A contractor’s “Past Performance” is one of the major factors evaluated in  awarding government contracts. When bidding on a contract, a company must demonstrate that it has  successfully performed that type of work before. Strong past performance can be a differentiator in the marketplace and is an important arrow in the quiver of any federal business development professional. Because of this, every active contract in your company’s portfolio is not only a source of current revenue, but  also an opportunity to position your firm for future work. It’s important to make this linkage between current contract execution and future contract opportunities.

So, what happens when a contract starts to fail and threatens your past performance record?

The answer is sobering for a federal business development professional: a failed contract will hinder your ability to grow your existing business vehicle and possibly jeopardize your probability of winning future contracts in that market. Every contract hits stumbling blocks but certain contracts begin to fail outright. Here are four steps for turning around a failing contract:

1. Identify the root cause(s)

First, understand why the contract is failing. Is it a personnel problem? A budget or schedule issue? Be careful to ensure that you’re identifying the root cause of the problem, not just the symptoms. For example, let’s say that you have a contract that’s way over budget. That’s the symptom. The root cause could be any number of issues—from poor financial controls and budget management to bad project management or an error in the original cost estimation of the contract against the scope of work.

How do you figure out the root cause? Observe how the contract is currently being executed. Interview key stakeholders on the team, as well as government customers. And be sure to review essential contract artifacts such as the contract terms, scope of work, status reports and risk/issue logs.

2. Develop corrective actions

Once you’ve identified the root cause(s) of the failure, identify corrective actions that will remedy the problem. These corrective actions could include everything from personnel changes to contract modifications to ensuring that all key stakeholders—both the contractor team and the government customers—are clear on the scope and schedule.

Depending on the condition of the contract, these corrective actions may be difficult. If your company’s primary customer-facing staff member, such as a program manager or engagement lead, has lost credibility with the customer, then they must be replaced. Even the best corrective actions will fail to achieve their desired outcomes if the company’s contract lead has lost credibility.

3. Analyze stakeholders & get buy-in for new approach

The third step is as important as developing the right corrective actions. Without buy-in on the corrective actions from key stakeholders—both on the government side and within your company—they will, at best, be executed suboptimally, or at worst, fail completely. These discussions should include the company’s leadership team for the contract as well as the contracting officer’s technical representative, contracting officer and key technical stakeholders on the government side.

4. Monitor aggressively

Establish a plan to monitor how well the corrective actions are working. Once you turn around the contract, you need to make sure it stays on course—and the only way to do that is to aggressively monitor key metrics. Keep the core group of stakeholders informed on progress and if/when new risks arise.

A smarter way forward

What’s the best way to avoid these problems altogether? Strong project management. This means following a proven project management methodology to manage cost, schedule, performance and risk. Each of the issues that cause a contract to fail can be identified through effective risk management practices. Identify risks early and develop plans for managing them. Review them weekly.  When a risk event occurs and becomes an issue, work swiftly to resolve it before it metastasizes.

Turning around a failing contract isn’t easy, but it’s achievable. These four steps will go a long way toward righting the ship. However, an effective turnaround requires strong leadership and the ability to dispassionately identify failures, solve problems, rally diverse stakeholders and make difficult decisions.

from Tom Skypek