Reducing Risk

Tips for service provider selection process

Is your company’s selection process for a service provider exposing you to a higher degree of liability? As an expert witness of risk and liability in exterior maintenance services, I’ve reviewed hundreds of cases whose outcomes would surprise and challenge how many facility managers and property owners review Request for Proposals (RFPs) and select their service provider (SP).

Expert witnesses for exterior maintenance always consider the actual selection process in addition to the contract, scope of work, weather conditions, etc. Let’s apply this to an actual slip-and-fall in a store parking lot, which is being serviced by a snow contractor hired by a store’s facility manager in which the scope of work used in the RFP process puts all the monitoring and service discretionary responsibilities on the contractor. Facility management (FM) would confidently say, “The contractor had full responsibility based on the RFP and contract; not us, we’re not liable.”

Not so fast. The expert witness will ask four important questions when reviewing the case:

• What was the process by the FM or facility owner for selecting this contractor?

• What was FM’s past spend for that exterior maintenance service for the site in question? (As an expert witness, I will go back and review 10 years of history to see if the FM was constantly trying to obtain a lower price during the RFP process and, at some point, was that price for the services realistic given the scope of work, site size and area’s weather conditions.)

• What was the current contractor being paid? The expert witness will want to determine if it is a realistic number based again on scope of the work, site size and weather conditions.

• What references did the snow plowing company submit to the FM? This is to determine if they are similar to what the site in question requires for that service.

If in fact the expert witness can find that there was not a reasonable expectation that the snow plower could perform to the scope of work for the price they were being paid, he or she will find negligence on the selection process during the RFP. They will allow that the buyer (facility management company/facility owner/manager) decided solely on price and not on the ability to perform, leaving some liability on the buyer for choosing a plowing company that was obviously not going to be able to perform properly and according to industry guidelines. It will remove the contract’s indemnity items, as this is a decision the buyer made and the plower cannot be liable for the decision of the buyer.

An expert witness will also find negligence on the plower for not adhering to the scope of work they agreed to perform. However, if it can be shown that the buyer should have known that the pricing was too low for the scope of work they were requesting then negligence is on the buyer. This is the whole “Buyer Beware” theory. If something sounds too good to be true (e.g. too low a price), then it probably is and they should have known this and not hired that particular snow plower.

Years ago when I served in the United States Marine Corps, we had a saying: “A ship without Marines is like a garment without buttons.” The same holds true for a facility. A store without the right service provider is like a garment without buttons. Give your facility a buttoned-down coat against risk and liability this year by selecting a service provider that has the expertise and experience for your site rather than the lowest bid.

Rich Arlington, CSP, LICM of Rich Arlington & Associates, is an expert witness, consultant to the industry and author of the recently published book, “Why Not You?” (rich@richarlington.com).