Winning a contract is only the beginning, not the end of the procurement process. For small businesses participating in procurement, winning a contract from a government agency or a larger company opens a window of opportunity.
As mentioned, winning a contact is only the beginning and only just the first hurdle. Upon the receipt of the contact binding two parties, there must be an understanding that the contract should be followed to the letter. A contract, like in many contexts, is a written agreement with consideration to goods and services. The contract also details in terms of items or services needed, prices, quality or quantity, mode of payment, delivery or duration and other business provisions, related information and pertinent details In addition, each parties responsibilities (both the seller and buyer) are spelled out. As a legal document, a contract covers a lot of areas related to a particular transaction.
For many small businesses owners, a contract is a huge responsibility. The donor, whether it is a government agency or a fellow company, expects the seller or any role that the small business will take to adhere to the conditions outlined in the contract. Doing the opposite will cause some irreparable damage to the small company in both financial and reputation aspect.
Caution must be exercised when dealing with a contract. It is a legal and sometimes, very technical document. Reading it twice or more, asking questions and remembering some pivotal details (like the agency or office that issued the contract) is as important as gathering facts before the procurement process.
In many ways, federal and commercial procurement contracts are the same. In a federal procurement contract, there are some unique provisions or clauses exceptional to the government. Some of these clauses include termination for default and convenience, contract changes, payments, specifications and inspections and testing.
1. Termination of contract includes the termination for default.
This happens when the company fails to deliver within the date specified in the contract, fails to introduce changes or progress and fails to perform. Before any termination, the government agency gives the small business an opportunity to remedy the situation or convince the agency to retain the business for the transaction. Termination will happen if there is no change. Depending on the situation, the business can receive a partial payment or shoulder the costs the government makes after choosing another supplier.
Another termination is termination for convenience or termination from the government. Simply, the government tells the small business that the transaction is stopped and associated business activities (work, reduction of orders, payments and activities with a subcontractor etc). Then, the small business should prepare a termination settlement claim. This claim will be received by the government with compensation for activities rendered and a portion of profit. Termination of convenience happens when the government (or the concerned agency) feels that the transaction (with the goods or services) is not necessary.
2. A contract can be changed during the transaction/project.
The concerned agency has the right to change some provisions on the contract, as long as they fall in a general scope. The small business, in turn, has to accept these changes.
3. Payment is another contention in terms of contract.
If the goods or services provided are relatively few, payment by the government is in lump sum. In large quantities, it is best to send the specific agency and invoice for anything rendered. In sending a bill to the government agency, it is always good to be accurate and specific. Mistakes in payment cause delays on both parties.
4. Contracts are long documents, often full of legalese and specifications that should be agreed by both parties.
Often, the specific parts of goods and services make the document long and cause disputes between the government and the business. Governments have specific needs and it states its exact requirements. It expects that a particular product or service is what they will get and pay for. Aside from product and good specification, there are also specifications when it comes to other related matters such as delivery, quantity and quality.
5. While working for a project for the government, it is customary that the government agency will send some people to perform inspection and testing.
These activities are included in the contract and are included to make sure that the business is performing to the stated specification and requirements. Some inspections and testing might occur during or after the product is sent or the service performed, depending on the agreement.
Indeed, getting a contract deserves a celebration but there is still work to be done. How do you plan to win your contract with corporations and the government? Share your best practices here.
