Jump to content
The Wifcon Forums and Blogs

Recommended Posts

Business Type: Large DoD Contractor

We recently transitioned to a new ?business system? and have encountered various Procurement related problems. This post describes one particular problem.

First, the ?old? system. The ?old? system let us ?manage? 3 different dates; the planner/program ?need? date, the Purchase Order negotiated contractual ?due? date and a ?promise? date which was used to track/update the date that the supplier said they would really deliver once it became known that they would not meet the ?due? date. The ?promise? date was used for internal planning. Only the ?Due Date? was exhibited on the face of the Purchase Order and was never changed unless there was very good reason to do so. The ?promise? date was ?understood?, but never exhibited to the supplier on the PO.

The problem now lies with the lack of a ?Promise? date in the ?new? system. I can only assume, and would otherwise assert, that someone that was part of the interface between the software supplier and our company did not understand the nomenclature and use of the old system dates and also did not understand just what a contractually binding date exhibited on the face of a PO meant. The new system no longer has a ?promise? date that the Buyer can change/manage. The only date that a Buyer can change is the date that prints on the face of the PO as the ?Contractual Date? (delivery schedule). The problem is that the Operations group used the old promise date for real time planning, and the Business Management group used it for cash flow projections (when invoices would actually/likely be due). The lack of a ?promise date? puts these folks in a heck of a bind!

So, , , , here is the problem, , , , we have been told to change the ?due date?, which automatically generates a Change Order that is issued to the supplier (in effect, the supplier will never be ?late" again). But, , , , the best part is that management still plans to judge the suppliers delivery performance on the basis of the originally issued ?due? date (which gets captured in the new system). And, , , , it gets better, , , , to get past this disconnect, , , , they intend us to put a ?Note? on the PO that says that the changed/new ?due? date (that prints on the face of the PO as the ?Contractual Date?) is not really the contractual date their performance will be judged on, but rather the originally issued date, which will no longer exhibit on the PO other than in a note!

So, will have a PO with 2 ?Due? dates on it; one that says ?Contractual Date?, and another found in a PO note that says, in effect, ?this is the real date?.

What do you think? Which date would you think that a Judge would favor, other than give you a funny look?

Link to post
Share on other sites
  • 2 weeks later...

Buyerboy:

First, this seems to be in the wrong forum (subcontracts and subcontract management).

Second, you should double check that the solution you described has been run by the attorney advisors (contract) in your organization. The attorney should help craft the language in the remarks section that will explain the situation.

The short answer to your question is that, assuming the "remarks" are clear, and that there are no other contract change allegations or issues, a judge will look at the entire (unilateral) modification, give everyone a funny look, and then, most likely, recognize the original due date. However, that was the short answer. Check with your attorney for a longer one.

Link to post
Share on other sites

Hi Buyerboy,

I'm assuming you're in industry.

In the legacy system, when you permitted the supplier to deliver late (i.e., when the promise date was later than the due date), did you not understand that, in effect, you had agreed to modify the contract? My point is that the new system seems to be forcing you to recognize a contract mod, when the legacy system permitted "unwritten mods" for a relaxed delivery date. Nothing wrong with that that I can see.

Moreover, I agree that the supplier should be evaluated against the original due date, even if the delivery date is moved to the right.

Hope this helps.

Link to post
Share on other sites

Well, in my part of the "Procurement World" there is no such thing as "permitting" a supplier to deliver late. I have no other choice than to just urge them to deliver as soon as they can. Happens everyday, everywhere I have worked. The supplier's "delivery performance" rating is gigged, but they, and I, know that I will soon be back to place another order for more precious, sole source, material. This is a non-issue in regard to my original post.

My concern is with the now "secret" original due date that is locked into our business sytem and, more importantly, the assumption by the generic buyers that a note in the body of the PO would suffice for telling the supplier that the printed "Contractual Due Date" is really not the actual "Contractual Due Date" that they would be judged against.

I'm trying gather a couple opinions before I push this to Legal.

Link to post
Share on other sites
Guest Vern Edwards

Buyerboy:

As I suspect you know, what you're doing is signing a contract with a delivery date ("due date") and then waiving it when the contractor does meet it. You're doing this as a matter of course ("course of dealings"), which effectively means that your suppliers believe that the delivery date is not contractually binding. I suspect that you do the same thing if they do not meet the "promise date."

When a supplier is late, the correct thing to do is negotiate a new delivery date ("due date") and modify the contract appropriately. But what's the point? You do not enforce your dates, and the suppliers know and rely on that. Your vendor rating system also seems pointless, since you continue to make give your business to delinquent performers. Really, I don't see why you're bothering yourself about this. It seems to me that a "note" somewhere is just fine.

Link to post
Share on other sites
  • 1 month later...

Update, , , ,

One of the other Buyers here just asked me about writing and sending a "Show Cause" letter. I asked them, and yes, they have been continually changing the "Contractual Due Date" on the Purchase Order(s). They, and their boss, were not happy about my answer of "How can you, the printed PO delivery schedule says they are not late, and/or are otherwise to schedule"!

Link to post
Share on other sites
Guest
This topic is now closed to further replies.
×
×
  • Create New...