An overview of the differences in Master Services Agreements and Statement of Work. As always, we encourage you and your agency to seek your own legal advice when it comes to reviewing and negotiating contractual terms.
A Master Service Agreement (MSA) is a legal framework that defines the relationship between two parties in a service transaction. It provides basic terms and conditions, eliminating the need to negotiate every contractual term in future transactions. An MSA helps companies decide early on in the process the rights and responsibilities of each party in the business relationship.
A Statement of Work (SOW) specifies the details of a business transaction. This might include detailing the scope of work, deliverables, and deadlines of a project. It can be used as both a project and a contract management document. Both types of contracts are critical in the performance stage of contract management, and they must be referenced several times to ensure that both parties perform their obligations.
MSA's and SOW's affect themselves differently. An MSA may have several SOW's under it, while an SOW usually depends on a single MSA. If they conflict, the terms of an MSA will generally supersede that of an SOW—unless the parties agree and state otherwise. An example of this might be invoicing and payment terms; if the MSA states a particular term and the SOW differs - the MSA will generally be relied upon. This is something to be careful of if you’re signing an MSA for agency services with a client. Especially if you’re executing individual contracts per worker placement, and expecting to vary overarching terms.
Both MSA's and SOW's are legally binding contractual documents, but they differ in their relationship to themselves. As always, it’s prudent to get legal advice, but it’s especially critical when you’re creating, reviewing and/or negotiating an MSA. A SOW can generally be reviewed, created or negotiated with lesser input - as it contains more practical details.
While Oncore can provide your agency with basic contract templates, it is important that you ensure that these are fit for purpose for your business. In order to access our funding, and for Oncore to continually meet audit requirements, we are required to ensure that we hold on file either an MSA with your client or an individual agreement (such as a SOW) per engaged worker. This demonstrates the legitimacy of the relationship, and serves as a guarantee of the trading terms and that Oncore can expect to receive invoices payments.