The document outlines a three step contract management system: 1) Documentation and reporting of contract performance, roles, and responsibilities. 2) Oversight and accountability for contract compliance through periodic reviews and audits to identify issues. 3) Independent reviews to incorporate lessons learned back into the process and ensure alignment with strategic goals.

1. Contract Management
System •Planning or Enhancing your CMS
•Due Diligence of Part(ies), Produce and or Service
•Material contract terms required by Company and or
regulators
•Negotiation & Finalization of Contracts
Step 1
Documentation
and Reporting
•Monitoring of Part(ies), performance of product or service, and
compliance with contractual terms
•Identification of Roles & Responsibilities
•Termination, Modification & Addendums, or Extension of Contract
Step 2
Oversight &
Accountability
•Periodic review and audit
•Identification of issues, losses and risks
•Incorporation of documented issues &
recommendations back into workflow (Step 1 & 2)
Step 3
Independent
Review

2. Documentation
and Reporting
Oversight and
Accountability
Independent
Review
PLANNING – how does your Company plan to manage the contract
process – what contracts will be included, how will you allocate
resources, what levels of security will be required, what oversight will
be required, what tiers of vendors will there be, what internal groups
will be involved in the process (IT, Legal, Business Unit) and how, what
regulations affect your industry, the contractual services or products?
DUE DILIGENCE – how does your Company review
potential third parties to contracts to ensure they (or
their service or product) have the requisite
experience, skills, controls, economic strength to
perform?
CONTRACT NEGOTIATION – how does your
Company allocate responsibility and oversight for
negotiating the terms of a contract including
enforceability, cost/pricing, liability, dispute
resolution?
ONGOING MONITORING - how does your Company
monitor the performance of the contract – including your
company’s and the other party’s compliance with the terms -
identifying and addressing non-compliance?
TERMINATION – does your Company have a plan for
migration of data or transfer of services to another
party if the contract is breached or the vendor fails to
meet their performance standards?
OVERSIGHT AND ACCOUNTABILITY – does your
Company have clearly defined roles and
responsibilities for monitoring the contract and the
parties’ performance – is it the business unit’s
responsibility, the legal department’s or another
administrative group? Is it an automated process
or system? Is it auditable?
INDEPENDENT REVIEW – is there an independent group
that conducts periodic reviews of the contract
management process to assess whether the process
aligns with your Company’s strategic goals? Whether the
process effectively manages risk and resources allocated
and budgeted to it?Whether the “lessons learned” are
being incorporated back into the due diligence,
negotiation process, or monitoring process?
As a Certified Risk and Compliance Management Professional and former in-house counsel for over 10 years representing private and publicly traded financial
institutions as well as litigator for the largest publicly held P&C insurer in America, I consult with US and EU companies to develop, review and enhance their
CONTRACT MANAGEMENT PROCESS. Elizabeth Baker, JD, CRCMP
BLUEPRINT FOR EFFECTIVE CONTRACT MANAGEMENT SYSTEM