UK Technology Business Participating in US Tender

Overview

We helped a UK technology business participating in a US tender. This involved advising our client on its contract with the lead US company, protecting the intellectual property in our client’s platform and helping our client with structuring its business in the US.

Context and Challenge

Our client specialises in monitoring traffic flows and providing data to help public authorities plan traffic management effectively. Our client provides its services through a cloud-based platform and other technology. Our client approached us for help as it was participating in a US tender and felt confident that the tender was going to be awarded to the consortium that it was part of.

One of the main challenges that we faced was working with the contract that the US prime contractor had sent to our client. This contract mirrored the head contract with the US public authority. The challenge was that the head contract was not really suitable for the kind of services that our client was providing – the contract was not really fit for purpose. It didn’t, for example, deal with intellectual property rights appropriately.

We couldn’t expect the US prime contractor to put itself in a position where supplier risk and customer rights contained in the head contract weren’t mirrored in our client’s contract but we couldn’t accept what the prime contractor had sent to our client.

Also, our client had to understand how best to structure its operations in the US. There was already the potential for another contract to land and it needed to understand how US tax rules and employment laws could impact on its operations.

Process and Insight

We spent time at the outset understanding our client’s business. The client had a lot of questions about tax and how to structure its operations. Some of these we couldn’t answer – advice would have been needed from US attorneys / tax advisers. However we were able to give some practical tips and provide the client with details of US advisers who could help them.

We analysed the contract that the US prime contractor had sent our client and we also had a quick look at the tender documentation to understand what flexibility the US public authority had to accept terms requested by the suppliers.

Solution

We concluded that on the whole the client would have to accept the subcontract agreement that the prime contractor had offered because the prime contractor was simply mirroring what was in the head contract. However, we also got the prime (and the local authority) to accept that our client would provide its service and technology solution through a software licence that we drafted and attached to the subcontract. Provisions in the software licence took precedence over those in the subcontract and contained appropriate clauses protecting our client’s intellectual property rights and mitigated other risks.