assess the current state of their contract management program and identify the critical next steps needed to improve.
Organizations move through the model’s continuum – beginning at the Ad Hoc stage, progressing to Foundational, then Advanced, and finally to the Future-Enabling level – as they become more and more mature in their implementation and management of their federal contract management program and realize increasing business value.
In this article, I’m diving deeper into the earliest stage of maturity, called Ad Hoc, and will offer some practical suggestions for driving a Contracts organization towards an improved, Foundational level of maturity.
Ad Hoc: A Lack of Standardization
As its name implies, the Ad Hoc stage of federal contract management maturity is first and foremost characterized by a lack of standardization: contracts stored in multiple locations, loosely defined processes, and highly manual, often inconsistent capture of contract-related details and data.
In general, Ad Hoc stage companies rely upon contract “heroes.” They depend upon seasoned contract managers to just “know” how to manage the regulatory, specific, and sometimes peculiar aspects of each contract. Contracts and related files are stored locally, in emails, or on shared drives. Contract professionals often rely on spreadsheets to track key information for each federal contract, making responding to data calls and piecing together reports highly labor-intensive.
If this Ad Hoc description sounds familiar – and it should too many companies based on the benchmark data above – how do you level up your Contracts organization?
How and Why to Step Up Your Game
The most critical investments you’ll make towards advancing your federal contract management program towards the Foundational level of maturity are first, to install and enforce defined, timed, and repeatable contract management processes, and second, to implement CLM (contract lifecycle management) software. If this sounds daunting, there is CLM technology that accomplishes both objectives. Government contracting-specific CLM technology enables a host of valuable standardization and systemization, providing the antidote to an Ad Hoc state, including:
- One, a centralized repository to house all government contracts and related agreements, providing a 360-degree view of a company’s business and the work being performed by subcontractors.
- System validations that reinforce consistent, accurate capture of key data at each stage of a contract’s lifecycle, improving data integrity as well as accuracy and reliability of reporting and analytics.
- Workflows and automation shorten cycle times and enforce adherence to defined business processes and approval authority, improving compliance and reducing administrative cost.
- Real-time visibility across a company’s entire portfolio of federal contracts, strengthening risk management, enabling efficient reporting and responses to data calls, and improving audit readiness.
Simply put, government contracting-specific CLM software provides the foundation for achieving more advanced levels of maturity by enabling the consistent capture of robust, high-quality data regarding the performance of your federal contracts. This wealth of historical performance data can then be used in increasingly sophisticated ways (application of ML/AI) to guide strategic decision-making and continuous improvement in the context of both post-award activities and pre-award business development and capture efforts.
Advancing to Foundational Maturity: CLM Considerations
As a contracts professional stepping into the process of researching and evaluating CLM software to achieve Foundational maturity, here are three practical considerations:
Beware of an out-of-the-box CLM that doesn’t meet federal contract management requirements.
Search for “CLM system” or “contract management software” and you’ll find a myriad of options. But keep in mind that many of these solutions are first and foremost commercially oriented, meaning their core product and R&D focus is on supporting B2B – not B2G – transactions.
It’s vitally important to understand a CLM vendor’s “out-of-the-box” functionality for managing both government and B2B contracts. In particular, dig deep into how a potential CLM solution will support your government contract management needs related to maintaining compliance with the multitude of strict rules and regulations, as well as recordkeeping and data call requirements imposed by the federal government. Significant (and expensive!) services work may be required to customize the CLM to support automation of your federal contract management workflows.
Partner with your IT Department and consider your existing technology investments.
It can be tough to get internal buy-in to invest in new CLM technology for the Contracts team. If you encounter this roadblock, look within your company’s existing technology investments for a potential solution. For example, many companies have, or are looking to invest in extensible CRM platforms used by Business Development and Capture teams – think Salesforce or Microsoft Dynamics 365 – which can also offer strong post-award CLM capabilities.
Leveraging software that’s already part of your organization’s tech stack often proves more cost-effective and can make it much easier to satisfy security-related requirements (i.e., if it’s already been vetted by IT based on FedRAMP, CMMC, etc. controls). This approach can also enable you to connect internal workflows more tightly for improved efficiencies.
Following through the CRM example above, once your company receives the notice of award, the related opportunity that Business Development created in the CRM platform is converted directly into the baseline record for the new contract within the platform’s CLM application, saving the Contracts team keystrokes and time.
All this said, I also urge Contracts teams – don’t settle!
Don’t settle.
When you evaluate potential CLM options within your company’s current tech stack, don’t lose sight of the fact that your CLM software will serve as the critical foundation for continuing to advance your department’s federal contract management maturity over time.
A basic contract management add-on to a broad enterprise system – such as an ERP or finance solution – may cover some fundamentals, but will it continue to help your department move the needle on improving efficiency, strengthening contract compliance, and more proactively managing risk?
It’s imperative to understand a potential vendor’s product roadmap specifically for federal CLM needs. Determine whether the vendor’s R&D investment is predominately focused on its flagship enterprise functionality versus enhancements that will benefit the Contracts team and heighten these professionals’ ability to serve as a strategic risk and compliance advisors to the business.
Building upon a Strong Foundation
In my next article in this series, we’ll tackle the Foundational stage of federal contract management maturity in more detail and explore how forward-looking Contracts organizations are building upon their initial CLM implementation successes to attain an advanced level of maturity and derive increasing value from investment in CLM software.
