It should now be much easier for technology vendors to contract
with the NSW Government.
On Monday 21 February, the NSW Department of Services,
Technology and Administration announced the launch of the new
"Procure IT" framework for IT contracting – the
standard terms and conditions used by the Government to purchase
technology and telecommunications products and services. The
existing Procure IT, version 2.1.3, has been completely overhauled,
not only to improve its structure from a contracting perspective,
but to address a number of key concerns which put IT suppliers
bidding for Government work on a collision course with the
Government time and time again in recent years.
Technology vendors had expressed concerns that the former
version 2.1.3 did not adequately address their legitimate issues.
Consequently, the path to successfully negotiating a NSW Government
IT contract could often be arduous for both sides. The NSW
Government listened to industry concerns and decided to make
important concessions designed to eliminate the time and expense of
protracted contract negotiations.
The result is the new version 3.0 of Procure IT, which is
intended to be a fairer deal in many respects. However, the
quid pro quo for this is that in the vast majority of
cases, the main terms of the agreement will be non-negotiable. Only
in the most exceptional cases will the Government entertain any
requested changes to the Procure IT terms. In other words, from now
on it really is a case of "take it or leave it" for IT
suppliers looking to contract with the NSW Government.
Some of the key changes to Procure IT are as follows:
Intellectual Property: the default position is that ownership
of newly-created intellectual property now stays with the supplier,
rather than being assigned to the Government. The Customer is
granted a broad, royalty-free, irrevocable licence of that
Limitation of Liability: the "risk assessment"
approach under version 2.1.3, under which the parties had to assess
risk once the contract was underway to put in place a liability
cap, has been scrapped. Instead, there is a default supplier
liability cap under a Customer Contract of the greater of $100,000
or two times fees for products or non-recurring services, or 12
months' fees for recurring services. This is a first for a
standard Government contract.
There are now separate Parts containing the terms of the
"Head Agreement" and "Customer Contract". This
allows Procure IT to be used:
under a panel arrangement, where a Government entity acts as
the Contract Authority and establishes a master purchasing
arrangement under which the supplier agrees to offer products
and/or services to "Eligible Customers" at pre-agreed
prices and on pre-agreed terms; or
under a one-off procurement authorised by the NSW State
Contract Control Board not involving a Contract Authority.
Warranties: product- or service-specific warranties now appear
in the relevant Modules, meaning that suppliers do not have to give
warranties which are not relevant to what they are providing.
The "best price" clause, long a bone of contention
for suppliers, has been replaced with an obligation on suppliers to
use reasonable endeavours to ensure that prices represent
"good value for money" over the life of the
Insurance: required levels of insurance cover have now been
reduced with the aim of ensuring that SMEs are able to bid for work
without having to meet prohibitive insurance obligations.
The previous "time is of the essence" provision has
been deleted and replaced with a more robust liquidated damages
regime applicable to delays caused by the supplier.
In this way, the NSW Government has sought to usher in a new era
of public sector IT contracting in NSW. Whether suppliers embrace
the revamped Procure IT framework remains to be seen, but the
Government has invested considerable effort and expense in
undertaking the overhaul, and has publicly called for technology
vendors to buy into this new way of contracting. The ultimate aim
is for technology contracts to be let with as little difficulty and
expense as construction contracts. Only time will tell if this
dream becomes a reality.
The content of this article is intended to provide a general
guide to the subject matter. Specialist advice should be sought
about your specific circumstances.
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