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JKL, Inc.

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JKL, Inc. outsources its event services for large group training sessions and annual meetings. The contract requires the supplier to report program metrics, including cost savings. The savings method employed compares the hotel’s initial bid to the final negotiated price. The first report shows significant hard savings on the average nightly rate for hotel rooms. JKL's category manager would like to claim the hard savings. Which of the following BEST describes why the finance department should deny this request?

A.

Unless there is a year-over-year reduction, the savings is cost avoidance.

B.

Savings from outsourcing are subject to a higher level of governance.

C.

Further data is required from the supplier to sufficiently support the savings.

D.

Unless there is a year-over-year reduction, the savings is cost containment.

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