Sofema Aviation Services (SAS) www.sassofia.com Considers the small print during Contract Development.
Introduction
Clearly, it is important to specify exactly what is expected and in this way, the Contractor / Service Provider has a clear understanding of what is expected, moreover there is a benchmark by which the work can be assessed.
What do we expect to see within a well-written contract?
- Specify what is expected of the contractor.
- Identify Milestones.
- Describe any Delivery Requirements.
- Confirm what the final deliverable will be and how it will be assessed or measured if relevant.
Use the 5 whys as a rough guide to support basic considerations regarding the preparation (Plus How). The intention is for these basic questions to help generate more detailed questions that in turn will help to shape the contract.
- Who
o Who will perform, provide, or receive the services?
o Are there any special requirements (e.g., insurance requirements, vendor certifications)?
o Do firms need to have any special qualifications/certifications (e.g., familiarity with biohazard waste, auditing experience, or construction experience)?
o Who will provide approvals?
- What
o What is the complete description of the items/services needed?
o What are the expected outcomes?
o What are the quantities and units of measure needed?
o What is the frequency of need?
o Are there future needs?
o Is any additional training or are warranties needed?
o What is the timeframe/term for delivery or service performance?
- Where
o Where is the physical location of delivery or performance?
o Where will the services be performed or delivered?
o Who is the agency contact person?
o When?
o When do you need it?
- Why
o Why do you need it?
o Is this a first-time request?
o Is this a replacement purchase?
o Are services being outsourced or augmented, or is advice necessary?
- When
o What is the timeframe/term for delivery or service performance?
o Does the contract require renewal options for future needs?
o Are there project milestones (e.g., monthly, quarterly, upon completion)?
o What are the payment terms?
- Maybe to include “How”
o How will we manage special requirements (e.g., insurance requirements, vendor certifications)?
o How to address special qualifications/certifications (e.g., familiarity with biohazard waste, auditing experience, or construction experience)?
It is important to establish clear costs and delivery criteria to ensure and quantity baselines prior to procuring a service and awarding a contract.
Contract language – The contract should:
- Ensure that minimum performance standards are identified in clear terms.
- Dispute resolution steps.
- Penalties for failure to meet performance expectations.
Legal clause to be included:
Abandonment or default
- Failure to perform, or defaults, this clause states that the agency reserves the right to cancel the contract, re-solicit the request and award the contract to the vendor that meets the requirements.
o Most agencies do not allow the defaulting contractor to be considered in the re-solicitation process.
o Some agencies go a step further and prohibit the contractor from being considered on future procurements for a set period of time.
o The period of suspension will be determined by the agency, based on the seriousness of the default.
Contractor responsibility
- The contractor shall comply with all applicable laws and statutes.
- The contractor is responsible and liable for the safety, injury, and health of its contractors and employees while performing work at the agency’s site.
Certificates and licenses
- Whenever a certificate or license is required, the contractor should be required to submit a copy of the document prior to contract award (or activation).
Dispute Resolution
- Identifies the steps for the contractor and agency to resolve their differences once it is clear that the dispute cannot be resolved through the course of regular business.
- Dispute resolution clauses typically state that if the agency and contractor cannot resolve their differences through direct discussions and negotiations, then the disputes may be mediated by a neutral third party.
- Finally, to be resolved in court.
Non-appropriation
- The contractor will not disclose proprietary or confidential information that it may receive while working for the organisation without prior written consent.
- In the event that the contractor is faced with legal action due to disclosure of the proprietary or confidential information, the contractor is required to indemnify and hold harmless the agency and its employees from any applicable claims or damages that may arise.
Right to audit
- The organisation may audit the contractor’s records during and after the contract.
- The contractor shall cooperate fully with the Organisations representatives during an audit or investigation.
o Stipulates how the contractor is to maintain its fiscal records, work papers, reports, books, data, files, software, records, and other supporting documents pertaining to the contract and provides a determined timeframe for keeping the records after the contract has ended and the final invoice issued.
Substitutions
- Not permitted without the written approval of the Organisation:
o Typically refers to Goods / Services agency.
o When referred to manpower skill level a provision should be added which requires substitution only with equally qualified personnel and prior organisation approval.
Termination Clauses
Stipulates that the contract will terminate upon completion of the terms within the contract. There are two types of termination clauses:
- Termination for Convenience
o Terminate by mutual agreement.
o Organisation to terminate with advised notice period.
o Contractor is not able to terminate for Convenience.
- Termination for Cause
o Written when the contractor defaults or fails to perform or comply with the contract requirements.
o Once the contractor receives written notice to terminate, the contractor shall promptly discontinue all services and is required to deliver all data, drawings, and materials accumulated while performing duties under the contract to the Organisation.
- Note Regarding Termination Clauses
o Essential for contract effectiveness.
o Ensure compliance with statutory & legal requirements.
- Develop Clear Performance Measures
o Criteria, based on strategic planning goals, for determining the results and quality of its activities.
o Creating a system for determining the supplied service is meeting its objectives.
o When standards are not available, then agencies must define contractor requirements in a manner that allows performance to be monitored against known levels of acceptability for example:
– Benchmarking
– Efficiency ratings
– Outcome measures
– Past performance
– Specific technical data such as plans, drawings, or reports
– Performance indicators/targets
- Ongoing contract management
o A key function of proper contract management.
o To ensure the contract is satisfactorily performed and the responsibilities of both parties are clearly understood.
o Minimizes problems and reduces potential claims and disputes.
o Verify contractor performance for purposes of payment.
o Identify material breach of the contract by assessing the difference between the contractor’s performance and contract requirements; and,
o Determine if corrective action is necessary and take the required action.
Next Steps
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