Purchasing Contract Administration: Contract Closeout

Buyers' Training
June 6, 2012 — 1,148 views  
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According to Acquisition Central, a United States E-Gov Initiative that describes all federal acquisition content, contract administration occurs when government officials award a contract to a contractor and the contractor and government are examined to see how the requirements of the contract were met. This process includes all interactions between the parties and continues until the work has been finished and accepted as completed, or when the contract has been terminated and all disputes have been resolved.

Contract administration is simply part of the payment process that ensures the government agency gets what it has paid for in terms of the contract agreement and that the job is of quality, within budget and on time, notes the source. The goal of this process is to make sure customers who will be using the product or services created under the contract are satisfied with the end result. Contract administration practices can also be used by civilian agencies.

There are problems that commonly occur in contract administration practices when used by civilian agencies. One of the main issues is purchasing contract administration officials spending more time creating and awarding new contracts than using existing contracts. By drafting new contracts, the risk of going over budget can be increased and there could be a postponement of receiving goods and services needed for the project.

Best practices for contract administration should be considered to avoid these and other problems throughout the process and during contract closeout. These techniques have been formed from practical experience and can be used to improve the purchasing process. 

The National Contract Management Association summarizes that contract closeout is when the project, products or services have been completed. It begins as soon as the duties outlined in the contract are physically completed - the structure has been built, the products have been delivered or the services have been executed. In some cases, the contract will be completed easily and quickly. Other times, it is a more complex process that may take more time.

How easily contract closeout can be finished is dependent on the contract type, nature of the work and any disputes that have occurred. The resource states best practices might include emphasizing the importance of contract closeout by establishing a separate entity within the contracting organization that focuses on the closing process.

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