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June 25 2025
Procurement Contracts pt1: Stop Playing With Madness!
Your Contracts Are Failing, and It’s Not About the Fine Print
In the latest episode of Proc n Roll, procurement veterans Conrad Smith and Natasha Gurevich dig into one of the biggest time sinks for any procurement team: contracts. The surprising takeaway? The real failures in contracting have little to do with legal clauses and everything to do with broken processes and misaligned expectations.
The discussion highlights how to stop wasting time and start adding value:
- Eliminate before you automate. The first step is to get rid of unnecessary work. Automating a dysfunctional process will only create “a giant mess”.
- Focus where the business is nervous. Instead of treating every contract the same, invest time and resources on the few deals where the business identifies significant potential risks.
- Fix the “familial conflict.” The dysfunctional relationship between Legal and Procurement must be repaired before building new systems or a “one front door” for intake.
- Hold the business accountable. The business must own and approve the scope of work (SOW). This prevents the most common failure: a misalignment between what the business thought they were buying and what the supplier delivered.
If there’s one message from this episode, it’s this: before you invest in new contract management software or AI tools, you must first fix the human element.
By repairing the partnership with legal and aligning on a practical, risk-based policy, you can free your organization from bureaucratic drag and focus on the strategic work that truly matters.
Watch now or read the transcript below.
Transcript: Proc-N-Roll | Procurement Contracts pt1: Stop Playing With Madness!
Zach: Welcome to Proc n Roll. Today we’re diving into a big topic: contracts. In many ways, procurement people are contract people, and it takes a huge amount of our time and resources. But has the nature of contracts changed? Natasha, what’s your take?
Natasha: For as long as there is a partnership, there should be some kind of contract. In the beginning, relationships are all roses and unicorns, but as business develops, it’s beneficial to have rules that govern the relationship. Hopefully, you never have to refer to it, but it’s there in case of misunderstanding.
Zach: So, should every purchase order be backed by a full contract? How much time should you really put into them?
Natasha: The answer is no, not every transaction needs an agreement. The approach should be three-dimensional, based on value, risk, and the time it takes to create the contract. If risk and value are high, you need a contract. But for repetitive, low-risk, and low-value transactions, you need different ways to govern those purchases, like a P-card or a simple purchase order.
Conrad: Natasha, this reminds me of our policy conversation. It highlights the need for a thoughtful vision for the work that’s coming across your desk. When I got to Adobe, 70% of all purchase orders had a contract associated with them, and the approval process was totally redundant and a waste of time. This is a huge area for optimization, but it requires a real collaboration with Legal, not just bowing down to them. They see things from a legal perspective, but we need an operational one too.
Zach: Does AI have a role to play in automating some of this?
Conrad: Before we talk about automating, my argument is to first eliminate. What work can we eliminate entirely? There are many cases where contracts aren’t even necessary. In my 30 years in procurement on the buy side, I’ve only had one example where a contract came out of a drawer for a discussion with a supplier. Think about the money and hours spent on agreements that are never seen again. This doesn’t mean you throw out clarity on the scope of what you’re buying, but we must streamline the paperwork.
Natasha: I agree with Conrad; it’s very rare to refer to contracts. That rarity should be a factor, because companies already accept that every day of operation exposes them to multiple risks. They openly determine which risks they are willing to take on.
Zach: So how do you get stakeholders to accept a slightly higher level of non-material risk in exchange for the time and resources you’d free up?
Natasha: Stakeholders resist having to fill out different forms in different systems for Legal and Procurement. If the systems are disconnected, they have to do the work twice. They can’t bypass Legal, but they can bypass Procurement, which is how we often get left out or brought in at the last minute. This is why having one front door for all purchasing activities is so important. It doesn’t mean one system, but one entry point that directs you from there.
Conrad: That assumes the organizations in the background are aligned. I see a lot of dysfunction between legal and procurement teams. I remember at Adobe, a senior legal staffer said, “Anything that’s important, we need to negotiate because procurement legal negotiates better than any of you procurement people.” But Legal hadn’t allocated resources to the work, so supplier agreements were backed up forever. If you don’t fix that dysfunction and align on policy first, and then build your orchestration, you’re just going to automate a giant mess.
Zach: That brings up a key question on process: should the approvers of requisitions also be the contract signers, or do you need a separation of duties?
Natasha: No, they should not be the same. Yes, there must be a separation of duties. From my perspective, budget owners should not be the contract signatories. I am a strong believer that signature rights should only belong to Legal or Procurement to ensure the decision is in the best interest of the enterprise, not just a particular project.
Conrad: I think the biggest failure of contracts isn’t the legal terms, it’s when the business slaps together a vague SOW about what they’re buying. Then, at the 11th hour, the business says the supplier didn’t do what they thought they were going to do. It’s a fundamental misalignment of expectations. So while the business shouldn’t sign the ink, they must be held accountable for approving the scope. You can’t divorce them from the process, because when it hits the fan, that’s what comes up: what did you buy, and did they deliver it? That cooperation has to come together.
This transcript has been edited for clarity while maintaining all substantive content