Broken Promises in Outsourcing and Contracting
surprisingly common occurrence is firms undertaking outsourced activities
simply not doing what they promised to do.
is not always as easy to deal with as one would guess. The expectation is
that one simply institutes legal action for breach of contract when this
are a number of complications.
first complication is that in a number of outsourcing arrangements,
promises made by the firm undertaking the outsourced activities never make
it into the signed contract.
area where this happens fairly frequently is when firms competing for the
contract to undertake the outsourced activity, are given the opportunity
to make presentations to the tender selection committee/panel.
the presentation promises are made which are not always put into the final
the tendering process is complicated there is a greater risk of promises
being left out of the final contract.
are where the tendering process involves many stages, where there are many
clarifications and requests for further information, where there are
retenders and post tender negotiations, where there are communications
which are not in writing, and combinations of these.
organisations attempt to cover this exposure by having a clause in the
contract and tender papers, which provides that all tender submissions,
correspondence and communications are part of the final contract.
is generally useful but does not always completely overcome the problem.
way that the promises were stated in the communications may result in
confusion, uncertainty and a lack of legal enforceability.
addition in some cases there is confusion as to whether the promises are
offers, offers extinguished by new offers, provisions of information, etc.
even where the promises were in writing there may still be confusion and
disputes as to whether or not the promises are enforceable and what they
has shown that where promises are not legally enforceable, they are often
broken. As the saying goes: “A verbal contract is not worth the paper it
is written on.”
Promises for Outsourced Work
made by firms wanting to undertake the outsourced activity are often not
incorporated into the signed final agreement. The result is that you are
left in a position where you usually have to rely on the goodwill of the
firm and are prone to fraud by them. There have been some spectacular
examples of this in recent months. This list is provided to help ensure
that the risk is avoided in your organisation:
For more tips, advice and practical pointers see Fraudproof Your Business Manual.