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Meeting Our IT Suppliers Half Way

Meeting Our IT Suppliers Half Way. Oregon Task Force Revises IT Terms & Conditions. The Public Procurement Business Problem. Some IT suppliers wouldn’t submit proposals - T’s and C’s too restrictive or too high risk for them. Pricing often at a premium to offset supplier’s risks

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Meeting Our IT Suppliers Half Way

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  1. Meeting Our IT Suppliers Half Way Oregon Task Force Revises IT Terms & Conditions

  2. The Public Procurement Business Problem Newly revised IT Terms and Conditions Some IT suppliers wouldn’t submit proposals-T’s and C’s too restrictive or too high risk for them. Pricing often at a premium to offset supplier’s risks See Exhibit C, TechAmerica White Paper

  3. The Problem Newly revised IT Terms and Conditions Solicitation timelines increased due to longer negotiations to reallocate risk. Sometimes parties were unable to agree on the T’s and C’s and the solicitation failed.

  4. Desired Results Newly revised IT Terms and Conditions Reduce costs associated with the solicitation process Encourage supplier participation with fair and equitable T’s and C’s Regain supplier confidence in our process Reduce contract negotiation time Receive competitively priced proposals

  5. National Conversation Begins September 2008 • National Association of State Procurement Officials (NASPO) Conference • IT T’s and C’s nation-wide sticking point • Reform needed to manage costs, attract providers, fairly apportion risk • NASPO Task Force launched Newly revised IT Terms and Conditions

  6. Western States Contracting Alliance (WSCA) December 2008 • WSCA worked in support of NASPO’s effort • Convened State’s Attorney Group • August 2010 target for model T’s and C’s & electronic resource guide Newly revised IT Terms and Conditions

  7. Status of National Effort • National picture much more complex than Oregon • Many states have significant barriers such as constitutional issues • Progress is being made on standard T’s and C’s while allowing flexibility See Exhibit D, NASCIO white paper Newly revised IT Terms and Conditions

  8. Oregon Task Force Convened January 2009 • July 2009 legal work began • Seven months build foundation of T’s and C’s • Consensus Driven • Multiple stakeholders involved • ‘Commercially reasonable’ was our goal Newly revised IT Terms and Conditions

  9. Task Force Members Newly revised IT Terms and Conditions State of Oregon Chief Procurement Officer State IT Procurement Analyst State Agencies CIOs or representatives Risk Management representative Oregon Department of Justice Assistant Attorney General Supplier’s advocate (TechAmerica)

  10. Negotiation and Dialogue • TechAmerica produced white paper with suggestions for IT T’s and C’s • State reviewed document and determined what we could do • State decided on 6 different templates to fit different projects • Templates reviewed by workgroup, then sent to TechAmerica for supplier review Newly revised IT Terms and Conditions

  11. Supplier Review • Focused on Service Agreement, which contained the most T’s and C’s and was overarching document (Exhibit B) • Other 5 agreements will use much of the language from the Services Agreement • Suppliers submitted over 100 changes • Oregon responded with decisions and rationale. Newly revised IT Terms and Conditions

  12. Six IT Templates Newly revised IT Terms and Conditions IT Software and Services Hardware services Software Maintenance rider Software License Agreement rider IT Services Agreement IT Consulting Services • All templates organized so specific clauses are numbered the same in each

  13. Successful Outcomes! • 2010 State of Oregon IT Services Agreement for Systems Acquisition is completed! • TechAmerica Association, voice for US Technology industry, applauds effort • Project experienced very few barriers or problems Newly revised IT Terms and Conditions

  14. Perceptions Changed: • Suppliers thought our T’s and C’s were more restrictive and unfair than they really were. • Dialog resulted in understanding and identification of real barriers. Newly revised IT Terms and Conditions

  15. Key IssuesUniform T’s & C’s vs Tailored • Template is designed for negotiating and tailoring • Complexity of IT is not suited to standard T’s and C’s • Oregon has and will continue to develop alternative K provisions for different circumstances Newly revised IT Terms and Conditions

  16. Key IssuesCOTS and Third-Party Software • Agreement: “State should not insist that vendors furnish more, in the performance or IP rights of COTS or Third Party Software, than the State acquires from the source.” • IP section revised and clarified by State Newly revised IT Terms and Conditions

  17. Key IssuesWho owns rights to new products developed during the contract? • Oregon agreed with suppliers: We don’t need to own the rights, but we need broad rights to use. • T’s and C’s changed with right to negotiate case by case. Newly revised IT Terms and Conditions

  18. Key IssuesLiability • Oregon started with “unlimited liability” that was a theoretical potential. • Suppliers didn’t like potential risk. • Some suppliers thought liability was as much as 8 times value of K. Highest we’ve seen in Oregon is 2 times value. • Liability was changed to 1X value of contract. Newly revised IT Terms and Conditions

  19. Key IssuesMutuality • Oregon agreed with suppliers: State has a role in successful performance of most IT contracts • In some cases contractors can recover costs associated with agency’s failure to perform its obligations Newly revised IT Terms and Conditions

  20. Key IssuesIntellectual Property Indemnity • State needs protection when there is a “middle man” who provides us with software from a third party and issues arise. • If a supplier infringes on the third party’s IP and compromised our system, a refund to the supplier for the software is not adequate remedy. • Suppliers should review each solicitation and request clarification or request changes as appropriate. Newly revised IT Terms and Conditions

  21. Key IssuesWarranty • Suppliers took exception to “correction of defects” type of warranty. • Perfection of product vs. suitability was argued • State clarified the obligations during the Warranty Period. • State acknowledged interplay between Warranty Period and post-implementation support and maintenance. Newly revised IT Terms and Conditions

  22. The ProcessPhase One: LaunchJanuary 2009 to July 2009 • Consensus & support among all parties • Compelling Business Reason • Enthusiasm (and money) for project • Clear goals for Dept. of Justice Newly revised IT Terms and Conditions

  23. The ProcessPhase Two: DraftingJuly 2009 to February 2010 • Oregon Department of Justice drafting • Comment and review period • Revisions • Publication Newly revised IT Terms and Conditions

  24. Rollout PhaseThe Importance of a Good Education Newly revised IT Terms and Conditions Train State IT procurement community on how to determine level of risk and use the appropriate clauses for their situation. Train suppliers on how to do business with the State

  25. The ProcessPhase Three: RolloutCurrent and Next Steps • Rollout and communication plan (April through October) • Training—Ground-level electronic delivery • Implementation—T’s and C’s available now; usage will pick up speed with rollout Newly revised IT Terms and Conditions

  26. List of Exhibits • Exhibit A: Letter to Carol Henton, VP, State and Local Government, TechAmerica, March 2, 2010. • Exhibit B: State of Oregon IT Services Agreement with new T’s and C’s • Exhibit C: TecAmerica white paper—Transforming Procurement for the 21st Century • Exhibit D: NASCIO white paper—Gaining Traction on the road to win-win: Limitations on liability in state IT contracting Newly revised IT Terms and Conditions

  27. Contacts Dianne Lancaster Oregon Chief Procurement Officer (503) 378-3529 Dianne.lancaster@das.state.or.us Lena Ferris State Procurement Analyst (503) 378-3001 Lena.ferris@das.state.or.us Newly revised IT Terms and Conditions

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