How to Make a Service Agreement

A Service Level Agreement is in essence a contract that is signed by 2 parties that identifies the services that are required by the Contracting Officer (user) and the performance that is expected by the Contractor (vendor). A Service Level Agreement identifies the parameters for the completion of the service that will be of benefit to both parties. Service Level Agreement contracts are those which directly engages the time and effort of a contractor whose primary purpose is to perform an identifiable task rather than to furnish an end item of supply. A Service Level Agreement Contract may also cover services performed by either professional or nonprofessional personnel, whether on an individual or organizational basis.

Instructions

Difficulty: Moderate

Service Contract Types

1. Some of the areas in which service contracts are found include the following: maintenance, overhaul, repair, servicing, rehabilitation, salvage, modernization or modification of supplies, systems or equipment; routine recurring maintenance of real property; housekeeping and base services; advisory and assistance services; communications services.
2. The Contracting officer should provide to the proposed contractors prior to issuance of bids a valid Performance Work Statement (PWS). Within these documents the Contracting Officer should provide information that will describe the work in terms of the required results. The Performance work statement should also provide to the proposed vendor how the Contracting Officer intends to assess the work performance. The Contracting Officer shall also ensure that the PWS includes how the proposed work will be measured or evaluated. A good performance work statement should provide some financial incentives in a competitive market to encourage potential contractors to perform at a higher level. A Performance Work Statement should also include the standards of performance that is expected to be in compliance with the proposed contract. It should also identify how the Contracting Officer intends to monitor the contract to assure that the requirements for quality assurance and quality assurance surveillance plans are clearly identifiable.
3. The Service Level Agreement will provide vital information to the contractor. The user or issuer of the contract should include at a minimum the following criteria: identify and define the customer’s needs (if you are the issuing office) in your scope of work or Performance Work Statement should clearly identify what your needs are so that the vendor will be able to fully understand what is expected of his/her company in order to satisfy the terms and conditions of the subject contract.
4. Provide a framework for understanding and clearly identify what the Contracting Officer requires of the contractor. So, for example, if contract is to include cleaning of windows, identify how many windows the contract is to include and the number of times that the contractor is to clean the windows. If providing a Performance of Work statement, you may include language which indicates that windows are to be cleaned and one can see out of them without dirt and grime.
5. Simplify complex issues, identify and define issues, and make your Performance of Work Statement easy to read and understand. Break down complex issues to their basics. If you want the carpets shampooed a minimum of twice a year and on as-needed basis to assure that they are clean of all debris, then state that in your Statement of Work.
6. Reduce areas of conflict. In preparing a good Performance of Work statement, you reduce areas of conflict. Assure that you have included all pertinent information on what the requirements are and what the ramifications are in the instance that the contractor fails to perform as per the contract
7. Encourage dialog in the event of disputes, The Contracting Officer should develop a means of communication between the Contractor and the user. This may involve assigning someone in your organization to act as a liaison between the contracting officer and the contractor. A date and time should be established that encourages communication.
8. Eliminate unrealistic expectations. The Contracting Officer should not put unrealistic expectations or demands upon the Contractor. For example, it is not realistic to hire a taxi service and expect that they arrive at 9:00 a.m. each morning, since there may be instances beyond their control, such as traffic, accidents and other matters, that precludes the vendor from meeting a deadline. Although these actions should be taken in advice, the Contractor should not abuse the leniences that are provided
9. Services to be delivered. Services should be provided within the terms and conditions of the contract. If the trash is to be picked up daily by 6:00 p.m., then the trash should be cleared at that time. If the contractor fails to meet the requirement, then the Contracting Officer has the option of requesting a solution to the situation.

Performance Tracking and Problem Management

10. The Contracting Officer should provide to the proposed contractor a definition of how performance, tracking and reporting are to occur. The Contracting Officer may delegate this authority to a Contract or Program Manager who will have oversight of the contract and provide timely feedback to the Contracting Officer. All reporting should be clearly identified within the contract so that all parties are aware of the standards that will be involved in rating the performance of the Contractor
11. The Contracting Officer shall establish standards to assure quality assurance shall be performed at such times and places as may be necessary to determine that the supplies or services conform to contract requirements. Quality assurance surveillance plans should be prepared in conjunction with the preparation of the Statement of Work. The plans should specify all work requiring surveillance; and the method of surveillance. Each contract shall designate the place or places where the Contractor reserves the right to perform quality assurance.
12. Legal compliance and resolution of disputes. The Contracting Officer should assure that the Service Agreement includes the terms of the proposed contract. It should identify what will happen if vendor fails to meet the terms of the agreement and it should identify what legal ramifications, if any, will be liable to the contractor who fails to meet the terms of the agreement.

Tips & Warnings

• Assure that a signed copy of the Service agreement is maintained within your office. Keep all correspondence with the contract action. Provide proper contract oversight to contract to assure that the contractor is in compliance with the terms and conditions set forth in the signed agreement
• Assure that you keep abreast of conflicts and non-conformance with contractor performance.