Contract Performance Intelligence 101

Congrats on your new contract. See you in five years.”

This is how one high-level procurement professional described the current state of their vendor performance management program. It’s not an uncommon refrain—while procurement leaders aspire to the kind of management that eliminates challenges and issues with on-contract suppliers, the efforts to achieve this have historically been time and labor intensive. It takes intention to not fall into this “set it and forget it” approach.

Often, these procurement leaders look to the idea of quarterly business reviews (QBRs) as a structured way to manage suppliers. But the traditional QBR setup has an inherent problem. What if an issue arises immediately after a QBR, or soon enough before a QBR that the news doesn’t have time to reach the contract manager from either the supplier or end user. This could leave a significant amount of time where an issue goes entirely unaddressed.

And that assumes end users are communicating about their challenges at all. Absent an easy way to share feedback—and the belief that it will even make a difference—in most cases, an end user never informs central procurement that their suppliers are struggling to meet their needs. Sadly, oftentimes, when an end user has a bad experience with a supplier, they simply “grin and bear it.”

Most procurement offices would love to hear regularly from end users and be able to use that information efficiently to help suppliers perform better.

The combination of new, cloud-based, AI-enabled technology and consistent end-user feedback data is making feasible a new solution to these problems—Contract Performance Intelligence.

What is Contract Performance Intelligence?
Contract Performance Intelligence is a technology-enabled system that provides a real-time picture of performance of every supplier on a contract. It provides this picture to every stakeholder in the procurement process—the procurement team and contract managers, suppliers themselves and agency end users. Lastly, it creates clear pathways for all stakeholders to connect, communicate and address issues and challenges together.

Contract Performance Intelligence has four key pillars:

• Contract Performance Intelligence is always on
  • Contract Performance Intelligence is driven by data
  • Contract Performance Intelligence is predictive
  • Contract Performance Intelligence is collaborative

Contract Performance Intelligence is always on
Contract issues do not arrive on schedule.

This means that while regularly scheduled business reviews can be incredibly helpful, they leave the suppliers and end users alike vulnerable to untimely challenges. Contract Performance Intelligence provides an always-on backstop against this. Powered by a real-time feed of end-user feedback data, Contract Performance Intelligence flags issues and provides the tools to address them before they become critical.

Similarly, not every contract requires equal supervision. Perhaps you have a long-time, reliable supplier of critical but recurring goods. A quarterly check-in may be entirely unnecessary. Whereas an IT services vendor working in a rapidly changing technology environment to defend against daily cyber-attacks may require a more diligent touch.

Contract Performance Intelligence gives contract managers the full understanding of who needs a more direct conversation and when, which in turn saves critical agency time and bandwidth, allowing contract managers to focus first on fires that are burning—and the causes of those embers.

Contract Performance Intelligence is driven by data
One of the biggest factors making Contract Performance Intelligence possible is the rise of new data streams in conjunction with new methodologies for extracting insights directly from that data.

The backbone of Contract Performance Intelligence is supplier performance data directly from end users. This feedback bridges the information gap between buyers, suppliers and end users. On top of that, when it is delivered as structured data—both qualitative and quantitative—it can be aggregated and then sliced (by agency, by geography, by specific supplier on a multi-bid contract) to create new insights and ways of understanding supplier performance holistically.

Contract Performance Intelligence is predictive
Traditional vendor performance management methodologies are reactive. You hear about a major problem with a supplier on contract, you mobilize, you get in touch with that supplier who maybe knows about the issue or maybe doesn’t. You try to figure out a fix.

But by then, it could be too late. Sometimes the road is already frozen or the new fleet vehicles have already started to fail, or the critical water purification chemicals weren’t properly handled… or… or… or.

Contract Performance Intelligence leverages data and artificial intelligence (AI) to be predictive, identifying the signals that might indicate a future problem. This enables suppliers and contract managers alike to see the signs of a performance issue brewing before it evolves into a crisis. Plus, by giving both agencies and suppliers access to predictive insights, there is greater opportunity for collaboration, creative problem solving and trust building between all stakeholders.

Contract Performance Intelligence lets every stakeholder be proactive instead of reactive in ensuring the health of the contract. And it’s worth repeating that the advent of generative AI in the last year has not only enabled this superpower, but it has also catalyzed the ability of Contract Performance Intelligence platforms to make it accessible.

Contract Performance Intelligence is collaborative
Contract Performance Intelligence is not designed to exist in a silo with central procurement, or with the supplier or with the end user. It is designed to be shared across all stakeholders, in a technology environment that makes this new intelligence actionable. One of the unique things about public sector procurement is that it isn’t a zero-sum game where suppliers win at the expense of their customers. Improved contract stewardship means improved supplier performance, which means the agency end users are more equipped to serve their communities better. But historically, collaboration towards this end has been limited by time, data and technology constraints.

Contract Performance Intelligence makes the act of ensuring supplier success collaborative at scale. Contract managers can be nimble and proactive, intercepting potential challenges. Suppliers have more insight into the ways they can improve performance and deliver optimal customer experiences. And agency end users have a place where they know their voices will be heard.

In this way, Contract Performance Intelligence lets governments and agencies get down to business—whether they are keeping our streets safe, modernizing local transit infrastructure, teaching our children or completing any number of the million tasks that strengthen very fabric of our society. Now more than ever, they can do so with greater trust in and collaboration with their partners and suppliers. And that’s good for everybody.

David Yarkin, the former chief procurement officer of Pennsylvania, is the founder and CEO of Procurated, the leading platform for supplier performance management powered by more than 60,000 supplier reviews directly from verified procurement professionals.

Steve Isaac is the director of marketing for Procurated, helping government procurement professionals to leverage the power of peer insights in their procurement processes. He has spent a decade working with tech startups across the fields of procurement, spatial data science, and nonprofit fundraising and communications. Isaac lives in the Capitol Hill neighborhood of Washington, D.C., with his wife, Lorna, and his daughter, Quinn.

Editor’s Note: This article originally appeared in the March 2024 issue of Government Procurement.