This contract tip is about when a vendor’s performance starts to go downhill, most customers don’t want to terminate. They want the vendor to fix the problem.
Some contracts include service levels to incentivize better performance, but that's not the only approach.
Here are some other ways for customers to manage problems without terminating the agreement:
1. More people - The customer could require that the vendor assign more people to help fix a specific problem or just as additional resources to do the work. Another option is for the customer to assign some of its personnel to fix the issues at the vendor’s expense.
2. Different people - The customer also could require the vendor to change the people performing the work. The customer would insist that the vendor replace some or all of the assigned personnel.
3. More oversight - The customer could require the vendor to provide more frequent and comprehensive reporting. The customer could go from quarterly to monthly or even daily updates on what the vendor is doing to fix the problem.
4. Rights to take over - The most drastic approach is to allow the customer or another vendor to step in and take over performance. Essentially, the vendor would pay for someone else to do the vendor's job.
What other mechanisms have you seen in your contracts?
PS - Apologies to all the wonderful vendors who do an amazing job despite trying circumstances. We could just as easily switch this over to a customer than never made a mistake and performed all its obligations exactly as and when required.
