Transcript 投影片 1 - ndhu.edu.tw

Contract Management
1
Outline
 practices
 Bethlehem
 clincial
 elements
Steel Corp.
service
in a contract
 examples
2
Contract
 the
document defines terms and specify
relationship, conditions, obligations and
rights to be discussed and eventually
approved by relevant parties
 the
understanding of the parties
3
Bethlehem Steel Corp.
4
Willing to Accept the Contract?
 Bethlehem
 generally
Steel Corp. at 1999
annual contract in industry
a
four-year contract proposed by GM, with
price 3% to 5% lower than before
 what
factors for Bethlehem Steel Corp. to
consider?
5
Willing to Accept the Contract?

factors to consider

overcapacity in steel production


keen competition from the emerging markets, Russia, Brazil,
Korea, etc.
financial strength from the stable source of income to
upgrade technology
better quality cold-rolled steel
 JIT service from local company


bargain chip from lower price to negotiation with labor
union
6
When Outsourcing Goes Awry
Richard Pesisch (1995) When Outsourcing Goes Awry,
Harvard Business Review, May-June, 24-26.
7
Case Context


organizations

Regional Medical Center (RMC)

Physicians Development Services (PDS)
characters

Mr. Grant Newman, CEO of Regional Medical Center (RMC)

Dr. Barry Doane


cofounder of PDS, a former reputable employee of RMC

attracted business to PDS
Dr. George Jacques, the chief of the 5 anesthesiologists from PDS
8
Case Context

Regional Medical Center

a hospital with surgical and obstetric services

large turn around of anesthesia group


desire of surgeons and obstetricians: a stable group of
anesthesiologists

costly lifetime-care malpractice lawsuits
business of RMC

downturn, reduction of in-patient days due to losing a large contract

competition in market
9
Case Context
 Physicians
Development Services (PDS)
a
subcontractor providing contracted anesthesia
services to more than 15 medical facilities
a
reputation for providing high-quality doctors
 management
lacking business skills, and company
undercapitalized
 rumors:
losing several big accounts, possibly
bankruptcy
10
Case Context

relationship between RMC and PDS
 contracted
anesthesia services to RMC by PDS starting
18 months ago
 responsibility
of PDS on the anesthesiologists:
everything
 the
management, recruiting, staffing, credentialing, and
scheduling of the anesthesia group, as well as its financial
management
 anesthesiologists
employed by PDS
11
Case Context
 the
rights and obligations of RMC
 rights:
to reject choices of PDS, at the expenses of
PDS
 obligations:
penalty cost of $120,000 on RMC for
each PDS contractor turned by RMC into its
employee
 law
sue by PDS to RMC if RMC interfering in any
resolvable dispute between PDS and its employees
12
Case Context

relationship between PDS and its employees
 smooth
first year, trouble started the second year
 in
three months, several times, late and bounced
paychecks from PDS
 failure
to renew contracts for 3 months for Jacques's
group
 late
a
and then bounced paychecks this month
fruitless conversation between Jacques and Doane
13
Case Context
 reasons
for the failure of renewal of contract
 failure
of PDS to pay the $300K year end bonus
 suspicion
of the group on PDS for falsifying the
financial statement to cheat $I50K bonus this year
 refusal
by PDS to provide the group the financial
statement for no contract renewal
 theoretically
not even providing the salary
14
Case Context

demands of Jacques to Newman
 help
from RMC
 break
the contract with PDS
 hired
the anesthesia group either as contractors or employees
 otherwise
the group leaving next week, with no
surgical services in RMC
 meeting
the anesthesia group in 45 minutes
 Jacques
in contact with local news media
15
Case Context

situation faced by Newman
 walk
out of anesthesiologists
 losing
reputation of RMC
 closing of surgical and obstetric services
 no
right to interfere
 PDS
still holding the contract
 issues between PDS and its employees
 any
interfere affecting future negotiation with similar
service providers
16
When Outsourcing Goes Awry

What should Newman do now?

What kind of tasks can be outsourced?

What should the relationship with a critical supplier
be?

What mistakes were committed by Newman?

Should there be any changes in the clauses of the
contract?

Were there any problems in RMC in the first place?
17
Elements in a Contract
18
Elements of a Purchase Contract

introduction of the contracting parties

definitions

scope of agreement

purchase orders

supply and delivery

specifications, quality, and health, safety, and
environment
19
Elements of a Purchase Contract

payment

liability

force majeure

effective date and termination

intellectual property

assignment and contracting

technology improvements
20
Elements of a Purchase Contract

most favored customer

confidentiality

statistics

key performance indicators and compensation

notices

severability
21
Elements of a Purchase Contract

third-party rights

free trade areas

minority- or women-owned business enterprises

general

governing law

signatures

appendices (schedules)
22
Information in Purchase Contracts

items bought, and their costs

shipment method and schedule of items

installation of items

warranties

remedies and penalties, for quality, damages,
tardiness

standard terms and conditions
23
Information in Purchase Contracts
 dispute
 choice
resolution mechanisms
of laws and place for arbitration
 currency
 language
 force
majeure
24
How to Write a Contract
 modified
from earlier agreements
 started
with a general form and/or sample
contracts
 advised
from corporate counsel
25
Samples of Purchase Agreement

Airbus A350 Purchase Agreement – AVSA SARL,
US Airways Inc, America West Airlines Inc. and
US Airways Group Inc. (SEP 27, 2005)

Semiconductor Purchase Agreement - Motorola
Inc. and Freescale Semiconductor Inc. (2004)

Manufacturing and Purchase Agreement - Flash
Electronics Inc. and 3PARdata Inc. (Sep 5, 2003)
26