Indirect observation is the method of monitoring contract performance by reviewing secondary sources of information rather than witnessing the work firsthand. This process involves analyzing progress reports, technical reviews, test results, and audits compiled by various observers and experts. It allows the contract manager to assess progress, quality, and compliance by synthesizing data and reports from multiple perspectives without being physically present at the work site. This method is crucial for managing complex contracts where direct oversight is impractical.

A. Direct observation involves firsthand, personal witnessing of performance, such as a site visit, which is contrary to using reports from others.

C. A contractual audit is a specific, formal review for compliance with contract terms, representing only one component of the broader indirect observation process described.

D. Change observation is not a standard term in contract management; the correct terminology relates to monitoring performance, not just observing changes.

1. National Contract Management Association. (2019). Contract Management Body of Knowledge (CMBOK) (6th ed.). Competency 4.5: Manage Contract Performance. The CMBOK describes performance management techniques, distinguishing between direct methods (e.g., site visits) and indirect methods, which include the review of reports, data, and audits as described in the question.

2. Garrett, G. A. (2007). World-Class Contracting (4th ed.). CCH. Chapter 11: Contract Administration. This text, often referenced in contract management curricula, details contract administration functions, including the use of progress reports, technical inspections, and audits as key tools for monitoring contractor performance remotely (i.e., indirectly).

3. Defense Acquisition University (DAU). (2022). Contract Administration and Management. CON 0990V. Module 4: Monitoring Contractor Performance. DAU courseware explains that monitoring can be accomplished through various means, including the review of contractor-submitted reports and formal audits, which are forms of indirect observation.