Traditionally, contingent workforce programs have followed a fairly predictable trajectory. A disorganized centralized supply base with poor processes, lack of contract control and rate uncertainty is identified as a problem. Subsequently, it becomes a corporate priority to resolve. Workforce management strategies are devised, usually incorporating some form of managed service provider and a vendor management system. This pattern also applies to the challenges one confronts when dealing with incorporating statement-of-work management into your contingent workforce program.
While the adoption path is the same as with traditional staff augmentation, the contract considerations may not be. SOWs are often significantly more complex and require a robust contracting strategy to protect both parties. Larger dollars are almost always at stake and often the buying organization knows little to nothing about how the end result is scoped and described — much less the validity of the given project milestones. With this in mind, it’s important to take contract structure and specifications and detail into account when drafting an SOW management program.
Structure. When deploying a new program for agency-sourced contingent workers, we often see the contract landscape littered with inconsistencies and poorly negotiated terms. Often, SOW contracts are based on suppliers’ contracts and the scoping documents are also written by the suppliers themselves. One of the first things you need to do is develop a contracting strategy. In the traditional master services agreement structure, you have tightly negotiated terms and conditions negotiated into the agreement with an approved supply base, and additional projects issued to those suppliers are incorporated into exhibits that have project details. These exhibits include language that incorporates them into the master supplier agreement and or cites the MSA as the governing language. For example: “This is statement-of-work shall be governed by the MSA executed between the parties on [date] and all terms and conditions described therein are incorporated into this document and take precedent over any conflicting terms.”
Specifications and detail. One of the main value planks of SOW as opposed to other modes of staff engagement is theoretically, the SOW is supposed to be a less-risky proposition for the client. Essentially, the supplier bears the bulk of the completion risk asking for a fixed price for a certain outcome regardless of the time it may take or the cost they may incur in delivering. This is a big unknown for many suppliers and represents a significant shift of risk from the client to the supplier. To be successful, the supplier essentially needs to create a bid that is more than the project actually costs. This should be obvious.
But in order to do that successfully, the specifications and level of detail need to be at a sufficient level, and unfortunately, these SOW engagements often fail because of poorly scoped and defined specifications. While entire books have been written about best practices in building SOW specs, the best way to hold suppliers accountable for the deliverable and ensure the timeline is adhered to is to make sure that your agreement carries the appropriate level of detail. To do that, include as part of your selection and contract process an inventory all of the bits of information suppliers may need in order to give you the most comprehensive bid. You can ask them this on the front end of the process in excruciating detail. This is essentially committing to deliver the appropriate level of support and provided your fact pattern remains the same, holding the supplier accountable for the timeline and deliverables.
Tackling the complex world of SOW is no small endeavor, but starting by including contracts that define clear boundaries and responsibilities while protecting everyone’s best interest is a great way to set yourself up for success.