There's no time like the present to prepare
11/01/2001
by Brad Whitsel
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Good quality management requires that a contract exist between two parties when a service is being provided. A good contract is simple, clear, inclusive and understood by all. It should be a comprehensive description of the way business will be conducted and include provisions that cover a wide array of circumstances.
You will be asked to sign a contract by your cleanroom apparel service provider.
When comparing cleanroom laundry service companies, a thorough understanding of their respective contracts is essential to the evaluation process. In fact, it can have a dramatic affect on the total cost of service. Unfortunately, this important and necessary document sometimes does not appear until after a vendor selection has been made. And worse, the user often regards it as routine and unimportant—like all the papers you sign at a house closing.
It's good business to insist that the contract be introduced early in the evaluation process along with pricing and apparel specifications. Insist on written explanations of points you do not understand, and pass it by your attorney along with a list of your expectations.
You may find that a three-year service contract really is a never-ending contract because of complex "evergreening," or that the weekly cost of service does not decrease with a reduction in your workforce. You may also find that your apparel cannot be upgraded without breathtakingly expensive buyouts, or that you cannot cancel the contract despite poor service without severe penalties—the possibilities go on.
Most responsible apparel service companies will be pleased to explain their contracts early in the evaluation process, and you will learn that many provisions that seem punitive are justified in light of the investment the company will be making on your behalf. However, contracts vary widely from vendor to vendor, and many of the hidden costs of doing business are contained therein.
The following are just a few of the key elements of the rental service agreement.
Statement-of-work
The contract, or its attachments, should clearly state what the apparel service company will do. This might be addressed in a single paragraph or section, or, more likely, its various elements will be spread throughout the contract. It's important that all elements be in writing. At the very least a statement of work should include:
- A detailed garment specification by item that addresses fabric and garment design
- All pricing
- Testing methods, frequency, documentation and reporting
- Delivery method, day, time, anomalies
- Garment cleanliness requirements.
Scope-of-work
Occasionally, the laundry contract will contain a paragraph that commits all laundry service requirements to convey with the signing of the contract. This can get complicated if you already have another vendor serving a different area.
Minimum weekly invoicing
Apparel service companies make a huge investment in garments to accommodate the needs of a new customer. Sometimes they will not allow a reduction in the invoice with a reduction in inventory. Understand what happens with a decrease in your workforce and, conversely, with an increase in your workforce. What is your responsibility at contract conclusion for mid-term inventory increases?
Guarantee
Is there a stated guarantee of customer satisfaction? Does it provide for a course of action that could ultimately lead to a legitimate breach of contract without penalty to the customer if the problems are not resolved in a reasonable period of time? There must be a way out of the agreement if service does not meet expectations. The expectations of both parties must be in writing.
Cancellation/conclusion
If an agreement is cancelled or concluded, what are the conditions under which the customer has no costs or liabilities? What exactly are the conditions, costs, and liabilities? It is critical that this aspect of the agreement be understood because there are contracts being used routinely that do not allow for anything but a brutally expensive escape.
Duration
What is the duration of the agreement? Is it a long agreement that locks you into conditions that cannot evolve with your needs (fabric, garment design, cleanliness level) except at great expense? Is a shorter period available?
Evergreening
Nearly all contracts evergreen unless certain things happen within a certain specified time. It is almost always the customer's responsibility to end the agreement. The conditions for conclusion are usually forgotten 4-5 years after the contract begins and seldom remembered in time to initiate a new evaluation process. Understand this automatic renewal language and consider reversing the role of notifier.
A good relationship with your vendor requires a mutual understanding of expectations. A contract defines those expectations in detail along with the way that you will work together under different circumstances. Cleanroom apparel service providers have had years to refine their agreements and to work out language to protect their interests, and they have signed thousands of contracts. Take the time to understand it, ask questions, get explanations in writing and compare contracts during the evaluation process. Always remember that the true cost of service is usually not the quoted cost per change.
Brad Whitsel has been involved in many aspects of microcontamination control since 1975. His experience includes engineering and cleanroom design, contamination control, and sales training, marketing, and management. He is president of Whitsel Associates Inc., a project management and consulting firm formed in 1986. Contact: [email protected].