This article originally appeared in the January 2003 issue of The Rational Edge E-zine on-line magazine, copyright 2002-2003 IBM and Max Wideman.

The Rational Unified Process (RUP) is a rigorous software development process advocated by the Rational Software Corporation.

The downloadable PDF file of the paper on this site is the one prepared by the Rational Edge editorial staff with the special assistance of Ms Marlene Ellin.

Published here October, 2003.

PART IV | Recap | Progressive Acquisition Workflow
Specifying the Work | Selecting or Pre-Qualifying Suppliers
Making the Solicitation | Evaluating Submissions | Negotiating the Contract
Administering the Contract and Controlling the Supplier's Work
Terminating the Contract | Understand Progressive Acquisition
Appendix: Glossary of Terms for Progressive Acquisition

Administering the Contract and Controlling the Supplier's Work

In all but the simplest of agreements, the acquirer has certain technical responsibilities with respect to the contract. How well you perform these responsibilities will have a significant effect on the supplier's performance. Your overriding aim should be to maximize the likelihood of meeting all the contract objectives on both sides. Therefore, you should pay close attention to fulfilling the following responsibilities.

  • Provide technical clarifications quickly.
  • Respond as soon as possible to supplier requests for information, or reviews and approvals, relating to schematics, architecture, interface configurations, use of subcontractors, and so forth.
  • Coordinate, or ensure coordination, among suppliers if the project involves multiple contracts.
  • Promptly exercise quality control acceptance, waiver, or rejection; if you reject something, quickly request correction of defects and certify progress when the correction is complete.
  • Resolve disputes and/or claims early by forewarning the supplier of potential difficulties, initiating fact-finding activities for potential or registered disputes, and initiating a change order process if appropriate.
  • Show interest by monitoring and tracking the supplier's progress and expediting roadblocks.
  • Process changes expeditiously.
  • Abide by the terms of the contract.
  • Above all, pay progress payments promptly. Nothing discourages a supplier more than leaning on his 30-, 60-, or 90-day line of credit!

Contract Control

As we noted earlier, the type of contract you select largely determines the degree of control you have over the supplier's work; the firmer the price, the lower the acquirer's level of control over contract performance. Nevertheless, even in fixed-price situations you still have levers, short of extreme actions such as termination and lawsuits. These levers are:

  • You can tie payments to acceptance or rejection of results; in other words, you can agree to pay upon acceptance but hold back payment if there are performance deficiencies. Your position will be stronger if you specify staged progress payments in the contract.
  • You can submit change orders to the supplier for adding or subtracting work. Preferably, you and the supplier should agree on the validity of each change order as well as on a corresponding adjustment to the cost.
  • You can issue a stop work order (under unilateral and exceptional conditions) provided that you justify the cause.

Of course, you must make sure to write these control procedures into the contract. You cannot expect to unilaterally assume these privileges after the contract is signed -- at least not without risk of legal action by the supplier!

Common Problems and Issues

Knowing some of the common problems and issues that arise in contract situations can help you avoid them. Here are four things to watch out for.

  • Flawed technical requirements, specifications, or descriptions. If the product you specify turns out to be a practical impossibility (although the supplier will have a difficult time proving this), all or part of the contract may be invalidated.
  • Formal registration of disputes and/or the application of extreme remedies. These typically cripple any work in progress. Therefore, make every effort to ensure that the work can continue while disagreements are being resolved.
  • Questions over warranty. Most contracts include an express warranty clause. However, if the supplier is aware of the acquirer's purpose and use for the product, then there is also an implied warranty. Disputes arise when the product does not meet the acquirer's needs, and the supplier refuses to honor that implied warranty.
  • Inappropriate change processing. Changes can be a source of dispute if:
    • Either the supplier or acquirer makes unilateral changes in breach of the contract or does not follow the change process agreed upon in the contract.
    • The acquirer (or one of the acquirer's agents), as a result of action or inaction, creates the need for a change that forces the supplier to perform in a manner that is more costly or difficult than that prescribed or contemplated in the original contract.
Negotiating the Contract  Negotiating the Contract

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