Provides suggested steps for defining a service agreement. It also identifies key considerations when building a service relationship, examines the types of service agreements and the situations to which they are best used, and takes a closer look at the specific elements that should be considered when developing a service agreement.
Date modified: 2012-07-04Topic:
The Guideline on Service Agreements: Essential Elements provides advice, guidance, practical examples and templates for individuals charged with developing a service agreement or reviewing a service agreement drafted by the other party in an evolving service relationship. A companion document, the Guideline on Service Agreements: An Overview, provides senior executives and managers with key concepts to consider when establishing service agreements.
The Guideline is the result of extended consultation with departments and agencies, and is part of the Treasury Board of Canada Secretariat ( TBS )'s efforts to support the development and management of service agreements. It is one of a series of guidelines to support client-centred service and service excellence, and forms part of TBS ' suite of service policy instruments. This Guideline supports the Directive on Internal Support Services and will also support organizations in pursuing consolidation and greater efficiencies in the delivery of services.
The approaches outlined in the Guideline on Service Agreements: Essential Elements reflect current best practices from the private sector, other jurisdictions, and consultations with government departments. This Guideline supports the Directive on Internal Support Services and will also support organizations in pursuing consolidation and greater efficiencies in the delivery of services. The Guideline recognizes that although the use and applicability of service agreements should be standard government-wide, service agreements themselves should be tailored to the circumstances and requirements of the participating departments, the various collaborative arrangements they may use, and the complexity of the service relationship. The goal of this Guideline is to help service managers and executives produce effective agreements that support client-centered, well-managed services.
This Guideline outlines a flexible approach to developing service agreements tailored to the specific requirements of a particular relationship and/or the complexity or scope of the service relationship. Application of the approaches described in this Guideline should improve the consistency and clarity of service relationships across government.
A service is the provision of a specific output, including information, that addresses one or more needs of an intended recipient and contributes to the achievement of an outcome.
For example, Public Works and Government Services Canada's Shared Travel Service Initiative (STSI) books air reservations (specific output) through its call centre and its on-line self-service booking services (set of actions) for all government employees (the recipient) in support of its program delivery responsibilities (outcome).
A service agreement is a formal agreement between two or more parties (e.g., between departments, between a department and a common or shared service provider, or between various levels of government) that articulates the terms and conditions of a particular service relationship. The term “department” applies generically to organizations listed in the Financial Administration Act, Schedules 1, 1.1, and 2.
Service agreements serve three primary functions:
Although the principles and elements involved in a service agreement between two government departments are equally applicable to service arrangements with external non-government organizations ( NGO s) or private sector entities, these types of arrangements are typically governed by a legal contract, a grant or contribution agreement, or through an invoice or sales agreement. These types of contracts and agreements are not within the scope of this guideline.
Service agreements can enhance governance, accountability, and service quality by clearly defining roles, responsibilities, processes, and performance expectations. The practice of establishing service agreements is strongly recommended in any type of client / service provider or collaborative service relationship.
This Guideline applies to client/provider arrangements in which a Government of Canada service is provided by one department to, or on behalf of, another department; when two or more departments collaborate on a service initiative or project; or when a province or municipality delivers a service for or jointly with a federal government department, or a department provides a service to a province or municipality. It reflects the current operating and policy environment and will be updated to reflect any legal and/or policy changes that affect the development and execution of service agreements.
The creation of service agreements is a sound management practice in any type of client / service provider or collaborative service arrangement including:
The term “client” applies generically to both clients in a client / service provider arrangement and to participants in a collaborative service arrangement. The term “service provider” or “provider” applies generically to providers in a client / service provider arrangement and the lead department that is delivering a service within a collaborative arrangement.
This Guideline should be read in conjunction with the following documents:
This Guideline is divided into the following sections.
Section 2 outlines the suggested steps for defining a service agreement.
Section 3 identifies key considerations when building a service relationship.
Section 4 looks at the types of service agreements and the situations to which they are best utilized.
Section 5 takes a closer look at the specific elements that should be considered when developing a service agreement – scope, governance, operations, finances, performance, and implementation.
Appendix A provides a checklist of the key elements typically included in a service agreement.
Appendices B to D present examples of the main types of service agreements.
Before initiating a service relationship whereby a department is providing a service to or on behalf of another department, the parties to the agreement are encouraged to ensure that they have:
A service relationship between two or more parties arises when one provides a service to another, typically on a fee for service basis (client/provider relationship); or when two or more departments collaborate by pooling resources to jointly create and/or deliver a service or project (collaborative relationship).
A service agreement is a formal agreement between two or more parties that articulates the terms and conditions of a particular service relationship.
Defining the service relationship, specifically the nature and scope of the services involved, how the relationship will be governed and operated, finances, and the performance measurement and reporting regime, is therefore, a necessary prerequisite to defining a service agreement.
Developing a service relationship typically involves answers to the following questions:
Depending on the underlying legislative or policy authority, whether the service provider is a Common Service Organization under the Common Service Policy or not, and/or the funding mechanism in play (appropriation, revolving fund, or net-voting authority), fees or charges for services may be based on full costs, incremental costs, or some other agreed upon basis. For the purposes of this guideline, the term “cost” is used generically. Parties to a service agreement must determine the appropriate basis underlying the service's fee structure.
A degree of preparation is required by both parties before they can productively sit down to discuss a service relationship.
Ideally, the clients should have a clear idea of the problem they are trying to solve or opportunity they are wanting to take advantage of and how they expect the new service relationship will help or contribute to these considerations. They should have a good understanding of their current baseline costs and their current and desired levels of service. If there are non-negotiable or unique business requirements (e.g., functions that must be retained, privacy or independence concerns, implementation timelines or deadlines, unique regional or functional requirements), these should be clearly identified. In short, clients need to be good buyers.
Ideally, the service providers will have defined their services offerings (i.e., service inventory), how the service is offered (e.g., basic and optional service packages), how the service is delivered (e.g., channels, minimum technical requirements, transferred and retained functions, business processes), the cost recovery model if applicable, and the implementation approach and activities. The service providers should also determine whether a new client can be accommodated within their existing capacity or whether an incremental investment is required to expand their productive capacity.
In some cases, particularly when new services are involved, the client and/or service provider may not have the information required to fully define all aspects of their service relationship. Service agreements can still be concluded in cases where more analysis or a pilot project is required. However, for the protection of both parties, a process to complete the analysis or pilot should be jointly formulated and articulated in the service agreement. The process should include appropriate off-ramps should the analysis or pilot indicate that a viable win-win relationship is not achievable. It is preferable that a non-viable relationship be abandoned at the outset before significant investments or contractual commitments are made.
Although individual service agreements can, and should, look very different from one another, they can generally be categorized into three types – a Memorandum of Understanding ( MOU ), a Master Agreement ( MA ), and a Service Level Agreement ( SLA ). The choice of agreement and the relationship to one another depends upon the scope and complexity of the service relationship and services involved.
Regardless of their complexity, it is strongly recommended that service managers consult expert counsel, such as corporate and legal services, in developing their service agreements.
Within a service relationship, the parties may share, provide, or consume one or more services. The parties can chose to establish one or more service agreements, each of which may encompass one or more services. Service agreements can and should be used to describe all aspects of the relationship. Section 4 describes the types of service agreements and the situations in which each should be utilized.
The articulation of requirements, gaps, expectations, and degree of risk (legal and otherwise) form the basis of the service relationship while the governance and operational structures and processes form the basis of the operational relationship. Important elements of the service relationship, particularly the commitments made by each party to the other, should be included in the service agreement.
Key elements of a service relationship that are typically covered in a service agreement include:
Section 4 further outlines the types of service agreements while section 5 provides guidance on the specific elements in each of these areas that could be included in a service agreement.
The speed and ease of developing a service agreement depends on many factors. Service agreements can be put in place quickly and easily when the service relationship is relatively simple and well understood and there are few issues to resolve. However, the preparation of more complex service agreements (e.g., to maximize the use of resources, respond to government-wide planning activities, or support horizontal initiatives between two or more departments) normally requires additional time and effort to complete.
Generally, there are three types of documents that are used to articulate a service agreement: a Memorandum of Understanding, a Master Agreement, and a Service Level Agreement.
These documents can be used alone or in combination. The choice of document(s) and their connection to one another depends upon the complexity of the service relationship as demonstrated by the following examples.
As part of its service agreement with a client department to provide or arrange for overseas accommodation and support, Department X establishes one or more SLA s that address items such as communications, housing, office space, and security.
A simple service agreement is used when the service delivery situation is uncomplicated (e.g., roles and responsibilities are clear, obligations are readily identified and evaluated, and there are few or no risks). A simple service agreement can be as straightforward as a one or two-page MOU between two or more parties, if it addresses certain elements of scope, governance, the financial arrangements, and performance. Inclusion of service levels in some manner is strongly encouraged in even the most basic of service delivery situations.
Where the service relationship, management, and delivery are moderately complex, service agreements are normally divided into two documents. The first document – often an MOU – describes the organizational relationships (including governance) and management processes that will regulate delivery of the service. It identifies the commitments the parties are undertaking and establishes the vision, mission, and mandate that frame the service relationship.
The second document, a SLA , delineates the operational specifics of the service, including clear, detailed information about the scope and service levels to be delivered. The SLA sets out detailed performance expectations, including service and performance standards, and acts as the basis for future evaluation activities.
Depending on the complexity of the service arrangement, parties may choose to combine the planning phases. Typically, negotiations for more complicated service arrangements (i.e., “three-tiered” service agreements) take place in phases, with documentation produced at the conclusion of each phase.
Complex service relationships and collaborative arrangements are most appropriately captured through a three-tiered service agreement, typically involving a MOU , one or more MA s, and one or more SLA s. The MOU typically defines the broad aspects of the service relationship between the parties particularly what the parties expect to mutually accomplish through the agreement and how the parties will govern the relationship. The MA sets out the services and/or projects, how the services or projects will be managed, and overarching operational parameters that are common across all projects and services. In most three-tiered service agreements, SLA s are established for each line of service outlining the scope, financial arrangements, and performance expectations.
Figure 1: Examples of Types of Service Agreements
Text version: Figure 1: Examples of Types of Service Agreements
No single approach or format for service agreements is suitable for all circumstances. The appropriate form and format are determined by a variety of factors, including:
Service relationships are generally defined by scope (e.g., services expressed in terms of functions, processes, activities, or projects), governance (e.g., decision powers, roles and responsibilities), operations (e.g., day-to-day operating procedures), financial arrangements (e.g., fee structures, settlement arrangements), performance (e.g., expected outputs, levels of service, reporting), and implementation (e.g., activities, timelines, level of effort).
Across these areas there are key elements, included in a service agreement(s), which together, articulate the service relationship. The elements are described below.
Service scope includes any and all services, activities, processes, functions, projects, and initiatives provided by or shared with the other parties to a service relationship. The nature of service scope varies depending on the particulars of the service relationship.
Clarity of scope is at the core of any service relationship. Disagreements regarding the scope, quality, and level of service are common. To maintain a positive relationship, it is critical that the parties have a clear understanding of scope so that the extent of work involved and respective obligations are clearly understood.
Understanding scope starts with the identification of the services covered by the relationship. Service scope may be expressed in terms of functions, processes, activities, or projects.
Moving to a new service arrangement is ultimately a transition from an existing state (i.e., who, what, where, and how the client is currently delivering the service) to a targeted end state (i.e., who, what, where, and how the service provider will deliver an equivalent or enhanced service).
Details are important. To fully understand the scope, the parties to the agreement should discuss and agree upon the following:
Service providers may bundle their services to provide options to clients and / or to more closely tie an appropriate fee structure to how the services are consumed.
Basic service package: Typically includes all services that all clients use on a regular basis and at a standard level of service for all clients.
Supplementary services package: Typically includes services that are only required by some of the provider's clients.
Optional service extensions: Typically a function that complements a basic or supplementary service. For example, expert financial advisory services as an extension to a basic reporting service.
Project services: For projects required to transition or upgrade a client, a provider may offer a team of experts to assist the client on a project-by-project basis.
Service level extensions: Where a client requires a level of service (e.g., hours of operation, turnaround times, the reporting frequency) beyond the standard level offered, a provider may offer a range of optional service level extensions.
Unique services: Special services, functions, or features to address a unique, business-critical need for one client.
Where offered, and as part of the service level agreement, each client chooses the packages they need. Alternatively, clients may choose to retain services in-house rather than purchasing options or extensions from the provider.
The objective of the scope discussion is to clearly identify the level of effort involved so that adequate resources can be applied. Clarity of scope will also support operational and implementation planning.
To the extent that the service description cannot be satisfactorily defined at the time the service agreement is prepared, a process to determine scope with an appropriate sign-off process should be developed and included in the agreement. Opting-out clauses should be considered as a full investigation of scope and related costs may affect the feasibility of the arrangement.
In particular, clarity of scope is important to reduce the risk of disputes. This is particularly important in arrangements where defining scope is a challenge and/or scope is a significant driver of cost and operational complexity.
Depending upon the complexity of the service arrangement, a service agreement may include provisions for some or all of the following scope elements:
Governance plays a different role at different stages in the lifecycle of a relationship. Consider:
Strategic governance can be established early on to set the parameters of the service relationship. It continues throughout the lifecycle of the relationship, supported first by transitional governance followed closely by operational governance.
Governance relates to the standards and processes that help achieve goals by enabling decisions to be made, and authority and accountability to be shared. Governance also refers to the structures that support these standards and processes, such as an Assistant Deputy Minister ( ADM ) Steering Committee or Senior Management Board.
Governance plays an integral role in developing, implementing, and managing a successful service relationship. Governance is like steering a ship – setting the course toward the destination and then making frequent steering adjustments to guide the ship through the currents and shoals along the way.
In developing good governance and accountability arrangements, it is helpful to focus on three key questions:
The governance elements in a service agreement are designed to ensure that the parties have a clear understanding, not only of who decides and who does what, but also when and how each will act in terms of enabling the service relationship. This will help ensure transparency and accountability, promote flexibility, and enable the parties to adapt and adjust the relationship and agreement in a systematic way as circumstances require.
This section deals with overall governance and the respective roles and responsibilities of departmental committees to address common service delivery issues.
Integrated Services Committee (ISC):
Depending upon the complexity of the service arrangement, a service agreement may include provisions for some or all of the following governance elements:
Operations covers all the day-to-day activities related to the provider's delivery of the service. As long as the client receives the scope of services at the level of service outlined in the service agreement, day-to-day operations are generally not a concern.
In developing the service agreement, consider not only what happens when things go right, but also what will happen when things go wrong. Despite the best efforts of client and provider, things can go wrong, such as the late processing of a transaction due to staff shortages to a complete service disruption due to a disaster.
In all cases, plans are needed to ensure that issues are identified quickly, escalated to the right level for action, and that action is taken to resolve the issue as soon as possible. Communication between provider and client is critical.
Service managers and their service providers should discuss and identify the most likely and most critical issues that might arise, agree upon a resolution process, and incorporate these in their service agreement. Typical issues that can arise include:
Depending on the nature and complexity of the service arrangement, the operational elements included in the service agreement may be few, particularly if it is an existing stable service and operating roles and responsibilities are clear.
When negotiating the privacy elements of a service agreement, it is highly recommended that service managers consult their privacy and legal experts. In most cases, a Privacy Impact Assessment (PIA) will be required for a new service arrangement. Managers should consult the Directive on Privacy Impact Assessment and related policies, guides and tools.
Depending upon the nature and complexity of the service arrangement, a service agreement may include provisions for some or all of the following operational elements:
For all types of arrangements, service providers should ensure that they do not enter into arrangements where the cost of doing so is greater than their available funds, be it appropriated funds, fees, or a mix thereof. This requires a solid understanding of their underlying cost model, the scope of work to be delivered, and the cost of taking on the new business (including but not limited to incremental costs).
A number of financial arrangements are in use across the types of client/provider and collaborative service arrangements described in Section 3: Defining a Service Agreement. Different financial arrangements are more or less suited to particular types of arrangements.
In crafting an appropriate financial arrangement, the following principles should be applied to the extent possible:
“Funding” deals with how the service provider acquires the resources necessary to deliver a service or a client acquires the resources necessary to purchase a service.
“Cost” refers to the resources a service provider consumes to deliver a service.
“Price” or “Fee” refers to the amount charged to clients for the services they have purchased (typically incremental or full cost).
Departments must ensure that they have the legal mandate to provide a service before expending departmental appropriations in delivering or collaborating in the provision of the service. Departments that provide services must also have the authority to recover cost and to re-spend revenue, if applicable. Any cost recovery model used must be consistent with existing cost-recovery authorities and Treasury Board policy.
Agreement on the basic funding model is the first step in concluding a financial arrangement between a client and a provider. Three basic funding models, in various combinations and with some variation, cover most client/provider and collaborative service arrangements:
When negotiating the cost recovery elements of a service agreement, it is highly recommended that managers consult their finance group.
In general, as client control over the funding of the service increases, the complexity to administer the funding also increases. For example, a flat fee based on estimated annual usage would tend to be easier to administer and would provide a more predicable and stable flow of funding. However, there is little connection between user behaviour and fees charged. A fee for service model that is calculated on actual transaction volumes would be complex to administer but could be tailored to drive desired user behaviours. Such a model would also be more adaptable and scalable and would be more cost transparent. Based on lessons learned from other public and private sector organizations, most organizations are moving away from “detailed” invoicing for services based on usage, to models that are simpler to administer.
It is not unusual to see mixed funding models that try to take advantage of the best features of the three noted above. For example, in shared service models in the private sector and in provincial governments, some core functions are funded through a fixed appropriation while volume-dependent functions are funded through fee-based cost recovery. The shared service may negotiate a service arrangement with a client for the year based on a client's service requirements for “core” and any “additional” services. Service volumes could be negotiated within a maximum and minimum range. Clients that exceed the maximum would have to pay an additional amount based on an agreed-to rate structure. If a client does not reach the minimum, there could be an option to receive a refund or to carry over the unused portion for the next year. Investments to keep the service current could be managed on a pooled basis or through an investment premium included in the cost recovery calculation.
Financial arrangements are the most critical aspect of building a win-win relationship. They are very difficult to get right and modifications may be required to accommodate changing conditions. It is very important that flexibility and adaptability be built into the service agreement to ensure that parties can adapt the financial arrangement to maintain a strong relationship.
Fee structures typically reflect how services are consumed. As a result, it is not unusual to see different fee structures attached to the different service bundles described in Section 4. The most common fee structures for each bundle are:
Basic service package: In a cost recovery model, the fee structure is typically based on a client's expected volumes for a period of time (usually a year) by a standard rate that reflects cost recovery. In an arrangement where the participants pool resources, the fee is based on an allocation of the total budget based on the client's relative size or transaction volumes.
Supplementary services package: This package is based on expected client volumes per additional service by a standard rate that reflects cost recovery.
Optional service extensions: Most optional service extensions involve incremental advisory services with a fee structure based on expected usage multiplied by a standard per diem rate that reflects cost recovery.
Project services: Generally a firm, all-inclusive price is used (for example, per diem rate multiplied by estimated effort) plus estimated materials / travel costs or a fee that covers time and material (for example, per diem rate multiplied by actual effort) plus actual materials.
Service level extensions: Where there is a specific output involved, such as additional reports, a standard rate is normally multiplied by a metric per output (for example, fee per report). Where there is no specific output (for example, extended help desk hours), a standard rate x is often multiplied by the expected volume.
Unique services: Full cost for the creation and operation of the unique service, function, or feature.
Depending upon the complexity of the service arrangement, a service agreement may include provisions for some or all of the following financial arrangement elements:
Department X undertakes a specific research project on behalf of Department Y. Terms of Payment Payment by Department Y will be made upon receipt and verification of periodic claims for payment. Claims will be made on delivery of specified deliverables or as directed by the Steering Committee. The estimate of Department X financial requirements is based upon a budget forecast that is satisfactory in form and detail to Department Y and is set out in the Project Cost Projections. Final payment will be made following receipt of all the deliverables identified in Schedule A.
Department X will provide, on a secondment basis, a full-time resource (Individual Y) for a period of twelve (12) months, starting on a date to be determined and agreed to in a secondment agreement. The duration of this secondment may be amended by mutual agreement. Department X agrees to cover the salary and related costs including travel and training for Individual Y during the secondment period. Department X will also provide statistical advisory services and support to the project team in conducting the Feasibility Study on a cost-recovery basis as requested. It is anticipated that this will involve between 5 to 10 person-days at the EC-07 level, between May 21 and August 25.
Department A delivers services to Canadians on behalf of a program administered by Department B. The agreed upon financial arrangements will take effect upon Department A obtaining Vote Netting authority to charge and re-spend, and will be retroactive to the beginning of the fiscal year in which Department A obtains the Vote Netting authority.
Department F acknowledges that on a quarterly basis, Department G will initiate an inter-departmental settlement request to Department F in accordance with this MOU to recover project charges and costs incurred by Department G for any work performed during the quarter.
Department F will effect settlement within 30 days of its receipt of the request.
Department G may initiate a settlement request to Department F, up to a maximum of $50,800 for Stages 1 and 2 as follows:
All settlements and conduct of the MOU may be subject to audit and evaluation by staff of Department F's Office of the Inspector General Audit Division.
Department A delivers services to Canadians on behalf of a program administered by Department B.
The success of any service relationship can be assessed by its performance against target. Performance can be defined “as what a government did with its resources to achieve its results, how well those results compare to what the government intended to achieve, and how well lessons learned have been identified.” See footnote 1
Performance, in terms of a service agreement, identifies outputs and outcomes the parties expect to achieve from the arrangement. Together, outputs and outcomes demonstrate how well the service arrangement has achieved its objectives. The collection of performance information is critical to ensuring continuous improvement of service delivery.
Research and experience indicate that establishing and monitoring performance against service standards and measuring client satisfaction are two of the most valuable activities an organization can undertake to promote service excellence. Service standards document a provider's commitment to the level of performance clients can expect under normal circumstances. Client satisfaction measures a client's actual and perceived assessment of the quality of the service received against their expectations.
Service standards and client satisfaction measurement are key components of a client-centred approach. Service standards and client satisfaction measures for services to external clients have been in use since the 1990s. In a client-centred approach, internal services should also be designed around client needs and expectations within fiscal constraints and thus standards and measures are equally applicable. Under the Common Services Policy, all common service organizations ( CSO s) are accountable for developing, in consultation with clients, meaningful and visible standards. The use of standards and performance reporting against those standards can be a valuable addition to a service relationship.
A service agreement should document service standards and client satisfaction measurement procedures for the client of the service, as well as performance measurement procedures.
Depending upon the complexity of the service arrangement, a service agreement may include provisions for some or all of the following performance elements:
Client satisfaction measurement is considered public opinion research and as such managers should consult the TB Communications Policy of the Government of Canada and associated Procedures for Planning and Contracting Public Opinion Research. Public opinion research is a mandatory common service and as such, departments must coordinate their planning, contracting, and implementation of their research requirements with PWGSC .
All of the activities and tasks required to implement a new service should be considered in the development of a service agreement.
In many ways, the successful execution of a service relationship depends on the care with which the details of the implementation are articulated and carried out. Schedules, milestones, performance objectives, and, where appropriate, detailed project or work plans need to be established to ensure all parties share common expectations about what implementation will look like. Plans and execution should be funded, resourced, managed, and tracked.
Implementation efforts are highly dependent on the complexity of the service involved and the collaborative arrangement in question. Moving to a new service relationship typically involves:
Generally, implementation discussions will not be necessary between parties renewing a long-standing service relationship. In more complex arrangements where multiple services are being provided under a single master agreement such as translation services for Department X, implementation details for individual services or projects are often captured in individual SLA s.
Depending upon the complexity of the service arrangement, a service agreement may include provisions for some or all of the following implementation elements:
When departments negotiate arrangements to work together or when they work individually to provide better services for internal and external clients, service agreements provide a means to promote the delivery of cost effective client-centred, well-managed service. They help reinforce accountabilities when one department provides service to or on behalf of another department by ensuring roles and responsibilities are clearly outlined and deputy heads have the correct information to discharge their accountabilities. Service agreements also increase the quality and consistency of service arrangements throughout the Government of Canada through the use of common structures, approaches, and, to some degree, processes. Together, these activities help enhance the management of service delivery and promote efficiency and effectiveness.
In some cases, the same element may be found in more than one type of agreement. If so, they should be at differing levels of detail. For example, a high-level description of scope may be found in a Memorandum of Understanding ( MOU ) and perhaps is as simple as the name of the service (for example, Application Hosting). The accompanying Service Level Agreement ( SLA ) for the same service may, however, would provide much greater detail on the scope of the Application Hosting service being provided, including details about the applications being hosted, the technical environment, supporting help desk services, business continuity provisions, and related service levels of performance targets. The provisions in the various agreements should complement one another. Overlap and duplication should be avoided to minimize the risk of conflicting interpretations between the various provisions.
The following table provides a list of elements typically found in service agreements and indicates, for simple, medium, or complex service arrangements, in which type of service agreement those elements are typically found.
Depending on the scope of the service relationship and the type of service arrangement, some items may not be applicable. For example, if the service in question will be billed on a cost recovery basis, there may be no requirement to discuss the pooling of resources.
In the table, for a simple or medium arrangement, certain elements are not included. This is based on the assumption that the arrangement is simple enough that these elements are not necessary. If, in developing a simple MOU , it is felt that some or all of these types of elements are indeed required, it is likely that the arrangement itself should be considered medium or complex rather than simple or medium. The choice of service agreements ( MOU , MA , and/or SLA ) would be governed accordingly.
| Element | Simple | Medium | Complex | |||
|---|---|---|---|---|---|---|
| MOU | MOU | SLA | MOU | MA | SLA | |
| Parties to the Agreement | Yes | Yes | Yes | Yes | Yes | Yes |
| Recitals (“Where as” and “Therefore” Statements) | Yes | Yes | Yes | Yes | Yes | Yes |
| Definitions | Yes | No | Yes | No | Yes | Yes |
| Commencement Date | Yes | Yes | Yes | Yes | Yes | Yes |
| Duration | Yes | Yes | Yes | Yes | Yes | Yes |
| Reference to Supporting Documents or Related Agreements | Yes | Yes | No | Yes | No | No |
| Maintenance of the Agreement | No | No | Yes | No | Yes | Yes |
| Notice Period for Termination or Withdraw | Yes | Yes | No | Yes | No | No |
| Designated Officials | Yes | No | Yes | No | Yes | Yes |
| Signatories | Yes | Yes | Yes | Yes | Yes | Yes |
| Element | Simple | Medium | Complex | |||
|---|---|---|---|---|---|---|
| MOU | MOU | SLA | MOU | MA | SLA | |
| Vision | Yes | Yes | No | Yes | Yes | No |
| Purpose or Objectives | Yes | Yes | No | Yes | No | No |
| Key Principles | Yes | Yes | No | No | No | No |
| Service Scope | Yes | Yes | Yes | No | Yes | Yes |
| Service Bundles / Service Inventory | Yes | No | Yes | No | No | Yes |
| Tiered Service Delivery / Channels | No | No | Yes | No | No | Yes |
| Relative Roles and Responsibilities | Yes | No | Yes | No | No | Yes |
| Key Service Assumptions | No | No | Yes | No | No | Yes |
| Element | Simple | Medium | Complex | |||
|---|---|---|---|---|---|---|
| MOU | MOU | SLA | MOU | MA | SLA | |
| Form and Structure | Yes | Yes | No | Yes | Yes | No |
| Roles and Responsibilities | Yes | Yes | No | Yes | Yes | No |
| Relationships with Stakeholders and Other Bodies | No | No | No | No | Yes | No |
| Accountability | Yes | Yes | No | Yes | Yes | No |
| Decision Making Processes | No | Yes | No | No | Yes | No |
| Dispute Resolution | Yes | Yes | Yes | Yes | Yes | Yes |
| Amendment and Termination | Yes | Yes | No | Yes | Yes | No |
| Audit and Monitoring | No | No | No | No | Yes | No |
| Element | Simple | Medium | Complex | |||
|---|---|---|---|---|---|---|
| MOU | MOU | SLA | MOU | MA | SLA | |
| Policies and Signing Authorities | No | No | Yes | No | No | Yes |
| Infrastructure | No | No | No | No | No | Yes |
| Work Sharing | No | No | No | No | No | Yes |
| Customer Relationship Management | No | Yes | No | No | Yes | No |
| Privacy | Yes | No | Yes | No | Yes | No |
| Security | Yes | No | Yes | No | Yes | No |
| Disclosure and Use of Information | No | No | Yes | No | No | Yes |
| Specific Requirements | No | No | No | No | No | Yes |
| Service Disruptions / Business Continuity Planning | Yes | No | Yes | No | No | Yes |
| Element | Simple | Medium | Complex | |||
|---|---|---|---|---|---|---|
| MOU | MOU | SLA | MOU | MA | SLA | |
| Funding Model | Yes | Yes | No | Yes | Yes | No |
| Fee Structure | Yes | Yes | No | No | Yes | Yes |
| Resource Pooling Arrangements | Yes | Yes | No | No | Yes | Yes |
| People and In-kind Contributions | No | No | Yes | No | No | Yes |
| Incentive Pricing | No | No | Yes | No | No | Yes |
| Investments in Service Enhancements | No | No | Yes | No | No | Yes |
| Cost Transparency | No | Yes | No | No | Yes | No |
| Variances and Adjustments | No | No | Yes | No | No | Yes |
| Contingent Funding | No | Yes | No | No | Yes | Yes |
| Consequences | No | Yes | No | No | Yes | No |
| Settlement Arrangements | Yes | Yes | No | No | Yes | No |
| Element | Simple | Medium | Complex | |||
|---|---|---|---|---|---|---|
| MOU | MOU | SLA | MOU | MA | SLA | |
| Performance Targets | Yes | No | Yes | No | No | Yes |
| Performance Measurement and Reporting | Yes | Yes | Yes | Yes | Yes | Yes |
| Link to Performance Management Agreements ( PMA s) | Yes | Yes | No | Yes | No | No |
| Monitoring Responsibilities and Processes | No | No | Yes | No | No | Yes |
| Evaluation and Reporting Frequency | Yes | No | Yes | No | No | Yes |
| Benchmarks | No | No | No | No | No | Yes |
| Performance of the Arrangement | No | No | No | No | Yes | No |
| Risk Reporting | No | Yes | No | No | Yes | No |
| Continuous Improvement | No | No | Yes | No | No | Yes |
| Consequences | No | Yes | No | No | Yes | No |
| Element | Simple | Medium | Complex | |||
|---|---|---|---|---|---|---|
| MOU | MOU | SLA | MOU | MA | SLA | |
| Transition Activities | Yes | No | Yes | No | No | Yes |
| Transition Roles and Responsibilities | Yes | No | Yes | No | No | Yes |
| Milestones | Yes | No | Yes | No | No | Yes |
| Resource Commitments | No | No | No | No | No | Yes |
| People and Human Resource Considerations | No | No | No | No | No | Yes |
| Transition and Training Plans | No | No | No | No | No | Yes |
| Risk Management | No | No | No | No | No | Yes |
Memorandum of Understanding ( MOU )
Between
[Department A] and
[Department B] etc.
| Number | Section(s) (if applicable) | Date | Changed by | Detail |
|---|---|---|---|---|
| 1 | [Section, page or sub-title] | [ YYYY - MM - DD ] | [Name, title or division] | [Nature and detail of the change] |
| 2 | [Section, page or sub-title] | [ YYYY - MM - DD ] | [Name, title or division] | [Nature and detail of the change] |
This section typically describes the mandates or capabilities of the parties involved and the overall goal of the agreement. For example, “Whereas Department A has the authority, capacity and expertise to deliver XYZ service and is authorized to charge and re-spend revenues received in delivering XYZ service” and “Whereas Department B is a new entity that requires XYZ service”, therefore “Department A agrees to provide XYZ service to Department A on a cost recovered basis”.
This section outlines the start and end dates of the agreement.
This section develops a common vision and associated business strategies to ensure the parties are aligned with the mutual vision and strategies as negotiations evolve. This section should identify the outcomes expected from the establishment of a relationship and their linkage to the business objectives of the department.
This section defines the specific intent of the service relationship being formed and the expected outcomes for all parties to the agreement.
This section identifies supporting documents such as project charters or Treasury Board submissions and/or related MA s or SLA s.
This section identifies the service that will be provided. It should also identify any key service assumptions (e.g., multi-channel strategies and priorities such as in-person centres within a region).
This section outlines the overall financial arrangements for the relationship. In cases where only an MOU is required, this section outlines the specific fee structure and/or resource pooling arrangement for the service in question. In more complex arrangements, such details would normally be in the MA or SLA with the MOU stating the overarching principles of the financial arrangement in question.
This section outlines the specific service level or other performance targets to be achieved and the nature and frequency of the performance reports related to those targets.
This section identifies any changes in the legislative authority and accountability for the program. Typically, authority and accountability generally do not shift to the department delivering the service. At a minimum, accountabilities should be discussed, agreed to, and documented. As the service is further defined, the authorities and accountabilities should be re-examined for compliance.
This section identifies the governance structure that will oversee and guide the service relationship and manage the specific service falling under the service relationship. It outlines the specific roles and responsibilities to be assumed by each party and how key planning and financial decisions will be made, as necessary.
This section identifies the approach and timeframes for the phases and stages of the implementation process, including detailed planning, service management, service delivery, and when the parties expect the service to become operational. It should also identify when designated officials expect to review the effectiveness of the relationship, prior to continuing or including additional services. In large horizontal initiatives, this section may also identify key decision points.
This section identifies who in each party will be accountable for the implementation and for the operation of the service. It may also establish committees and decision-making bodies if necessary.
This section identifies the disaster recovery provisions that will be in place and may also identify specific time commitments for recovery from service disruptions including the clear delineation of recovery priorities.
This section identifies how any disputes arising from the implementation of the MOU will be resolved and how issues that cannot be resolved by the parties to the agreement will be considered by higher authorities (escalation).
This section identifies how amendments to the agreement will be made (e.g., in writing and with the mutual consent of both parties) and any provisions regarding the termination of the agreement, including authorities required.
Although departmental signing authorities vary across the Government of Canada, execution of service agreements should be aligned with departmental policy. It is anticipated that the parties to any service agreement will identify individual office holders who are accountable for the actions being undertaken.
By signing below, Approvers indicate their acceptance of all terms and conditions outlined in this Agreement.
| Approvers | Name Title | Approval Date |
|---|---|---|
| [Signature] | [The MOU should be signed at the Designated Official, DM / ADM level] | [ YYYY - MM - DD ] |
| [Signature] | [The MOU should be signed at the Designated Official, DM / ADM level] | [ YYYY - MM - DD ] |
| Approvers | Name Title | Approval Date |
|---|---|---|
| [Signature] | [The MOU should be signed at the Designated Official, DM / ADM level] | [ YYYY - MM - DD ] |
| [Signature] | [The MOU should be signed at the Designated Official, DM / ADM level] | [ YYYY - MM - DD ] |
Master Agreement ( MA )
Between
[Department A] and
[Department B] etc.
Memorandum of Understanding Reference:
[Identification of Governing Memorandum of Understanding]
| Number | Section(s) (if applicable) | Date | Changed by | Detail |
|---|---|---|---|---|
| 1 | [Section, page or sub-title] | [ YYYY - MM - DD ] | [Name, title or division] | [Nature and detail of the change] |
| 2 | [Section, page or sub-title] | [ YYYY - MM - DD ] | [Name, title or division] | [Nature and detail of the change] |
This section typically describes the mandates or capabilities of the parties involved and the overall goal of the agreement. For example, “Whereas Department A has a mandate to provide common services in the areas of real property and acquisition services” and “Whereas Department B requires real property and acquisition services” therefore “Department A and Department B agrees to enter into a Master Agreement that will govern the following real property and acquisition services … [specify services]”.
This section outlines the start and end dates of the agreement, including notation of significant milestones such as evaluation and benchmarks. For example, the agreement will be for two (2) years with a semi-annual performance review.
This section includes any definitions that may be required to ensure the language of the agreement is understood and meaningful to the parties to the agreement.
This section specifies the management relationship between the parties to the agreement.
This section should identify the various services covered under the MA . It should also identify the associated SLA s and any relevant supporting documents such as project charters or Treasury Board submissions. Define channels to be utilized and designation of priority channels if applicable.
This section identifies the governance structure that will oversee and manage the specific services falling under the MA . It also outlines the specific roles and responsibilities to be assumed by each party. As necessary, this section will also outline how key planning and financial decisions will be made across the services included in the MA .
This section should describe the Customer Relationship Management regime of the service provider. This should include the services available, issue resolution processes, key contact names and contact information, any related response times, and issue resolution commitments. Escalation procedures for day-to-day relationship issues should also be detailed. The nature and frequency of reports to the appropriate governance committee on the volume of issues and the timely resolution of those issues should be described.
This section describes how all the services covered by the MA will be measured and reported. It should describe the distribution and frequency of performance reporting and the governance committees that are involved in performance review meetings. The process through which service improvements to one or more services are tracked in response to performance deficiencies should also be described.
This section identifies the nature of financial arrangement to be applied to the services covered by the MA . The methodology for calculating the fee structure or resourcing pooling arrangement should be documented. This section identifies how and when payment will be made to the provider. The financial implications of non-performance, or the exceeding of service levels, should be spelled out.
Note : To estimate the cost of providing services, refer to the TBS Guide to Costing.
This section recognizes that the document will be amended over time to reflect the evolving relationship and the addition or removal of services under the MA . During the first year of operation, the MA should be reviewed on a semi-annual basis. In subsequent years, the review should be annual.
This section identifies requirements regarding privacy and security of data, access to information, and the service organization's compliance in meeting, or exceeding, these requirements.
This section provides a general description of the dispute management process and procedures to be applied to the MA . It should describe the process to resolve the dispute, together with the escalation process, and identify responsible personnel in all parties to the agreement. Any specific additional details will be associated with each service described later in the SLA should also be noted.
This section identifies the agreed-upon terms and conditions necessary to terminate the MA or a specific service covered by the MA , prior to its intended date (e.g., six (6) months notification in writing).
Signatures of authorized individuals must be aligned with the respective department delegation of authority. Generally, MA s are signed by senior staff responsible for the service or product under consideration.
By signing below, Approvers indicate their acceptance of all terms and conditions outlined in this Agreement.
| Approvers | Name Title | Approval Date |
|---|---|---|
| [Signature] | [The MA should be signed at the Designated Official or ADM level] | [ YYYY - MM - DD ] |
| [Signature] | [The MA should be signed at the Designated Official or ADM level] | [ YYYY - MM - DD ] |
| Approvers | Name Title | Approval Date |
|---|---|---|
| [Signature] | [The MA should be signed at the Designated Official or ADM level] | [ YYYY - MM - DD ] |
| [Signature] | [The MA should be signed at the Designated Official or ADM level] | [ YYYY - MM - DD ] |
Service Level Agreement ( SLA )
Between
[Department A] and
[Department B] etc.
Master Agreement Reference:
[Identification of governing Master Agreement]
| Number | Section(s) (if applicable) | Date | Changed by | Detail |
|---|---|---|---|---|
| 1 | [Section, page or sub-title] | [ YYYY - MM - DD ] | [Name, title or division] | [Nature and detail of the change] |
| 2 | [Section, page or sub-title] | [ YYYY - MM - DD ] | [Name, title or division] | [Nature and detail of the change] |
This section typically describes the mandates or capabilities of the parties involved and the overall goal of the agreement. For example, “Whereas Department A and Department B have entered into a Master Agreement governing a range of real property and acquisition services” and “Whereas Department B requires property management services for the following properties … [specify properties]” therefore “Department A agrees to provide property management services to Department B on a cost recovery basis and in accordance with the following terms and conditions”.
This section outlines the start and end dates of the agreement. The agreement may be renewed if agreed to by both parties. It should be reviewed at regular intervals by both parties to ensure its effectiveness and appropriateness and to make adjustments as required.
This section includes any definitions that may be required to ensure the language of the agreement is understood and meaningful to the parties to the agreement.
This section defines the details of the service being requested and the business objectives being sought. These should align with the vision, strategies, and outcomes described in the MOU and MA . This section should include:
Common examples of targets include:
This section describes specific service levels or performance targets to be achieved by the service provider once the service has been clearly defined. There may be multiple service level targets per service. Targets are to be stated in business terms and understandable to the client receiving the service. Typically, service level targets focus on service availability, time to recover or repair, cost effectiveness, end-user response time, accessibility, accuracy, and client satisfaction measurements. The following information is typically used to describe a service level target:
This section deals with key operational considerations related to the service in question. Examples include privacy, security, infrastructure or technical requirements, work sharing arrangements if applicable, signing authorities, and disclosure and use of information.
This section describes how the services will be measured and reported and processes that will be enacted based on a comparison of results with service level objectives.
This section should describe the distribution and frequency of performance reporting and include a schedule of review meetings if applicable. Individuals responsible for performance tracking and reporting should be identified. The process through which service improvements will be determined and executed in response to performance deficiencies should be described including the authorities required to proceed with the identified changes.
This section describes all aspects of the financial arrangement between the client and provider. The items typically covered include the fee structures or resource pooling arrangements, any incentive pricing, investments in service enhancements, cost transparency, variances and adjustments, and settlement arrangements. This section is aligned with the MOU and MA . Any financial consequences resulting from performance deficiencies should be clearly described. It should also include a description of the amendment process, if applicable, and identify the responsible individuals.
This section identifies the approach and timeframes for the phases and stages of the implementation process, including detailed planning, service management, service delivery, and when the parties expect the service to become operational. It should also identify when designated officials expect to review the effectiveness of the relationship, prior to continuing or including additional services.
This section identifies the service provider's requirements regarding privacy and security of data, information, and access with respect to any and all services identified in the SLA , and also covers the service provider's compliance in meeting, or exceeding, these requirements.
This section describes the dispute resolution process and procedures to be applied for each service identified in the SLA . The process that will be used to define a problem or incident should be identified. The escalation process should also be identified as well as all responsible personnel.
This section identifies who in each party will be accountable for the implementation and for the operation of the service. It may also establish committees and decision-making bodies if necessary.
By signing below, Approvers indicate their acceptance of all terms and conditions outlined in this Agreement.
| Approvers | Name Title | Approval Date |
|---|---|---|
| [Signature] | [The SLA should be signed at the ADM / DG level] | [ YYYY - MM - DD ] |
| [Signature] | [The SLA should be signed at the ADM / DG level] | [ YYYY - MM - DD ] |
| Approvers | Name Title | Approval Date |
|---|---|---|
| [Signature] | [The SLA termination should be signed at the ADM / DG level] | [ YYYY - MM - DD ] |
| [Signature] | [The SLA termination should be signed at the ADM / DG level] | [ YYYY - MM - DD ] |
© Her Majesty the Queen in Right of Canada, represented by the President of the Treasury Board, 2017,
ISBN: 978-0-660-09779-4
