SubscribeCompanies that outsource aspects of their projects rely on the abilities of the contractors to achieve success. Choosing an inappropriate contractor can seriously delay projects and lead to lost revenue or additional costs.
However, contractor selection is, in many companies, a somewhat ad hoc process. A recent contract dispute has demonstrated the importance of thoroughly researching contractors before using them, and carefully monitoring their performance while carrying out your work. Some details have been changed to protect confidentiality.
The client was a small pharmaceutical development company with no laboratories or factories of their own. They had in-licensed the rights to a novel synthetic route for a currently marketed product and needed to manufacture materials according to Good Manufacturing Practice for clinical and stability testing.
They had identified a company that appeared to be able to do this work for them. Their precontract investigations were based largely on presentations made during meetings and statements made in tender documents.
The contractor claimed that they had very well qualified staff, which were particularly experienced in dealing with this kind of process, and understood the requirements of GMP. The client carried out no quality audits of the contractor, did not ask for proof of the contractor’s abilities or previous experience with similar projects, and did not question how the contractor would manage the project, if awarded.
In the event, staff that did not have a full understanding of either the technical or quality requirements of the project carried out the work; results were inconsistent and the project timeline began to slip badly.
The contractor’s staff also did not have the experience to recognise important observations that might shed light on the reasons for the variable results, so did not report them to the client. Eventually, the client decided that enough was enough, transferred the work to another contractor and sued for damages.
The end result was that the project launch was delayed, leading to losses of revenue and income stream, and the client was forced into the cost and effort of finding another contractor and conducting an expensive legal action against the original one.
So how could this have been done better? The main message that this case demonstrates is the importance of carrying out thorough investigations before you commit to a contractor. If a contractor tells you that they have well-qualified staff, ask them to prove it; look at their CV’s.
Talk to the staff and management; do they understand the work you require? Inspect the facility; is it properly equipped and well maintained? Does it comply with GMP? Find out how work and reports are checked. Confirm how work will be reported (regular emails/telecoms, project meetings, monthly reports etc). What access will you have to raw data, such as lab books?
Clients must also carefully monitor contractors during the performance of the contract. It is very tempting to leave the work to the contractor and wait for the results to arrive, particularly in small companies where resources are scarce and staff may not have the knowledge or experience to assess contractor performance.
However, in this example, if the results had been questioned more carefully at the regular project meetings, the contractor’s deficiencies may have been recognised earlier.
Good Manufacturing Practices, both in US and EU, put the onus on the client to ensure that their contractors have the appropriate staff and facilities to carry out the work required. Since the entry into force of the Clinical Trials Directive (2001/20/EC), inspectors have been asking trial sponsors to show that they have written procedures for contractor selection, and have formally audited them for compliance with Good Clinical and Manufacturing Practice.
They also want to see evidence, such as emails or meeting minutes, that the client regularly reviewed and assessed the contractor’s work. Failure to demonstrate this satisfactorily could lead to rejection of the data by the regulatory authorities.
Unfortunately, many small development companies do not have their own staff with this expertise in contractor selection and management, nor do they have the time to visit potential contractors and carry out these in-depth investigations. A solution is to get help from a consultancy with experience in these fields.
In many cases, they can advise from prior experience which contractor is likely to have the appropriate facilities and experience to carry out a particular project. They also have experienced auditing staff who know what questions to ask during a contractor selection visit, and how to evaluate the responses. The cost of this advice at the start of a project is much less than that of replacing a poorly performing contractor and repeating work later on.