Contract management is a discipline that originated on the other side of the Atlantic (in the US!). It is therefore often interesting to immerse oneself in their practice of the discipline, in particular to draw inspiration from their best practices, given their greater maturity, especially in terms of processes and documentation of the profession. To this end, we have chosen to focus on the Defense Contract Management Agency (DCMA), which embodies the quintessential rigor and excellence of American contract management.

Created nearly 25 years ago, this agency is at the heart of the strategic and operational management of US defense contracts. In this article, we explore not only the definition and missions of the DCMA, but also the considerable impact of its actions and best practices, offering valuable lessons for organizations across the globe.

A. What is DCMA?

1. DCMA: definition

DCMA is an acronym that standsfor “Defense Contract Management Agency”. As the name suggests, it is an agency of the U.S. Department of Defense (DoD) responsible for defense contract management. Although the agency was created almost 25 years ago, taking over from the DCMC created in 1990, contract management has been professionalized within the DoD since the 1960s!

Today, the DCMA plays a crucial role in managing the lifecycle of defense contracts, ensuring that suppliers deliver what has been promised, in line with costs, deadlines and quality standards.

2. DCMA’s missions

DCMA’s missions are varied and essential to national security and the efficiency of military spending. They are built around three values: “integrity, service and excellence”, values that many contract management departments can draw inspiration from. To return to the Agency’s missions, here are the main ones:

• Contract management: DCMA monitors suppliers’ compliance with contractual requirements, from production to delivery.
• Quality assurance: This ensures that the equipment and materials supplied meet the strict quality standards required for defense operations.
• Production monitoring: The DCMA monitors the production line to prevent any potential delays or quality problems affecting the armed forces.
• Audits: We carry out regular audits to ensure that funds are used efficiently and contracts are executed fairly.
• Technical support: The agency also offers technical support and expertise to help solve specific problems that may arise during contract implementation.

One aspect of contract management that is particularly interesting to note here is the spectrum covered by the discipline, which includes auditing, monitoring and even quality assurance, testifying to the importance of contract management on the other side of the Atlantic!

3. Key figures

The DCMA’s impact is significant, as it contributes not only to national security but also to value for money. By ensuring that every dollar spent contributes to defense effectively and efficiently, DCMA plays a pivotal role in maintaining the operational capability of the US armed forces.

The quantified impact of DCMA’s activities testifies to the importance and influence of the agency, with figures and indicators that make your head spin.

• 230,000 active contracts under management
• 3.8 trillion dollars in contracts
• 10,000 employees
• 1,000 new contracts a day

* According to the DCMA website.

B. DCMA best practices

As you can imagine, with over 10,000 employees and a 25-year history (not counting the legacy of the DCMC, or the DoD’s preparatory work since the 60s), the DCMA is a goldmine of best practices!

1. Procedures galore

Make no mistake: we’re not fervent advocates of the all-out process! However, it has to be said that a well-processed business offers many advantages in terms of clarity, continuous improvement and service continuity and quality.

DCMA’s “instructions” and “policies” include clear, easy-to-read documents on financial analysis of contracts, negotiation procedures and price modifications and changes. In short, more than fifty procedures (American-style, in other words) to draw inspiration from.

2. A clear roadmap

The DCMA applies Nicolas Boileau ‘s quote to the letter: “What is well conceived is clearly stated, and the words to say it come easily”. Indeed, the agency publishes clear “strategic plans”, indicating an action plan, priorities and a clear contract management strategy.

For the current period (2022-2026), the following 4 priorities have been identified:

• Focus on on-time, on-quality deliveries
• Improving flexibility and decision-making processes in acquisition schemes
• Adoption of tools and working methods to deliver maximum value and prepare for future challenges
• Innovation and modernization of working conditions

3. Relevant positioning and organization

Last but not least, there are two other elements to be noted as good practices applicable to our French and European organizations.

The first is positioning. The DCMA is directly attached to the U.S. Secretary of Defense (DoD) (see organizational chart below), which enables it to remain very close to operational needs, while at the same time having the independence and legitimacy (and the ability to listen) at a high level to be able to evolve and adapt rapidly to changes in contract management.

The second relates to its organization, as the above chart shows a matrix organization, combining geographical sectors and business approaches, to provide 360° expertise in contract management. While it is difficult to apply such an organization (over 10,000 people within the agency) to a team of contract managers evolving within a company, we can nevertheless point to a sectoral and geographical cross-fertilization that can be interesting to set up, all the more so as contract managers often have rich and varied backgrounds.

Conclusion

This focus on the Defense Contract Management Agency (DCMA) reveals not only the strategic importance of contract management within the U.S. national defense establishment, but also its maturity in terms of contract management. Its well-defined processes, efficient organization and proactive contract management and auditing strategies are elements that any organization, public or private, can seek to emulate.

By drawing inspiration from (and re-adapting) the DCMA’s operating principles, values and methods, French contract management departments can not only improve their operational efficiency, but also increase their added value within their organization, in a complex and demanding environment. In this way, DCMA not only plays a crucial role in US security, but also serves as a compass for international contract management.