A procurement Contract is a written agreement between a procurement entity and a supplier, contractor or consultant which is enforceable by law. Administration is defined as the activities involved in managing a business organization or institution. Management is defined as the process being responsible for a business organization or institution. In this part, contract administration and contract management shall have the same meaning and may be used interchangeably. Contract administration pertains to the preparation of procurement documentation, the processing and approval of such documentation, monitoring contract implementation, approving and administering contract variations and modifications, and possibly cancelling or terminating contracts.
Weak contract administration is an invitation to corrupt practices. If a Procuring Entity fails to ensure that the vendor or contractor delivers to the specification or quantities of the contract this can lead to substantial losses. If a Procuring Entity approves contract variations that lead to significant deviations from original agreed costs, this undermines effective competition since for example an increased volume of delivery addressed at the time of tender could have led to significantly lower per unit prices from the competing bidders.
Poor documentation and records management, along with weak coordination between the Government‘s representative, the procuring unit and the accounting unit undermine payment controls and lead to payments in excess of contract ceilings, especially in multi-year contracts. It is imperative that the Accounting Unit maintain accurate and up to date ledgers that properly track all contract payments and record contract totals and approved contract variations to serve as payment ceilings.
Several procurement reviews in Kenya and elsewhere around the world have identified weak contract administration as a major source of loss and a significant area of abuse and corruption.