Contract and Procurement Management PM 598 Mitchell J

Contract and Procurement Management (PM 598) Mitchell J. Ross

Session 1 Agenda • Introduction • Course Administration • Course Overview • Steps in the Process • Roles and Responsibilities • Readings • Standards of Conduct Mitchell J. Ross

Introduction • Name • Program • Background • Expectations Mitchell J. Ross

Course Administration • • • Format Description Terminal Course Objectives Texts Case Studies Supplemental Readings Negotiation Academic Integrity Evaluation Sessions Mitchell J. Ross

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. Mitchell J. Ross

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 Mitchell J. Ross

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. Mitchell J. Ross

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. Mitchell J. Ross

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. Mitchell J. Ross

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. Mitchell J. Ross

Text Getting to YES Negotiating Agreement Without Giving In By Roger Fisher and William Ury with Bruce Patton, Editor I The Problem 1. Don’t 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 Won’t Play? 8. What If They Use Dirty Tricks? IV In Conclusion V Ten Questions People Ask About Getting To Yes Mitchell J. Ross

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. Mitchell J. Ross

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. Mitchell J. Ross

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 factfinding, negotiations and debriefing. Mitchell J. Ross

Evaluation • Mid Term Examination 30% • Final Exam 45% • Negotiation 20% • Class Sessions 5% Mitchell J. Ross

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 Mitchell J. Ross

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 Mitchell J. Ross

Course Overview Common Process - Specific Differences Public and Private Procurement Product and Service Procurement Bids and Proposals Large and Small Procurement Projects and Items Mitchell J. Ross

Steps in the Process 1. Planning 2. Soliciting 3. Offering 4. Selecting 5. Awarding 6. Performing 7. Closing Mitchell J. Ross

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 Mitchell J. Ross

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 Mitchell J. Ross

Readings • Business Ethics: It’s 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 Mitchell J. Ross

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 Mitchell J. Ross

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? Mitchell J. Ross

Case Study Standards of Conduct • Voice: Argue internally or blow the whistle • Exit: Resign or threaten to resign • Loyalty: Accept subservience to the organization Mitchell J. Ross