Rift valley University Harar Campus

Project Procurement and

Contract Administration
Code: PMgt 661
Credit Hours: 2

BY: Debela Tezera(PhD)Can

 CHAPTER ONE
OVERVIEW OF PROJECT PROCUREMENT
 Chapter outline
 What is project logistics?
 What is procurement?
 What is Project Procurement Management?
 Goals of Project Procurement
 Establishing standard Procurement procedures and Policies
 A generic Project Procurement Process
 What is project Logistics?
 Project is a series of tasks that need to be completed to reach a
specific outcome.
 A project can also be defined as a set of inputs and outputs required
to achieve a particular goal.
 All projects have a beginning and an end. They have a team, a
budget, a schedule and a set of expectations the team needs to meet.
 Logistics refers to the overall process of managing how resources are
acquired, stored, and transported to their final destination.
 Logistics is also the process of planning and executing the efficient
transportation and storage of goods from the point of origin to the
point of consumption.

What is project Logistics?

 Project Logistics is the process of transporting items from A to B. But
it’s usually a lot more complicated than that.
 Project Logistics involves the management of everything to do with
the logistics of your project, throughout complex supply chains.
 It encompass from getting items ready to be moved, to arranging
transportation via sea, air or land freight, storage, onwards travel and
unloading at the final destination.

 supply chain management

 What is procurement?
 Procurement is the act of obtaining goods or services, usually for
business purposes.
 Procurement involves every activity involved in obtaining the goods
and services a company needs to support its daily operations,
including sourcing, negotiating terms, purchasing items, receiving
and inspecting goods as necessary and keeping records of all the
steps in the process.
 Procurement generally involves making buying decisions under
conditions of scarcity.
 Procurement generally involves making buying decisions under
conditions of scarcity.
 Generic procurement Process

STEP 1: Know your requirements

 Planning is always beneficial. The first step is to figure out what
you're going to require and then think about how to acquire it.
STEP 2: Request a purchase
 Procurement or a financial controller is usually in charge of
reviewing purchase requests.
STEP 3: Evaluate and choose vendors
  Every company must decide where to obtain its supplies. Some
businesses have an approved vendor catalog, a list of suppliers
who have passed the purchaser's selection criteria, and contract
negotiations.
STEP 4: Negotiate the price and terms of the deal
 Contracting is an essential step for every company to take to
maximize value generation and encourage buyer-supplier
collaboration.
STEP 5: Create a purchase order
 The purchase order specifies the product or service's pricing,
specs, and terms and conditions, as well as any other
commitments.
STEP 6: Check for three essential elements
 Purchase orders, Vendor invoices, and packaging slips are the
three documents to be cross-checked.
STEP 7: Complete the Payment Process and audit delivery of
requested Goods/Services
 Payment is released as per the payment terms agreed upon
between the supplier and buying party.
 The supplier delivers the goods/services based on payment and
contractual terms.
STEP 8: Maintain records
 For bookkeeping and accounting purposes, the receiving
(purchasing) company must retain accurate records. This means
that for each completed purchase, you should save all required
paperwork.
Procurement Vs. Purchasing

 What is Project Procurement Management?

  Procurement management is a term that describes the process of
managing and optimizing a project’s budget as it applies to the
goods, services, and resources you’ll need to complete your project.
 Procurement Project Management is a structured process that is used
to define, plan, implement, control and transition an activity from a
current to a future state.
 Project procurement management is the creation and maintenance of
relationships with external resources needed to complete a project.
 Therefore, project procurement is obtaining all of the materials and
services required
 Goals of Project Procurement
 The overall purpose of project procurement is to acquire the goods
and services necessary to achieve the project scope.
 Support operational Requirements
 Develop strong relationships with other groups
 Enhancing organizations effectiveness and efficiency
 Enhancing competitive advantage
 Reduce cycle times
 Eliminating unnecessary wastes
 Increasing supplier participation and loyalty
 Reduce risk and ensure the security of supply


 Procurement policies
 To provide guidelines for the procurement of goods and services.
 To ensure that ethical and professional practices are adhered
 The policy encompass the detail specifications, quantities and
qualities, unit price, delivery deadlines, locations and payment
schedules must be specified in contracts.
 The policy includes what are the requirements for adequate supplier
competition
 Group Discussion
o What factors determine procurement?
o What are the most common errors of Public procurement?
o Local procurement and import procurement
o Optimum procurement strategy
o What are the common types of Procurement Risk and how to
mitigate risks?
 CHAPTER TWO
PROJECT PROCUREMENT PLANNING AND ANALYSIS
Chapter out line
 Procurement Requirement Analysis
 Make or Buy Decisions: A theoretical Perspective
 Factors influencing Make-or-buy decisions
 The transaction cost approach
 The capability approach
 The resource based view and the make-buy decision
 Procurement Requirement Analysis
 Why to prepare requirement form
 Procurement Requirement Analysis
 Procurement requirements analysis represents the key element
of for every procurement activity. It aims to precisely define needs,
technologies and services related to the procurement activities.
 Project procurement requirement analysis is obtaining all of the
materials and services required for the project.
 Procurement analysis is the process of collecting and analysing
procurement data to form meaningful insights and aid effective
business decision making.
 Requirements is a systematic approach to define the procurement
requirements included that;
 All requirements that are determining factors in the evaluation
of offers must be clearly stated in the solicitation documents.
 All applicable technical, financial, commercial, legal, and
operational factors must be stated in the solicitation
documents and must be in accordance with the approved SSP.
 Procurement Requirement Analysis
 Delivery/Performance
 Delivery of goods/services on time
 Delivery of goods/services in full
 Quality, Price, Quantity, Price, Time, Location,
avaliability…
 Quality of goods/services accordance with
specifications/TOR
 Technical competence
 Adherence to warranty provisions
 Communication
  Responsiveness of vendor (requests, complaints,
etc.)
 Appropriate handling and timely submission of
documents (reports, invoices, shipping documents,
etc.)
 Introduction of innovative solutions
 Cost savings to the initiated by the contractor
 Make or Buy Decision
 Make / Buy
 It is compares the costs and benefits associated with producing a
necessary good or service or buying from outside supplier.
 A company's decision on whether to make or buy is based on
its core competence
 A decision has to be made about which items to make and which
to buy.
 If we decide to make items, cost are
 Direct material costs
 Direct labor costs
 Overhead costs
 Managerial costs
 Inventory costs
 If we decide to Buy items, cost are
 Purchasing costs
 Transportation costs
 Inspection costs
 Storage Costs
 Consideration Make or Buy decision
 Reasons to Make In-House
 Can produce for less cost than a supplier.
 To utilize existing equipment to fullest extent.
 To keep confidential processes within control of the firm.
 To maintain quality.
 To maintain workforce
 Reasons to Buy Out
 Requires less capital investment.
 Uses specialized expertise of suppliers.
 Allows the firm to concentrate its own area of
specialization.
 Provides known and competitive prices.
 PRACTICAL EXAMPLES ON MAKE-OR-BUY DECISIONS
  Example 1: XYZ Company has extra capacity that can be used to
produce items the company has been buying for birr 10 each. If
XYZ decides to make items, it will incur material costs of birr 3
per unit, labor costs of birr 4 per unit, and variable overhead
costs of birr 1 per unit. The annual fixed cost associated with the
unused capacity is birr 8,000. Demand over the next year is
estimated at 4,000 units.
1. Would it be profitable for the company to make the items or
buy?
 PRACTICAL EXAMPLES ON MAKE-OR-BUY DECISIONS

 Factors Influencing Make or Buy Decision:

 Some of the Factors Influencing Make or Buy Decision:
 Volume of Production
 Cost Analysis
 Utilization of Production Capacity
 Integration of Production System
 Availability of Manpower and other resources
 Secrecy or Protection of Patent Right
 Fixed Cost
 Availability of competent suppliers or vendors
 Technical factors
 Approach's of Make or Buy Decision
1. Transaction cost approach
2. The capability approach
3. The resource based view
1. Transaction cost approach
  The transaction cost concept was formally proposed by Ronald
Coase in 1937 to explain the existence of firms.
 Transaction cost theory modified (Williamson 1979, 1986) posits
that the optimum organizational structure is one that achieves
economic efficiency by minimizing the costs of exchange.
 The theory suggests that each type of transaction produces
coordination the costs of monitoring, controlling, and managing
transactions.
 Coase argued that market mechanism not cost-free, but involves
transaction costs: time & money to search for sellers & buyers,
negotiate exchange terms, write contracts, inspect results,
enforce deals
 The theory argued that when to buy raw materials, it has to be
low and when to sell our finished products it has to be greater
than before.
2. The capability approach
What is capability approach introduced by Amartya Sen?
 The capability approach claims that freedom to achieve well-
being is a matter of what people can do and be able to do and,
the kind of life they can effectively lead.
 Procurement capability is a skill set, experience and ability to
perform and manage procurement tasks and activities.
 Capability can relate to agencies or individuals.
 The agency capability assessment tool contains the performance
standards to assess agency procurement capability.
3. The resource based view
 Internal resources are more important than external
factors.
 Physical resources
 Financial resources
 Human resources
 Organizational resources
1. Organizational Culture
2. Management and leadership qualities
3. Marketing practice
4. Finance/Accounting and its decisions
5. Production/Operations
6. Research & Development
7. Management Information Systems
 Methods of procurement Ethiopian Procurement
a. Open Bidding (
b. Request for Proposals
c. Two stage Tendering
d. Restricted Tendering
e. Request for Quotation
f. Direct Procurement
CHAPTER THREE: PROCUREMENT METHODS AND STRATEGIES
 Sourcing and Supply Management Strategies
 Project Procurement Methods
 Project Procurement Standard Bid Document Preparation Competitive
Bidding Process

 Sourcing concepts
 Bidding
 Competitive Bidding

 Standard Bid Document Preparation

 BIDDING PROCEDURES
Section I:Instructions to Bidders (ITB)
  This Section provides information to help Bidders prepare their bids.
Information is also provided on the submission, opening, and
evaluation of bids and on the award of Contracts.
Section II. Bid Data Sheet (BDS)
 This Section includes provisions that are specific to the bidding
process and supplement Section I, Instructions to Bidders.
Section III. Evaluation and Qualification Criteria
 This Section specifies the criteria to be used to determine the
lowest evaluated bid and the requirements for the Bidder’s
qualification to perform the contract.
Section IV: Bidding Forms
 This Section includes the forms which are to be completed
by the Bidder and to be submitted as part of its bid.
Section V. Eligible Countries for international Bids
 Preparation of Bid documents
 Cost of Bidding
 Language of Bid
 Documents Comprising the Bid
 Letter of Bid and Price Schedules
 Alternative Bids
 Bid Prices and Discounts
 Currencies of Bid and Payment
 Documents Establishing the Qualifications of the Bidder
 Documents Establishing Eligibility of the Goods and Related
Services
 Period of Validity of Bids
 Bid Security
 Format and Signing of Bid
 Instructions to Bidders (ITB)
 Scope of Bid
 Source of Funds
 Fraud and Corruption
 Eligible Bidders
 Eligible Goods and Services

 Submission and Opening of Bids

 Submission, Sealing and Marking of Bids
 Deadline for Submission of Bids
 Late Bids
 Withdrawal, Substitution, and Modification of Bids
 Bid Opening
 Examination of Bids
 Confidentiality
 Clarification of Bids
  Responsiveness
 Bid Evaluation and Comparison
 Correction of Arithmetical Errors
 Conversion to Single Currency
 Bid Adjustments
 Qualification of the Bidder
 Comparison of Bids
 Accept, and Reject

 Award of Contract
 Award Criteria
 Notification of Award
 Signing of Contract
 Performance Security
 CHAPTER FOUR
SOLICITATION PLANNING, SOLICITATION,
EVALUATION AND SELECTION OF SUPPLIERS
Chapter Outline
 Solicitation planning
 Solicitation
 Key supplier evaluation criteria
 Supplier Selection
 Solicitation
 Solicitation is the act of offering, or attempting to purchase, goods
and/or services. Legal status may be specific to the time or place
where it occurs.
 Solicitation comes from solicit, which means "to request," or "to
entreat." So solicitation is the act of requesting.
 Solicitation planning involves preparing several documents.

Definition
1. Solicitation planning
2. GAP-Assessing Difference between current state and
Solicitation objectives (needs)
3. Design of performance specs
4. SOW- Statement of work/scope of work
5. Solicitation Execution
6. Evaluation criteria – Factors specified in the PFP that will be
considered for award (mandatory/Desirable)
7. Best value – Determined by comparing solutions against
customized criteria
8. Life cycle Cost – Total cost of acquiring, support, Operation,
maintain and disposal (as applicable)
 Solicitation Planning Proccess
 Solicitation planning involves preparing the documents needed for
 Solicitation and determining the evaluation criteria for the contract
award. Two common documents are;
 Request for proposals:- Used to Solicit proposals from
prospective suppliers. In this case, the product scope is not
well-defined. The buyer may choose a particular option out of
several options provided by various suppliers
 Requests for Quotes:- used to solicit bids or quotes for well-
defined product or item
 Invitations for bid or negotiation, and initial contractor
responses are also part of Solicitation planning
 Types of Solicitation
 RFQ (Request for Question) is used to obtain information and
quotations on pricing.
 RFP (Request for proposal) is used to communicate government
requirements to prospective contractors and solicit proposals. The
RFP will describe the government’s requirements, anticipated terms
and conditions, information required and factors that will be used to
evaluate the proposal.
 IFB (Invitation for Bid) is often referred to as a sealed bid
solicitation. Typically there will not be any discussions or
negotiations following the IFB response. Price is the key
consideration during this bid process.
What YOU understand
 Pre-Solicitation
 Solicitation
 Evaluation
 Award
 Administration
What to Avoid…..
 Not fully understanding the solicitation and governing regulations
 Submitting an incomplete or late submission
 Not providing specificity or focus
 Highlighting too much fluff and not enough substance
 Not understanding best value considerations
 Unrealistic pricing
 Failure to address evaluation factors
 Errors in submission
PLANNING
SOLICITATION

 Evaluation of Non-Price/Cost Factors

 The government applies a rating to each category for each
proposal received on the following factors:
Factor 1: Technical Approach
Factor 2: Past Performance
Factor 3: Management Approach
Factor 4: Experience
 Factor 5: Quality Control Approach
 When developing a technical proposal:
 Include past performance to show that you have successfully
completed projects that are similar to the one in the
solicitation.
 Create a high level sketch of how the project will be
managed then drill down to specific tasks, timelines, and
deliverables.
 Develop a team with adequate experience to meet the
requirements this might require you to develop a strategic
alliance or bid with a partner.
 Use a quality assurance process that includes Plan, Do,
Check, Act, and Improve.
How to Get Technical
Did you consider?
 List past performance of individuals
 Team with others.
 Personal vs non-personal services
 All service contracts

Did you review?

 Performance Work Statement (PWS) that provides required
outcomes and quality standards.
 Place of performance
 Period of performance or delivery schedule for supplies
 Key experience or skills required of Contractor personnel
How to win!
 The government evaluates the proposals it gets and decides
which represent the “best value.” Best value is not simply
about price but is a judgment concerning several factors
including capability, capacity, past performance, and price.
 The technical aspects of a proposal are often more important
than those involving price.
 Proposal evaluation is an assessment of the proposal and
your ability to perform the prospective contract successfully.
The technical evaluation of a proposal is made by technical
specialists who are deliberately kept in ignorance of the bid
cost of the several proposals.
  When developing a proposal, confine the text to essential
matters; the quality of the information is significantly more
important than the quantity.
 The government evaluates all proposals on the same non-
price/cost factors: Technical Approach, Past Performance,
Management Approach, Experience, and Quality Control
Approach.
 Supplier Selection
 Evaluation of supplier:- When potential candidates quote
to supply materials, evaluation and selection of suppliers will
be made:- Quality factors include the following:
 Visit to the location of the supplier ( Vendor)
 Sample approvals,
 Inspection costs
 Rejects
 Rework and etc
 Delivery factors:- Include the following:
 Follow-up costs( fax, telephone, and etc)
 Expediting costs
 Transportation costs and etc.
 Service factors:- Include the following:
 Services facilities
 Financial stability
 Labor relation
 Geographical location
 Technical support and after sales services etc.

 Price factor: - This refers the lowest price consistent with

other factors.
 Evaluation Criteria
 Past Performance
 The focus should be on how well the company has
implemented a solution utilizing their proposed agile
process.
 Key personnel
 Evaluate key personnel based on their demonstrated
experience in implementing in an Agile environment.
Do not prescribe certifications or qualification.
 Process
  Should describe how the vendor will manage, execute,
and measure their Agile development to meet end user
objectives and maintain quality.

 SELECTION & MOTIVATION OF SUPPLIERS

 FACTORS IN SUPPLIER SELECTION:- The following are
important factors which are used for selecting the suppliers:
A. Assurance of supply: - The buyer always seeing the reliability of
supply while selecting the supplier. The buyer should confirm the
continuous supply from supplier even during the scarcity of supply.
B. Capacity and economic condition of supplier: - Another factor for
selecting the supplier is capacity and economic condition of the
supplier. supply the raw material continuously in predetermined price
even the price is raising in future.
C. Local source of supply:- The local source of supply is cheaper than
the Global source of supply. All the buyers are interest to purchase
from local if it is suitable to their requirements.
D. Terms and Condition of supply
 Always the selections of suppliers are based on the terms and
condition of the supply.
 The terms include the credit period, amount of discount, price,
transport cost etc.
E. Size and Number of supplier
 If the size of supplier is less, then the buyer should select
the supplier without his option and vice versa.
 If the size of order is more, then the buyer selects more
than one supplier.
 The weighted Point method for supplier selection
 In a weighted point method, an organization
determines in advance a number of evaluation
factors/ criteria such as:
 Weight reflects the relative importance of the
category. The total of each weight must equal
1.0.
  Quality
 Delivery cost
 Cost reduction suggestion
 Price and etc
Example:
o Assume that your organization has decided to apply the
weighted point method of evaluating and selecting suppliers
using the following evaluation criteria and their respective
weights:
Factors Weights (%)
Quality 45
Delivery 25
Cost reduction 20
suggestion
Price 10
Total 100%
o From the past records, the following information was
obtained about the past performances of three suppliers:
Performance
Suppliers Quality Deliver Cost reduction Price(bir
y Suggestion r)
XYZ 95 72 25 600
ABC 80 82 25 500
QST 75 100 50 700
 Which supplier shall the tender committee of your
organization select and offers the bid award?
 Answer can be provided by weighted point method (WPM)
as follows: we rate each factor according to the
performance of each supplier

 Quality factor can be rated as follows

Supplier Past performance in Weight given for Total
quality quality (45%) Percen
tage
(%)
XYZ 95% 45% 43
ABC 80% 45% 36
QST 75% 45% 34
  Delivery factor can be rated as follows:
Supplier past performance in Weight given for Total
Delivery Delivery (25%) Percenta
ge
XYZ 72% 25% 18
ABC 82% 25% 20.5
QST 100% 25% 25
 Cost reduction suggestion factor can be rated as
follows:
Price factor can past performance Weight given for Total
be rated as in cost reduction cost reduction Percentage
follows: Supplier suggestion suggestion (20%)
XYZ 25% 20% 5
ABC 25% 20% 5
QST 50% 20% 10

 Price factor can be rated as follows:

Supplier past performance % in price weight given for Total

in Price price factor perce
factor(birr) ntage
reduction
suggestion
XYZ 600 83% 10 8.33
ABC 500 100% 10 10
QST 700 71% 10 7.14
 In the case of price factor we take the lowest price to be
our base and determine the percentage for other
suppliers’ price.
 In our example the lowest price is offered by supplier ABC
which is 500 birr. Thus, the price rate for supplier ABC will
be 100%.
 Therefore, the percentage in price supplier ABC, XYZ and
QST is:
ABC% = 500/500 * 100 = 100%
 XYZ % = 500/500 * 100 = 88.33%
QZT %= 500/700 * 100 = 71.43%
 Now, we can combine all the rating together as
follows:
 Combining ratings
Supplier Quality Delivery Cost Price Total
reduction
suggestion
XYZ 43 18 5 8.33 74.3
3
ABC 36 20.5 5 10 71.5
QST 34 25 10 7.14 76.1
4
 Now, it is obvious that a supplier with the highest
percentage of weights in its performance is selected by
the respective buyer. And hence, the rank of the tender
committee’s evaluation will be:
 Supplier QST= 1st
 Supplier XYZ=2nd
 Supplier ABC= 3rd
 Therefore, the award according to this evaluation
will be given to supplier QST.
 CHAPTER FIVE: PROJECT LOGISTICS MANAGEMENT

Chapter Outline
 Project stores and Materials Management
 Transport Management in Project
 Physical Distributions Management in Project
Materials management
 It is concerned with planning, organizing and
controlling the flow of materials from their initial
purchase through internal operations to the service
point through distribution.
 Material management is systematic flow of materials
that incorporates;
 Anticipating materials requirements scientifically
  Sourcing and obtaining the right materials
 Inspecting materials
 Introducing materials into organization
 Storing and handling materials
 Disposal of scraps and unserviceable items

Objective of material management

 Primary

 Right price
 High turnover
 Low procurement & storage cost
 Continuity of supply
 Consistency in quality
 Good supplier relation
 Development of personnel
 Good information system
 Secondary

 Forecasting
 Inter-departmental harmony
 Product improvement
 Standardization
 Make or buy decision
 New materials & products
 Favorable reciprocal relationships
 Store Management
 Transport Management

Transport Management…..

Transport Management…..
Transport Management…..

Transport Management…..
Cont…..

 Physical Distribution Management

Physical distribution is the materials management sub-function
most closely related to finished goods.
The cost of physical distribution components represents a
significant portion of product cost and has a decided impact on
overall price levels.
 Chapter Six: Project
Contract
Administration
 What is contract Administration?
 Elements of a Contract
 Types of Contracts and contract strategies
 Settling Contractual Disputes
 Contract Closeouts
 Elements of Contract
 Contract Award Activities
• Contract Documentation & File
– Establish contract file, assign number, and populate
with relevant and required proposal and contract award
data and documentation
• Contract Briefing
– Captures important information from the contract
including relevant clauses
– Information should be stored in a central repository
– Assists in the preparation of ICS & Other Federal
Reports/Notifications
• Contract/Project Kick Off Meetings
– Contract Administrator, Subcontract Administrator,
Project Manager and other key personnel meet to
discuss contract brief, special terms & conditions,
reporting requirements and delivery, maintenance,
communication, roles & responsibilities & execution
plan for contract
• Project Set-Up
– Internal setup and controls necessary to maintain and
monitor for compliance and accountability
– Project billing
 Contract Delivery
– Execution of project scope against project plan and
schedule
– Monitoring & reporting of actuals to planned/forecasted
– Compliance with T&Cs
 First Invoice Review
– Draft first invoice and proceed with first invoice review
procedures with contract and subcontract
administrators and project manager to verify accuracy
and compliance with contractual requirements
– Edit and update to establish precedence/prototype for
subsequent invoices to follow
 Contract Performance Priorities
• Cost
– Stay within cost estimates on a cost- reimbursement
contract
• Schedule
– Ensure timely delivery or make progress towards timely
delivery
• Performance
– Deliver supplies or services that meet contract
requirements
 Contract Administration Activities
• Contract Work papers
– Deliverables
– Evidence of receipt & acceptance
– Advance Agreements
• Purchasing / Subcontracting
– Purchasing & Subcontract Administration,
modifications, flow down of clauses
– Monitoring & Reporting
– Small Business Plan Compliance
• Labor & Payroll / T&E
– Time reporting and compliance
– Expense submission
• Accounting
– Project and Labor Cost Accounting
– Financial Project Cost & Progress Reporting/ETCs
– Cost Allow ability & Allocability
• Ethics
– False Claims/ False Statements, Independence
• Contract Modification / Change Orders
– Written notification
– Contractor must adjust work scope and project
accounting to account for changes
– Segregate costs of performing changed work
 • Billing
– Invoice Review Checklist
– Funding limit maintenance
– Invoice preparation and submission
– Exclusion of Unallowable and Contract Specific Non-
Billable costs
– Billing Files
– Cumulative reporting & notification of limitation of
funding
– Collections
• Government Property
– Disposition, maintenance & reporting of Government
Property
– Classified / Sensitive Material Protection
– Classification, disposition, maintenance and reporting
secure/cleared contracts
• Federal Reporting
– Limitation of Cost/Funds notifications
– Requests for consent
– Forward Pricing & Provisional Rates
– Mandatory Disclosures
• Federal Reporting (cont’d)
– Certifications
– Disclosure Statements (if applicable)
• Federal Audits
– Ongoing standard audits including audits of indirect
rates, post award surveillance reviews, etc.
– System audits including Accounting (Billing, Labor,
Indirect), Estimating, Purchasing and Property
 Types of Contract
 Contract Changes
• Change Authority
− Both the buyer and seller should clearly identify the individuals in
their respective organizations who have the requisite authority to
make changes.
− If the buyer and seller agree in advance to honor only changes
made by authorized personnel, and to promptly notify the other
if unauthorized personnel attempt to make changes, they can
avoid many problems.
− In Government contracting, only Contracting Officers acting
within the scope of their authority may execute contract
modifications on behalf of the Government.
• Responsibilities
− Contractor’s Responsibility; The contractor must continue
performance of the contract as changed
− Government’s Responsibility; Provide an equitable
adjustment in time, money, or both.
 Contract Closeout Activities
 Completed Contracts: A contract is considered to be
physically completed when:
 The contractor completed the required deliveries and
the buyer has inspected and accepted the supplies;
 The contractor has performed all services, and the
buyer has accepted these services;
 All option provisions, if any, have expired;
 The buyer has given the contractor a notice of complete
termination; or
 The contract period of performance has expired.
 Its purpose is to ensure that each party’s
responsibilities are fulfilled, and that the contract file is
documented accordingly.
 Key documents that are required to be retained during
contract closeout and at least 3 yrs. beyond include:
– Contract and Modifications
– Deliverables and Evidence of Government Acceptance
– Correspondence Relating to Project/Advance Agreements
– Level of Effort certifications
– Timesheets
– Accounting Records and Financial Status/Progress Reports
– Subcontract documentation
– Final Rate Determinations/Audit Reports of Incurred Costs