A bit like Christmas morning, procuring new contracts for your telco services can be quite exciting when the responses to the RFP arrive on deadline day. Potentially shiny new services that technically shade the services you currently consume. Feeling the anticipation of a fall in costs as pricing terms improve after 2-3 years on contract! Satisfied at the promise of being supported by willing account managers and an entourage of vassals.
All positive outcomes that must be documented at the end of the exercise by the signing of contracts and if you are methodical the least exciting part of the process! If this is the first time you have seen the contract you have left it too late! Request a sample copy as a supporting document in the service providers response, this will allow you time to thoroughly review the terms and conditions before making a decision. The contract terms are essential to include in weighing up the suitability of the service provider, are they balanced and are there any liability risks that need to be addressed?
Once you have chosen ‘the one’ you may be tempted to continue negotiation. Bear in mind that the contract may be from a long-term service provider or one you want to work with for a long time, so a win-win situation is healthy. And squeezing a vendor to the point where the deal is a money loser may mean a cut to support and reduced service levels within the contract period.
Clearly, the responses you have received are all on point, covering the scope of services you require, and the service levels meet your needs. In dealing with supplier contracts, there are always new hooks that appear no matter how many you have seen. These are a few that stand out for me, for example.
The trend to include web links to the service providers website, so many of these web pages disappear over time, get the content printed and add them as an appendix to your contracts.
Cunning jurisdiction terms that force you to appear in a foreign courtroom to contest any disagreement that might arise.
Be aware of the “whole of contract” clause that means that none of the additional terms agreed to outside of the contents of the written contract are enforceable
Unbalanced liability clauses that heap responsibility on you and none with the service provider.
On the other hand, there are some clauses that you would be wise to consider.
Negotiate penalty clauses where your supplier fails to meet service levels, and an escape clause should this continue to be unsatisfactory.
Include a clause that covers payment following acceptance testing. You don’t want to be paying for services before they are operational, and you are still paying for your existing services.
Also, include a suitable provision for disengaging from that supplier if it becomes necessary at the end of the contract term. To be fair most carriers are very good about this, but it pays to be prepared.
Try to limit any liability to your organisation to a realistic level particularly around mobile roaming. This has become very important with mobiles and roaming costs where unscrupulous people will steal a phone to get your sim card to use in an automatic dialler. The result can cost your organisation hundreds of thousands of dollars for your organisation.
A new telco contract will typically be set for 2-3 years. As soon as the agreement is signed, it is out of date, a bit like the fall in the value of a new car driven out of the sales yard. Therefore, it is a good idea for you to have an annual bill review or benchmarking clause included to be conducted by an independent third party. Beware the royal ‘we’ will review your pricing against the market clause! “We” means the supplier.