OutsourcingContract Negotiations

Writing an SLA

John Webster - Director

Salt Lake County Fleet Management

What can you expect today? Gain better understanding about public /

private partnerships with vendors

Learn how to negotiate with vendors and write contracts for services

Understand the value of Service Level Agreements

Learn how to develop positive relationships with Fleet customers

INTEGRITYWhen you are looking at the characteristics on how to

build your organization:

First comes INTEGRITY.

Second, MOTIVATION.

Third, CAPACITY.

Fourth, UNDERSTANDING.

Fifth, KNOWLEDGE.

Last and least, EXPERIENCE.

Without INTEGRITY, motivation is dangerous.

Without MOTIVATION, capacity is impotent.

Without CAPACITY, understanding is limited.

Without UNDERSTANDING, knowledge is meaningless.

Without KNOWLEDGE, experience is blind.

EXPERIENCE is easy to provide and quickly put to good use by people with all other qualities.

Make absolute integrity the compass that guides you in everything you do. And surround yourself only with people of flawless integrity.

Let’s Get Started

Outsourced ContractsWhat is outsourcing?

Public /Private Partnerships

Contracting with another company or person to do a particular function. Almost every organization outsources in some way.

Although outsourcing has been around as long as work specialization has existed; in recent history, companies began employing the outsourcing model to carry out narrow functions.

Outsourced ContractsAdvantages - Key Points

Cost Savings

Quality of services

Access to specialized skills

Contractual obligation

Staffing issues

Capacity management

Outsourced Contracts

Disadvantages - Key Points

Social responsibility

Company knowledge

Staff turnover

Outsourced ContractsWhat types of service to outsource?

Towing

Heavy Truck Tire Service

Paint and Body

Vehicle Up-Fitting

Vehicle Re-Marketing

Motor Pool

Warehousing

Outsourced ContractsWhat do I need?

Research, Measurements, and Metrics - (Financial)

Identify all pros and cons

What is the Organizational Impact - (Personnel) Internal External

A plan to mitigate or minimize negative impacts

Outsourced Contracts

Negotiating with the vendor

The research and measurement/metric phase

The RFP is where all the negotiations take place

The RFP will be where the terms, conditions and final contract come from

Don’t Jump Past Opportunity

In-Sourcing Contracts

There are opportunities to in-source contracts

Salt Lake County Fleet currently manages 5 inter-local agreements

Successful Customer – VendorRelationships

Face-to-face meetings Establishes roles and expectations

Communication

Wear each others hat

Flexibility

Set up and meet quarterly

Listen

Only a collaborative effort will succeed

Getting up to Speed with Customer Success

Service-Level AgreementsWhat are Service-Level Agreements (SLA)?

Service-level agreement (SLA) is a contract between a service provider and a customer. Specifies, usually in measurable terms, what services the service provider will furnish.

Although an SLA is an excellent expectations-management mechanism, it is important to manage your own expectations of what it can realistically accomplish.

Unfortunately, some people view an SLA as a complaint-stifling mechanism or a quick fix to a troubled relationship. However, using it for such purposes creates more problems than it solves.

Service-Level AgreementsBenefits of Service-Level Agreements

Most important benefit, SLA is communications tool: The value of an agreement is not just in the final

product - the very process of establishing an SLA helps to open up communications.

A conflict-prevention tool: An agreement helps to avoid or alleviate disputes

by providing a shared understanding of needs and priorities. If conflicts do occur, they tend to be resolved more readily and with less gnashing of teeth.

Service-Level AgreementsBenefits of Service-Level Agreements (cont.)

A living document. This is one of its most important benefits. The

agreement isn't a dead-end document consigned to the “Forget Forever” file. On a predetermined frequency, the parties to the SLA review the agreement to assess service adequacy and negotiate adjustments.

An objective basis for gauging service effectiveness. An SLA ensures that both parties use the same

criteria to evaluate service quality.

Service-Level AgreementsEffective Service-Level Agreement must

have two sets of elements:

Service Elements

Management Elements

Service-Level AgreementsService Elements: Clarify what services are provided

Clarify services not provided (if customers might reasonably assume availability of such services)

Clarify conditions of service availability

Establish service standards, such as the timeframes in which services will be provided

Define the responsibilities of both parties

Establish cost vs. service trade-offs

Describe escalation procedures

Service-Level AgreementsManagement Elements:

How service effectiveness will be tracked

How information about service effectiveness will be reported and addressed

How service-related disagreements will be resolved

How the parties will review and revise the agreement

Service-Level Agreements

Periodic meetings with customers

Collaborative effort

Follow-up on goals and / or concerns

Service-Level AgreementsProcess of establishing an SLA:

Even with attention to both sets of elements, a successful agreement requires much more than simply plugging the elements into an SLA template.

The process of planning, establishing, and implementing an agreement is typically a many-month process of information-gathering, analyzing, documenting, presenting, educating, negotiating, and consensus-building.

Service-Level Agreements

When is an agreement NOT an agreement?

If customers are not involved and engaged in the process, it is NOT an agreement!

The process must involve customers.

Contact Information

John Webster – Director

jwebster@slco.org

385-468-0480

Salt Lake County Fleet

604 West 6960 South

Midvale, UT 84047

Finished Q&A