The following article was prepared by Mike Taylor, C.P.M. for distribution to NAPM affiliate newsletters. 

August 2004

Proactive Procurement

Before reading this article, read this disclaimer!

Do you subcontract for ANY services today (or want to, in your next job)? I'm not talking about just the giant 10 Million dollar construction. How about elevator repair, bookkeeping, record transcribing, payroll processing, maintenance services, transportation, repair, cleaning, lawn mowing, window washing, etc.? If you do; or worse, someone in your company does informally or by using their purchasing card, then you need to be proactive in your contracting.

The first step in being proactive is to understand the potential problems. Read this real-life horror story about subcontracting gone terribly wrong, http://www.mltweb.com/tools/buytrain/news0405.htm#Education 

Now try this on for size:

Monday morning about 5:15 a.m. a senior buyer for a mid-size distribution company receives a breathless call from the maintenance supervisor. The supervisor had gone to the warehouse early to check the condition of the brand new floor coating that had been installed by a subcontractor over the weekend. On arrival, the supervisor discovered a person lying in the middle of the new floor. Before providing details the supervisor hung up to meet the emergency service personnel just arriving.

Now it's up to you to be a little breathless as you hurriedly dress and jump into traffic to get to the plant. While waiting for stop lights, here are a few probable thoughts:
· Was he dead?
· Who was he anyhow?
· Was he a contractor employee, a nigh watchman or a warehouseman showing up early?
· Was that coating process hazardous?
· Did it generate toxic fumes or waste?
· What does the fine print in the contract say about liability?
· Who is responsible if someone is hurt doing work under contract in my warehouse?
· And on and on and on and on……

Yes it can happen. The elevator repairman crushed a leg, the pump repairman receives an electrical shock, the new floor is toxic, the truck driver is intoxicated, etc. At times like these, it pays to have done a very careful and proactive job of writing the contract.

Here are some suggestions for issues to consider. Take a look at your standard contracting terms and process and see if you think these issues are covered. Any loopholes or questions and it may be time to get a little professional legal advice.

Before issuing the contract, at the solicitation and proposal phase, find out, ask questions, and investigate. Making an assumption about what your contractor is proposing is making a GIANT mistake.

1. Will the contractor be using his own employees or is he planning on subcontracting any of the work?
2. Does the contractor have a record of OSHA violations or problems?
3. Does the contractor have a history of problems with the Department of Labor?
4. Is the contractor licensed to do this work?
5. Are the employees trained?
6. Will a trained professional supervise them? Who is that person and how can he be contacted (24 hour coverage).
7. Does the contractor have a safety program and does the contractor verify that it is followed?

In your contract terms talk to your legal counsel and make sure you are covered:

1. Contractor is strictly responsible for the contractor-employee relationship including all applicable department of labor, safety and legal requirements.
2. Contractor will use it's own employees to do the work and will NOT subcontract any portion of this contract without prior written approval of the buyer.
3. Contractor will ensure that all employees performing work on the buyer's site are properly trained and supervised.
4. Contractor may not share, use or retain any of the buyer's information, data, material, drawings, etc. Buyer retains all ownership and rights.

I hope this gives you some ideas.

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