Seven Tips for Better Technology Services Agreements: Cloud Computing and Cloud Marketplace Toolkit Project

In a perfect world, all technology vendors would present their clients with balanced legal agreements that perfectly represent the commercial deal between the parties and fully meet the client’s business and legal requirements. Unfortunately, we don’t live in a perfect world, and experience has shown that some vendors are better than others at creating transparent and fair contracts. Based on my own experience, the following list may be helpful to counsel acting on behalf of users in negotiating technology services agreements.
1. RFPs and vendor proposals do matter.
If the client began the contracting process by issuing a Request for Proposal (RFP) and then awarding the deal to the winning vendor based on the vendor’s proposal, then it is critical to incorporate the vendor’s proposal in the contract by reference. This ensures that the extensive promises made by the vendor in its response to the RFP are actually included in the contract. This is not only fair to the client but fair to all the other proponents that were not chosen for the transaction. The winning vendor’s proposal is not supposed to be a marketing bluff: clients do rely upon the representations and promises made in such documents, and the successful proponent should be held accountable.
Unfortunately, some vendors do attempt to disavow their own proposals, even going so far as to say that their responses are not legal contracts that did not pass through the vendor’s own legal approval, and so cannot be incorporated into the final contract. This approach seemingly undercuts the trust process at the beginning of the relationship and strikes me as a red flag that the vendor may be acting unscrupulously and seeking to distance themselves from the various commitments made in their proposal, potentially including pricing and other key assurances. If the client accepts this and decides to proceed with such vendor regardless, it will be important for the client to scrupulously ensure that all of the critical components contained in the vendor’s proposal (and the requirements of the client’s RFP) are actually expressly included in the vendor’s contract, including those related to security/cyber resilience, location of vendor personnel, service levels, certifications, etc.
2. Read the SOW(s).
The Statement of Work (SOW) is the document that describes, in very plain and detailed language, the scope of the actual deliverables and services to be provided by the vendor, applicable project phases/timelines/milestones, pricing, the various responsibilities of the parties, any assumptions/dependencies, staffing, compensation to be paid by the client and any other salient business terms. Unfortunately, SOWs are often the place where some vendors try to reject critical legal and business terms otherwise contained in the main body of the services agreement, through the insertion of net new (and flatly contradictory) terms. This includes the repudiation of legal representations/warranties