3.8 Contract Monitoring

A formal or informal post-award conference with contractor personnel responsible for administering the contract should be held as soon as practical after award. Although contractor personnel involved with the procurement process should already be aware of the contract requirements, the post-award conference ensures that contractor personnel who were not involved in the procurement, but will be responsible for contract administration, understand the contract requirements, including the contract monitoring plan. The conference helps to avoid potential misunderstandings early in the life of the contract.

For guidance in conducting a post-award conference, see the Contract Management Handbook, Section 7.1.9.

Contract Monitoring Overview

Performance monitoring is a key function of proper contract administration that helps (1) confirm that the contractor is performing all of its duties and obligations in accordance with the terms of the contract, and (2) identify and address any developing problems or issues. Contract monitoring may be viewed as:

• A preventative function;
• An opportunity to determine contractor’s needs for technical assistance; and
• A valuable source for information concerning the effectiveness and quality of goods/services provided

Performance monitoring tools should be specified in the solicitation and included in the contract. Reporting and testing are examples of contract monitoring tools. This assures the University’s ability to enforce contract compliance.

The Departmental Contract Administrator (DCA) is responsible for developing and administering a contract monitoring plan.

Determining What to Monitor

The Office of Contracts and Procurement (CNP) will develop a Contract Risk Assessment along with the Departmental Contract Administrator. This assessment will provide a basis for identifying risk elements associated with the contract and used to develop a monitoring plan.

A Contract Risk Assessment will be completed for all contracts with a value of $250,000 or greater. For contracts below $250,000, a Contract Risk Assessment will be completed only if other "High Risk" factors are known to exist.

While DCAs are responsible for effectively managing all of their contracts, only those above this threshold require a formal written plan.

The Contract Risk Assessment establishes risk level based upon the following areas of risk:

Criteria

Risk Level

Low

Medium

High

Amount of Agreement

Term of agreement

Personal, Health, Student Data

Data or Information Security Issues

Information Security Office Recommendation

Contract not Allowed

Intellectual Property Issues

Safety or Security Issues

HUB Subcontracting Plan

Specificity of SOW Deliverables

Monitoring Plans

CNP will discuss the Contract Risk Assessment with the Departmental Contract Administrator and determine the type of monitoring that will be required:

Routine Monitoring – Departmental Contract Administrator will develop a written monitoring plan that addresses all medium risks that have been identified for the contract. The contract monitoring plan and contract monitoring activities must be kept in the contract file at the department level.

Enhanced Monitoring – If any “High Risk” items are identified, CNP will work with the Departmental Contract Administrator to develop the contract monitoring plan. Both CNP and the Departmental Contract Administrator will maintain copies of the contract monitoring plan. CNP will actively participate in meetings with the contractor and be provided with any reports that are submitted by the contractor. CNP is responsible for identifying and reporting any significant contract issues to the Board of Regents thru the Office of Business Affairs.

Monitoring Tools

The Contract Management Guide, Section 7.2.3 addresses things to consider when deciding on monitoring tools. These include:

• Site Visits – Contracts that are complex or have a high degree of risk may require visits to the contractor’s facilities. Site visits may be used to verify that the contractor’s performance complies with the contract schedule or other requirements.
• Periodic Business Reviews – Formal, face-to-face business reviews should be schedule at appropriate intervals (quarterly, semi-annually) to assure that contractor’s performance is discussed. These reviews should have a formal agenda that specifically addresses all identified areas of risk, as well as discussion of opportunities for improvement that have been identified.
• Desk Reviews – A desk review includes a review of reports submitted by a contractor to the University. Criteria for items that require reporting by the contractor should be included in the contract monitoring plan.
• Expenditure Document Reviews – An expenditure document review includes analysis of contractor invoices to determine (1) if the fee rates and expenditure items are permitted under the terms of the contract, and (2) if the supporting documentation adequately supports the invoice.
  

Contract Management Team

The complexity of a contract may require that multiple individuals be involved in supporting the Departmental Contract Administrator. This could involve from one to several individuals depending on the dollar value, term, level of risk and complexity of the contract. The Departmental Contract Administrator (contract manager), in consultation with CNP, should assign roles and responsibilities to each member of the contract management team. Potential roles for contract management team members are listed in the Contract Management Handbook, Section 7.1.8.