Using Service Contracts

This chapter provides an overview of service contracts and discusses how to create service contracts.

Understanding Service Contracts

You must have PeopleSoft Purchasing installed to take advantage of service contracts. Service contracts are used to secure standard rates with suppliers to hire service providers at specific rates.

When service coordinators source a requisition and include contract suppliers, the system finds all the contract suppliers that match the role and unit-of-measure combination. Service contracts are only applicable to resource-based roles that have a rate associated with them or to category contracts for a category associated to a Services Procurement service type. Category adjustments are only applied when a rate sheet is available to use as the base rate from applying the adjustment. For example, if the rate sheet is for 45 USD an hour and a category-based contract exists for a reduction of 10%, the contract rate will be considered as 40.50 USD an hour and that rate will be compared to the bid or work order rate.

When suppliers bid on a requisition, the system checks for the category or the role, unit of measure, and vendor location to verify whether they match a current contract. If a match is found, the system enforces that the bid rate is less than or equal to the contract rate. You are not required to award bidders with a contract; they are treated as just another bidder. When the requisition is filled, the system uses the lower rate from the Filled Rate field to create the work order. The system takes the currency from the contract header and the merchandise amount is the rate-per-hour.

If PeopleSoft Purchasing is installed and you are integrating work orders with purchase orders, then when the work order is released, the system verifies against the contract again and overrides the work order rate with the contract rate if necessary. If a new contract becomes active between the time that the supplier bids on the requisition and the time that the purchase order was created, the purchase order uses the most current contract price and the work order is updated to match that price upon its release.

For example, you could have a contract with a supplier to provide construction services at the rate of 45 USD an hour. You source a requisition for a contracting job, and the supplier attempts to bid 48 USD an hour for the job. The system enforces the contract rate and requires the supplier to bid at or below the contract rate. The bid would be filled and the work order created for the rate of 45 USD an hour. If a new contract is subsequently negotiated for a rate of $42 USD an hour prior to creation of the purchase order and release of work order, the system adjusts the work order rate down to the 42 USD an hour rate during the work order release.

Creating Service Contracts

This section discusses how to:

• Create service contracts.

• Use service contracts in bidding.

• Use service contracts with purchase orders.

Pages Used to Create Service Contracts

Creating Service Contracts

Access the Contracts page (Services Procurement, Requisition Fulfillment, Maintain Contracts).

Note. You must enable service contracts on the Installation Options - Services Procurement page to add service contracts.

See Defining Services Procurement Installation Options.

To create a service contract:

1. Create a new contract.

   You can select General Contract,Purchase Order, or Release to Single PO Only types to use for purchase orders. For more information about contract types, see the PeopleSoft Source to Settle 9.1 PeopleBook.

   See Contract Process Options.

2. Select Role as the type.

3. Enter the resource-based project role as the type ID.

4. Access the Details for Line page.

5. Add the negotiated rate for the vendor location in the Base Price field.

6. Approve the contract by changing the contract status to Approved.

See Also

Using Voucher and Order Contracts

Understanding How to Apply Procurement Contract Prices to Transactions

Using Service Contracts in Bidding

To check for contract rates on bids:

1. Enter and source a requisition.

   Service coordinators have visibility into those vendors who have contracts.

2. Suppliers bid on the requisition.

3. If the supplier, role, unit of measure, and location match the contract, the system prevents the service provider contact from submitting a rate greater than the contract rate.

Using Service Contracts with Work Orders

To check for contract rates with work orders:

1. Create a work order.

2. Once the work order is approved, create a purchase order.

If the supplier, role, currency, and location match the contract, the system uses the contract rate if it is less than the work order rate. The system overrides the work order rate with the contract rate when the work order is released.

For multi-resource services, the link to purchase orders is at the parent, multi-resource service level; however, contract rates will be enforced for the lower-level individual child service bids and work orders.

Note. Contracts are verified during the work order creation process as well as the sourcing process.