Sole-Source Transactions

The record is clear: the quality of the relationship between the buyer and the service provider directly relates to the success of outsourcing. While there's a definite art to creating and nurturing a mutually-beneficial relationship in a competitive setting, you shouldn’t underestimate the feasibility of formulating or expanding an existing relationship without competition.

A variety of reasons impact an enterprise’s decision to engage or expand an outsourcing relationship without going through the time and expense of a competitive solicitation. Most frequently, sole-source outsourcing transactions arise from an existing client-provider relationship and often they result from the match of unique requirements and capabilities. Taking a “pilot” relationship to larger scale is a common blend of these motives.

For higher transaction value arrangements, as well as engagements that address mission-critical scope, business executives commonly require a validation of the market-worthiness a sole-source transaction. This increased oversight on financial commitments demands that objective third-part expertise validates and affirms the essence of the relationship terms.

Ø      Your advisor and legal counsel should be aligned to your business objectives, using efficient processes to achieve the level of contractual framework required to support the relationship envisioned by the parties

Ø      You intended service provider partner should be motivated to engage in a proactive dialogue with an industry expert with the aim of establishing a sound commercial agreement

Ø      As all transactions entail certain risks, you should apply commonly-recognized terms and conditions that frame the agreement to industry norms

Ø      You should ensure that your advisor possesses and asserts the level of industry-recognized expertise appropriate for ensuring sound business practices

In supporting your sole-source transaction, TPI will achieve the foundation of a solid outsourcing agreement, whether we’re starting from a clean slate or expanding an existing relationship:

►     Clarity of expectations

►     Defined services and prices

►     Volume-based pricing

►     Market-based terms

►     Proven flexibility through categories of change

►     Transparency and consistency of decision process

►     Organizational change management

TPI’s informed objectivity ensures that the resulting contract meets the essential requirements of a sound business agreement:

►     Confidence in the market-worthiness of the contractual terms

►     Assessment of Client management/governance responsibilities

►     Validation of essential contractual assumptions

►     Evaluation of financial implications through scenario modeling

►     Allocation of essential service measure principles

►     Establishment of equitable gainsharing / value-creation principles

Sole-source agreements can work to the mutual benefit of the parties, but they require the design and implementation that come from informed practice.

 

For more information, contact:

outsourcing@tpi.net