Managing Government Contracts

Today's government organization bears little relation to the government organizations of the past. Traditional government organizations:

  • Were vertically and hierarchically structured

  • Incorporated a wide array of functions under the organizational umbrella

  • Utilized permanent, fulltime employees for most organizational functions

  • Relied on managers to guide the daily behavior of their employees

Today, government services are provided by a network of organizations. In some cases, government agencies have divested the ability to provide services to a variety of subordinate agencies. For example, for decades mental health services were provided at the state level in cumbersome and often-substandard state institutions. Propelled by community action and federal court orders, those institutions were shut down and most services were transferred to community control. Today, mental health services are provided through a network of community, not-for-profit and for-profit organizations. Where once, state mental health agencies were direct providers of services, now those agencies regulate and help fund others engaged in service provision.

In other cases, agencies have contracted with for-profit organizations for the provision services not essential to the public purpose of the agency. For example, many functions previously provided by uniformed military personnel are being provided by contractors. Those services include food service, fleet maintenance, and, even, base security.

The level of service outsourcing is expanding quickly with no sign of slowing, particularly as government resources become scarcer. According to the Office of the President, spending on federal government contracts has more than doubled between 2001 to 2008 and reached the $500 billion mark in that year.

That trend toward outsourcing government services, though sometimes challenging and ill-conceived, is likely to increase as governments are challenged to continue to do "more with less," the mantra that reflects the ongoing and increasingly severe financial constraints on government, which has, unfortunately, been coupled with a demand for heightened levels of services to the public.

In this new environment, the role of public-sector managers has changed. Rather than managing long-term employees, whose activities were monitored on a daily basis, managers in today's modern organization is being asked to:

  • Manage contractors who have an information advantage over contracting agencies

  • Manage vendors who have been assigned critical organizational and public-service functions

  • Maintain the quality of services within the constraints of contract mechanisms

  • Work with sometimes cumbersome and limited contracting mechanisms

Meeting these challenges requires a new set of management skills, skills that are focused more on managing toward outcomes rather than activities. The challenges include identifying those outcomes, specifying them clearly, managing changes in needed outcomes, creating the legal frameworks that build relationships and, at the same time, ensure compliance, and managing transitions.

This two-day workshop is designed for managers who are seeing these new challenges. Its objectives are to:

  • Describe the new government environment

  • Identify those services which are the best candidates for outsourcing

  • Identify the challenges of managing for outcomes and managing vendors

  • Describe the tools and methods for specifying the necessary outcomes and creating the legal framework for managing in the new environment including effective contracts and service level agreements

  • Identify best practices in outsourcing and service and contract management

  • Apply relevant tools from project management that can help manage the transitions involved

  • Engage the participant in exercises designed to improve their ability to apply these concepts and skills

The educational goals of this workshop are to:

  • Improve the capacity of government managers to create good outcomes and results through vendors

  • Allow participants to apply the skills and concepts to case studies and their own workplace

  • Improve the ability of managers to create workable, long-term relationships with vendors and avoid contractor and vendor problems

Course Outline

Day 1:

Module 1: Introduction to the workshop

  • In this module, we will detail the course objectives and schedule and identify participant interests and concerns

Module 2: The changing workplace and changing face of management

  • In this module, we'll examine how the workplace has changed and why the management of vendors and outsourced services is so critical to government managers. We'll look at the new demands on managers and the management tools required in this environment. We'll also examine the challenges of identifying what services are the best candidates for outsourcing.

Module 3: The challenges of outcome management, identifying and defining clear outcomes, performance management, managing the cultural changes necessary for successful outsourcing; the myths of outsourcing

  • In this module, we'll describe the major challenges of managing outsourced services and vendors in government, challenges that require a change in our management toolkit and mindset. We'll describe outcome management and its difficulties and the changes that an organization needs to make to be successful in an outsourced environment. Last, we'll examine the myths of outsourcing, myths that, if adhered to, will cause outsourcing and vendor management to fail.

Module 4: Using project management to create effective transitions to outsourced services

  • In this module, we'll examine the tools and methods of project management that can help us make the transition to outsourced services in public-sector agencies. We'll focus on defining the project and its desired outcomes and managing project risks. We'll give attention to the transfer of services to the vendor and from our current arrangements.

Module 5: Building risk-based contracting strategies

  • In this module, we'll focus on the risks of service outsourcing in the public sector and examine a variety of mechanisms for addressing those risks. We'll also address contract types and their relationship to risk management.

Day 2:

Module 6: Vendor selection and the management of vendor selection risks

  • In this module, we'll examine the tools for identifying and selecting vendors for public services. We'll identify the risks inherent in vendor selection and tools for managing those risks.

Module 7: The legal framework for managing outsourcing and outcomes

  • In this module, we'll describe the legal framework and documents that govern the outsourced arrangement. We'll identify key legal requirements and best practices in creating a workable arrangement.

Module 8: Service level agreements and statements of work

  • In this module, we'll examine the creation of the document at the heart of the outsourced services relationship-the service level agreement. We'll discuss and apply concepts that allow for the creation of good SLAs and SOWs and describe the necessary components of that important agreement.

Module 9: Managing changes and expectations, resolving conflict and creating win-win relationships

  • In this module, we'll further examine the outsourced services as a means of building a relationship that benefits the buyer and the seller. We'll describe methods for making the relationship adaptable and managing the expectations of managers and recipients of the services. We'll examine some of the management challenges likely to be present in an outsourced service relationship. We'll describe and practice a conflict management method that can help us craft good, workable relationships and optimize outcomes in the face of the conflict that will accompany any outsourced relationship.

Module 10: Workshop wrap-up

  • In this module, we'll wrap-up the workshop, make concluding comments, address remaining questions, and evaluate the workshop


This two-day workshop is designed for managers who are seeing the new challenges in government organizations.