Getting the Statement of Work right

The Statement of Work is a critical part of any Government procurement contract. The Statement of Work sets out what the Government wants by detailing the specific requirements in relation to the contractor's obligation to manufacture the equipment, supply the goods, construct the infrastructure or provide the services (as the case may be). In large part, the Statement of Work often represents the "sharp end" of the contract in that it is frequently a source of dispute between the parties whenever contractor performance becomes an issue. Where the Statement of Work is inadequate, there is a significant risk that the objective of the contract will not be achieved.

In this article, we'll consider a number of practical issues which will help Government get the Statement of Work right.

1. Invest time in preparing the Statement of Work: Government regularly devotes substantial time and resources in settling the conditions of contract. Given that the Statement of Work sets out Government’s requirements, Government should also invest appropriate time and resources upfront to ensure that the Statement of Work contains sufficient detail having regarding to the nature of the procurement. This should include a detailed review of the linkages between the conditions of contract and the Statement of Work. Government should also ensure that appropriate input is obtained from persons with experience in the relevant industry. Amending the Statement of Work midway through the procurement process where Government fails to get it right up front can often result in additional costs, bidder frustration and substantial delays.
2. Avoid making the Statement of Work a wish list: Government can be tempted to ask for more than it actually needs in the Statement of Work. This can result in bidders tendering a price which does not provide value for money. Accordingly, care should be given to ensure that the Statement of Work reflect Government’s needs.
3. Consider adopting an output or performance based Statement of Work: Except in exceptional circumstances, Government should adopt an output or performance based Statement of Work. Such a Statement of Work prescribes Government’s requirements by reference to the output or performance required. It is then up to the contractor to determine how to meet those requirements. This can be contrasted with an input based Statement of Work which defines the Government’s requirements by reference to specific inputs. The contractor must meet Government’s requirements in accordance with the prescribed inputs. The benefit of an output based Statement of Work is that the risk of performance can more readily be transferred to the contractor. By defining the contractor’s obligations by reference to the outputs, the contractor’s obligations are specifically linked to performance.
4. Use appropriate language: Government needs to ensure that appropriate language is used in the Statement of Work to describe its requirements. For example, if it is intended that the contractor comply with a particular requirement, use mandatory language such as "must" or "shall" rather than non-mandatory language such as "may" or "should".
5. Avoid imposing contractual obligations in the Statement of Work: It is important to distinguish between contractual obligations and the detailed requirements of the Statement of Work. The conditions of contract, not the Statement of Work, should be the primary source of contractual obligations. The purpose of the Statement of Work is to prescribe the detailed requirements of the contractor’s obligation to provide the equipment, infrastructure or service. The Statement of Work should be reviewed to ensure that it does not contain any provisions which would more appropriately be included in the conditions of contract.
6. Avoid inconsistencies: The conditions of contract will generally contain a clause providing that the conditions of contract have priority over the Statement of Work to the extent of any inconsistency. This makes it important to ensure that the Statement of Work is consistent with the conditions of contract because parts of the Statement of Work that are inconsistent may have no effect.
7. Be careful when referring to other documents: Statements of Work often require contractors to comply with requirements contained in documents outside the Statement of Work such as Government policies or standards. These documents can contain a broad range of requirements which may be inappropriate to the procurement or inconsistent with other requirements in the Statement of Work. Bidders will normally fully price the cost of complying with such documents and this may not provide value for money. Government should carefully review any such documents to ensure that the requirements are appropriate and specify in the Statement of Work which document is to apply in the event of inconsistency.
8. One size doesn't fit all: It is rarely the case that any two procurements are the same. Accordingly, care needs to be taken when using templates for the Statement of Work to ensure that the Statement of Work has been properly tailored for the procurement. In addition, overly complex templates are often not appropriate for simple procurements.
9. Consider testing the market: If in doubt about whether the requirements in the Statement of Work are achievable or whether the Statement of Work will satisfy Government’s requirements, consider testing the market to obtain bidder feedback. A draft Statement of Work can be issued to prospective bidders either before or after the commencement of the tender process for the purpose of obtaining feedback. This will help to ensure that the Statement of Work is commercially realistic and reflects the Government's requirements. It may also save time in the long run. However, be aware that this approach may carry some probity risk which will need to be properly managed.
10. Unproven technology: If the procurement involves unproven technology, consider engaging a specialist consultant to help develop the Statement of Work or, alternatively, consider adopting a staged approach in the contract. The first stage would involve the contractor developing the Statement of Work and, if the Government approves the Statement of Work and decides to proceed with the second stage, the second stage would involve implementing the Statement of Work.

Writing an effective Statement of Work can help Government ensure that contracts are performed on time, on budget and to the required capability.

Steven Power, Senior Associate, and Susan Dodsworth, Solicitor, practise in Clayton Utz' Government Services Group.