5 SUPPLIER TIPS TO DEAL WITH SOW CHALLENGES

You have a Master Service Agreement (MSA) in place so getting the Statement of Work (SOW) signed should be easy, right?  Maybe in other industries, but not in Life Sciences.  

Let’s think about what it takes to get an SOW in place.  Typically, there has been an RFP process to select the right vendor, then there are conversations to finalize the scope of work and price to complete the project.  This process can move fairly quickly, depending on how involved procurement is. When these discussions are completed, clients and suppliers can have very different views regarding the status of that project.  Clients may think the hard part is done, and the work will begin.  For suppliers, the work is just starting.  Following are some tips that may help you deal with SOW challenges.

SIGNING AUTHORITY

The SOW is sent to the project manager or stakeholder leading the project for their signature to initiate the project.  This signature is typically mandated in the governing MSA.  However, often projects cost more than the stakeholder has the authority to sign for.  All companies designate signing authority based on your level in the company.  Depending on the organization, a Director’s signing authority may go from $20K up to $125K.  

This means that suppliers need to determine who has the authority to sign the SOW.   Suppliers often fail to ask that question which adds time to the process by going back and forth to get to the correct stakeholder and engage with them.  Depending on the stakeholder’s workload, it may be further delayed.

Supplier Tip 1– First, determine exactly who needs to sign the contract.  Next, if applicable, utilize an electronic signature contract management software like DocuSign or PandaDoc.  These can be set up for multiple signatures and send automatic reminders.  

NOTE:  The ESIGN Act is a federal law passed in 2000. It grants legal recognition to electronic signatures and records if all parties to a contract choose to use electronic documents and to sign them electronically. No contract, signature, or record shall be denied legal effect solely because it is in electronic form.

ADMINISTRATIVE BURDEN

After the recession and many layoffs in the pharma industry, there is often one admin assistant supporting six people or a whole department. That means a greater administrative burden on stakeholders.  Let’s say there is an SOW which a stakeholder has the authority to sign.  The stakeholder has to read the contract, print it out, sign and scan it, and email the signed copy to the supplier.  When you receive 75 emails a day, that task may fall to the bottom of the list.

When the SOW is over the stakeholder’s signing authority, they will send it to their admin assistant, who will forward it to the assistant of the next signer.  Let’s say that person is in a VP role.   They may be traveling and not available to sign it.  In addition, even if they are in the office, they are usually booked in back to back meetings all day.  When suppliers are requesting a signature, the stakeholder has a couple of options. First, they can work with the VP’s admin assistant to make sure their contract is a priority.  Second, they can follow the VP themselves and ask for a signature on the way to the next meeting.  Either way, you end up hassling someone during the process.

Supplier Tip 2 – See Supplier Tip 1

THE PURCHASE ORDER

Okay, you finally received the signed SOW, so it should be a quick process to get the Purchase Order (PO) number.  In all transparency, it takes less than a day to raise a PO, and administrative assistants are responsible for this task.  How quickly you receive a PO number depends on the admin. Do they support the entire department? If so, the head of that department gets first priority, even though direct reports may raise more POs.  When your stakeholder is not leading the department, there will be a delay in most cases.  Worth it to note that admin assistants focus most heavily on raising POs at the end of the month for accounting purposes.  If you are negotiating a contract at the end of the month, you have a greater likelihood of a speedy process.

Supplier Tip 3 – Get to know the administrative assistant.  Make friends with him/her and communicate via phone. It is very easy to ignore an email, but much more difficult to ignore a person.  

CHANGE OF SCOPE

Very few projects go to completion without some scope creep.  The suppliers that handle this best are the ones that notify the client immediately once the creep begins.  It is important to jump on a call to discuss. If it is something minor and there is a good client/supplier relationship, there may be no charge.  Clients do not like working with suppliers whom they feel nickel and dime them.  However, if the changes are significant, you both need to agree to the terms and additional costs to be incurred as soon as possible.  Whenever stakeholders are told the cost is going to be greater than anticipated, they inform their boss.  The director always asks what the number is, and if the stakeholder doesn’t have it, they don’t look informed.

Supplier Tip 4– Immediately inform clients when they are getting close to the end of their budget or if they are requesting items out of scope. This is best done over the phone, not email.

WHY WON'T CLIENTS TELL YOU THEIR BUDGET?

Short answer – they may not know the appropriate budget range for their project, and they want to avoid the potential of being overcharged.  Experience has shown that if a client tells you their budget is $150K, proposals usually come back close to that amount.  The client doesn’t know if you are just giving them the minimum for that price or if that is standard for this project type. 

Supplier Tip 5 - Give clients budget ranges for their project type. For example, “We have worked on several of these projects, and they can range from $75K for a bare bones approach to $175K for a state of the art approach.  What type of approach would you like to consider?”  

CONCLUSION

The more suppliers can do to automate processes and help take the administrative burden off clients, the smoother the contracting process will go. Most importantly, never underestimate the power of administrative assistants.  When it comes to SOWs, you could argue that they are the ultimate boss.