28 February 2018
8 min read
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The QITC Framework
In August 2017, the Queensland State Government introduced the new Queensland Information Technology Contracting (QITC) framework for procurement of information and communications technology (ICT) products and services by Queensland Government.
In this QWIK QITC Series, we are providing general information in respect of how the framework operates.
In the previous edition of QWIK QITC Series, we considered how ownership and licensing of intellectual property rights is addressed in the QITC contracts, including the different kinds of materials incorporating intellectual property rights, and arguments for and against each party owning any newly developed intellectual property rights.
In this edition of the QWIK QITC Series, we will consider the manner in which software (licensed and developed) and related services are procured under the QITC contract documents.
Background
Software, whether it is licensed or developed, and related services, such as maintenance and support, are key ICT resources for the Queensland Government to support its many projects and improve overall efficiencies. There have been a number of high profile software procurements in Queensland, which have ranged in success. Accordingly, the QITC framework addresses a number of issues which are specific to these ICT products and services.
What software can be procured under QITC?
The QITC contracts contemplate several kinds of software: Licensed Software, Developed Software, and Third Party Software. These terms are addressed at clauses 5.3 to 5.5 of the General Contract Conditions, and in Module 2 (Software) of the Comprehensive Contract (see QWIK QITC Week 2 for details on these contracts).
Licensed Software is contemplated as the Supplier's own commercial off-the-shelf (COTS) software, and includes customisations and configurations to activate or implement add-ons, features or functionality within the Licensed Software, and any adaptations, translations or derivatives. The specifics of the Licensed Software, such as the class of licence and specifications are included in the Contract Details, as well as the specifics of the Licence, such as the term, class of licence, and restrictions on use.
Third Party Software is software owned by a party who is not the Supplier or the Government Customer. This concept is only addressed in the Comprehensive Contract, and such Third Party Software licensed to the Government Customer on the same terms as the Supplier’s own Licensed Software. Clauses 3.3 and 4.3 of Module 2 (Software) also provides for Suppliers who license a Third Party Provider’s licensed software as a Reseller. Where the Supplier is a Reseller, the regular provisions regarding the Supplier’s warranties and defect resolution fall away, and instead the Supplier must procure that the Government Customer is assigned and has the benefit of the Third Party Provider’s warranties. It is then the Supplier’s responsibility as Reseller to coordinate the warranties and support services of the Third Party Provider with the Government Customer.
Developed Software is new software or a software application developed in accordance with specifications in the Contract Details. It specifically excludes customisations and configurations to Licensed Software. Developed Software includes both a product and service element, as the parties can specify whether the Supplier provides design, how and when the Supplier must deliver the Developed Software, and who will conduct the Acceptance Tests. Additionally, the parties can specify who will own Intellectually Property Rights in Developed Software. If the Supplier owns Developed Software, it will be licensed to the Government Customer on the same terms as Licensed Software. If the Government Customer owns the Developed Software, it will be licensed to the Supplier as New Material. See last week's QWIK QITC for more details on such licence terms.
Software Support Services
Software Support Services are not automatically included when the Government Customer purchases software (whether Licensed or Developed), and must addressed separately in the General Contract Details or Module 2 (Software) Order Form, as applicable. The software that is supported by these services is referred to as the Supported Software.
While the scope of the Software Support Services can be prescribed in the Contract Details, a key aspect is resolution of Defects, which are broadly defined as a failure of a Deliverable to comply with the prescribed Requirements. The Supplier must resolve the Defect in accordance with agreed Service Levels, and if not prescribed, in a reasonable time and manner. If the Supplier cannot address the Defect in a timely manner, the Government Customer can arrange for a third party to fix the Defect at the Supplier’s cost.
There are also a number of instances where the Supplier is not required to meet the Services Levels, such as where the Government Customer has failed to comply with the Contract or the Requirements, the software has been modified by someone other than the Supplier, or the Government Customer introduces a virus or other Harmful Code (that is not due to the fault of the Supplier). In such circumstances, the Supplier can charge additional fees and expenses (in accordance with agreed rates) for resolving such Defects.
Updates and New Releases
The parties can agree whether the supply of Licensed Software and/or services in respect of Supported Software includes Updates and New Releases.
An Update is an updated version of the relevant software produced primarily to overcome any Defects in that software. A New Release means any software that provides an extension, alteration, improvement or additional functionality in the Licensed or Supported Software, but does not include the Supplier’s existing extensions that are generally licensed as a different product.
The Government Customer is under no obligation to accept any Update or New Release, and may request that the Supplier provide certain information in order to assist with such decision. Any refusal will not disentitle the Government Customer to Software Support Services, but the Supplier may cease to provide support for that version of the Supported Software after 18 months, and the Supplier is not responsible for any Defect in the Supported Software which would not have occurred if the Government Customer had the latest version.
Takeaways
For Government organisations
If you require support and maintenance for software acquired under QITC, ensure that you have also arranged for adequate Software Support Services to be included in the QITC contract, having regard to your in-house capability.
Ensure you set Service Levels in respect of the Supported Software that are relevant to the level of risk and potential consequences if the Supported Software fails or goes down. For example, if your Supported Software is used in connection with critical ITC infrastructure, the Service Levels may need to reflect a higher level of service levels, including in respect of speed of resolution of issues. Note that you do have the right to engage a third party to resolve any Defects at the Supplier’s cost if the Supplier is not providing adequate support. This means the level of support needs to be clearly particularised to avail third party contractors where support is “inadequate”.
If possible, you may need to take steps to ensure regular deployment of Updates and New Releases. If you fail to maintain the most up-to-date version of the Supported Software, the Supplier may have the right to cease support 18 months after a New Release or Update has been made available. Keep in mind your rights to request that the Supplier provide you, and your technical team, with sufficient information to enable you to determine whether you should accept the Update or New Release.
For suppliers
If you are a Reseller of Third Party Software, you may prefer to engage with Government organisations by use of the Comprehensive Contract. Under that contract, you may be able to avoid giving warranties in respect of Third Party Software provided that you pass on to the Customer the benefit of any third party warranties in respect of Third Party Software. This may depend upon your arrangements with the Third Party Provider.
As noted in QWIK QITC Week 4, it is important that you ensure the Requirements are clearly specified and articulated in the QITC. If broad, uncertain or unclear “Requirements” are specified, then this may increase the risk that the Customer can assert (and prove) a “Defect” has arisen. Additionally, you should take steps to ensure that any Service Levels for resolution of Defects are realistic and achievable – otherwise (among other things) you may need to give Service Credits to the Customer, depending upon the available remedies to the Customer under the Contract.
You should undertake a risk analysis of any Software in order to ascertain the likelihood of risk of any Defects. Detailed technical information and specifications along with support material needs to be maintained. As set out above, the responsibility of the Supplier to resolve a Defect in accordance with the Service Levels may not operate in certain circumstances (see general commentary in respect of clause 5.4(h) of the General Contract Conditions and clause 4.8 of Module 2 (Software), above). You will need to include separate rates in any pricing schedule for addressing Defects which are outside the scope of the Services you are required to otherwise deliver under the Contract.
In the next edition
In the next editions, we will consider in more detail the liability provisions under the QITC Framework.
Authors: Trent Taylor & Barton Donaldson
Contacts:
Brisbane
Trent Taylor, Partner
T: +61 7 3135 0668
E: trent.taylor@holdingredlich.com
Paul Venus, Partner
T: +61 7 3135 0613
E: paul.venus@holdingredlich.com
Melbourne
Dan Pearce, Partner
T: +61 3 9321 9840
E: dan.pearce@holdingredlich.com
Sydney
Angela Flannery, Partner
T: +61 2 8083 0448
E: angela.flannery@holdingredlich.com
Disclaimer
The information in this publication is of a general nature and is not intended to address the circumstances of any particular individual or entity. Although we endeavour to provide accurate and timely information, we do not guarantee that the information in this publication is accurate at the date it is received or that it will continue to be accurate in the future. We are not responsible for the information of any source to which a link is provided or reference is made and exclude all liability in connection with use of these sources.
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