The Contract is Starting to Fail: Ideas for Righting the Course


It is always difficult when vendor performance on a contract starts going south. The signs are often small at first, a missed deadline, a work product that just isn’t quite what you were expecting, a meeting with stakeholders that does not work out as planned. Then the issues become bigger – multiple missed deadlines, incomplete or nonexistent work products, vendor staff that are chronically remiss in their duties or overly reliant on agency staff. Agency staff knows the contract is at risk for failure but it seems like there is nothing that can be done. Numerous emails and phone messages have failed to resolve the issue. The complaints at your agency are escalating. Tensions are building with the vendor but no resolution is in sight. There are six steps that can be taken to turn the project around.

Read the contract carefully

First and most importantly, return to the contract (and associated addenda) which are the foundation of your agency’s relationship with the vendor.  Read your contract carefully; highlight places in the contract scope where the vendor is failing to meet expectations. Reexamine the timeline, work products and payment milestones. Provide the vendor with concrete evidence from the contract about where the performance is lacking. This removes subjectivity and moves the analysis of performance to a more objective place for discussion. Both the agency and the vendor signed off on the contract so there was a time when both parties committed to the scope and terms therein.  This is a very useful place to start when defining what exactly is going wrong with the contract. The ability to define the problem is the first step to finding resolution.

Take a look at your part in the problem

Next, step back and look at how the agency has participated in the creation or perpetuation of the problem. Rarely is the problem wholly on the part of the vendor. Gather agency staff and management who are involved in the contract and focus the discussion on the agency’s role in the problem. Look critically at agency participation and communication. Where has the agency failed to live up to its part of the contract? What steps can it take to own up to these issues? Write down a list of areas where the agency has failed and suggestions for how the agencies deficiencies can be remediated.

Clearly articulate agency needs internally

Often times, when contracts go awry, it is because communication has broken down. Large projects require hundreds or even thousands of communications via email and phone. There are requests made and completed in back and forth exchanges among multiple staff people on both the agency and vendor sides. In steps one you reread the contract and defined the areas of deficiency on the part of the vendor. In step two, you worked with agency staff to identify deficiencies on the agency side. Now put the agency’s concerns with the vendor and deficiencies down in writing. Reread them, ensuring that they make sense and are related only to the scope of the contract as the contract is written.

Meet in person with senior management

Have an in person meeting of senior management from both the vendor and agency side to discuss the state of the contract. Bring agency concerns to the meeting in writing. Listen to feedback from the vendor. There may be issues that the vendor is having with the agency which have never been addressed that are hindering progress. Air these issues from both sides. Look for paths to resolution of the issue. In most cases, both the agency and the vendor are best served by completing a contract with a successful outcome. Maintaining a spirit of cooperation and seeking resolution amenable to both sides facilitates this occurring. Holding this meeting without having the staff who are involved in the day-to-day operation of the contract can be helpful because it disengages some personalities and emotion from the discussion to focuses on the contract scope and resolution of issues.

Create a written plan of action

Following the meeting, the agency should write up a plan of action based on the issues discussed with the vendor. Send the plan of action to the vendor to solicit feedback and buy-in. Make any needed adjustments. Senior management should share this document with agency staff for their input and to establish the expectation that the plan will be followed. One of the best ways to enforce vendor performance is for the agency to uphold its part of the plan.

Check in regarding the status of the work plan weekly

Use the plan as a checklist for correction of any areas where the vendor is deficient and to praise the vendor for areas where improvement is made. Adjust the work plan as needed during the remainder of the contract always tying it back to the scope of work in the contract and clearly articulating agency needs and concerns

There is not exact recipe to follow to rescue failing contracts, but if agencies adhere to the six steps above with an attitude of respect and collaboration, there is a greater likelihood that the relationship can be reestablished and even strengthened.

Carolyn Ninedorf is part of the GovLoop Featured Blogger program, where we feature blog posts by government voices from all across the country (and world!). To see more Featured Blogger posts, click here.

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