Complex services negotiations are special types of RFQs having one or more of the following characteristics:
High dollar value projects.
Long lead time delivery schedules.
Progress payments based on work completion.
Contract financing.
Complex Services negotiations enable buying organizations to:
Negotiate on financing attributes such as advance amount, progress payment rate among others.
Negotiate on retainage attributes such as retainage rate.
Specify and mandate pay item structure or request the suppliers to provide the pay item structure as part of the quote.
Oracle Sourcing tightly integrates with Oracle Purchasing enabling organizations to enforce the negotiated advanced payment options (such as advance amount or retainage rate) and payment schedule after an award is made.
At the time of execution organizations can perform such operations as:
Make an advance payment on a line.
Track the progress on pay items using work confirmations provided by the supplier.
Retain a certain percentage of invoice to mitigate the risk of supplier non-completion.
Pay against a contract financing request.
Note: Complex service negotiations are available only with RFQs.
Definitions
Advance
An advance is a financing payment made to the supplier, usually before any work or service has been performed, or many a times at the point when an award is made. The payment is in anticipation of, and for the purpose of, complete performance under the contract.
Pay Items
Pay items represent a schedule of value (SOV) or statement of work (SOW) in a structured manner. Each pay item refers to a work or service being negotiated. After an award is made, the completion of a pay item makes the supplier eligible to be paid based on the means of payment negotiated for the pay item. There are three kinds of payment schemes that organizations can choose from:
Progress payments - Payment is based on the progress made on the pay item. For example, 30% of the pay item amount is paid when 30% of the work is completed on the pay item.
Performance or milestone based payments - In this case the pay item represents a milestone and supplier is paid in full when the milestone is achieved.
Rate based payments - Rate based pay items involves quantity and price. Supplier is paid based on the quantity delivered. It can also include cases like number of hours of consultant's time.
Contract Financing Payment
Financing payments are any payments that are made before final acceptance of work or products. In the government sector, financing payments include advances, performance based payments, and progress payments. In the private sector, only advances are considered financing payments.
Retainage
Retainage is the practice of withholding a fixed amount or percentage of payment until all work under a contract is complete and accepted to mitigate the possibility of the supplier not completing the contract. .
Recoupment Rate
The recoupment rate is the percentage of the invoice amount that can be used for recoupment of an advance or contract financing payment made earlier.
Purchasing Styles
Purchasing styles allow organizations to control the look and feel of the application to match the usage of the purchasing document. Organizations can turn on or off various features, thereby simplifying the user interface. For example, you can specify whether or not to enable complex work features such as advances, retainage and contract financing. The list of values for the Outcome field in a sourcing document has been extended to include user defined purchasing styles. While creating a sourcing document, only if you select an Outcome (that is, purchasing style) that enables complex work, does the sourcing document display information relevant for complex work negotiation.
See Creating a Negotiation Header for instructions on creating the header for a negotiation, including specifying the negotiation Outcome.
See Oracle Purchasing documentation for details on creating Purchasing Styles.