The Statement of Work in Transportation Contracts

The Statement of Work can be a very confusing document for transportation attorneys.  It can also really take the wind out of the sails of everyone who has worked really hard to finalize a contract negotiation.   It usually goes something like this:

A transportation contract will get completely negotiated between the parties, and then a Statement of Work will get submitted for review with terms that seem to duplicate what everyone has just worked so hard to negotiate/modify/re-draft.  This causes a lot of consternation among attorneys and logistics personnel.  So where do these documents come from and what are they for?

Well, Statements of Work are generally the product of a purchasing department.  Purchasing Departments often need a trigger for a purchase order to be issued.  This trigger is often called a Statement of Work.  The Transportation Agreement is intended to govern the general terms of carriage, and then when that is done the Statement of Work is needed for funding.  The problem lies in the fact that the Transportation Agreements and the Statements of Work often contain terms that overlap and that are completely duplicative. This is because they are typically generated by the business operations personnel within a company, and represent a hybrid of procedural and operational requirements.  Many times operational processes are driven by legal requirements.  This creates overlap and duplication.

So, it is important to be pro-active when negotiating Transportation Agreements by looking at any required Statement of Work in conjunction with the the Transportation Agreement. In my experience Statements of Work are best used to separate the different business process requirements for individual divisions and operating units within a company.  They can be effective in creating exceptions and creative differences to address business needs that are particular to an operating unit.  Address them early in the process or Statements of Work can cause a Lot of Work!