Federal Contract Management Technology: Yesterday, Today, and Tomorrow

I am a data junkie. More specifically, I am a federal procurement data junkie. For more than two decades of my career, I’ve been in roles that involve researching, modeling, and analyzing the federal government’s budget and spend (my job while at RAND Corporation), or building products that help companies use this public data alongside their own internal data to gain actionable intelligence (my current role at TechnoMile and the type of work I did while at BGOV). All this to say, I wholeheartedly believe in the power of data to help companies large and small make better decisions.

As a contracts professional, you understand there’s a wealth of information generated over time about your company’s federal contracts and their performance – at the individual contract level and regarding your broader contracts portfolio. But the challenge I often hear from Contracts teams is, “how do we effectively capture and use our contracts data to inform decision making, mitigate risk, and improve our operational performance?” It’s no surprise that technology is the linchpin, so let’s take a closer look at the federal contract management technology landscape of yesterday, today, and tomorrow.  

Yesterday

Historically, Contracts organizations within the federal contracting space have been underserved from a technology perspective. World Contracting & Commerce benchmark reports focused on the Aerospace & Defense and technology sectors found that these industries are behind most others when it comes to use of contract management technology, concluding that “existing functionality provided by technology is, for most, extremely limited… often based on rudimentary tools such as Excel spreadsheets.”

We routinely encounter companies, both large enterprises and SMBs, that are struggling with decentralized contract data sources and manual, often poorly-defined contract management processes. Contracts and related files are stored locally, in emails, or on shared drives (and may be augmented by paper files) and contracts professionals often rely on hand keying data into spreadsheets to track essential details related to each federal contract.

The result? Data inconsistencies and inaccuracies abound. Locating contract details and piecing together reports is labor intensive, resulting in lower productivity and longer cycle times. These companies have limited visibility into individual contract details as well as across their holistic portfolio, leading to heightened risk – they simply don’t know what’s hidden in their contracts. Contract administration costs are high, especially related to generating mandated reporting and responding to data calls. Without modern tools, even creating a standard contract brief can be a burden.

Given the significant downsides of this basic technology approach, why has our industry lagged behind with regard to uptake of Contract Lifecycle Management (CLM) technology? I believe a key sentiment noted in the benchmark report referenced above rings true: many executives in our space have “continued doubts over the extent to which technology can address the complexity of their contracts.” Undoubtedly, few industries are as regulated as US government contracting and this is reflected in the unique complexities of managing federal contracts. However, CLM solutions built specifically for government contracting have emerged that now enable successful digital transformation for these Contracts organizations.  

Today

It’s true that the majority of CLM solutions in the market are commercially-oriented, meaning they’re focused on facilitating B2B – not B2G – transactions. Given this, companies find that the customization work required to tailor a commercial CLM to their federal contract management workflows quickly drives up the solution’s total cost of ownership and extends its implementation timeline.

Even within the “government CLM” technology space, there are players whose primary focus is on solutions designed for government agencies, rather than industry. You’ll also find “all-in-one”-type solutions that offer CLM as an offshoot of a core competency, like ERP. So, when evaluating CLM vendors, it’s important to pay close attention to each one’s primary R&D focus and their product’s out-of-the-box capabilities to support your CLM needs as a government contractor – particularly around maintaining regulatory compliance.

What then should you expect from a government contracting-specific CLM? Here are suggested capabilities to evaluate:

• Provides a single, centralized repository to house all government contracts and related buy-side agreements

• Systematic validations to ensure critical contract details are consistently and accurately captured

• Automated ingestion of standard solicitation, award, and modification forms to speed the creation of contract records within the CLM and accurate capture of details

• Clause library pre-populated with FAR, DFARS, and agency-specific clauses; automated library updates based on acquisition.gov changes

• Tracking of essential federal contract details – CLINs/SLINs/ACRNs, clauses, flow downs, subcontracts, deliverables/CDRLs, mods, etc.

• Pre-built industry-specific workflows – e.g., OCI vetting, small business planning, CPARS response management, contract closeout

• Task assignments/notifications for compliance actions

• Automated generation of common documents and reports – e.g., Contract Briefs, Limitation of Funds

• Ability to create related commercial agreements (e.g., NDAs, TAs, subcontracts) and digitally route them for review, redlining, and e-signature

• Library of industry-specific reports

• Standard “connectors” to integrate the CLM with other typical systems found in a federal contractor’s tech ecosystem – e.g., Costpoint ERP, SharePoint

• Support for compliance with FedRAMP, CMMC, and other cloud security requirements

In addition, consider whether a vendor offers a broader, end-to-end solution for doing business with the government that can support your organization’s pre-award workflows as well. Using a single platform that tightly connects your company’s pre- and post-award processes enables more efficient collaboration between Contracts and Business Development/Capture/Proposal teams, creates smoother handoffs and simplifies contract setup as solicitations convert seamlessly to awards, and allows for easier analysis of contract performance to inform future pursuits.

Tomorrow

Now, beyond the CLM, where is contracts technology headed next for our industry? What will tomorrow look like? The future of contracts technology focuses on harnessing the power of the historical data that companies have begun to amass within their CLM software, along with publicly available procurement data. The goal? To activate this data to guide strategic decision making within your organization, both pre and post award, as well as to inform continuous improvement.

Organizations with a government contracting-specific CLM in place are building a treasure trove of data regarding contract execution, performance ratings and evaluations, risks, profitability, fulfillment, delivery, subcontractors, negotiation cycles for partner and subcontract agreements, and more. Meanwhile, data available in public databases, such as USASpending, offers the opportunity to benchmark performance against competitors and the overall market(s) in which a company operates.

The application of technologies such as natural language processing (NLP), machine learning, and artificial intelligence to both internal and public contract data will allow companies to predict performance, improve risk management, make better decisions regarding pursuits, partners, and subcontractors, and even facilitate “self-serve” data calls. Consider just a few use cases:

• Automated risk identification based on the past performance of similar contracts, of a specific subcontractor, etc., enabling more proactive risk mitigation

• BD/capture strategies and go/no go decisions on new opportunities guided by past performance and business outcomes of like contracts, driving superior profitability and growth

• Redline activity for similar past negotiations used to inform B2G and B2B contract negotiations, streamlining review cycles and guiding improvements to agreement terms

• Automated consistency checks against federal procurement data enable an organization to identify potential inconsistencies within their own contracts portfolio, improving audit-readiness

• NLP-enabled chatbots automate responses to common queries/data calls from internal stakeholders, saving contracts professionals time

The Future is Now

In closing, I submit to you that the future is now. If your Contracts team has yet to do so, now is the time to invest in a government contracting-specific CLM solution to achieve digital transformation. This will not only empower more effective risk and compliance management and efficient contract administration today, but will also lay the critical groundwork that your organization will require to advance to the data-driven contract management world of tomorrow.

Frequently Asked Questions

What is Contract Lifecycle Management (CLM) for government contractors?

Government contracting-specific CLM software centralizes a company's federal contracts and related agreements, tracks compliance details like CLINs, SLINs, ACRNs, and clauses, and automates common contract tasks – distinct from commercial CLM tools built primarily for B2B transactions.

Why have federal Contracts teams historically lagged in adopting technology?

Industry benchmark research on Aerospace & Defense and technology sectors found contract management functionality in these industries was often limited to tools like Excel spreadsheets, driven partly by executive doubt that technology could handle the complexity of regulated government contracts.

What problems does relying on spreadsheets and shared drives create?

Decentralized, manually-entered contract data leads to inconsistent records, slow report generation, limited visibility into contract and portfolio-level risk, and higher administrative costs – especially for mandated reporting and data calls.

What capabilities should a government contracting-specific CLM include?

Key capabilities include a centralized contract repository, a clause library pre-populated with FAR and DFARS clauses, automated ingestion of solicitation and award documents, tracking of CLINs/SLINs/deliverables, pre-built compliance workflows (e.g., OCI vetting, CPARS response), and support for FedRAMP and CMMC requirements.

Why should Contracts and Business Development use a connected platform instead of separate tools?

Connecting pre-award and post-award systems lets Contracts and BD/Capture teams collaborate more efficiently, simplifies the handoff from solicitation to award, and makes it easier to analyze past contract performance to inform future pursuits.

How will AI and machine learning change federal contract management?

AI and NLP applied to CLM and public procurement data (such as USASpending) will enable automated risk identification, performance-informed go/no-go decisions, insights from past negotiation and redline activity, and NLP chatbots that handle routine internal data requests.

What is the difference between commercial CLM and government-focused CLM?

Commercial CLM tools are typically built for B2B transactions and require heavy customization to meet federal compliance and workflow needs, driving up cost and implementation time – government-focused CLM is purpose-built for FAR/DFARS compliance and federal contract structures from the start.

What data sources can contractors use to benchmark contract performance?

Beyond their own CLM data, contractors can use public federal procurement databases like USASpending to benchmark their performance against competitors and the broader market.