The National Law Review, a scholarly journal of legal analysis and news, recently published an article highlighting contract issues unique to facilities management outsourcing.
In a facilities management outsourcing scenario, the employees of the third-party service provider work in-house, have regular daily contact with the client’s personnel and share some responsibility for the client’s facilities, equipment and supplies. It’s this high level of visibility and contact that differentiates facilities management outsourcing from typical business process outsourcing (BPO) transactions, according to the NLR.
The article’s authors identified five top issues to consider when negotiating a contract with a provider of outsourced facilities management services. Here is a brief summary of each issue:
1. Establish a communications plan: With a third party working within the facility, it’s important to have a documented plan that establishes clear lines of communication between the services vendor, the customer and the occupants of the facility.
2. Define performance measurement: At a minimum, the customer should expect the same quality of service that existed prior to outsourcing. The service provider’s duties and quality expectations should be clearly defined.
3. Establish a process for resolving issues and complaints: The NLR points out that issues involving facility-managed arrangements typically require an immediate response rather than relying on periodic performance reviews.
4. Establish confidentiality rules: With the vendor’s personnel on-site, they will likely have access to and encounter a good amount of the customer’s confidential information.
5. Review insurance and risk responsibilities: The vendor’s personnel will have access to and use the customer’s facilities and equipment. The customer should check with its insurance representatives for the appropriate insurance coverage.
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