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Sub-Contractor Service Level Agreement

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SUB-CONTRACTOR SERVICE LEVEL AGREEMENT

This Sub-Contractor Service Level Agreement ("Agreement") is made and entered into as of Effective Date: by and between Prime Contractor Name: with principal place of business at ("Contractor"), and Sub-Contractor Name: with principal place of business at ("Subcontractor"). Contractor and Subcontractor are each a "Party" and collectively the "Parties."

RECITALS

WHEREAS, Contractor has entered into one or more prime agreements pursuant to which Contractor is obligated to provide certain services to its clients; and

WHEREAS, Contractor desires to engage Subcontractor to perform specified services described herein and Subcontractor represents that it has the expertise, personnel, and resources to perform such services in accordance with the performance standards and service levels set forth in this Agreement; and

WHEREAS, the Parties desire to set forth their respective duties, performance metrics, remedies, and administrative procedures governing Subcontractor's provision of services to Contractor.

NOW, THEREFORE, in consideration of the mutual covenants and promises contained herein, the Parties agree as follows:

1. DEFINITIONS

For purposes of this Agreement, the following terms have the meanings set forth below:

"Services" means the tasks, deliverables, and activities described in Exhibit A attached hereto and incorporated herein by reference, which Exhibit A shall set forth specifications, milestones, and acceptance criteria.

"Service Levels" means the measurable performance standards described in Section 3 and in the Service Level Schedule contained in Exhibit B.

2. SCOPE OF SERVICES

Subcontractor shall perform the Services set forth in Exhibit A. Subcontractor shall deliver all deliverables on or by the dates specified in Exhibit A and shall comply with the specifications, acceptance tests, and quality assurance procedures set forth therein.

Subcontractor shall provide adequately trained personnel, materials, equipment, and supervision to perform the Services in a professional and workmanlike manner consistent with industry standards.

3. SERVICE LEVELS AND PERFORMANCE STANDARDS

Subcontractor warrants that, during the Term, Services shall meet the Service Levels set forth in Exhibit B. Key performance indicators include, but are not limited to: uptime, response times, mean time to repair, and defect rates. Minimum uptime percentage: %.

Failure to meet Service Levels shall entitle Contractor to credits, withholding, or other remedies as set forth in Section 5. Measurement of Service Levels shall be performed in accordance with the measurement methodology described in Exhibit B.

4. MEASUREMENT, REPORTING AND REVIEW

Subcontractor shall maintain logs and records necessary to demonstrate compliance with Service Levels and shall provide monthly performance reports to Contractor within calendar days after the end of each month. Reports shall include metric values, incident descriptions, root cause analyses, and corrective action plans.

5. SERVICE CREDITS AND REMEDIES

If Subcontractor fails to meet a Service Level for any reporting period, Contractor shall be entitled to service credits as set forth in Exhibit B. Service credits shall be Contractor's sole and exclusive monetary remedy for service level failures, provided that nothing in this Section shall limit Contractor's right to terminate for material breach under Section 8 or seek injunctive relief.

6. COMPENSATION AND INVOICING

Contractor shall pay Subcontractor the fees set forth in Exhibit C. Fees for Services performed on a time-and-materials basis shall be billed monthly in arrears. Fixed-price milestone payments shall be invoiced upon acceptance of the corresponding deliverable.

7. TERM AND TERMINATION

The initial term of this Agreement shall commence on the Effective Date and continue for a period of months (the "Initial Term"), unless earlier terminated in accordance with this Section. Thereafter the Agreement shall automatically renew for successive twelve (12) month periods unless either Party provides written notice of non-renewal at least thirty (30) days prior to the end of the then-current term.

Either Party may terminate this Agreement for material breach by the other Party that remains uncured for thirty (30) days following written notice specifying the breach. Contractor may terminate for convenience upon sixty (60) days' prior written notice to Subcontractor.

8. CONFIDENTIALITY

Each Party shall protect the other's Confidential Information with at least the same degree of care it uses to protect its own confidential information, but no less than reasonable care. "Confidential Information" includes nonpublic business, technical, financial and client information disclosed in connection with the Services. Confidential Information shall not include information that is publicly known without breach by the receiving Party or that is independently developed by the receiving Party without use of the disclosing Party's Confidential Information.

9. INTELLECTUAL PROPERTY

Unless otherwise agreed in writing, all deliverables, work product and inventions conceived, reduced to practice, or produced by Subcontractor in the performance of the Services ("Work Product") shall be the exclusive property of Contractor. Subcontractor hereby assigns and agrees to assign all right, title and interest in such Work Product to Contractor and shall execute such documents as Contractor reasonably requests to effectuate such assignment.

10. WARRANTIES; REPRESENTATIONS

Subcontractor represents and warrants that: (a) it has the full power and authority to enter into this Agreement; (b) the Services will be performed in a professional manner consistent with prevailing industry standards; (c) the Services and deliverables will not infringe third party intellectual property rights; and (d) Subcontractor shall comply with all applicable laws, rules and regulations in performing the Services.

11. INDEMNIFICATION

Subcontractor shall indemnify, defend and hold harmless Contractor and its officers, directors, employees and agents from and against any and all claims, losses, liabilities, damages, costs and expenses (including reasonable attorneys' fees) arising out of or resulting from: (a) Subcontractor's negligence or willful misconduct; (b) breach of Subcontractor's representations, warranties or obligations under this Agreement; or (c) third party claims that the Services or Work Product infringe any intellectual property right, except to the extent such claim arises from Contractor-provided specifications.

12. INSURANCE

During the Term, Subcontractor shall maintain at its expense insurance of the types and minimum limits customary for the trade and sufficient to cover Subcontractor's obligations under this Agreement. Upon request Subcontractor shall furnish certificates of insurance evidencing such coverage and naming Contractor as an additional insured where appropriate.

13. LIMITATION OF LIABILITY

EXCEPT FOR LIABILITY ARISING FROM GROSS NEGLIGENCE, WILLFUL MISCONDUCT, BREACH OF CONFIDENTIALITY OR INDEMNIFICATION OBLIGATIONS, IN NO EVENT SHALL EITHER PARTY'S AGGREGATE LIABILITY UNDER THIS AGREEMENT EXCEED THE AMOUNTS PAID OR PAYABLE TO SUBCONTRACTOR UNDER THIS AGREEMENT IN THE TWELVE (12) MONTH PERIOD PRECEDING THE EVENT GIVING RISE TO THE CLAIM.

14. SUBCONTRACTING AND ASSIGNMENT

Subcontractor shall not subcontract or assign any material portion of its obligations under this Agreement without the prior written consent of Contractor, which consent shall not be unreasonably withheld. Subcontractor shall remain fully responsible for the performance of any approved subcontractors.

15. COMPLIANCE WITH LAWS

Subcontractor agrees to comply with all applicable laws, rules and regulations in performing the Services, including labor, safety, export control and data protection laws applicable to the Services and personnel.

16. NOTICES

All notices required or permitted under this Agreement shall be in writing and delivered to the addresses set forth below or to such other address as a Party designates by notice in accordance with this Section. Notices shall be deemed given when delivered personally, by nationally recognized overnight courier, or three (3) business days after deposit in the United States mail, postage prepaid, certified mail, return receipt requested.

17. AMENDMENTS; WAIVER

No amendment to this Agreement shall be effective unless in writing and signed by authorized representatives of both Parties. Failure to enforce any provision shall not constitute a waiver of future enforcement of that or any other provision.

18. GOVERNING LAW; DISPUTE RESOLUTION

This Agreement shall be governed by and construed in accordance with the laws of the state or jurisdiction selected by the Parties: , without regard to conflicts of law principles. Any dispute arising out of or relating to this Agreement shall be resolved as follows: the Parties shall first attempt in good faith to resolve the dispute through negotiation; if unresolved within thirty (30) days, either Party may seek relief through mediation or in a court of competent jurisdiction.

19. ENTIRE AGREEMENT; SEVERABILITY; COUNTERPARTS

This Agreement, together with all Exhibits and any written change orders executed by the Parties, constitutes the entire agreement between the Parties with respect to the subject matter hereof and supersedes all prior negotiations, understandings and agreements. If any provision of this Agreement is held invalid or unenforceable, the remaining provisions shall continue in full force and effect. This Agreement may be executed in counterparts, each of which shall be deemed an original and all of which together shall constitute one and the same instrument.

20. ADDITIONAL PROVISIONS

Contractor - Printed Name:

By:

Date:

Subcontractor - Printed Name:

By:

Date:

Enter text✕

What a Sub-Contractor Service Level Agreement Covers

A Sub-Contractor Service Level Agreement (SLA) is a contractual document that defines the operational standards, measurable performance targets, and remedies between a primary contractor and a subcontractor. It sets scope of work, deliverables, quality criteria, response and resolution times, reporting obligations, inspection and acceptance procedures, and escalation paths. SLAs typically specify how performance is measured, the reporting cadence, credits or liquidated damages for missed targets, confidentiality obligations, insurance and indemnity requirements, and the contract term and termination rights.

Why you should use a Sub-Contractor Service Level Agreement

A clear SLA reduces disputes, aligns expectations, and provides predefined remedies for underperformance. Properly executed SLAs support operational continuity, improve risk allocation, and create objective metrics for contractor oversight while preserving contractual remedies and auditability under ESIGN (15 U.S.C. ch. 96) and UETA.

Why you should use a Sub-Contractor Service Level Agreement

Who typically prepares and signs an SLA

Final approval and signature usually require authorized representatives with contracting authority from each party and any required corporate approvals.

  • Prime contractors and program managers who need measurable service guarantees and remediation structures.
  • Subcontractors and vendors that accept defined performance obligations and documented acceptance criteria.
  • Procurement, compliance, and in-house counsel responsible for drafting, approving, and retaining signed SLAs.

Core provisions to include in a professional SLA

A comprehensive SLA organizes obligations into measurable categories, assigns responsibilities, and documents escalation and remedy procedures to support enforceability.

Scope of Work

Describe services, deliverables, acceptance criteria, and excluded activities to avoid ambiguity and scope creep; attach exhibits for specifications.

Service Levels

Define measurable targets (response, resolution, uptime, throughput) with exact units and sample measurement windows for consistent enforcement.

Measurement & Reporting

Specify metrics, monitoring tools, reporting cadence, data sources, and dispute procedures for measurement disagreements.

Remedies and Credits

List credits, fee reductions, or liquidated damages for missed targets and state how and when credits are applied or invoiced.

Change Control

Include a formal process for scope changes, approvals, effect on price and schedule, and how SLAs adjust to change orders.

Compliance and Insurance

State applicable laws, insurance minimums, confidentiality, data protection obligations, indemnities, and any regulatory addenda (e.g., HIPAA).

Step-by-step: complete and execute the SLA

Follow a consistent sequence to prepare, review, sign, and distribute the SLA to ensure legal and operational readiness.

  • 01
    Draft: Populate scope, metrics, remedies, and exhibits; review against master services terms.
  • 02
    Legal Review: Have counsel check indemnities, insurance, governing law, and allocation of liabilities.
  • 03
    Operational Review: Confirm measurement methods and reporting tools with operations or IT teams.
  • 04
    Sign and Archive: Execute by authorized signatories; distribute signed copies to stakeholders and retain per retention policy.

Where to send and how routing typically works

Identify targeted recipients, delivery methods, and who receives notices or performance reports to avoid misrouting and ensure timely action.

  • Legal Dept.: Receives final executed copies and maintains the governing contract record.
  • Project Manager: Receives operational performance reports and notices of breach or escalation.
  • Finance: Receives invoices, credits, and pricing adjustments tied to remedies.
  • Vendor Admin: Receives signature requests, renewals, and contact updates for the subcontractor.

Recommended digital workflow settings for online completion

Configure a simple, auditable workflow for sending, authenticating, reminding, and storing executed SLAs to preserve chain of custody.

Field Configuration
Authentication Method Email link with optional SMS OTP or KBA depending on risk
Routing Order Sequential signing: prime contractor then subcontractor
Reminder Frequency Automatic reminders every 3 days for up to 3 sends
Expiration Set if signatures required within defined days, then reissue

Digital delivery and integration considerations

Ensure the chosen platform captures a tamper-evident audit trail and stores signed records according to retention requirements.

  • Integrations: Salesforce, NetSuite, Google Workspace, Microsoft 365
  • File formats: PDF, DOCX, HTML, Excel supported
  • Authentication: Email+SMS OTP, SSO, or KBA options

eSignature vendor comparison for executing SLAs

Compare common pricing and capability points relevant to SLA execution, including starting price, trial availability, bulk send, audit trail, HIPAA support, and envelope caps.

signNow DocuSign Adobe Sign PandaDoc HelloSign
Starting Price $8/user/mo $15/user/mo $14/user/mo $19/user/mo $15/user/mo
Free Trial 7-day trial Varies by vendor Varies by vendor Varies by vendor Varies by vendor
Bulk Send Yes Yes Yes Yes No
Audit Trail Yes Yes Yes Yes Yes
HIPAA Compliant Yes Yes Yes No No
Envelope Cap No envelope cap 100 envelopes/user/year Varies by plan Varies by plan Varies by plan

Security and compliance items to include in the SLA

Confidentiality: Mutual non‑disclosure obligations
Access Controls: Least-privilege and role-based access
Encryption: TLS 1.2/1.3 in transit; AES-256 at rest
HIPAA: BAA required when handling PHI
Audit Trail: Detailed signing history and timestamps
Certifications: SOC 2 Type II, ISO 27001 where applicable

Primary penalties and risks of an incomplete or incorrect SLA

Liquidated Damages: Unenforceable if unreasonable
Delay Penalties: May trigger deductions or termination
Termination Risk: Early exit if critical SLAs fail
Insurance Gap: Insufficient coverage exposes parties
Indemnity Exposure: Broad indemnities increase liability
Tax/Withholding: Incorrect contractor classification risks penalties

Common mistakes when preparing a Sub-Contractor SLA

  • Vague performance metrics that lack units or measurement periods, making compliance and credits impossible to calculate.
  • Missing escalation and dispute procedures, which delays remediation and increases litigation risk.
  • Failing to align reporting tools and data sources with measurement definitions, producing inconsistent or unverifiable metrics.
  • Not specifying authorized signatories or approval thresholds, risking challenges to the agreement's validity.

Typical timelines and deadlines to include

Document explicit timing for effectiveness, response, cure, and reporting to avoid ambiguity and accelerate remedies.

Effective Date:

MM/DD/YYYY format; governs when obligations begin

Response Time:

e.g., 24 hours for incident acknowledgement (specify units)

Resolution Window:

Define reasonable remediation period tied to severity levels

Cure Period:

Typical 10 business days to cure noncritical breaches

Reporting Cadence:

Monthly or weekly performance reports as defined

Frequently asked questions about Sub-Contractor SLAs

Answers to common legal, execution, and technology questions about preparing, signing, and enforcing SLAs.


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