Contract performance

Contract performance is the contractor's fulfilment of the requirements agreed in a contract. It includes delivery of the specified goods, services or works within the required quality, schedule, terms and performance indicators.

The term belongs to contract management, the stage after award. NATO describes contract management as covering all phases of managing a contract, including performance, in its performance audit of NSPA. For a supplier, contract performance is the point where a bid promise becomes a measurable record.

The obligations behind contract performance

Contract performance rests on two linked obligations. The contractor must furnish the contracted goods, services or works. The customer must pay after delivery and acceptance. NATO's procurement policy connects performance to both sides of that exchange.

Performance is therefore judged against what the contract says. The specified deliverables, the schedule, the terms and conditions, and any stated performance indicators form the yardstick.

How NATO evaluates vendor performance

NATO's Procurement Manual defines vendor performance evaluation as the evaluation of a vendor's fulfilment of contracted requirements, including quality, delivery, timeliness and other performance indicators. The requisitioner or end user carries out the evaluation against commercially significant factors. Those factors include:

• fulfilment of the delivery schedule
• compliance with contractual terms, conditions and special requirements
• adherence to warranty provisions
• quality of what is delivered
• timeliness of delivery

The manual also recommends that statements of work express requirements as service-performance targets or service levels where practicable. Written this way, a requirement gives both parties a clear measure of whether performance has been met.

Vendor Performance Management at PSPC

In Canada, Public Services and Procurement Canada (PSPC) applies Vendor Performance Management (VPM) to some contracts issued under its task-based supply arrangements. The informatics task-based supply arrangement states that resulting contracts may be subject to VPM, with evaluation against contractual obligations. Where VPM applies, Canada evaluates the supplier using a contract-specific Vendor Performance Management Scorecard. It then conducts a final evaluation at the end of the contract period.

The task-based professional services supply arrangement works the same way. The resulting contract identifies whether VPM applies, and a scorecard and final evaluation may measure the supplier's performance against its contractual obligations.

Terms connected to contract performance

Several related terms appear in contract documents and shape how performance is defined and measured:

• Vendor performance evaluation: the assessment of how well a vendor met contracted requirements.
• Service-performance targets and service levels: measurable ways of stating what a service must achieve.
• Deliverables: the goods, services or works the contractor must provide.
• Period of performance: the span of time during which the contractor performs the work.

What contract performance means for a supplier

Read the resulting contract closely to see whether VPM applies, and which obligations will be scored. Treat the delivery schedule, the terms and conditions, the warranty provisions and any service levels as the measures your work will be judged against. Where a final evaluation takes place at the end of the contract period, the record of your performance across the whole contract is what the customer assesses.