Contract Agreements and Contract Compliance

An agreement is a negotiated set of conditions in a contract. The agreement spells out the conditions and terms that apply to the contract. The PeopleSoft Supplier Contract Management system is used to monitor and validate agreements. Agreements are assigned through PeopleSoft Strategic Sourcing bid factors and Purchasing contract maintenance. This formal tracking process makes it possible for you to ensure that a supplier is in compliance with the agreements in a contract. Agreements are also known as service level agreements (SLAs) and can be created for specific items in a contract (line agreement), for a contract in general (header agreement), and for a group of items (category agreements).

Contract terms that reference the contract cannot be measured by the data that is captured on a traditional purchase order, receipt, and voucher transaction. These contract terms are considered nontransactional agreements. An example might be that work can only be performed during daylight hours or that site grading must meet certain standards. Within the contract management system, a more generic structure exists for measuring the milestones and compliance factors of nontransactional agreements. This structure is more practical for monitoring and tracking the performance of the supplier against the contract.

An agreement can contain a list of interested parties and a target date for notifying the parties about the contract header, line, or category agreement. You can set up notifications for completion, changes in the status, passing a target date, or reminder days. Notifications can be directed to suppliers, internal users, or both.

Agreements can also have clauses assigned to them. After you create agreements, you can use the document authoring system to manage documents that were created to support the agreement. When monitoring agreements, the system manages step verification requirements and the individuals who are responsible for monitoring the agreements. The system notifies individuals using e-mail when an action, such as a scheduled performance review, is needed.

You can specify that related files need to be created and attached to a contract record. For example, a contract might state that to receive final payment, the supplier must certify that they have returned all company-furnished equipment and intellectual property. You can create a clause that requires the system to attach a certification file to the contract and store it in the system. This action not only helps maintain compliance with the contract, but it also helps to uncover cost savings that may not have been realized.

Contract compliance is divided into two parts. The first part involves predefining agreements and assigning agreements to purchasing contracts. The second part is monitoring and analyzing compliance of agreements.