Defra policy on awarding contracts: contract management and performance standards
Introduction
Defra has implemented a Centre of Excellence (COE) for contract management to develop consistent standards across the Department and provide support to its contract management teams and suppliers.
The COE is committed to best practice in contract management and promotes an open and two-way approach to managing contract relationships. It also encourages the regular review of contract performance to ensure delivery of the operational and strategic aims of the Department.
Definitions
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Contract management is the process which ensures all parties to a contract fully meet their obligations, in order to satisfy the operational objectives of the contract and the strategic business goals of the customer.
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Key components for successful contract management are preparation, communication, administration, service delivery and relationship management.
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Contract performance standards form the system by which performance of contractual obligations is measured and reviewed. These usually take the form of Key Performance Indicators (KPIs).
Objectives
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Commitment to proactive contract management activities to ensure the successful delivery of the contractual requirements within the agreed timescales.
- Develop contract performance standards linked to key objectives,
in partnership with key suppliers that enable both parties to:
- Monitor performance with respect to quality and timeliness in the provision of contract deliverables
- Identify and agree the process for preventing and addressing performance failures at the earliest opportunity, to prevent escalation of minor discrepancies into major issues
- Monitor and manage the delivery of value for money from the contract for the Department and the taxpayer.
Process
1. The foundations for effective contract and performance management are typically set during the procurement planning process and not just at contract award stage.
2. The specification of requirements at tender stage must set out the contract and performance management requirements of the contract.
3. OGC GatewayTM Reviews take place throughout the procurement process. A key purpose is to ensure effective contract planning and management
4. Contract management is a key consideration in the compilation of a contract before award. A Contract Management Manual can assist by recording the agreed contract management structure and commitments.
5. After award, a contract start-up meeting enables both parties to jointly take ownership of the scope and agree the key deliverables and project milestones, including the performance-monitoring regime.
6. During the execution of the contract, the following activities are essential:
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Regular and structured meetings throughout the life of the contract
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Detailed progress reporting, particularly with regard to performance
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Review and evaluation of performance against the agreed measures
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Relationship management based shared objectives and values
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Shared risk management and contingency planning
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Effective change control, dispute escalation and resolution
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Continuous service improvement and contract innovation.
7. Upon completion, the decision to renew, renegotiate or close the contract must be taken in accordance with the procurement strategy.
8. Contract documentation should be closed-out and retained in accordance with records management requirements.
9. Post-contract, the final stage of good contract management is to evaluate the service delivery and derive any lessons learnt to improve future contracts.
Page published: 11 July 2005