Contract and Procurement Management (PM 598)

1
Contract and Procurement Management (PM 598)
2
Session 1 Agenda

• Introduction
• Course Administration
• Course Overview
• Steps in the Process
• Roles and Responsibilities
• Readings
• Standards of Conduct

3
Introduction

• Name
• Program
• Background
• Expectations

4
Course Administration

• Format
• Description
• Terminal Course Objectives
• Texts
• Case Studies
• Supplemental Readings
• Negotiation
• Academic Integrity
• Evaluation
• Sessions

5
Course Description

• Contract and Procurement Management examines the
  process by which goods and services are acquired
  in the project environment. Also examined are
  legal issues project managers face. Topics
  include contract law contract and procurement
  strategies source selection, contract type
  identification product liability and risk
  tender documents invitation to bid bid
  responses and evaluation contract risk
  assessment and contract negotiation.

6
Description

• Contract and Procurement Management examines the
  process by which goods and services are acquired
  in the project environment. Also examined are
  legal issues project managers face. Topics
  include contract law contract and procurement
  strategies source selection, contract type
  identification product liability and risk
  tender documents invitation to bid bid
  responses and evaluation contract risk
  assessment and contract negotiation.

• contract
• procurement
• management
• process
• goods and services
• acquired
• project environment
• law
• strategy
• source selection
• contract type
• liability
• risk
• tender documents
• bid
• negotiation

7
Terminal Course Objectives (12)

• A. Solicitation Given a situation to solicit a
  bid or proposal from potential suppliers, develop
  a Request for Proposal.
• B. Specifications and Statements of Work Given a
  procurement situation, develop a recommendation
  based on the strengths and weaknesses of
  performance standards versus specifications.
• C. Make/Buy Given a procurement problem,
  identify the major considerations in a make/buy
  decision and recommend a position.

8
Terminal Course Objectives

• D. Source Selection Given a supplier selection
  situation, identify and apply the principles of a
  supplier evaluation process and recommend a
  supplier choice.
• E. Contract Formation Given situations to draft
  and execute contracts with outside parties,
  analyze and select the best structure for various
  types of contractual relationships.
• F. Contract Principles Given descriptions of
  project procurement and administration
  situations, select and apply appropriate contract
  principles to these projects and specify the
  essential contract requirements.

9
Terminal Course Objectives

• G. Disputes Given project situations that
  include the potential for breach of contract,
  analyze and determine appropriate contractual
  remedies and / or damages.
• H. Capital Equipment and Services Given a
  standard procurement process, evaluate its
  appropriateness for a project requiring capital
  equipment or services procurement.
• I. Administration Given project situations
  requiring contract administration, select and
  apply techniques that will ensure successful
  contract performance.

10
Terminal Course Objectives

• J. Changes Given a change of requirements during
  the project, describe the steps to be taken to
  execute this change.
• K. Supplier Review Given a procurement
  situation, plan and implement a supplier review
  and recommend an appropriate course of action
  based on the review.
• L. Negotiations Given a situation requiring
  establishment of a contractual relationship with
  another party, develop a negotiating strategy and
  execute it using appropriate techniques of
  effective negotiation.

11
Text
Getting to YES Negotiating Agreement Without
Giving In By Roger Fisher and William Ury with
Bruce Patton, Editor

• I The Problem
• 1. Dont Bargain Over Positions
• II The Method
• 2. Separate the People from the Problem
• 3. Focus on Interests, Not Positions
• 4. Invent Options for Mutual Gain
• 5. Insist on Using Objective Criteria
• III Yes, But
• 6. What If They Are More Powerful?
• 7. What If They Wont Play?
• 8. What If They Use Dirty Tricks?
• IV In Conclusion
• V Ten Questions People Ask About Getting To Yes

12
Case Studies

• Ethics
• The Space Shuttle Challenger
• Principles
• Selection of Contract Type Scenarios
• Planning
• Maine-Barnes
• Solicitation
• Futronics
• Offers
• Tristar Computer Company
• Source Selection
• Great Western University
• Peach Computer Company II
• Vigard Manufacturing Company
• Award and Peformance
• AAA, Inc.

13
Supplemental Readings

• The supplemental readings are taken from multiple
  sources. Most are from people that work in the
  field of purchasing or procurement or contract
  management or supply chain management or
  acquisition. Some are from people that work in
  research and academic settings. The purpose of
  the supplemental readings is to provide a sense
  of the thinking and state of knowledge in the
  field. Perspective is more important that detail.

14
Negotiation

• The class will be divided into teams and will
  negotiate a contract modification based on the
  AAA, Inc. case study. Sessions 8 and 9 will be
  devoted, in large part, to fact-finding,
  negotiations and debriefing.

15
Evaluation

• Mid Term Examination 30
• Final Exam 45
• Negotiation 20
• Class Sessions 5

16
Sessions

• Session 1 Introduction and Overview
• Session 2 Principles
• Session 3 Planning
• Session 4 Solicitation
• Session 5 Mid Term Examination
• Session 6 Offers
• Session 7 Source Selection
• Session 8 Award
• Session 9 Performance
• Session 10 Final Examination

17
Course Overview

• Contract and Procurement Management is the buying
  and selling of goods and services between two
  parties. It entails a process of engagement that
  results in commerce.
• Acquisition
• Procurement
• Purchasing
• Contracting

18
Course Overview

• Common Process - Specific Differences
• Public and Private Procurement
• Product and Service Procurement
• Bids and Proposals
• Large and Small Procurement
• Projects and Items

19
Steps in the Process

• Planning
• Soliciting
• Offering
• Selecting
• Awarding
• Performing
• Closing

20
Roles and Responsibilities

• Buyer
• Seller
• Contracting Officers
• (PCO, ACO, TCO)
• Purchasing Manager/Agent
• Contract Manager
• Acquisition Manager

• Team
• Integration
• Shared Responsibility
• Regulations
• Codes
• Law
• Channels
• Sources
• Distribution

21
Readings

• Documents
• Simple Contractor Agreement Template
• Request for Quotation
• Solicitation, Offer and Award
• Solicitation/Contract/Order for Commercial Items
• Contract Pricing Proposal Cover Sheet
• Past Performance Evaluation Questionaire
• Useful Web Sites

22
Readings

• Business Ethics Its Greek to Me!
• by Michael Cassady April 2001
• The Evolution of Purchasing to Supply Chain
  Management
• by Richard Pinkerton February 2000
• The Procurement Manager of the Future
• by Robert A. Welch December 1997
• Training the Contracting Officer of the Future
• by Ralph C. Nash March 1997
• The Buyer as a Business Manager
• by W. Gregor Macfarlan August 2000

23
Readings

• Engineers Allies or Adversaries?
• by George C. Belev Winter 1989
• The Contract Manager versus the Program Manager
• by Leslie S. Deneault and Bryan Stambaugh June
  2000
• Deals on the Side
• by Andrea Gerlin for the Wall Street Journal
  February 1995
• Ethics and the Acquisition Profession
• by Nancy Liounis July 1998
• Acquisition and Procurement Do They Mean the
  Same Thing
• by O. S. Hiestand July 1999
• The Revolution in Business Affairs Will
  Contracting Officers Survive or Be a Casualty?
• by Randy Shearer November 2000
• Five Tracks to Acquisition Success
• by Bob Welch and Ann Costello August 2000
• One on One An Interview with Helmut F. Porkert
• By Kristen Kioa Winter 2001

24
Case Study

• A. Should Roger Boisjoly and Arnie Thompson have
  done more?
• B. Were Thiokol and NASA management unethical?.
• C. Why was the risk assessment by Thiokol and
  NASA so faulty?
• D. What standards of conduct should govern our
  actions as professionals?
• E. How do we differentiate between bad management
  or engineering judgment and unethical behavior?

25
Case Study

• Standards of Conduct
• Voice Argue internally or blow the whistle
• Exit Resign or threaten to resign
• Loyalty Accept subservience to the organization