Draft Of Service Level Agreement

For longer-term contracts, the parties must verify the provision of services. Provisions relating to reports, meetings, information and procedures for escalating disputes are sometimes contained in the CFS and not in the main part of the agreement. Unfortunately, these types of provisions are often overlooked, but for a service contract to be concluded, it is important that contract management procedures are agreed upon and effectively followed. Management elements should include definitions of measurement standards and methods, reporting processes, content and frequency, a dispute resolution procedure, a indemnification clause to protect the customer from third-party disputes in the event of a breach of the level of service (but this should already be covered in the contract) and a mechanism to update the agreement as appropriate. If all parties accept the agreement, it is necessary to ensure that the parties concerned are satisfied and there is no error on the part of the parties who must respect their requirements and responsibilities. Simply put, this means that periodic (quarterly) reviews should take place. In the text of the SLA, there is usually a section that describes the minutes of these audits, who will carry them out and when and how other parties should be contacted in the event of a problem. Often, the SLA includes a change control procedure that establishes a mechanism for agreeing and recording changes to the agreement or services to be provided. In an agreement of any length or complexity, it is inevitable that changes will be made to the services (which affects the level of service) and that an agreed and properly implemented change control procedure will be essential.

For the SLA to have a “bite”, the lack of a level of service must have financial consequences for the service provider. This is most often done through the inclusion of a credit system for services. In essence, where the service provider does not meet the agreed performance standards, the service provider pays or credits the customer an agreed amount to encourage performance improvement. These service credits can be measured in different ways. For example, if the 99.5% level for reporting is not reached, the SLA could include a service credit that grants some price reduction for each 0.5% discount per week. Alternatively, service credits can be awarded if, for example, there are three or more errors to fulfill a service level within a certain period of time. Here too, each level of service must be considered individually and a reasonable level of credit must be agreed between the provider and the customer if the agreed level is not reached over a given period. It is important to ensure that service credits are appropriate and encourage the service provider to do better, and that they intervene early enough to make a difference. Most service providers have standard SLAs – sometimes several that reflect different levels of service at different prices – which can be a good starting point for negotiations. However, these should be reviewed and amended by the client and the lawyer, as they are generally inclined to the benefit of the supplier. Then, the customer should indicate successively the expected performance standards for each service.

It depends on the service. Based on the reporting example above, a potential service level could be 99.5%. However, this must be carefully weighed. Often, a customer wants performance standards at the highest level. While this is understandable, it might prove impossible, unnecessary, or very expensive in practice…