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The ethics of Contract Managers

September 17, 2013

This month’s edition of Contracting Excellence focuses on ethics and their impact on contract and commercial management. it features a wide range of articles and case studies that illustrate the ethical and moral dimension of our work – for example, the highly-publicized scandals at Satyam and Siemens, the impact of the Snowden affair on outsourcing contracts, and the cost of lying in negotiation.

In the editorial, IACCM asks about the role that contract and commercial staff should have in the application of ethical standards. It makes the point that contract managers may have visibility into broader acts of contract performance that raise ethical questions. An obvious example is of deliberate overcharging – perhaps expanding the hours worked, or claiming the rate for a top consultant when activities were conducted by a trainee.

Actions like this are often justified as ‘industry practices’. Just like minor acts of bribery, everyone knows they happen, so they are acceptable so long as they stay within limits. Increasingly, such attitudes are not accepted and it is perhaps time for the contract management community to consider its role in the management and application of ethical standards.

The article then offers four brief examples of ethical dilemmas faced by contract or commercial managers. Each is based on a real situation and the reader is asked “What would you do in these circumstances?” This week, i will reproduce each of the scenarios in this blog and ask you to give your reaction.

Dilemma #1: We might not meet customer requirements

You work within an industry business unit in your corporation. The unit head is ambitious and sometimes overbearing. You are involved in the negotiation of a multi-million contract and other members of the team are expressing concerns over the ability to meet customer requirements. The terms demanded by the customer offer no room for maneuver and you feel that either a) the customer should be told that the current scope may not be achievable or b) senior management should be alerted to the risk. Your unit head dismisses these recommendations and insists on pushing ahead with contract signature. Other team members disagree with this position, but simply shrug their shoulders and stay silent.

One Comment
  1. Amit Kapoor permalink

    I would engineer a decision like this to be vetted by someone who would bear the brunt of failed delivery – and the resulting escalations. In my view ethical dilemmas should be resolved by explicit approval of authorities within your organisation. I think many decision makers wouldn’t intervene if something wrong but beneficial was being actioned, but may not explicitly approve such action.

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