Michael McGovern, partner, had his “6 Tips for Reviewing Vendor Contract Terms” article published by Employee Benefit News. The article discusses the hidden risks that can arise in vendor performance guarantees tied to employee benefit plans and related services.
While “zero increase” pricing and savings guarantees may appear attractive during renewals and transitions, Michael explains that the true value of these provisions depends on how contract terms define pricing, baselines, exclusions, and performance measurements. He emphasizes that employers and advisers should carefully evaluate what costs are included in a guarantee and how vendors calculate projected savings and outcomes.
“The practical value of the guarantee depends heavily on the contract terms that sit behind the headline.”
The article also highlights the importance of clearly defining exclusions, verification rights, reporting obligations, and contractual remedies if guarantees are not met. Michael notes that advisers can add significant value by helping clients understand the assumptions underlying vendor calculations and by ensuring agreements include practical mechanisms for validating results and resolving disputes. Ultimately, clear and transparent contract language can help employers avoid unexpected costs and build stronger long-term vendor relationships.
Employee Benefit News subscribers can read the full article here.