Contract Centralization vs. Decentralization

Different public agencies have different models for how they handle public works construction contracting and consultant contracting. Some are very centralized with expert contracting staff handling the basic procurement and contracting functions, while others have no staff or very limited resources dedicated to contracting.

Because contracting is a specialized function, decentralization poses a number of risks for an agency, since personnel not in tune with contracting practices and laws may end up conducting bids and solicitations and writing contracts and amendments (or change orders).

There is always a tension between the contracting function and the project management and construction management function. Project and construction managers lean toward speed, working independently of established guidelines, and making the project move forward, while contract administrators serve as a balance to protect the agency’s legal, financial, and audit risks. Often, the time spent doing the bid, solicitation, contract, change order, or amendment correctly in the first place can save the agency significant expense later.

Contracts are written to anticipate and deal with how to handle circumstances if there is a disagreement between the parties or a lack of performance. It's important to think about this and develop contracts that protect the public's best interests.

It’s important to be able to distinguish between what are business decisions that should be made by project and construction management personnel, and decisions that have longer term impacts about the legality of the process or contract. Contracting staff bring valuable expertise to the table in helping to ensure that scopes of work and costs are sufficiently negotiated and documented.

I'd be interested to hear your stories about where your agency fits on the centralization or decentralization spectrum and what you have found to be important factors in dealing with the tensions between expediency and process.