By Mick Fox
Chief Operating Officer, TechnoMile
Did you know there are currently more than 200 vendors in the Contract Lifecycle Management software market? Even with a clear understanding of the many benefits delivered by CLM tech — e.g., more effective risk and compliance management, greater contract profitability, improved delivery to customers, more cost-effective contract administration — contracts organizations often find it overwhelming to begin a CLM software selection initiative given the tremendous number of available systems.
Additionally, for a contracts department operating in the aerospace and defense or government contracting industries, there’s an added challenge: your CLM needs are in many ways cut from a different cloth than those of your counterparts in the commercial world. The vast majority of CLM solutions in the market are first and foremost designed to support the request, creation and negotiation of commercial-to-commercial agreements and often lack critical capabilities that support the many and varied roles the contracts team plays throughout the lifecycle of pursuing, winning and performing a federal contract.
How do you begin to sort through the noise of 200-plus potential solutions? What evaluation criteria are most important when managing contracts in the federal marketplace? After reviewing over two dozen requests for proposals I’ve been involved with in the A&D/GovCon sectors and speaking with two major information technology research firms about inquiries they’ve received from our industry, I’ve come up with three imperatives for federal contractors to consider to successfully shape your evaluation of CLM technology.
1. Think cradle to grave
A significant part of your role as a contracts professional is that of business advisor, and many areas where your guidance and risk management expertise come into play occur well before a contract is awarded. It follows, then, that your CLM solution should also provide cradle-to-grave support for managing the government contract lifecycle. A quick review of the NCMA’s Contract Management StandardTM highlights the critical tasks that occur during the pre-award, award and post-award phases of a contract’s lifecycle. It can be insightful to have potential CLM vendors showcase how their solutions’ capabilities can support your contracts team during each of these phases and bring new efficiencies and effectiveness to specific tasks. For example:
- Pre-award – Let’s look at the “cradle” end of the spectrum. Can a potential CLM solution help your company “shred” an RFP – i.e., automate the process of extracting critical details from a solicitation? Dig into capabilities that will enhance the contracts team’s ability to communicate regulatory and other key requirements to stakeholders to support activities such as bid/no bid decisioning, requirements shaping, proposal development, risk mitigation planning and building of cost estimates.
- Award – Setting up a new contract award in the CLM is often one of the most time consuming and labor-intensive activities for a contracts team. Furthermore, that contract will get modified by your customer several (perhaps hundreds of) times over its lifecycle, which is even more labor intensive. Make sure to have potential vendors demo the creation of a new contract record in their system that is inclusive of all critical details that must be tracked for federal contracts (e.g., FAR clauses, CLINs/SLINs, deliverables and other obligations, etc.). Can standard award documents can be scanned to extract contract details for review and validation, eliminating keying of data for your contracts professionals? Can modifications be ingested into the CLM as well?
- Post-award – At the “grave” end of the lifecycle, does the potential CLM offer prime and subcontractor contract closeout workflows? Can you configure your own closeout task lists, assign tasks to stakeholders, notify external points of contact and track the required reviews/approvals?
There are obviously a myriad of other activities to consider at each phase, but you get the picture: you’ll derive greatest value from a CLM solution that tightly maps to your team’s roles throughout the end-to-end federal contracting lifecycle.
2. Maintain a sharp focus on obligation and risk management
What are the most essential aspects of a CLM solution for government contractors? In my experience, they are obligation and risk management — i.e., the capabilities that will enable your organization to readily identify and comply with the litany of rules and regulations imposed by the US government that are buried within your federal contracts. It’s important to note that this is out of step with the functionality that’s at the heart of a typical commercial CLM solution, which focuses first and foremost on contract creation — i.e., the ability to request, author and negotiate commercial agreements. Yes, you’ll need the ability to create buy-side agreements (see imperative number three below) but faced with managing a portfolio of complex sell-side agreements all issued on government paper, I’d argue that robust obligation and risk management capabilities tailored to federal contracting needs should be at the very top of your list when evaluating CLM technologies. Here are some examples to consider:
- Deliverable/Contract Data Requirements List management – Ask how the CLM can help your contracts team streamline the capture of all obligations embedded within a contract and assign corresponding tasks, thus strengthening your company’s ability to maintain compliance throughout the contract lifecycle. Can a potential CLM solution machine-extract deliverables, CDRLs and other obligations from standard award documents?
- Regulatory clause library – The ability to readily identify contracts containing clauses that your organization deems risky or business critical should be a key expectation for your CLM solution, but beware creating a heavy data entry lift for the contracts team in order to achieve this. Be sure to identify whether a potential CLM’s clause library offers pre-populated federal regulatory content, including FAR and DFARS clauses and any agency supplements that are important to your business. Inquire about the process to maintain this content when regulatory updates occur – is it automated or manual?
- Configurable alerts – Assess how well the CLM will call attention to any action your Contracts team must take to ensure your organization remains compliant throughout the contract lifecycle. For example, does the system provide alerts when PoP is ending or when a contract is about to reach its 75 percent limit and the limitation of funds action must be initiated?
Few (if any) industries are as highly regulated as federal contracting, so it behooves you to ensure that your CLM tech investment will significantly bolster your team’s efficiency and effectiveness when it comes to managing compliance obligations and risk.
3. Seek contract creation capabilities with the right context
What do I mean by contract creation with the right context? As noted above, you’ll need the traditional capabilities a CLM provides for authoring and negotiating contracts, but I encourage you to look closely at the workflows and business processes that surround these features in a potential CLM. There are two main use cases to evaluate:
- Pre-award partner planning – Helping your company’s business development and capture teams assess teaming options and partners for an opportunity is a critical pre-award contracts function. Evaluate the CLM’s ability to streamline workflows for the creation, negotiation, approval and execution of non-disclosure agreements and teaming agreements. Ask how these capabilities can integrate with your organization’s sales processes and CRM technology. Likewise, how will these processes connect to your post-award subcontracting workflows?
- Post-award subcontractor management – You’ll also want the ability to digitally create, negotiate, and execute both subcontract and subcontract modification agreements. Investigate any features that will help enforce compliance during the subcontracting process. Are there validations that an NDA, PIA and/or TA are in place before a subcontract is created? Are required clause flow-downs included by default? Are key details in the subcontract pulled from the associated prime contract – e.g., CLINs/SLINs/ACRNs, PoP, labor categories?
With these types of workflows surrounding core contract creation capabilities, you’ll not only benefit from simplified agreement authoring and accelerated review and negotiation cycles, you’ll also improve collaboration with your BD and capture team partners and strengthen compliance.
Vertical-specific solutions on the rise
You may have noted a common theme across the imperatives outlined above: the emphasis on evaluation criteria that will help you identify a CLM that natively maps to the unique complexities of managing federal contracts. In fact, vertical-specific software solutions are on the rise. Gartner has noted that it “increasingly finds that its clients look for systems that are immediately relevant to their selling context. They want out-of-the-box applications that offer business processes and application functions that reflect the best practices of their industry.” It follows that seeking out government contracting-specific CLM solutions can be a smart strategy to identify software tailored to your needs, without requiring costly and time-consuming software customizations.
Ultimately, each company must choose a CLM vendor based on its own requirements, but for many leading organizations in the federal marketplace, using evaluation criteria that tightly align with the cradle-to-grave federal contract lifecycle and exploring vertical-specific CLM solutions have proven to be a recipe for CLM success. For more on the topic of CLM evaluation criteria, check out this comprehensive list of more than 150 requirements to use to assess CLM software based on the unique and complex needs of federal contractors.
