NEED FOR A CLEAR AND CONCISE SOW

An SOW is usually developed by the person responsible for ensuring that an activity’s technical requirements are met (i.e., the requisitioner), with the support of contracting personnel. Because the SOW describes the contractual work requirements, it is the heart of the procurement action and must include a clear and concise description of the work requirement. Developing the SOW is, without a doubt, the most important step in the procurement process. A poor description of the work requirement is likely to be misunderstood, leading to—if not causing—problems throughout the procurement process and subsequent contract performance. Although a clear and concise description of the work does not guarantee the contract will be successful, it does significantly reduce the likelihood that problems will arise.

The author of the SOW is usually part of the organization for whom the work will be performed and therefore has a vested interest in the quality of the SOW. If the SOW does not work, the project may fail. Because it usually takes longer to solve a problem than it does to avoid one, it makes sense to take the time to do it right initially.

A clear and concise SOW is essential both before and after contract award and serves three main purposes:

Establishing performance standards and a contractual baseline

Providing the contractor with a basis of estimate

Communicating effectively.

Before Award

Contractors must understand the SOW requirements to be able to develop their technical, management, and staffing plans and to price the proposal properly. The SOW in the request for proposals (RFP) is the only official description of the work requirement. Accordingly, it must provide prospective contractors enough information to develop and price the proposal—without the need for further explanation. A clear and concise SOW helps ensure the receipt of a well-written proposal. It also establishes a uniform basis for evaluating proposals (matching the proposed effort to the stated technical requirement) and for comparing prices.

If questions about the SOW arise during the solicitation process, you must answer them, but use care when providing explanations. Oral explanations, unless put into writing as an amendment to the SOW, are usually not binding. Refer the questions, along with the appropriate answers, to the contracting officer for an official response.

If deficiencies in the SOW are identified before award, the RFP must be amended to correct the deficiencies immediately and prospective contractors must be given additional time to consider the corrections and make appropriate revisions to their proposals. Do not wait and make the corrections after award. Keep the pricing of the corrections in the competitive pre-award environment; modifications after award are likely to cost more. Delaying changes until after award can also make your agency vulnerable to protests from unsuccessful offerors who perceive the delayed changes as favoritism to the successful offeror.

After Award

After award the contractor must understand the SOW requirements to be able to perform the work properly. The SOW in the contract is the only description of the requirement that the contractor is legally bound to follow. Accordingly, it must clearly and concisely describe what you want to buy and any special considerations or constraints that apply.

The SOW, as published in the contract, defines the contractual scope of work—the contractor is required to do only what is written into the contract. A poorly defined SOW therefore often results in a need for changes in the technical requirements, opening the contract to pricing and delivery changes. The number of changes and difficulties in negotiating their scope and price are usually directly related to the quality of the SOW. If the SOW is ambiguous or unclear and a dispute arises over contract interpretation, the courts will follow the contractor’s interpretation, as long as it is reasonable. The courts generally hold the originator of the SOW responsible for its clarity.

To Establish Performance Standards and a Contractual Baseline

The SOW, through its description of the work requirements, establishes the standard for measuring performance effectiveness and achievement both during contract performance and upon contract completion. The work description establishes goals that become the standards against which contract performance is measured. The SOW is not complete unless it describes both the work requirements and the criteria for determining whether the work requirements are met.

The SOW also establishes the baseline from which the degree, extent, and ramifications of proposed contract changes are determined. Proposed changes are checked against the SOW to determine if they are within the scope of the contract. If the proposed change is within the scope of the contract, the change is handled by a contract modification. If it is not within the scope of the contract, a new contract is required. The clarity and conciseness of the SOW are, therefore, important throughout the life of the contract.

To Provide Prospective Contractors with a Basis of Estimate

Prospective contractors need sufficient information on which to base the estimated cost of contract performance. This information or “basis of estimate” is provided in the SOW through the description of the task requirements, a statement of the estimated level of effort required (when appropriate), or both.

Contractors develop cost estimates based on the work description in the SOW. First, they break the work description down into its smallest components, and then, starting from the bottom up, they develop estimates of the resources necessary to complete each component of each task. Cost figures are developed for the estimated resources required. Overhead and general and administrative (G&A) expenses are added to make up the total estimated cost. Profit or fee is then added to the total estimated cost to come up with the total estimated price.

Therefore, the work requirement must be described in a manner that will enable prospective contractors to develop an accurate cost estimate. This is important. If the successful offeror’s estimate is too high, you will pay more than you should for the contract effort. If the estimate is too low, the contract requirement will be underfunded. If your contract is cost-reimbursement, underfunding usually results in a contract modification for additional funding or in contract termination. If your contract is fixed-price, underfunding puts the contractor in a loss position, because the contractor must complete the effort regardless of its own costs. Contractors in a loss position will try to minimize their losses by cutting corners or making contract changes, if they can. Cutting corners adversely affects the contract quality, and changes usually increase the contract cost. Neither of these actions is in your best interest.

A well-written SOW is no guarantee that the contractor will develop an accurate cost estimate. Many requirements (such as studies, analyses, R&D, and software development) are inherently difficult to estimate because of the nature of the work. Therefore, it is important to write the SOW as accurately as possible. A well-written SOW helps minimize the differences between estimated and actual costs by providing the offeror with the best possible basis for cost estimating.

To Communicate Effectively

The SOW is ultimately a vehicle for communication. It must communicate your requirement in a manner that can be understood by all personnel involved in the solicitation process as well as those involved in contract performance. This includes government as well as contractor personnel. Various people must read and understand the SOW during the course of the solicitation, award, and performance of the contract. These include the contractor’s technical personnel, accountants, and cost estimators; government accounting and auditing personnel; government and contractor legal and contracting personnel; and subcontractors. Readers must be able to understand the requirements without having to interpret, extrapolate, or otherwise guess at the SOW’s meaning.

It is a mistake to use the SOW language as a test of a contractor’s ability to understand the requirements by writing a broad and generalized SOW just to see how contractors will respond. Misunderstandings may well be carried through into contract performance. The SOW must be written clearly and simply. The quality of the SOW directly affects the quality and pricing of the contractor’s proposal and, eventually, the quality of the contractor’s performance.

Before addressing how to write an SOW, however, it is necessary to discuss two other topics: the relationship of the SOW to the solicitation and contract, and the use of proposal preparation instructions with respect to the SOW. You need to understand how the SOW fits into the solicitation and contract and how it affects other parts of the solicitation. You also need to understand the relationship of the SOW to the proposal preparation instructions and how you can use them most effectively.