Your Presenters. Today s Agenda 5/18/2018. Policies & Procedures. Introduction to the Study. Firmographics. Tools & Resources

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2 Your Presenters Brent Calhoon Partner Baker Tilly Pat Fitzgerald Director Baker Tilly Brent Calhoon has over 20 years of government contract industry experience. He advises government contractors on complex accounting, pricing, financial reporting, and government audit matters. He also helps clients and their legal counsel avoid or resolve disputes regarding cost allowability, allocability, contract changes, and other regulations that govern business practices. Pat Fitzgerald joined Baker Tilly in He has over 35 years of experience in government auditing and acquisition which includes enhancing the cost effectiveness of business operations, resolving compliance challenges, improving business system effectiveness, conducting internal investigations, preparing for negotiations, and improving relationships between contractors, auditors, and contracting officers. Prior to joining Baker Tilly, Pat served for five years as the director of the Defense Contract Audit Agency. 3 Today s Agenda 01 Introduction to the Study 06 Policies & Procedures 02 Demographics 07 Training 03 Firmographics 08 Tools & Resources 04 Contract Management Function 09 Best Practices: 7 Tips For Success 05 Government Oversight & Risk 4 2

3 01 Introduction to the Study 5 About the Survey More than 250 federal contracting professionals were polled to benchmark how businesses perform the contract management function. > Small, mid-market and large companies > Array of industries > All levels of experience and responsibilities 55% Inside DC Metro Area 45% Outside DC Metro Area 6 3

4 Actions Speak Louder Than Words Today s complex regulatory environment makes it more important than ever for federal contractors to effectively manage their contracts to ensure compliance and optimize performance. Contract management is a critical business function. 7 A Disconnect Continues Despite near-universal agreement on the vital role that contract management plays for federal contractors, the survey results showed inconsistencies in the actions taken in support of this belief. 8 4

5 02 Demographics 9 Respondent Demographics The CM Workforce Senior level respondents Turnover Underlying demographic trends Tenure 66% < 10 years 22% < years 12% > 20 years Job Level Age 10 5

6 Respondent Demographics Level of Education Staffing Responsibility Firmographics 12 6

7 Firmographics: Industry/ Offerings Two-thirds of respondents identified their firms as service providers 13 Firmographics: Business Size The majority of respondents work for a large business (based on Small Business Administration size standards for primary NAICS code) Business Size Employees 14 7

8 Firmographics: Revenue Fiscal Year Revenue Highest Federal Revenue Source Revenue Associated with Federal Government* *In the last fiscal year 15 Firmographics: Cost Accounting Standards Coverage More than half of respondents reported that their companies hold CAS covered contracts. 16 8

9 04 Contract Management Function 17 Contract Management Function: Size & Structure > The majority of respondents reported that their companies have a centralized contracts department > Companies best suited to manage federal contracts view their overall contract management teams holistically > They use teams and resources spanning all areas of an organization, including legal, HR, accounting, business development and operations 54% A centralized department with all contracts-related responsibilities within that department 35% A centralized department with all contracts-related responsibilities dispersed across the organization 11% Had no contract department or were unsure 18 9

10 Contract Management Function: Size & Structure > Respondents most often report their firm has a dedicated contract groups between 2-10 people Dedicated Contracts Groups Size > The size of the contract management group is dependent on the size of the organization Companies can find success managing their contracts through either a centralized or decentralized department Regardless of size and structure, the fundamentals of good contract management are key to any organization's success Government Oversight & Risk 20 10

11 Government Oversight & Risk Respondent organizations are currently experiencing differing oversight levels from its government customers with most reporting medium oversight. Two-thirds describe their organization as having a low risk profile relative to the level of oversight from its government customers. 21 Minimize Risk, Maximize Success > Respondents who work for a company with >10,000 employees and those who experience medium to high oversight from the government rate their firm s ability to proactively identify and manage risk significantly higher than others. > Service providers rate their firm s ability to quickly respond to audit and information requests significantly higher than manufacturers/resellers, while manufacturers/resellers rate their firm s bid/proposal win rates significantly higher than service providers

12 06 Policies & Procedures 23 Policies & Procedures > 59% indicated that robust contract management policies and procedures are formally documented and mandated throughout the organization Robust policies are formally documented and mandated throughout the organization Some exist but are not formally documented and may be applied inconsistently None Exist Other or Don t Know Formally documented contract management policies and procedures are critical to ensuring efficiency, risk mitigation, and consistency in business practices This is true regardless of industry or the size of the contracts group 24 12

13 07 Training 25 The Impact of Training A significantly greater portion of respondents whose employers provide formal internal or external training agree that their company has the appropriate policies, procedures and tools to effectively manage its contracts

14 The Impact of Training The survey results show a strong correlation between training and a contractor s success in the federal marketplace. Contracts-Oriented Employee Training 27 Training for the Win The majority of respondents whose employers provide formal internal or external training rate their company s ability to proactively identify and manage risk, its bid/proposal win rates and training of resources as above average/excellent

15 08 Tools & Resources 29 Tools & Resources > Many respondents use either Microsoft Excel or SharePoint to track/manage their firm s contracts 30 15

16 Tools & Resources Standard Costpoint Projects Module 31 Tools & Resources Standard Costpoint Projects Module 32 16

17 Tools & Resources Deltek Integrated Solution Set 33 Tools & Resources Deltek Capture Management Customization 34 17

18 How does your company stack up? Perceptions Regarding Resources and Risk Best Practices: 7 Tips for Success 36 18

19 Best Practices: 7 Tips for Success? 1. Thoroughly assess your company s business practices, compliance obligations, and infrastructure in order to develop a contract management program that is optimally tailored to the unique characteristics of your organization. 2. Ensure some degree of centralization with respect to the management and storage of contract documentation, confirm that document retention practices are aligned with basic government standards, and organize this information in a way that will allow for ease of access if audited. 3. Establish the appropriate segregation of duties between contract management and sales to eliminate potential conflicts of interest and minimize risk to the business. 37 Best Practices: 7 Tips for Success? 4. Document relevant business practices in formal policies and standard operating procedures, and make certain that that preventive/detective controls effectively mitigate risk. 5. Provide contracts personnel with recurring and targeted training to ensure they have the skillset necessary to succeed in their role(s). 6. Make sure that the system(s), tools, and resources relied upon to manage contracts are properly suited to the business, its compliance obligations, and contract volumes. 7. Implement a process with defined metrics to periodically measure the effectiveness of the contracts function and adjust practices as necessary to remediate control gaps and enhance efficiency

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