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William Li | A/Senior Business Documentation Standards Officer NSW Procurement NSW Department of Finance and Services T 02 9372 8713 F 02 9372 8889 E [email protected]

USER GUIDE

PROCURE IT Version 3.1

Issued on 24 October 2013

COPYRIGHT

This Procure IT version 3.1 User Guide has been prepared by NSW Procurement and Legal

Services Branch for and on behalf of the Crown in right of the State of New South Wales. This

User Guide is protected by Crown copyright.

© State of New South Wales – NSW Procurement, for and on behalf of the Crown in right of the

State of New South Wales, 2001.

All rights reserved. No part of this User Guide may be produced by any process, electronic or

otherwise, in any material form or transmitted to any other person or stored electronically in any

form, without the prior written permission of the State of New South Wales, except as permitted

under the Copyright Act 1968.

.

SCHEDULE OF DOCUMENT AMENDMENTS

Revision

Number

Date Update Description

3.0 28 February 2011 Document Original - first publication

24 April 2012 Change of Department name and logo

3.1 24 October 2013 • It is aligned with legislative changes, e.g. removal of

reference to SCCB, agency head is now the

Contract Authority and SME policy framework has

been updated.

• Management fee clauses removed.

• Annexure 6 Management fee Audit Confidential

Disclosure Agreement removed.

• New clause 25.2 (c) inserted in Customer Contract

• New clause 19.1 (c) inserted in Head Agreement.

PROCURE IT Version 3 User Guide


Table of Contents

THE PROCURE IT FRAMEWORK 5

1. HEAD AGREEMENT 6

2. CUSTOMER CONTRACT (PANEL ARRANGEMENT ) 6

3. CUSTOMER CONTRACT (NON-PANEL ARRANGEMENT ) 7

PART 1 - HEAD AGREEMENT 8

IMPORTANT ASPECTS OF THE HEAD AGREEMENT 9

PREPARING AND EXECUTING A HEAD AGREEMENT 13

PRE-TENDER ACTIONS 14

POST-TENDER ACTIONS 15

PART 2 – CUSTOMER CONTRACT 17

ENTERING INTO A CUSTOMER CONTRACT (NON-PANEL ARRANGEMENTS) 17

IMPORTANT ASPECTS OF THE CUSTOMER CONTRACT 18

CHANGE CONTROL 28

PREPARING AND EXECUTING A CUSTOMER CONTRACT 33

PART 3 – DICTIONARY 45

PART 4 - MODULES 47

PROCURE IT Version 3.1 User Guide 5

PROCURE IT Version 3.1 User Guide

The Procure IT Framework

NSW Procurement Board has issued a Direction to require all NSW Government

agencies to use the Procure IT Framework for the acquisition of information and

communications technology related Products and Services.

The Procure IT Framework for panel arrangement is made up of:

• Part 1 – Head Agreement

• Part 2 – Customer Contract (including General Order Form)

• Part 3 – Dictionary

• Part 4 – Modules (including Module Order Forms)

The Procure IT Framework for non panel arrangement is made up of:

• Part 2 – Customer Contract (including General Order Form)


• Part 4 – Modules (including Module Order Forms)

The Procure IT Framework is designed so that Products and Services can be acquired:

(a) as a result of a panel arrangement where an entity acts as the Contract

Authority and establishes a master purchasing arrangement (i.e. Standing

Offer) where a number of Contractors agree to offer certain Products and/or

Services to Eligible Customers at pre-agreed Prices and on pre-agreed core

terms and conditions, for a defined Term (Panel Arrangement ); or

(b) using an alternate procurement process that does not involve a Panel

Arrangement (Non-Panel Arrangement ).

The Procure IT Framework provides for the use of three different types of

Agreement/Contract:



1. Head Agreement

2. Customer Contract (Panel Arrangement)

3. Customer Contract (Non-Panel Arrangement)

1. Head Agreement

The agreement between the Contract Authority and the Contractor contains:

• Part 1 – Head Agreement (including Annexures)

• Part 2 – Customer Contract (including Schedules specified to apply in Annexure

1 of the Head Agreement)


• Part 4 – any Modules and Module Order Forms specified to apply in Annexure 1

of the Head Agreement

2. Customer Contract (Panel Arrangement)

The contract between the Customer and the Contractor where the Products and

Services are purchased under a Panel Arrangement contains:

• Annexure 3 (Product and Service List) to the Head Agreement (if applicable);

• Part 2 – Customer Contract (including any Schedules that are stated as forming

part of the Customer Contract in Item 9 of the General Order Form);

• the Agreement Documents as itemised in Schedule 2 to the Customer Contract

(if any);

• any Additional Conditions (if applicable); and

• Part 3 - the Dictionary; and

• any Modules that are stated as forming part of the Customer Contract in Item 8

of the General Order Form and the corresponding Module Order Forms.



3. Customer Contract (Non-Panel Arrangement)

The contract between the Customer and the Contractor where the Products and

Services are purchased without a Head Agreement contains:

• Part 2 – Customer Contract (including any Schedules that are stated as forming

part of the Customer Contract in Item 9 of the General Order Form);

• the Agreement Documents as itemised in Schedule 2 to the Customer Contract

(if any);

• any Additional Conditions (if applicable); and

• Part 3 - the Dictionary; and

• any Modules that are stated as forming part of the Customer Contract in Item 8

of the General Order Form and the corresponding Module Order Forms.



Part 1 - Head Agreement

Where the Procure IT Framework is used for a Panel Arrangement, the Contract

Authority will undertake a procurement process and the successful Contractor(s) will

sign the Head Agreement and go onto the panel. A panel may contain only one

Contractor. The Head Agreement requires that all Eligible Customers who acquire

Products and Services under the Panel Arrangement acquire the Products and

Services using the form of Customer Contract that is set out in the Procure IT

Framework.

The Head Agreement describes the relationship between the Contract Authority and

the Contractor for the administration of the Panel Arrangement, including:

• the Products and Services that can be acquired under the Panel Arrangement;

• how those Products and Services can be updated during the Term;

• the Pricing for the Products and Services;

• which entities are entitled to acquire Products and Services under the Panel

Arrangement;

• which Approved Agents can be used by the Contractor to supply the Products

and Services;

• the Term of the Panel Arrangement;

• the minimum insurance requirements;

• any Performance Guarantee that might apply to Customer Contracts entered

into under the Head Agreement; and

• the general terms and conditions applicable to the relationship



Important Aspects of the Head Agreement

Survival Clause

This section provides that where a Customer has entered into a Customer Contract

with a Contractor during the Term the Customer may, provided that the Customer first

obtains the written approval of the Contract Authority, and provides a copy of that

approval to the Contractor:

(a) acquire additional Products or Services; or

(b) acquire maintenance or support Services

even after the expiration or termination of the Head Agreement. The consequence of

non-compliance with these conditions is that the purchase will be out of contract. This

means that the Customer will lose any protection under the Head Agreement and

Customer Contract for such things as unsatisfactory product performance and

unsatisfactory service delivery. The Customer will also be unable to rely on the

Contract Authority to invoke the dispute resolution clauses against the Contractor.

Nominee Purchaser

Eligible Customers may use a Nominee Purchaser to enter into a Customer Contract

on its behalf. The Contractor cannot refuse to enter into that Customer Contract solely

on the basis that the Customer Contract will be signed by the Nominee Purchaser as

agent for the Eligible Customer under certain conditions.

It is vitally important for Eligible non government bodies and Eligible Customers to

make it clear that they are intending to purchase Products and Services pursuant to a

Customer Contract made under the Head Agreement in order to gain the contractual

benefits.

Formation of Customer Contract under Head Agreement

Cl 4.5 provides that: A Customer Contract between a Contractor and an Eligible

Customer will be created under this Head Agreement upon:



• the Eligible Customer and the Contractor agreeing the Order Details in the

Order Documents, and any Additional Conditions for the Products and/or

Services; and

• the Eligible Customer and the Contractor signing the General Order Form,

and will comprise the documents listed in clause 3.8 of Part 2.

Cl 4.6 provides that: The Parties agree that each time the Customer and the Contractor

enter into a Customer Contract, a separate agreement is created between the

Contractor and the Customer which takes effect on the date the General Order Form is

signed by the Eligible Customer and the Contractor.

Cl 4.7 provides that: The Contractor has no obligation to supply any Product or Service

to an Eligible Customer until a Customer Contract for the supply of that Product or

Service has been created in accordance with clause 4.5.

Insurance

There is a stipulated amount of insurance provided in Cl 10 in the Head Agreement:

• $10,000,000 in respect of each claim and for the total aggregate liability for all

claims for the period of cover - public liability insurance

• $10,000,000 for the total aggregate liability for all claims for the period of cover -

product liability insurance

• workers’ compensation insurance in accordance with applicable legislation for

all the Contractor’s employees.

It is possible for the Customer to request that the Contractor increase the amount of

cover under any of the policies of insurance stated above. Note that these amounts

cannot be reduced.

Performance Guarantee

For panel arrangements, performance guarantees will usually only be required under

the Head Agreement only. The performance guarantee required under the Head

Agreement will apply to all Government Customers automatically, but Eligible non-



government bodies will have to enter into their own separate arrangements with the

Contractor.

If the Contract Authority has not required a Performance Guarantee under the Head

Agreement, the Customer may only require one under a Customer Contract if it obtains

the Contract Authority’s consent.

During the term of the agreement the Contract Authority may, on reasonable grounds,

request that the Contractor arrange for a guarantor “approved in writing by the Contract

Authority” to enter into an agreement with the Contract Authority.

There is a Performance Guarantee template located in Annexure 5 of the Head

Agreement and Schedule 9 of the Customer Contract. It is not necessary for these

exact forms to be used.

For non-panel arrangements the Customer may require a performance guarantee.

However, they should be used only where there is a perceived high risk involved in the

purchase e.g. where the Contractor or Approved Agent is located overseas or the

purchase is of a kind that is unique or requires a higher level of technical support. It is

unreasonable to require a Contractor to provide a Performance Guarantee for all

purchases of IT Products and/or Services.

If, when requested, the Contractor does not provide a Performance Guarantee, then

this may be a ground for termination.

Liability

The Contractor’s liability to the Contract Authority will not exceed $250,000 in

aggregate for any and all claims that arise out of, or in connection with, this Head

Agreement.

The Contractor has no financial cap on its legal liability where that liability arises from:

• bodily injury,

• loss of, or damage to, tangible property,

• infringement of a third party’s intellectual property rights or

• breach of the Contractor’s obligation of confidence



Neither Party is liable to the other Party for any Consequential Loss. Liability will be

reduced proportionately to the extent that either Party contributes to any damage.

Indemnity

The Contractor indemnifies the Contract Authority in the event of any claim against it by

a third party. The Contractor’s liability to the Contract Authority in contract is capped to

$250,000 in aggregate for any and all claims that arise out of, or in connection with, this

Head Agreement, except:

• bodily injury,

• loss of, or damage to, tangible property,

• infringement of a third party’s intellectual property rights or

• breach of the Contractor’s obligation of confidence

Dispute Resolution

All disputes will be solved at a Senior Executive level within 5 days after the aggrieved

Party has submitted an Issue Notice to the other Party. Each Party will be responsible

for their own costs.

If a dispute is not resolved at a Senior Executive Level then the dispute can be

resolved through Expert Determination, subject to the amount in dispute being less

than $100,000.

Termination

Either Party may terminate the Head Agreement for convenience by providing the other

Party at least 60 days notice in writing.

The Head Agreement can also be terminated if the Contractor breaches a provision of

the Head Agreement or in the event that the Contractor becomes insolvent.



Preparing and Executing a Head Agreement



Pre-Tender Actions

Step 1: Review Parts 1, 2 and 3

Familiarise yourself with the terms and conditions of the Head Agreement and

any future Customer Contracts.

Step 2: Complete the following items in Annexure 1 Agreemen t Details:

Item 1 Head Agreement Number

Item 2 Contract Authority and Authorised Representa tive

The Contract Authority is the Head of a Government agency which may

procure goods and services for that agency or for other government

agencies consistent with any applicable policies and directions of the

Board, the terms of its accreditation (if any) by the Board, and the

principles of probity and fairness.

Item 4A Modules

Tick any modules which will apply in Item 4A

Item 4B Schedules

Tick any Schedules to the Customer Contract which will apply in Item 4B

Item 7 Insurance Policy Amount (cl 10 of Part 1)

For all Panel arrangements:

• If different from minimum $10 Million, enter Public Liability

Insurance level required in Item 7(a)

• If different from minimum $10 Million enter Product Liability

Insurance Level required in Item 7(b)

Where Services are to be provided:

• If different from minimum $1 Million enter Professional Indemnity

Insurance level in Item 7(c)

Item 8 Codes, Policies, Guidelines and Standards an d other Laws

List policies, etc which the Contractor must comply with. For example:



• Code of Practice for Procurement

• Implementation Guidelines NSW Government Procurement 1999

• Environmental Management Procurement Guidelines

• Occupational Health and Safety Procurement Guidelines

• SME Policy Framework

Item 9 Expert Determination Amount (cl 18 of Part 1 )

Enter Expert Determination Amount in item 10. If no amount is entered

cl 18.11 provides that the default amount of $100,000 will apply.

Item 10 Performance Guarantee (cl 11.1-11.8 of Part 1)

Specify if a Performance Guarantee is required in Item 10.

Under cl 11.2 any performance guarantee will apply automatically to all

Customer Contracts signed by Customers (other than Eligible non-

Government Bodies).

Post-Tender Actions

Step 3: Complete Annexure 1, 2 and 3

These Annexures are completed by the contract officer who is preparing the

panel arrangement.

Annexure 1 Head Agreement Details

After tender evaluation, the following items need to be completed:

• Item 3 Contractor and Authorised Representative Det ails

• Item 6 Term

• Commencement date of term

• Last day of term

• Period of extended term (if any)

• Item 10 Performance Guarantee

• May be required for some successful tenderers



• If required after tender process, tender conditions should

state that performance guarantee might be required

• Item 11 List of Approved Agents (if any)

• Item 12 Liability to Provide Sales Reports

Annexure 2 Head Agreement Documents (if any)

List and append additional documents which will form part of the

agreement, if any. Contract officers may wish to include:

• communications between the Contract Authority and the

Contractor

• the tender received from the Contractor

Annexure 3 Product and Service List

Step 4: Obtain completed Annexures 4 and 5 (if required)

Annexure 4: Deed Poll – Approved Agents

Each Approved Agent (if any) is to complete a Deed Poll.

Annexure 5: Performance Guarantee

To be completed if decided that a Performance Guarantee is required.

The Performance Guarantee is completed by the Contractor and the

Guarantor.

Annexures 6 is not relevant at this stage

Step 5: Pre-complete Schedule 1 to Part 2 (General Order F orm)

(The following Items need to be completed when establishing the panel)

Item 7: Head Agreement

Item 8: Modules

Item 9: Schedules

Step 6: Execute Head Agreement

Prepare and sign the Execution Page.

The Head Agreement is executed as a Deed.



Part 2 – Customer Contract

The Customer Contract defines the relationship between the Customer and the

Contractor for the supply of Products and Services as described in the Customer

Contract. Where the Customer Contract is made under the Head Agreement:

a. the Products and Services that can be acquired, the Prices at which they can

be sold, and the degree to which the terms and conditions can be varied are

limited by the terms of the Head Agreement; and

b. the Customer is entitled to the benefits of any arrangements that have been

made by the Contract Authority under the Head Agreement in respect to

insurance and any Performance Guarantee.

Entering into a Customer contract (Panel Arrangemen ts)

In order for a Customer Contract to be entered into under the Head Agreement, the

Head Agreement must be cross referenced to Item 7 of the General Order Form.

Entering into a Customer contract (Non-Panel Arrang ements)

For non panel arrangements the Customer Contract is entered into upon the execution

page being signed by both parties (i.e. Contractor and the Customer).

The General Order Form must also be signed.



Important Aspects of the Customer Contract

Formation of Customer Contract under a Panel Arrang ement

A NSW Procurement officer will normally complete Item 7 of the General Order Form.

If Item 7 is not completed, the Customer will not receive the full benefits and protection

offered by the Head Agreement and Customer Contract.

Clause 3.3 states that parties only need to sign the General Order Form to create the

Customer Contract under a panel arrangement and do not need to sign the Customer

Contract itself.

A Customer Contract between the Contractor and Customer is created upon:

a. the Order Details and any Additional Conditions being completed and agreed by

the parties; and

b. the General Order Form being signed by the Customer and Contractor. Note

that the Customer and Contractor do not need to sign execution page of the

Customer Contract.

Formation of Customer Contract under a Non Panel Ar rangement

The Customer Contract is entered into when the execution page of the Customer

Contract and the General Order Form are signed by both parties (i.e. Contractor and

the Customer).

Note: The following guidelines apply to Customer Contract for both panel arrangement

and non panel arrangement

Inconsistencies

Pursuant to cl 3.9 of the Customer Contract, in case of conflict between documents

comprising the Customer contract, the order of priority of the documents is as

contained in cl 3.8 as follows:

a. any Modules that are stated as forming part of the Customer Contract in Item 8

of the General Order Form and the corresponding Module Order Forms;

b. any Schedules that are stated as forming part of the Customer Contract in Item

9 of the General Order Form other than Schedule 1 (General Order Form),



Schedule 2 (Agreement Documents), Schedule 3 (Service Level Agreement) or

Schedule 12 (PIPP);

c. any Additional Conditions (if applicable);

d. these clauses 1 to 26;

e. Part 3, the Dictionary;

f. any PIPP agreed by the Parties based on Schedule 12 (PIPP);

g. any Service Level Agreement agreed by the Parties based on Schedule 3

(Service Level Agreement);

h. all other Order Documents;

i. Annexure 3 to the Head Agreement (if applicable); and

j. the Agreement Documents (if any)

Liquidated Damages

For this provision to apply, the Parties must specify in Item 21 of the General Order

Form or the Payment Implementation and Project Plan (PIPP) the “Due Date” for the

performance of certain obligations under the Customer Contract.

Liquidated Damages (LDs) are payable by the Contractor to the Customer upon a

delay in meeting a Due Date for a LD Obligation.

LDs are a substitute for damages which might otherwise be awarded by a court in

cases of delay. By agreeing on LDs, the Parties agree at the outset the rate or how

much damages will be payable upon the failure by the Contractor to meet a Due Date.

To be enforceable LDs must be a genuine pre-estimate of the damage likely to be

suffered. The method for calculation of LDs will be important in demonstrating that the

damages claimed are based on a genuine pre-estimate. In calculating LDs, tangible

costs in relation to project delay should be considered (e.g. salaries, rents, daily

revenue losses) and legal advice should be sought.

The Customer is not allowed to terminate the Customer Contract immediately if parties

have agreed in Item 21 of the General Order Form that LD’s will be payable for the late

completion. However, if the Contractor has failed to pay the required LDs within the

specified liquidated damage payment period, then the Customer may terminate the

Customer Contract.



Mutual Warranties

The Contract Authority, Customer and the Contractor have provided mutual warranties

to each other on things like acting reasonably, acting in good faith and working in a

collaborative manner.

Acceptance Testing

Acceptance Testing is carried out to find errors in a solution that is being developed.

Testing should be undertaken throughout all stages of the development cycle.

Acceptance Tests are critical in that they allow the Customer to determine whether the

Product conforms to the Contract Specifications, works in the Customer’s designated

environment and meets the requirement needs of the Customer.

There are deemed Acceptance provisions. Deemed Acceptance occurs:

• 2 Business Days after delivery, if Order Form does not state that Acceptance

Testing is required (i.e. Default is that no Acceptance Tests are required)

• on the last day of the Acceptance Test Notification Period, if no notice of

rejection or conditional acceptance received

• the Customer fails to perform the Acceptance Tests, other than through the fault

of the Contractor

• the Customer uses the Deliverable in production environment or for business

purposes without the prior written consent of Contractor

The Contractor gets one attempt to re-submit the Deliverable for further Acceptance

Testing prior to the Customer being able to reject the Deliverable.

Payment and Invoicing

If time for payment is not stated in the Order Documents and/or Item 14 of the General

Order Form, the Customer must pay the Contract Price:

• on Actual Acceptance Date (AAD) for Products

• monthly in arrears for Recurring Services other than Services provided under

Modules 2 and 5

• annually in advance for Services provided under Modules 2 and 5



Performance Guarantee

A Performance Guarantee is agreed between the Contract Authority and the Contractor

under the Head Agreement. It will automatically apply to all Customer Contracts made

under the Head Agreement. If the Contract Authority has not required a Performance

Guarantee under the Head Agreement, the Customer may only require one under a

Customer Contract if it obtains the Contract Authority’s consent.

If there is no Head Agreement, the Customer and Contractor can negotiate the

Customer’s requirement for a Performance Guarantee in the form of Schedule 9 of the

Customer Contract.

Financial Security

The Contract Authority can not ask for a financial security as part of a panel

arrangement. A Customer may require a financial security under a Customer Contract.

Financial Security must be in form of the agreement in Schedule 10, or in the standard

form that is usually provided by the issuing entity.

Whether or not a Financial Security should be required depends upon the Customer

establishing that there are reasonable grounds for the requirement. These may

include:

• the type of Product or Service to be procured and the level of complexity

involved in the procurement;

• the Contractor’s experience in providing such Deliverables;

• the financial viability of the Contractor;

• the Contractor’s dependence on Specified Personnel, third parties or sub-

contractors to fulfil the requirement; or

• the Contractor’s capacity and resources.

Insurance

The levels of insurance cover are agreed between the Contract Authority and the

Contractor under the Head Agreement. However, if a Customer requires a higher

insurance cover than what is provided in the Head Agreement, the Customer is able to

specify the higher amount in the General Order Form.



Limitation of Liability

Limiting or capping liability is achieved by placing an upper limit on the liability the

Contractor would otherwise have under the Contract. The innocent Party will be

responsible for some of the losses in the event that the limit of liability is exceeded.

Customers will need to ensure that they cover this risk either with appropriate

insurances or ensure that they are able to manage this risk appropriately under the

terms of the Contract. Otherwise such risks, if realised, will be a liability that the

Customer must bear under its allocated budget.

There is no requirement to conduct a risk assessment to determine the level of cap. Cl

18.1 provides that a Contractor’s liability to the Customer is:

a) limited in the aggregate for all claims arising out of the contract.

b) based on a multiple of the Contract Value of the type of Product or

Service from which the claim arose (not the total contract price payable

under the Customer Contract), with a minimum of $100,000

Note that Contract Value refers to individual value of products or services but not to the

total Contract price.

For example if the Contract is for the purchase of computers for $1 Million and software

for $ 500,000, the contract price is $1.5 million. The contract value is $1 Million for

computers and $500,000 for the software as separate items. If there is a fault in the

software the contractor’s liability is limited to 2 times $500,000.

The above default applies for all transactions except “Prescribed Use” and “over $20m

contract value”. In these cases, the parties must agree a new cap.

The cap is divided in three categories:

• Non-Recurring Services or Product, two times the Contract Value;

For example, systems integration services (i.e. combining hardware and

software to complete a project) where the cost of the hardware is $1 Million and

the cost of the software is $500,000. If there is a fault in the software the

contractor’s liability is limited to 2 times $500,000.

• Short Term Recurring Services, the Contract value;



For example, if an IT consultancy service for a period of less than 12 months is

being procured and the value is $500,000, then the contractor’s liability for a

claim will be $500,000.

• Recurring Services other than Short Term Recurring Services.

For example,

(a) If the claim arose after 12 months, then it is the value of the services for a

period of the previous12 months.

(b) If the claim arose before the first 12 months expires, then the amount is

equal to the monthly average times 12.

Capped Liability under Procure IT is subject to a number of exclusions under clause

18.5, e.g. personal injury, breach of privacy, confidence and infringement of IP.

Any kind of fees, LD’s or losses should be taken into account as offset to any claims of

liability.

Indemnity

Each Contractor’s indemnity is subject to the exclusion of consequential loss,

proportionality and the obligation to mitigate losses. The Contractor is provided with

the right to defend any third party claim (subject to government policy to the contrary)

or reasonably agree to the final settlement of the third party claim.

The privacy and IP claim indemnity have uncapped liability, however, there are a

number of exceptions to the IP indemnity as provided in clause 19.5, e.g.

any open source software that forms part of the Del iverable;

any Intellectual Property Rights including Moral Ri ghts, material or thing provided by any person other than the Contrac tor or its Personnel, including any Customer Supplied Items;

any modification of the Deliverable by any person o ther than the Contractor or its agents.

Third party indemnity claims are subject to the capping clause but is also subject to the

uncapped heads of damage, e.g. a third party claim arising from a defective product

would have a cap of 2 times contract value, unless the claim is for death or bodily

injury.



Intellectual Property

The default position is in favour of the Contractor owning the IP in software developed

under Procure IT. Customers may still be able to retain intellectual property based on

the following reasons (as referred to in the Commonwealth Guidelines):

• State security and/or strategic interest

• law enforcement

• Public interest

• where the IP applies to a critical Government ICT system

• where the IP includes personal information

• where the underlying IP is wholly or predominantly owned by the

Commonwealth before entering into the service agreement.

Where the contractor retains ownership of the IP, the Customer retains a transferable,

irrevocable royalty free license to use the IP.

A Customer should remember that any IP it owns is an asset, which must be

inventoried and protected proactively from infringement.

Dispute Resolution

Clause 24.11 prescribes a default figure over which the expert determination process

will not be used to resolve the dispute. The default figure for the Customer Contract is

$ 250,000. The Parties can put in any figure (which may be higher or lower than

$250,000) in item 41 of the General Order Form. The default figure applies if Item 41 is

not completed. Any dispute the value of which is less than $ 250,000 must be

determined by expert determination.

Clause 24.12 provides that where Parties unable to agree on the amount claimed, the

amount in dispute will be calculated by way of average.

Clause 24.13 provides that in the event, a party has terminated the Customer Contract

for a substantial breach or fundamental breach, the dispute resolution process does not

apply.



Termination

Termination for convenience is only available to the Customer. Either Party can

terminate for cause.



Customer Contract - Schedules

Schedule 1 General Order Form

This Schedule includes the order details that relevant to the Customer Contract. It must

be signed as an agreement.

Schedule 2

This Schedule is to include all documentation (including any supplemental terms and

conditions agreed to by the Customer, accepted tenders, offers or quotes from the

Contractor, and any letter of acceptance or award issued by the Customer) between

the Customer and the Contractor.

Schedule 3

This is merely a guide for Service Level Agreement

Schedule 4

This Schedule lists the procedure for changing Project Implementation and Payment

Plan or any part of the Customer Contract.

Schedule 5

This Schedule contains Escrow Deed.

Schedule 6

This Schedule is a Deed Poll enabling the Approved Agents to provide the Products

and/or Services to Customer on behalf of the Contractor under the Customer Contract.

Schedule 7

It is a form of Statutory Declaration for Subcontractor to complete.

Schedule 8

This Schedule contains Deed of Confidentiality.

Schedule 9

This Schedule sets out the Performance Guarantee.

Schedule 10

This Schedule sets out details of financial security.



Schedule 11

This Schedule sets out the dispute resolution procedures.

Schedule 12

Only meant as a guide, it includes Order Details relating to the implementation of a

project and associated payment arrangements which is included in a Customer

Contract if stated in Item 20 of the General Order Form.



Change Control

The Customer must be aware of:

1. Schedule 4 Variation Procedures; and

2. Protected Clauses (apply to panel arrangement): the Contract Authority’s

written consent must be obtained prior to varying a Protected Clause:

a) Additional Conditions (clause 3.2(b))

b) Clause 3.6 and 3.7

c) Intellectual property Rights (clause 13)

d) Privacy (clause 15)

e) Insurance (clause 16)

f) Liability (clause 18)

g) Indemnities (clause 19)

h) Conflict of Interest (clause 20)

i) Notice of Change in Control (clause 23.3)

j) Dispute Resolution (clause 24 and Schedule 11)

k) Termination (clause 25)

l) Assignment and Novation (clause 26.3 to 26.6)

m) Applicable law (clause 26.18)

PROCURE IT Version 3 User Guide 33


Preparing and Executing a Customer Contract


34


Preparing and Executing a Customer Contract under P anel

Arrangement

Step 1

a. Browse Annexure 3 of Head Agreement to check Products and Services that

can be acquired and the prices at which they can be sold via smartbuy.

b. Browse through the Customer Contract template for terms and conditions under

which the Customer and Contractor must perform their obligations.

Step 2 Complete General Order Form (Schedule 1)

There are a number of important provisions in the Customer Contract relevant to

the General Order Form that have been agreed between the Contract Authority and

the Contractor under the Head Agreement. However, some items could be

changed by the Customer in this Schedule 1, e.g.

• Levels of insurance,

• Ownership of Intellectual Property,

• Expert Determination Amount,

• Cap of liability,

• Payment term,

• Deemed period of acceptance if no Acceptance Testing is required,

• Date by which the Performance Guarantee must be provided

The following outlines the important items that the Customer may need to complete,

but please note :

A. If the order is a straight forward and/or low value order for hardware, software

or services where the maximum value of the order can be calculated with

certainty (i.e. the maximum amount payable is set out in the “Total Amount

Payable” box in Item 11, then the Parties may use a shortened version of the

General Order Form and any Module Order Form.


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The shortened version of the General Order Form must :

• Include all the Items that are set out in clause 3.4 of the Customer Contract. (i.e. Items 1, 4, 7 (if there is a Head Agreement), 8, 10, 11, 12 and 13);

• Include any other Items (if any) that the Parties agree;

• Be in the same form and structure (even if some Items are omitted);

• Ensure that the Items that remain are have the same number or heading as the number of heading in this pro forma General Order Form

• Include the following as a title:

“General Order Form. Schedule 1 to the Customer Co ntract (which is Part 2 of the Procure IT Framework)”

• Include the following text above the signature box;

“This General Order Form is part of the Customer Co ntract and incorporates all Parts, terms and conditions and ot her documents listed in clause 3.8 of Part 2 as if repeated in fu ll in this General Order Form.”

• Be signed by both parties.

• Cross reference and include the relevant Order Details from any Module Order Form and any details from the Module Order Forms that are required to describe the Products or Services.

B. Items 16 to 43 are likely to be needed for large value orders and/or complex

purchases such as software development, systems integration, web services,

managed services, and telecommunications services etc.

If the Parties require one or more of the Items 16 to 43 for any other type of

purchase, then these can be added to the General Order Form.

a. Items 1-6

These items require parties to include names and services address

information and details of authorised representatives.

b. Item 7 Head Agreement

For Panel Arrangement, Item 7 must be completed to include:


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• Relevant Head Agreement number;

• Terms of the Head Agreement;

• Level of insurance under Head Agreement

• Performance Guarantee, if appropriate

c. Item 8 Modules

Check Item 4A in Annexure 1 of the Head Agreement, tick any Modules

which will apply to the Customer Contract in Item 8

d. Item 9 Schedules (pre filled by NSWP)

Check Item 4B in Annexure 1 of the Head Agreement, tick any Schedules

which will apply to the Customer Contract in Item 9.

Note: If Schedule 2 is ticked, all documentation (including any supplemental

terms and conditions agreed to by the Customer, accepted tenders, offers or

quotes from the Contractor, and any letter of acceptance or award issued by

the Customer) between the Customer and the Contractor must be itemised in

Schedule 2 in descending date order.

Do not use Schedule 9. If required, it has been completed in the Head

Agreement between Contractor Authority and Contractor.

e. Item 11 Common Details

Specify the product, quantity, and unit price for simple purchases.

f. Item 18 Site Inspection and Maintenance

Specify whether the Contractor is to provide a Site Specification. In most

instances the Customer would prepare the Site in accordance with an

approved Site Specification (if there is one) or any other requirements

specified here unless there are particular environmental requirements for the

Deliverable, which the Customer is unable to provide. In which case, if

appropriate, the Contractor should be noted here.

g. Item 21 Liquidated Damages


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For this provision to apply, Customer must specify here or the PIPP the “Due

Date” for the performance of certain obligations under the Customer

Contract, together with the calculation of the amount.

h. Item 31 Customer’s Compliance with Standards, Co des and Law

In addition to any legislative or policy requirements that the Contractor

should comply with, Customer should also reference those legislative and

policy requirements to which the Customer is subject. Customer should

remember that if it is required to comply with a code, policy or guideline, it

will still be held to account regardless of whether those policies are relevant

to an obligation that has been contracted out.

Standards can be used to benchmark performance expectations under the

Customer Contract and can be referenced in the Service Level Agreement

as a measure of quality. Of greater importance is the warranty given by the

Contractor under clause 9.3 that the Deliverables conform to the standards

specified in the Order Documents.

i. Item 32 Acceptance Testing

Customer needs to specify the period required following delivery of the

Deliverable as required by the order Documents when the Actual Acceptance

Date for a Deliverable occurs, if a Deliverable is not to undergo Acceptance

Tests. The deemed period is 2 business days.

j. Item 34 Intellectual Property

If applicable, the Customer is to specify any IP that the Customer will own.

Unless stipulated to the contrary in here, the default position is in favour of

the Contractor owning the IP in software developed under Procure IT.

k. Item 36 Insurance

The levels of insurance have been agreed between Contract Authority and

Contractor in the Head Agreement. Customer only needs to specify here if a

higher limit of cover is required by the Customer Contract.

l. Item 37 Performance Guarantee


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This item is not required to complete for panel arrangement. If a performance

guarantee is required, it has been agreed in the Head Agreement. However,

if no performance guarantee is provided in the Head Agreement, the

Customer thinks it is necessary to have one under the Customer Contract,

the Customer needs to obtain Contract Authority’s approval prior to fill in this

item 37.

m. Item 38 Financial Security

Customer needs to specify if a Financial Security is required, and when to be

provided.

n. Item 39 Limitation of Liability

The best estimate of the Contract Value must be inserted here for the

purpose of determining the capped amount of liability, if the maximum

amount that the Customer is legally required to pay is not capable of

calculation.

Alternatively, the Customer can specify different cap of liability here, if it is for

Prescribed Use or over $20m contract value.

o. Item 41 Dispute Resolution

Customer needs to specify the threshold amount for issues to be resolved by

expert determination if default figure in the Head Agreement is deemed not

appropriate.

p. Item 43 Additional Conditions

If the Parties consider that the Agreement does not cover a particular issue

or does not cover the issue to the extent desired by the Parties, they may

insert additional conditions here. A proviso applies in that should the

additional conditions be contrary to a Protected Clause, the Contract

Authority must provide its prior written consent to the additional conditions for

them to be valid and legally enforceable.


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Step 3 Sign General Order Form

a. The completed General Order Form must be signed as an agreement.

The General Order Form is part of the Customer Contract and incorporates

all Parts, terms and conditions and other documents listed in clause 3.6 of

Part 2 as if repeated in full in this General Order Form.

b. It is optional to execute the Customer Contract. If preferred, parties can

execute the Customer Contract in addition to the signing General Order

Form.


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Preparing and Executing a Customer Contract under N on Panel

Arrangement (Agency Specific)

For agency specific arrangement, only Part 2 Customer Contract is needed. No Head

Agreement is required in this instance.

Pre Tender Actions

Step 1 Review Part 2 and 3

Familiarise yourself with the terms and conditions of the Customer Contract.

Step 2 Complete the following items in Schedule 1 G eneral Order Form

A. Only items 1-3, 8-9 (and Item 33 if paying by credit card) need to be

prefilled when it is a small value and/or simple straightforward purchase

for hardware, software and services where the value of the purchase

can be calculated with certainty (i.e. the maximum amount payable is

set out in the “Total Amount” box in Item 11). Item 7 is not required for

Agency Specific arrangement.

The shortened version of the General Order Form must :

• Include all the Items that are set out in clause 3.4 of the Customer Contract. (i.e. Items 1, 4, 7 (if there is a Head Agreement), 8, 10, 11, 12 and 13);

• Include any other Items (if any) that the Parties agree;

• Be in the same form and structure (even if some Items are omitted);

• Ensure that the Items that remain are have the same number or heading as the number of heading in this pro forma General Order Form

• Include the following as a title:

“General Order Form. Schedule 1 to the Customer Co ntract (which is Part 2 of the Procure IT Framework)”

• Include the following text above the signature box;


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“This General Order Form is part of the Customer Co ntract and incorporates all Parts, terms and conditions and ot her documents listed in clause 3.8 of Part 2 as if repeated in fu ll in this General Order Form.”

• Be signed by both parties.

• Cross reference and include the relevant Order Details from any Module Order Form and any details from the Module Order Forms that are required to describe the Products or Services.

Item 1 Name of Customer

Item 2 Service Address

Item 3 Customer’s Representative

Item 8 Modules

Tick any modules which will apply

Item 9 Schedules

Tick any schedules which will apply

B. The following items also need to be prefilled for complex purchases

such as software development, systems integration, web services,

managed services, and telecommunications services etc.

If the Parties require one or more of the Items 16 to 43 for any other

type of purchase, then these can be added to the General Order Form.

Item 17 Performance Review Procedures

Specify if a service and performance review/s of the Contractor’s

performance of the Customer Contract is required

Item 19 Implementation Planning Study

Specify whether the Contractor must provide an implementation

planning study

Item 21 Liquidated Damages

Specify whether LD is applicable


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Item 22 Customer Supplied Items (CSI) and Customer Assistance

Specify each CSI to be provided by the Customer

Item 23 Escrow

Specify whether an escrow is required, if software development is

involved.

Item 24 Business Contingency Plan

Specify if a Business Contingency Plan is required

Item 25 Secrecy and Security

Specify any secrecy or security requirements that the Contractor and its

Personnel must comply with

Item 29 Quality Standard Accreditation

Specify any quality standard accreditation arrangements the Contractor

must hold during the Contract Period

Item 30 Contractor’s Compliance with Standards, Cod es and Laws

Specify any laws, codes, policies, or guidelines the Contractor must

comply with

Item 31 Customer’s Compliance with Standards, Codes and Laws

Specify any laws, codes, policies, or guidelines the Customer must

comply with

Item 33 Credit/Debit Card

Specify whether there is any credit/ debit card or electronic facility that

the Customer may use to pay the Contractor

Item 34 Intellectual Property

Specify who will own the IP created in the software.

Item 35 Confidentiality

Specify whether Contractor must arrange for its Subcontractors to

execute a Deed of Confidentiality substantially in the form of Schedule 8

– Deed of Confidentiality


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Item 36 Insurance Requirements

Specify the levels of insurance cover required. The default levels have

been provided in the Customer Contract. However, the Customer is able

to negotiate with Contractor for any higher amount of cover.

Item 37 Performance Guarantee

Specify whether a Performance Guarantee is required

Item 38 Financial Security

Specify whether a Financial Security is required

Item 40 Performance Management Reports

Specify whether such reports are required

Item 41 Dispute Resolution

Specify the threshold amount for issues to be resolved by expert

determination. If it is not filled, the default amount will apply.

Post Tender Actions

Step 3 Complete all unfilled items in Schedule 1 af ter tender

evaluation

A. Complete items 1-15 (except Item 7) for simple straightforward purchase

for hardware, software, and services where the value of the order can

be calculated with certainty (i.e. the maximum amount payable is set out

in the “Total Amount” box in Item 11); and

B. Items 16 to 43 also need to be completed for complex purchases such

as software development, systems integration, web services, managed

services, and telecommunications services etc.

Step 4 Complete Schedule 2 Agreement Details (if applicable) Step 5 Obtain completed Schedule 6, 9 and 10 (If ap plicable):


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� Schedule 6 Deed Poll – Approved Agents

Each Approved Agent (if any) is to complete a Deed Poll

� Schedule 9 Performance Guarantee

To be completed by the Contractor and the Guarantor. However, this

is example only, parties can use such other document reasonably

acceptable to the Customer.

� Schedule 10 Financial Security

This is example only, it can be in the standard form that is usually

provided by the issuing entity

Step 6 Sign General Order Form

Step 7 Sign Customer Contract


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Part 3 – Dictionary

The following is the list of newly included defined terms:

1. Acceptance Test Notification period

2. Acceptance Test Data

3. Acceptance Test Period

4. Agreement Documents

5. Annexure

6. Approved Agent

7. Authorised representative

8. Bespoke User Documentation

9. Bundled Software

10. Business Day

11. Contract Value

12. Defects List

13. Due Date

14. Estimated Contract Price

15. Existing Material

16. General Order Form

17. Hardware

18. Head Agreement

19. Head Agreement Details

20. Head Agreement Documents

21. Insolvency Event

22. LD Obligation


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23. Licensed Software

24. Material

25. Material Adverse Event

26. Minor

27. Module Order Form

28. Non-Recurring Services

29. Order Documents

30. Part

31. Payment Period

32. Prescribed Use

33. Procure IT Framework

34. Protected Clauses

35. Recurring Services

36. Related Company

37. Reseller

38. Short Term Recurring Services

39. Tax

40. User Documentation


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Part 4 - Modules

To be added.

Each Module has its own Order Form that should be completed in addition to the

General Order Form.

Modules cannot be added without the consent of the Contract Authority. However,

Modules can be deleted without the Contract Authority’s consent.

NSW Department of Finance and Services

NSW Procurement Level 10, McKell Building 2-24 Rawson Place Sydney NSW 2000 T 1800 679 289 F 02 9372 8687 TTY 1300 301 181 www.finance.nsw.gov.au