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New Federal Procurement Contracts Receive Warm Welcome

by Staff Writers •
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Industry reaction to version two of the SourceIT model contracts for simple procurement of information technology (IT), has generally been positive. However, it will take suppliers some time to completely digest these complex new documents, and assess their full impact.

Release of version two of the SourceIT model contracts (released 28 May) follows extensive consultation with suppliers, and responds to concerns expressed by industry in relation to a number of issues including capping of liability, intellectual property and closure of Endorsed Supplier Arrangements.

The Government claims that the new model contracts “will help to reduce the complexity and possibly the cost associated with doing business with government, opening the way for a broader range of companies to bid for government work.”

This claim is broadly supported by Australian Information Industry Association (AIIA) who worked closely with the Government during development of Source IT. While not all of AIIA’s submissions were incorporated into the new contracts, the Association seems satisfied at the level of consultation by Government, and by the improvements that were achieved.

However, it seems clear that this is the beginning of an ongoing process, rather than the end.

AIIA predicts that some suppliers may have concerns with the model contracts “ … around the breadth of certain warranties and indemnities, while others may be concerned with terms relating to termination. In addition, some disquiet may also emerge regarding potential interference in subcontracting arrangements and certain issues relating to moral rights.”

The model contracts provide templates for Australian Government agencies when purchasing the following IT:

  • Hardware Acquisition and Support;
  • Licence and Support of Commercial Off-The-Shelf Software;
  • Licence of Commercial Off-The-Shelf Software (without support); and
  • IT Consultancy Services.

It will take some time to fully digest the four new model contracts. Suppliers (and their legal advisers) will be pawing over the documents to assess the implications of the new contracts.

What seems clear is that these legal advisers should not be concerned that they’ll be out of work as a result of implementation of the contracts – or not yet, at least.

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