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How Does Government Contract Management Work?

May 10, 2021, by Michael Diener

Businesses that work with the U.S. government can enjoy a strong source of revenue, which means that competition for specific contracts can be significant.

Once a contract is awarded, the contractor faces the responsibility of ensuring full compliance with accounting rules and taxation.

Many government contractors enlist the services of experienced government contract managers for help through every step of the process.

What Is Government Contract Management?

Government contract management entails developing and maintaining a formal business relationship between private sector contractors and federal government agencies for supplying goods or services.

Government contract management requires a high degree of specialized knowledge and training as well as previous experience with the intricacies of this often-complicated process.

Governmental agencies at every level, from local through federal, must work under stringent regulations.

Moreover, contracts are not always as straightforward as they sound because governmental agencies may change the scope or terms of a project when it is already underway.

However, contractors do have a right to receive compensation for their work and any losses they incur when these changes take place.

There are also many important deadlines that must be managed. Government contract management handles all the administrative and accounting tasks involved in government contracting so that contractors can focus on delivering the goods or services under their contract.

What Services Does Government Contract Management Offer?

Government contract management offers a range of services to businesses that wish to work on government contracts, from the bidding stage through termination or renewal.

Contract Bidding

Pricing the original bid correctly is important for businesses to make money while performing the contract.

Unlike the commercial world, loss leaders are not going to be profitable, and guessing or making “ballpark estimates” can backfire. Government contract management services can provide expert guidance on successful pricing.

Contract Modification

Ideally, businesses will submit a bid that allows them to profit from their contract. However, there are some conditions that may permit contractors who are losing money on a contract to make a constructive change to correct the situation. Government contract management services can help contractors determine when and how to carry this out effectively.

Contract Negotiation

Negotiating government contracts is quite different from commercial negotiations. Government contracting already has slim profit margins, and it is easy to run into problems during the negotiation stage without experience or guidance.

Contract Proposal

Experienced government contract specialists can help draft contract proposals that feature winning attributes to make them stand out and have a better chance of success.

They can ensure that the business meets the requirements of the contract and that the proposal showcases the company as providing a good value to the government while mitigating potential risks.

Whether complete proposal writing services are needed or assistance is only required with certain aspects, such as review and critique, having expert input can make the difference to a proposal’s success.

Contract Renewal

If the first contract is successful, it may be possible to renew it. Government contract management services can help to negotiate changes to the terms in addition to preparing and submitting the renewal.

Contract Termination

One way in which government contracting is different from commercial business is in regards to contract termination. If the termination is not the result of a breach on the part of the contractor, they must still be compensated and should file appropriate settlement paperwork within a prescribed time frame.

The government may choose to terminate a contract at any time, and it is essential to have experts on hand in these situations to protect contractors and help them determine the best course of action.

Request for Equitable Adjustment (FAR Clause)

Government contract managers can help to assess and resolve disputes related to federal government contracts and subcontracts, such as requests for equitable adjustments (REAs). These are requests for a contract price to be adjusted or additional time to be obtained.

Compliance for Government Contracts

Government contract management can also assist with ensuring compliance. There are many governmental agencies that have various accounting requirements and contract administration needs, including:

  • Department of Defense
  • Health and Human Services
  • Department of Energy
  • U.S. Department of Agriculture
  • National Institutes of Health
  • National Science Foundation
  • National Aeronautics and Space Administration

Some of the areas in which contractors must be compliant include:

  • Federal Acquisition Regulations (FAR)
  • Defense Contract Audit Agency Requirements (DCAA)
  • Generally Accepted Accounting Principles (GAAP)
  • NASA Far Supplement (NFS)
  • Contractor Audit Manual (CAM)

Category iconGovernment Contract Consulting

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125 Rowell Court Falls Church, VA 22046 703.386.7864

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