Overview
We produced a software and hardware development, supply and integration agreement for a client advising the Government of Somalia on the procurement of a customs management system. The project was funded by the UK’s FCDO.
Context and Challenge
By the time the client approached us for help with the contract they had already run the procurement process and appointed the contractor. No form of contract had been included in the tender documents so the contractor had not bid on the basis of a contract that they would be expected to sign up to.
As the tender had already been awarded everyone was keen to press on with the project but a contract of this nature is not straightforward. Amongst other things we had to address:
- Software development and acceptance testing (pre-installation and post-installation).
- The business requirements specification and technical specification.
- System warranties and guarantees to be provided by the supplier.
- Liquidated damages for delay.
- Change order process.
- What types of software were being supplied (e.g. categorising any open-source software).
- Intellectual property rights and ownership / licensing of these.
- Supplier’s limitations and exclusions of liability.
- Force majeure (particularly relevant in this context).
- Support and maintenance for the hardware as well as the software, service levels, availability guarantees and service credits.
- Data protection compliance.
Not only did all of the above need to be provided for in the contract – these elements had to be negotiated as well.
In addition, the funding for the project was originating from FCDO so we had to take into account key provisions that FCDO would expect to see in a supplier contract being funded with FCDO money.
Finally, the contractor was based in a jurisdiction where enforcement of the contract would have been very challenging so we had to come up with ways to deal with this risk.
Process and Insight
We analysed the tender documents and the winning contractor’s bid. We discussed key things that our client, FCDO and the Government of Somalia wanted to achieve in particular around ownership of IP. There were varying attitudes to IP ownership so we came up with practical solutions that everyone, including the contractor, would be able to live with.
The contractor’s team was pretty easy to work with. We all adopted a pragmatic approach that followed best practice around risk allocation and supplier / purchaser obligations. They understood the constraints that we were working under with the project being funded by FCDO.
Solution
We drafted a contract using a template that the contractor would recognise as being one that is used in many donor-funded large projects of this nature. By adopting this approach we reduced the potential for the contractor to argue that the contract was unfair in its risk allocation or overly burdensome.
We also included provisions in the contract that we knew, from having worked with them in the past, FCDO would expect to see in a contract of this nature.
Although the template we used was useful for the reasons set out above, it was lacking in certain areas which would be apparent to technology lawyers in the UK in particular around support and maintenance and cybersecurity. We pulled in appropriate provisions from our usual templates to deal with this.
We came up with solutions to address enforcement risk mainly around the timing and conditions under which payments to the contract would be made.
Results
The approach that we took around IP, support and maintenance, warranties, contractor payments etc were all accepted by our team and the contractor’s team with relatively little pushback from the contractor so although it took quite a lot of work to pull the contract together, it was fairly straightforward to reach agreement on thanks to the collaborative approach taken by all.
The project has been a success and 5 years on is still running in support and maintenance phase.
