One of the most critical aspects of any contract is the definition of contract deliverables. Deliverables are often called a statement of work, a statement of requirement, specifications or other similar terms, and should explain the goods or services to be provided under the contract.

A common approach is for the contract deliverables to be described in terms of the results or outcomes required, particularly in relation to services. The emphasis on results and outcomes rather than on inputs and processes used by the contractor can allow the opportunity for operational flexibility and innovation. This can increase the possibility of achieving the same results at lower cost than if the acquiring entity specified the detailed processes to be used or followed.

Nevertheless, in some situations, a more prescriptive description of the contract deliverables may be appropriate, particularly where there is little scope for flexibility in how those services will be provided.

The following case study provides two examples of contract deliverables.

One of the most critical aspects of any contract is the definition of contract deliverables.

Case Study: Specifying contract deliverables

Example 1

Provide office cleaning services that meet specified performance standards.

Example 2

Conduct a review of the operation of the [...] scheme over the past three years. Provide a report on (a) the views of key stakeholders on the effectiveness of the scheme and suggestions for any changes; (b) the results of a quantitative analysis of the impact of the scheme in relation to its published three-year objectives; and (c) options for changes to the scheme to reduce administrative costs, together with costs, benefits and possible problems for each option. The report is to be provided within three months and should be of a presentation quality suitable for internal use, and of an accuracy and reliability suited to be used as a basis for policy and budgeting decisions.

Depending on the complexity and nature of the goods or services there may be a short version of the deliverables, followed by more detailed description in schedules to the contract.

The specification of deliverables in most contracts is likely to draw on a number of sources of information to assist with the definition of the results being sought. These include the request for tender, the contractor's proposed and published specifications and other discussions and negotiations.

The statement of deliverables should set out: what needs to be delivered, to what standard and in what timeframe(s). It should be:

• as concise as possible;

• clear, consistent, unambiguous and not conflict with itself or other contract terms and conditions;

• complete, accurate and correct;

• feasible and achievable; and

• measurable and verifiable.

Depending on the type of contract requirement it should be written in functional and performance terms rather than technical terms. It should also indicate the relative importance of each contract deliverable or each part of the deliverable where appropriate.

In defining the contract deliverables, it can often be important for the contract to reflect the fact that the deliverables may need to be amended over the life of the contract to take account of changing circumstances or requirements. This is particularly the case for many service contracts such as IT services.

Depending on the type of contract requirement deliverables should be written in functional and performance terms rather than technical terms.

In defining the service deliverables, care needs to be exercised to ensure that contractors do not provide services at a higher level than what is actually required in order to attract a higher level of payment. For example, failing to resolve a client inquiry by telephone because this attracts a lower payment and requiring the client to attend a face-to-face interview which attracts a higher payment.

Good Practice Tip: Peer review of draft contract specifications

When drafting contract specifications, read relevant background documentation to help to understand the requirement and communicate it clearly. Remember, tenderers need to understand the requirement in order to develop an effective submission and deliver the goods or services. So, before finalising the contract specifications, ask colleagues or a subject matter expert to review the draft, with a view to identifying any errors, gaps or lack of clarity. Effective time spent in developing sound contract specifications should in turn facilitate the quality of tenderer submissions received, reduce time spent in negotiating the contract, and the delivery of actual goods or services required.

Case Study: Impact of poorly specified contract deliverables

An entity wished to acquire a new vessel to support its operations. The contract specifications were developed by a person who was inexperienced in procurement and the construction of vessels. The resulting contract specifications incorrectly identified the nature of the waters the vessel would be expected to travel in (which dictated the type of vessel constructed), and failed to identify the need for safety and navigation equipment to be fitted on the vessel. Testing of the seaworthiness of the vessel was not conducted before it went to sea. Although there were a number of contributing factors, the vessel sank and tragically resulted in the loss of lives.

Comment: This case study highlights the importance of ensuring the accuracy and completeness of contract specifications. It also highlights the need for appropriate skills, including the review and input by subject matter experts and other relevant stakeholders, in developing contract specifications, particularly for more complex procurements.