Government contract management involves administering agreements between private parties and government entities to meet legal requirements and ensure compliance with regulations. Businesses can contract with any government agency, but compliance can be challenging. Contract administrators must track and document specific contract requirements and ensure compliance with government regulations. Legal and accounting responsibilities are divided to ensure compliance with contractual terms and spending of funds.
Government contract management is the process of administering an agreement to provide goods or services between a private party and a government entity to meet the spending, hiring, record keeping, and auditing requirements as prescribed by the contract. These contracts typically have significant legal restrictions on the use of public funds regarding how the money is spent and how a contracting party can operate. Stiff civil and criminal penalties can result from the misuse, mismanagement, or misappropriation of government funds. Contract Management seeks to ensure that there is a person who is knowledgeable in the legalities and keeps adequate records to demonstrate compliance in the event of an audit.
A business or individual can contract with any government agency in any jurisdiction as long as the government is authorized to contract goods and services from the private sector. In the United States, a business can contract with the federal, state, or city governments, provided that the business first goes through the process of becoming an approved supplier by each government authority. Government contracts are generally considered a secure source of revenue due to the low probability that the government will default on its payment obligation, but the requirements for administering a government contract are so demanding that many small businesses lack the ability to comply with the legal and accounting obligations.
The primary concern of government contract management is compliance. Each contract has its own parameters derived from public purposes and goals related to money. For example, a city government contract might require that at least 50 percent of the people working on the contract come from local communities. A state education contract might include performance metrics, such as achieving a certain success rate. These specific contract requirements must be tracked and documented, and some contracts require periodic reports on progress towards these objectives.
In addition to the special requirements, a government contract includes an implied obligation to comply with that government’s regulations regarding the use of public funds. For example, a federal government contractor in the United States may not discriminate in hiring and must comply with federal standards for occupational safety. A business that has multiple contracts across jurisdictions has, in effect, multiple clients with multiple accounts, and each client and account has different needs. Each requires client account management services, which, in this context, is government contract management.
A contract administrator doesn’t need to have a legal background, although it can be especially helpful. The management of public contracts is often divided into legal and accounting responsibilities. The legal area ensures compliance with contractual terms, such as hiring, safety standards or insurance requirements. Accounting responsibilities include making sure the spending of funds is in line with the budget or price proposal that was submitted to get the contract, and that government money is not mixed and is only spent on permitted expenditures in authorized amounts.
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