Legal Insights

Procuring small-scale software solutions

• 24 October 2018 • 1 min read

Councils may experience difficult negotiations when procuring small-scale software solutions. Maddocks has in-depth understanding of the market.

We have been noticing recently that a lot of our local government clients have been procuring a wide variety of smaller-scale cloud-based software solutions. With these types of procurements, vendors will try to insist that council agree to and execute the vendor’s template terms and conditions. These terms and conditions are often extremely one-sided in favour of the vendor, and give the customer very limited recourse in the event that the solution is defective or some other damage occurs (such as a data security incident).

One way to avoid protracted negotiations trying to get a vendor agreement into a form which is suitable for a local government entity is for councils to have a template cloud services agreement which has been specifically tailored for smaller-scale cloud-based services.

An agreement for a smaller-scale solution will be quite different to an agreement for a business-critical or high risk service. A template developed for such larger-scale procurements is unlikely to be acceptable to vendors of smaller products. However, a well-crafted template targeted specifically at smaller-scale products, with appropriate risk allocation regimes, pricing structures and service level models, is likely to be something that a vendor will work with, and which should also address many of the risks specific to a local government entity (such as its obligations under Victorian data security legislation).

Has your council experienced difficult negotiations with a software vendor for what should be a low-risk low-cost cloud solution?

Maddocks has an in-depth understanding of the market for small-scale software solutions, and has experience in developing template agreements which adequately address the risks for councils while most often also being acceptable to vendors.

Need advice on procurement matters?

Contact the Procurement & Contracting team.

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