SLA and KPIs in your proposal: make quality measurable without tying your own hands

What is an SLA?

A service level agreement is an agreement on the level of your service. It is often an annex to the service contract, in Dutch the dienstverleningsovereenkomst: the contract covers the legal side, the SLA describes what the client can concretely expect and how that is measured.

A KPI is the measure you use for that level. An SLA without KPIs is an intention. PIANOo, the Dutch public procurement expertise centre, describes contract management in government as measuring performance and adjusting, with output-based KPIs as the objective measure.

In a private tender you often propose the SLA yourself, as part of your proposal. In a public tender it is usually already in the documents: in the requirements or in the draft contract. Then the question is not how to write it, but whether you can meet it.

What goes in an SLA?

A workable SLA answers six questions. Leave one out and the discussion comes later, during the contract.

1. 1Which services, and which notThe services, locations, hours and volumes, and what falls outside them, such as extra work on request.
2. 2What service levelOne or more KPIs per service, each with a standard: what is good enough, and from what point is it a shortfall.
3. 3How it is measuredWith which system or method, how often, by whom, and over what period.
4. 4How you reportWhat the report contains, how often, and in which meeting you discuss it.
5. 5How you escalateWho calls whom when things go wrong, and within what time, from the team on site up to management.
6. 6What the consequences areAn improvement plan, a deduction, a penalty, or a bonus for better performance. And how much, with what cap, and when not, for example when the cause lies with the client.

Deduction, penalty and bonus: what is the difference?

In PIANOo’s terms, a bonus is a reward that encourages extra effort. If you meet all the agreed conditions, the buyer must pay it. A deduction, in Dutch a malus, is a sanction that does not fall under the statutory penalty clause rules. PIANOo’s example is an SLA in which printers are repaired within 24 hours, with a deduction of 5 euros for every hour a printer is out of action beyond that.

A penalty does fall under those rules. Article 6:91 of the Dutch Civil Code treats any clause that makes you pay a sum of money if you fail to perform as a penalty clause. By law (Article 6:92 of the Civil Code) a penalty in principle replaces damages, but a contract may depart from that. The Dutch central government’s model service contract (ARVODI-2025) has no standard penalty clause. If a buyer adds one, the model links the amount to the contract value with a cap, and the buyer may also claim performance and damages on top. A Dutch court only reduces a penalty at your request and if fairness clearly requires it (Article 6:94 of the Civil Code). Do not count on it.

A deduction costs you part of your invoice. A penalty can cost more than the contract earns.

What makes a good KPI?

A good KPI is SMART, measurable by both parties, and within your own control. The last two are the ones most often forgotten. PIANOo also advises Dutch public buyers to make performance linked to an incentive SMART, to make the threshold clear and to measure automatically where possible.

• SMARTSpecific, measurable, time-boundNot “fast follow-up”, but “on site within four hours for a high-priority call, in 95% of calls per month”.
• SharedThe same data for bothMeasure from a source the client can also see: its ticketing system, a joint inspection, a timestamp in the system. Two separate measurements produce two versions of the truth.
• ControlOnly what you controlYou control a response time. A user satisfaction score also depends on the building, the client’s policies and the mood of the day. Agree on numbers like that as a signal, not as a standard with a deduction.

A KPI you cannot influence is not an agreement. It is a gamble.

Examples of KPIs by sector

For some services there are established measurement systems. In Dutch commercial cleaning that is VSR-KMS, a system that assesses cleaning quality against objective technical criteria. It is laid down in the Dutch standard NEN 2075, whose September 2018 version replaces the 2000 version. The standard compares the quality delivered with the quality agreed, based on a visual assessment of a sample. For grounds maintenance in public space, quality is often described as a visual standard: the Kwaliteitscatalogus openbare ruimte (public space quality catalogue) of CROW, a Dutch knowledge institute, works with visual measuring scales, measuring instructions and definitions. An updated version appeared in 2023.

If the client names no measurement system, propose an existing one. It saves arguments about how you measure.

How do you avoid tying your own hands?

An SLA protects you too, if you scope it well. Write down what you need from the client, such as access, timely reports or information, and agree that a standard does not apply when the cause lies with the client. Ask for a start-up period in which KPIs are measured but have no consequences yet. And agree on a cap for deductions per month or per year.

Price deductions and penalties into your bid deliberately, based on what you expect to miss. According to PIANOo, suppliers do build deductions into their prices in practice.

Think beyond the contract, too. If you showed significant or persistent deficiencies on an earlier public contract that led to early termination, damages or comparable sanctions, a public buyer may exclude you from a later tender. A standard you miss structurally costs more than a deduction.

What do you do with the buyer’s SLA or penalties?

In a Dutch public tender you cannot change the terms in your bid. Bidding with conditions attached is not allowed. If you want something changed, it has to happen before you bid, with a question in the clarification round, in Dutch the nota van inlichtingen. The Gids Proportionaliteit, the Dutch Proportionality Guide, says bidders must get the chance to suggest changes to the draft contract (rule 3.9 B).

The guide also gives you the arguments. A risk belongs with the party best able to control or influence it (rule 3.9 A). Penalties are as a rule not insurable. And clauses must be looked at together, because in combination they can become disproportionate, even when each one seems reasonable on its own. How to take a disproportionate requirement further is covered in the Proportionality Guide. Weigh the penalties in your bid/no-bid decision as well.

How do KPIs in your method statement score points?

KPIs make a promise verifiable, and an evaluation panel can only award points for what it can verify. A method statement, in Dutch a plan van aanpak, with a goal, a number and a date persuades more than a plan full of good intentions.

But be aware of what you are doing. PIANOo writes that what a bidder offers must be honoured during the contract, and that the buyer can check whether you keep to what you promised in your bid. PIANOo also points out to buyers that quality is easier to enforce the more SMART it was requested. Every KPI in your method statement is a KPI in your contract.

• Promise“We respond quickly to faults.”Impossible to verify. The panel can do nothing with it.
• With a KPI“We pick up high-priority reports within 4 hours. On a comparable contract we did so for 97% of reports last year. We report monthly from your own ticketing system.”A standard, evidence from your own work and a measurement the buyer can see for itself. Fictional example.

1. 1Start from what the buyer cares aboutTake the goals from the requirements and the award criteria, and choose your KPIs to match. More in writing for points.
2. 2Use your own numbersPromise a standard you already meet for comparable clients, and show it. A standard you meet nowhere is a risk, not added value.
3. 3Offer something extra that you can measureA faster response than required, or a report the buyer would otherwise make itself. Measurable added value is something the panel can reward.
4. 4Test every KPI before you submitHave operations read every standard. Can they deliver it? If not, take it out.

What you promise in your bid, you will read again in your contract.