It may seem a little odd to join purchasing, which is concerned with the assembling of supplies, equipment and services essential to the company's production, and contract administration, which is concerned essentially with the sale of products, in a single category. Yet in reality they are closely related inasmuch as both are primarily concerned with the developing and monitoring of contracts.
One of the important roles which lawyers can and do play in the purchasing and sales areas relates to the "battle of the fine print," i.e., the difficulties that all buyers and sellers have with the differences between the terms and conditions of purchase orders and of terms of sales. The working out of these differences, and in many instances the development of basic agreements between purchasers and sellers becomes a function in which legal training plays an important role. Likewise the development of an understanding on the part of both management and buyers and salesmen of the effects of differences in the fine print can frequently be left to those with legal training in purchasing and sales departments.
In the purchasing area, responsibilities may encompass a variety of activities. As the sums involved may run in the millions of dollars during the year, it is probable that in most instances, bids will be sought from suppliers based on the specifications of one or more departments within the company. Frequently it may be necessary to survey vendors' plants or facilities to assess such factors as production capacity, quality control and financial status to determine vendors' ability to meet the specifications.
When the supply contract has been completed, the purchasing area will monitor conformance to delivery and cost schedules. If technical problems arise, the purchasing function will serve as the coordinating unit between the vendor and the various company departments involved in the purchase.
Contract administration is closely allied to the sales and marketing functions. In some companies, the work is also split into commercial and government areas. However, its essential function remains the same: that of monitoring the execution of the company's contracts as to price, performance and schedules.
Accomplishing this will require coordination with purchasing, production, quality assurance and engineering functions. Records and reports may need to be prepared for customers and contract modifications may have to be negotiated. This area of responsibility alone can be tremendously complex. Consider, for example, the complexities involved in the monitoring of a single contract for the development of an experimental aircraft for the Department of Defense.
In addition, this area may also be responsible for the gathering of data for bid proposals and may analyze all major bids to determine why the company was not awarded the contract, plus recommending procedures to use to obtain future contract awards.
Such data can be of profound assistance to the marketing function. Close coordination with the financial and credit areas is also most essential.
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