Negotiating and concluding a master service agreement, or MSA, and the adjacent supplier agreements can be challenging. However, the exercise can be executed more efficiently with proper information and preparation.
Staffing Industry Analysts’ report, “The Master Service Agreement and Supplier Agreement in an MSP Program,” describes several MSA and supplier agreement characteristics to help contingent workforce managers understand how such agreements should be drafted.
“This report is a useful tool for any contingent workforce program manager looking to enter into a relationship with a managed service provider; the outline structure included within the report can be used as a framework from which to build a tailored MSA,” said Jo Matkin, SIA’s global workforce solutions research director and an author of the report.
SIA’s Global Lexicon defines the master service agreement as: “A contract reached between parties, in which the parties agree to most of the terms that will govern future transactions or future agreements. Often companies will craft an MSA to outline the parameters of the legal relationship and include additional countries and or service lines as additional schedules to the MSA. This ensures that key contract provisions are uniform and saves time.”
The following recommendations can be deduced from the report:
- Start early, preferably before the program implementation commences.
- Analyze and summarize the characteristics of the intended MSP program.
- Use sample MSA contracts to gain insight, but don’t fully rely on them.
- Involve the legal department and/or external legal expertise early.
- Prioritize the articles and attachments to be negotiated with the MSP.
- Together with the MSP, prepare for potentially challenging conversations with staffing suppliers when negotiating the supplier agreement.
- Determine which other disciplines in the organization are needed (ICT, finance, security).
- Check local legislation (or legislations if a multinational MSA is intended).
- Determine in which language the MSA and supplier agreement should be crafted.
- Determine and prioritize incumbent staffing suppliers for negotiation (optional attachment to MSA).
- Involve one or two prioritized (incumbent) staffing suppliers to pre-assess the intended supplier agreement.
The full report is available online to CWS Council members. An outline of the structure of an MSA and adjacent SA is included within this report as a reference tool.
For information on CWS Council membership, click here.