NAO audit framework

Contract approach

4. Has the contract set up risk and reward dynamics that will encourage delivery, minimise perverse incentives and promote good relationships?

4.1  Is there an appropriate allocation of risk between department and contractor?

4.2  Are there incentives to encourage the contractor to act in the interest of the department?

4.3  Are suitable mechanisms established to drive the desired relationship?

Examples of relevant guidance

NAO good practice contract management framework

5.2  A performance management framework is in place when the contract is signed. The framework is comprehensive, objective and provides incentives for the supplier to meet or exceed agreed performance standards.

5.3  Service levels agreements are in place, and are linked to business needs, understood by the supplier, and monitored by the contract manager and/or end users.

5.4  Supplier performance is assessed using clear, objective and meaningful metrics, linked where appropriate to the Office of Government Commerce's 'Common Assessment Framework' for monitoring suppliers.

NAO payment by results guidance

Explains benefits, structure, risks and framework for payment by results.

Model services contract (Cabinet Office)

Details expected contract terms for different approaches.

The Scottish Government's Procurement Journey - Contract and supplier management