Definition
Service Level Agreement(SLA)
The agreed performance standards attached to a service contract.
A Service Level Agreement (SLA) is the part of a contract that defines the agreed standard of service a supplier must deliver, including response times, availability, quality thresholds and the consequences of falling short. It is usually set out as a contract schedule and monitored throughout the life of the agreement.
What an SLA typically covers
SLAs commonly specify measurable service standards such as response and resolution times, system availability or uptime percentages, quality or accuracy thresholds, and reporting obligations. They usually also define how performance will be measured, how often it is reviewed, and what happens when service levels are not met.
- Definitions of the service and any exclusions
- Specific measurable targets, often tiered by priority or severity
- Monitoring and reporting mechanisms
- Remedies for breach, such as service credits or improvement plans
How SLAs are evaluated in tenders
Some tenders provide a draft SLA and ask bidders to confirm acceptance or propose amendments; others ask bidders to draft their own proposed SLA as part of the technical response. Evaluators look for realistic, well-evidenced commitments rather than aggressive targets a supplier cannot actually sustain in practice, since overpromising creates performance risk once the contract is live.
Frequently asked questions
- Is an SLA legally binding?
- Yes, once incorporated into the signed contract, an SLA is a binding contractual document and failure to meet it can trigger the remedies specified, such as service credits or termination rights, depending on how serious and persistent the failure is.
- Can a supplier propose changes to a buyer's draft SLA?
- Often yes, through the tender clarification process or contract negotiation stage, particularly where a target appears unrealistic or poorly defined. Once the contract is signed, changes usually require a formal variation agreed by both parties.
- What is the difference between an SLA and a KPI?
- The SLA is the overarching agreement describing expected service standards, while KPIs are the specific measurable indicators used within it to track performance, such as a percentage uptime target or an average response time.
Related terms
Go deeper