The Sky’s The Limit: Subcontract Management Is Coming into Its Own
By Anne Laurent
It was not too long ago that subcontract management lived in the shadow of contract management in many companies.
“Historically, contract management was prioritized,” says Bob Gemmill, senior vice president for supply chain at Leidos. “But the pandemic-driven ‘great supply chain disruption’ now has C-suites and board rooms talking about labor and material disruptions and shortages.”
As a result, subcontract management now is coming into its own. Federal subcontract spending has nearly doubled since 2016.1 Companies, governments and even consumers have a newfound appreciation for the challenges involved in finding, engaging, managing and strengthening relationships with high-performing, reliable and available subcontractors.
To help NCMA members from government and industry, large organizations and small, and prime and subcontractors better understand subcontracting organizations and professionals, we asked industry leaders in the field to share their insights and experiences in answer to four key questions:
- What competencies are especially key to successful subcontract management?
- How would you describe a typical career path(s) for subcontract management?
- How does industry prioritize subcontract management vs contract management?
- Describe a primary challenge facing a subcontract manager.
This article features the insights, observations, and wisdom of:
- Amanda Christian, senior vice president for subcontracts and procurement at CACI International
- L. Denyce Carter, vice president for contracts and purchasing at General Atomics
- Tina Richards, senior vice president and chief procurement officer at SAIC
- Bob Gemmill, senior vice president for supply chain at Leidos
- Darryl Scott, vice president for contracts and subcontracts at General Dynamics Information Technology (GDIT), and a team of his subcontracting professionals including Andrew Hinkle, subcontracts senior director, federal civilian and Cynthia Beard, subcontracts senior director intel.
The leaders agreed on four key subcontracting competencies:
- Understanding of regulations and laws and technical competence.
- Attention to detail.
- Customer service.
Technical competence and communication tied for top priority with attention to detail and customer service skills close behind. In different ways, all five leaders made clear they most prize subcontracts managers who combine these competencies into skill in advising internal clients how to negotiate the best path forward for each program by getting the best performance from the subcontractors supporting it.
Christian noted that it takes a strong foundation in the fundamentals and solid understanding of the law and regulations to assist subcontracting stakeholders in navigating gray zones and manage subcontractor performance while also ensuring compliance with rules, mandates, and requirements.
The GDIT team noted that subcontract managers’ negotiations to achieve company price targets and mitigate execution risk are critical to capturing business opportunities and winning contracts.
At Leidos, subcontracting pros are known as Swiss Army knives, Gemmill says, “because they touch so many areas and must understand the risks and opportunities in a wide variety of places.”
Deep knowledge and understanding of subcontracting skills, contracting transactions of all sizes, the Uniform Commercial Code and Federal Acquisition Regulation enable top-flight subcontract managers to exercise creativity, flexibility and business savvy. They do this while keeping their companies and subcontractors in compliance with a complex and evolving regulatory regime.
“The successful subcontracts manager must be an agile thinker and find a path to yes,” says Richards. “Rather than a hammer or a stop sign, compliance should be a framework to help devise a solution.”
Being able to distill information and clearly articulate it is vital for subcontracting professionals. They collaborate with and serve a broad array of stakeholders inside and outside their companies and translate complex requirements and regulatory flow downs for subcontractors.
Internally, they must effectively exchange information with colleagues in program management, engineering, contracts, finance, legal and security. Externally, they must ensure that subcontractors understand and meet legal mandates and achieve their contractual requirements.
According to Gemmill, “The sheer number of relationships necessitates effective communication as the most critical of all competencies.”
Attention to Detail
Not only must subcontracting professionals capture all program requirements in subcontracts, they also are responsible for ensuring that changes in the contract are covered. In addition, they must document their files in accordance with their company’s procurement manual and the law.
Scott and team noted that missing a critical requirement in a subcontract can lead to contract disputes, audit findings and potentially financial losses for the firm.
Managing the flow down of federal contract clauses and regulations is daunting and requires care in choosing only applicable clauses. It also necessitates keeping up with continual changes in mandates covering an array of issues ranging from intellectual property provisions and cybersecurity to domestic preferences and more.
Subcontract managers need emotional intelligence and dedication to customer service to build trust among internal stakeholders and subcontractors so the inevitable tough issues, changes, and problems can be resolved quickly and effectively with minimal pain. As Darryl Scott’s GDIT team noted, effective subcontract managers “build bridges with all of their counterparts, help resolve their open issues and actions, and demonstrate that they are there to be partners with each of them.” Subcontractor managers “need to keep their cool when an irate project manager issues a demanding action, or a subcontractor sends a rude response to an inquiry.”
The road to a subcontracting career can begin almost anywhere, leaders say.
Traditionally, subcontract managers got their start as business administration graduates or MBAs who became buyers. Sometimes they evolved from other disciplines such as contracts, finance, purchasing, materials and other operations roles.
Today’s ranks include people who were bartenders, event coordinators, professional decorators or tour guides, according to the GDIT team. In addition, Gemmill observed, “I have seen an accelerating shift over the past decade where we are hiring young professionals from universities with highly ranked supply chain management programs.”
College degrees are essential to help evolve critical thinking skills, according to the GDIT team. Beyond that, however, the subcontracting core competencies can be found in almost any industry or career path.
Several leaders point out that successful subcontracts managers can go on to excel in many roles.
“Subcontracts professionals gain experience in contracts, finance and program management and often will have negotiated with executives and owners of companies,” Gemmill observes, which readies them for adjacent professions and business leadership.
“When you have been a subcontracts manager, you have infinite possible career paths to branch into, such as program management, supply chain, pricing, contracts, risk management and many others,” Christian says.
Adding professional certifications from organizations such as NCMA, the Institute for Supply Management and the Association for Supply Chain Management adds to subcontracts managers’ attractiveness by demonstrating personal investment in their professional development, Gemmill added.
Subcontracting has been emerging from behind contracting in importance for companies. While the contracting staff gets attention for tending the direct path to customers, subcontracts managers often are the experts in the FAR and its Defense Supplement, so they are sought out for their expertise, Richards said.
Increasingly, subcontracting has become its own functional organization with a separate reporting chain from contracting.
“Contracts are now typically reporting to legal while purchasing, supply chain, and subcontracts management are more aligned with operations and finance,” Christian says. “This has given supply chain and subcontracts management more visibility, especially in today’s climate.”
The growing importance of the supply chain enhances the value of subcontract management, Richards notes.
“High performing companies understand that this is not an internal competition, but instead a collaboration where the functions have high levels of communication to drive successful program outcomes for our customers,” Gemmill says.
And as Carter observes, in the end, contracts and subcontracts are equally important to meeting customers’ requirements. “A company cannot successfully execute on its contracts without reliable subcontractors that delivery quality products and services on schedule at a reasonable price,” she says.
Accelerating change, shrinking supply bases and the difficulty of setting clear requirements for subcontractors all challenge subcontract managers, according to their leaders.
As the GDIT team observes, “Federal requirements are constantly adjusted. The socioeconomic environment is always shifting. Company systems are updated or switched out. The labor market and available resources vary over time. Company priorities will shift throughout the year.”
“Today’s subcontracts professionals are addressing new requirements and challenges that were not even on the radar just five to seven years ago,” Gemmill says. “If subcontract managers are not devoting time to read, study, and evolve, they are falling behind.” Most are keeping up, he adds.
That kind of effort enables them to conquer a challenge Richards raised of ensuring that requirements are solid enough to impose firm subcontract obligations and clear enough so subcontractors can execute them.
Devotion to self-development, along with the mental flexibility to rapidly adjust policies, processes and priorities, also can help subcontract managers tackle what Carter identified as the extraordinary challenge presented by sourcing critical materials and stable pricing and long lead times.
The subcontracts leaders’ responses varied, but they showed remarkable unity on what is important to succeed in commercial subcontracting roles. They also all voiced belief in a glowing future for the subcontracting profession and those who master it.
Christian may have captured it best, saying, “The sky’s the limit for a business-savvy person with strong customer service skills and the ability to communicate effectively in the field of subcontracts management.” CM