Basics 5 of 7 · Oil and gas industry basics
Prequalification, insurance and the MSA
They will not take the meeting until a system they do not run says you are safe to have on site.
In most industries you get approved as a supplier after you have won the business. Here it is often the other way round, and the show is blunt about it.
“A lot of places in the industry, you have to get pre-qualified as a vendor before they will even talk to you.”
Source: Breaking into Oil and Gas, a Five Step Process, episode 100 of the Oil & Gas Sales & Marketing Podcast.
The qualification is not about your product. It is about insurance requirements, safety training, and whether your people can be allowed on a site. The show names the systems that run it and the kind of credential that comes up. The reason behind all of it is the one word that explains most of this industry's buying behaviour: risk. A new vendor is a risk, a new product is a risk, and nobody wants to be the first to have taken one.
Six gates between a first meeting and a first invoice
- PrequalificationISNetworld, Avetta or Veriforce score your insurance and safety record, not your productepisode 100
- InsuranceThe show's own company carries a $5 million umbrella; some sponsors require more, added as a riderepisode 98
- Site credentialsSafety training, and IDs like the TWIC card for ports and some facilitiesepisode 100
- LegalYour MSA and SOWs in front of their legal team as soon as you come in the doorepisode 98
- Vendor portalOnboarding in their procurement tool, Ariba in the show's example, took almost two monthsepisode 98
- First POWith the MSA in place, every later deal is a short SOW that references itepisode 70
The words
- Prequalification
- Being approved as a vendor before any purchase is discussed. Run through third-party systems (ISNetworld, Avetta, Veriforce) that score insurance, safety record and training, not the product.
- MSA
- Master service agreement. The contract that sets the legal terms between the two companies once, so each later purchase needs only a short statement of work (SOW) that points at it.
- Umbrella policy
- Liability insurance above the standard policies. Operators set a minimum; the certificate of insurance proving it is part of prequalification.
- TWIC card
- Transportation Worker Identification Credential, the federal ID that lets a person onto ports and some facilities. One of the show's examples of a credential a buyer may ask about before a meeting.
- Vendor portal
- The buyer's procurement system (Ariba is the one the show names) where a vendor is onboarded and invoices. Being awarded the work and being set up to be paid for it are two different events.
More from the show
Which is also why a reference from a company the buyer respects matters more here than anywhere else you have sold.
“Everything is looked at from the risk lens. And if no one's done it before in the industry, no one wants to be the first.”
Source: Breaking into Oil and Gas, a Five Step Process, episode 100 of the Oil & Gas Sales & Marketing Podcast.
Legal and procurement are not the last step. The show's rule for enterprise deals is to put the paperwork in front of legal on the way in, because the yes you will eventually get is conditional on it.
“as soon as you come in the door of that company, the first thing you do is you get your MSA, your SOWs, all your legal language in front of legal.”
Source: How to Accelerate Deal Closure in Oil and Gas, episode 98 of the Oil & Gas Sales & Marketing Podcast.
Even after the yes, the portal can hold the deal. The show's own example is being onboarded as a vendor in a sponsor's procurement system. The same episode puts a number on insurance: the show's company carries a $5 million umbrella policy, and some sponsors require more, added as a rider.
“it delayed the deal for almost two months. Just getting onboarded in their tool to pay us.”
Source: How to Accelerate Deal Closure in Oil and Gas, episode 98 of the Oil & Gas Sales & Marketing Podcast.
The MSA is the fix for most of this friction, and the show's habit is to negotiate it up front even on a small first deal, because it makes every later deal a short statement of work.
“It's a lot of work, and especially if it's a small deal, people will tell you it's not worth the effort, but it is, because now you have the legal rights to buy in that company”
Source: Mastering Sales Negotiation: Insights from Saad A Saad, episode 70 of the Oil & Gas Sales & Marketing Podcast.
Before the next call
Which prequalification system does this operator use, and are you in it?
