Former MOD commercial director shares some of his lessons on global contract logistics in his new book. Here he offers some top tips.
Until two years ago, Steven Morgan was commercial director for the UK Ministry of Defence. He has also worked as a US Navy rear admiral specialising in major system acquisitions and as competition advocate in the US Department of Energy. A fellow of CIPS and the Institute of Civil Engineers, he shares his advice on global contract logistics:
1. The most important step in contracting is defining the need...not setting the requirement. Too many specifications include unnecessary frills and extra costs. Stick with the need and understand it entirely.
2. Firm-priced contracting is not always best.
3. Shifting as much risk as possible to a supplier is expensive and often unwise.
4. Using liquidated damages is an illusory insurance policy... you pay for it whether the bad thing happens or not.
5. Relying on long-term relationships and sticking with one contractor without re-competition is like handing your wallet over and asking the supplier to be gentle.
6. Partnering and collaboration are good things but partnerships with suppliers and cohabitation is dangerous.
7. Paying suppliers fast and relying on auditing as a deterrent at the end of a contract is naïve.
8. The low bidder is not always the best source.
9. Letting contractors write their own specification because “they know best” is lazy contracting.
10. Measure victory when contractor performance ends – was the need satisfied?
Steve Morgan’s book Global Contract Logistics,
A Best Practice Toolkit for Planning, Negotiating and Managing a Contract, is available from Kogan Page.