There are many articles written in Sourcing industry literature about making sure your vendors are in compliance with the contracts. Contract Management Software firms sell you (and probably reasonably so) on the fear of the monetary and other losses a company suffers from non-compliant vendors.
What do you do if you discover that a vendor is in fact non-compliant?
The first thing you want to do is verify the facts. Make sure there are no official amendments to the contract or even informal agreements that have been made outside of Purchasing's control. (I know, perish the thought!)
Next, notify the vendor rep. It may just be a simple oversight that can be corrected easily if brought to the right person's attention. This happened to me once when I found out that a vendor was not providing the agreed upon early payment discount. It was a non-contract vendor, but I had saved all my e-mail correspondence and simply forwarded the rep her own e-mail agreeing to the discount months earlier and there were no additional problems.
What if the non-compliance is intentional? That is obviously a bigger problem. That is when phrases like breach of contract come in handy. If necessary, don't be afraid to issue a new RFP and replace the vendor.
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