Procure IT user guide

Updated: 24 Oct 2013

Guidance on how to use the Procure IT framework for ICT contracts.

The Procure IT framework

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 3 – Dictionary
Part 4 – Modules (including Module Order Forms)

The Procure IT Framework is designed so that products and services can be acquired:

as a result of a panel arrangement where an entity acts as the contract authority and establishes a master purchasing arrangement (standing offer) where a number of contractors agree to offer certain products or services to eligible customers at pre-agreed prices and on pre-agreed core terms and conditions, for a defined term (panel arrangement), or
using an alternate procurement process that does not involve a panel arrangement (non-panel arrangement).

The Procure IT Framework provides for the use of 3 different types of agreement/contract:

Head Agreement
Customer Contract (Panel Arrangement)
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 3 – Dictionary
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)
Part 3 – the Dictionary
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)
Part 3 – the Dictionary
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 Procure IT 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 or services under the panel arrangement acquire the products or services using the form of customer contract that is set out in Procure IT.

The head agreement describes the relationship between the contract authority and the contractor for the administration of the panel arrangement, including:

the products or services that can be acquired under the panel arrangement
how those products or services can be updated during the term
the pricing for the products or services
which entities are entitled to acquire products or services under the panel arrangement
which approved agents can be used by the contractor to supply the products or 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
the general terms and conditions applicable to the relationship.

Important aspects of the head agreement

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:

acquire additional products or services, or
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.

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 or services pursuant to a customer contract made under the head agreement in order to gain the contractual benefits.

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 or services
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.

There is a stipulated amount of insurance provided in Cl 10 in the head agreement :

$10 million in respect of each claim and for the total aggregate liability for all claims for the period of cover – public liability insurance
$10 million 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.

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 arranges 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, for example 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 or services.

If, when requested, the contractor does not provide a performance guarantee, then this may be a ground for termination.

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.

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

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.

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 Agreement details

Item 1 head agreement number

Item 2 contract authority and authorised representative

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 and other laws

List policies the contractor must comply with.

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 details
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.

Annexure 6 is not relevant at this stage.

Step 5: Pre-complete schedule 1 to part 2 (general order form)

(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 or services as described in the customer contract.

Where the customer contract is made under the head agreement :

the products or 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
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 arrangements)

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 arrangements)

For non-panel arrangements, the customer contract is entered into upon the execution page being signed by both parties (that is, the contractor and the customer).

The general order form must also be signed.

Important aspects of the customer contract

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:

the order details and any additional conditions being completed and agreed by the parties, and
the general order form being signed by the customer and contractor. The customer and contractor do not need to sign the execution page of the customer contract.

The customer contract is entered into when the execution page of the customer contract and the general order form are signed by both parties (the contractor and the customer).

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:

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
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)
any additional conditions (if applicable)
these clauses 1 to 26
part 3, the dictionary
any PIPP agreed by the parties based on schedule 12 (PIPP)
any service level agreement agreed by the parties based on schedule 3 (service level agreement)
all other order documents
annexure 3 to the head agreement (if applicable)
the agreement documents (if any).

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 (for example, 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 LDs 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.

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 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 (the 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.

If time for payment is not stated in the order documents 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

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 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.

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 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.

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.

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:

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

Contract value refers to the individual value of products or services, 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 $20 million contract value. In these cases, the parties must agree a new cap.

The cap is divided in 3 categories:

Non-recurring services or product, 2 times the contract value

For example, systems integration services (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, if the claim arose:

after 12 months, then it is the value of the services for a period of the previous12 months.
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, for example personal injury, breach of privacy, confidence and infringement of IP.

Any kind of fees, liquidated damages or losses should be taken into account as an offset to any claims of liability.

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, for example:

any open source software that forms part of the deliverable
any intellectual property rights including moral rights, material or thing provided by any person other than the contractor or its personnel, including any customer supplied Items
any modification of the deliverable by any person other than the contractor or its agents.

Third-party indemnity claims are subject to the capping clause but are also subject to the uncapped heads of damage. For example, 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.

The default position is in favour of the contractor owning the intellectual property (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 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.

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 are 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 for convenience is only available to the customer.

Either party can terminate for cause.

Customer contract schedules

Schedule	Description
1	General order form. Includes the order details that relevant to the customer contract. It must be signed as an agreement.
2	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.
3	This is merely a guide for service level agreement.
4	Lists the procedure for changing project implementation and payment plan or any part of the customer contract.
5	Contains escrow deed.
6	Deed poll enabling the approved agents to provide the products or services to customer on behalf of the contractor under the customer contract.
7	Form of statutory declaration for subcontractor to complete.
8	Contains deed of confidentiality.
9	Sets out the performance guarantee.
10	Sets out details of financial security.
11	Sets out the dispute resolution procedures.
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 schedule 4 (Variation procedures) and protected clauses (apply to panel arrangement): the contract authority’s written consent must be obtained prior to varying a protected clause:

additional Conditions (clause 3.2(b))
clause 3.6 and 3.7
intellectual property rights (clause 13)
privacy (clause 15)
insurance (clause 16)
liability (clause 18)
indemnities (clause 19)
conflict of interest (clause 20)
notice of change in control (clause 23.3)
dispute resolution (clause 24 and schedule 11)
termination (clause 25)
assignment and novation (clause 26.3 to 26.6)
applicable law (clause 26.18).

Preparing and executing a customer contract under panel arrangement

Step 1

Browse annexure 3 of head agreement to check products or services that can be acquired and the prices at which they can be sold.
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, for example:

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:

If the order is a straightforward or low-value order for hardware, software or services where the maximum value of the order can be calculated with certainty (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.

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 (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 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 contract (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 contract and incorporates all parts, terms and conditions and other documents listed in clause 3.8 of part 2 as if repeated in full 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.

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.

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.

Items 1-6

These items require parties to include names and services address information and details of authorised representatives.

Item 7 Head agreement

For panel arrangement, item 7 must be completed to include:

relevant head agreement number
terms of the head agreement
level of insurance under head agreement
performance guarantee, if appropriate.

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

Item 9 Schedules (pre-filled)

Check Item 4B in annexure 1 of the head agreement, tick any schedules which will apply to the customer contract in Item 9.

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 contract authority and contractor.

Item 11 Common details

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

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.

Item 21 Liquidated damages

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.

Item 31 Customer’s compliance with standards, codes 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.

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.

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.

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.

Item 37 Performance guarantee

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.

Item 38 Financial security

Customer needs to specify if a financial security is required and when to be provided.

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 a different cap of liability here, if it is for prescribed use or over $20 million contract value.

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.

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.

Step 3. Sign general order form

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.

It is optional to execute the customer contract. If preferred, parties can execute the customer contract in addition to the signing general order form.

Preparing and executing a customer contract under non-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 parts 2 and 3

Familiarise yourself with the terms and conditions of the customer contract.

Step 2. Complete the following items in schedule 1 (general order form)

Only items 1-3, 8-9 (and Item 33 if paying by credit card) need to be prefilled when it is a small value or simple straightforward purchase for hardware, software and services where the value of the purchase can be calculated with certainty (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 (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 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 contract (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 contract and incorporates all parts, terms and conditions and other documents listed in clause 3.8 of part 2 as if repeated in full 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.

The following items also need to be prefilled for complex purchases such as software development, systems integration, web services, managed services and telecommunications services.

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 liquidated damages is applicable.

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, codes 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 card, 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.

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 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 after tender evaluation

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 (the maximum amount payable is set out in the total amount box in item 11).

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.

Step 4. Complete schedule 2 Agreement details (if applicable)

Step 5. Obtain completed schedule 6, 9 and 10 (if applicable)

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

Part 3 – Dictionary

The following is the list of newly included defined terms:

Acceptance test notification period
Acceptance test data
Acceptance test period
Agreement documents
Annexure
Approved agent
Authorised representative
Bespoke user documentation
Bundled software
Business day
Contract value
Defects list
Due date
Estimated contract price
Existing material
General order form
Hardware
Head agreement
Head agreement details
Head agreement documents
Insolvency event
LD obligation
Licensed software
Material
Material adverse event
Minor
Module order form
Non-recurring services
Order documents
Part
Payment Period
Prescribed Use
Procure IT Framework
Protected clauses
Recurring services
Related company
Reseller
Short-term recurring services
Tax
User documentation

Part 4 – Modules

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.

Key changes from Procure IT v3.1

Item	Procure IT 3.2	Procure IT 3.1
Customer data	Clause 7.4: Establishes the default position re ownership of Customer Data by the Customer. Clauses 7.5 and 7.6: Customer Data which comprises “State Records” cannot be transferred outside of NSW without the Customer's prior written consent or as specified in new Item 25A of General Order Form. Clauses 7.7 to 7.9: Obligations relating retention and destruction of Customer Data use of Customer Data for testing, and Customer Data backup obligations. Clause 25.9: obligations re Customer Data on termination.	Clauses 7.4 to 7.9 did not exist Clause 25.9 did not exist
Security	Clause 7.10(a): obligations relating to safety and security of Customer Data and Customer's Confidential Information. Clause 7.10(b): obligations to notify the Customer of safety and security procedures and safeguards, including any amendments from time to time. Clause 7.12: obligations relating to breaches of secrecy and security requirements.	Clauses 7.10 and 7.12 did not exist
Systems	Clause 5.11(a) extends the operation of Procure IT to “Systems” (where applicable), with final acceptance being deferred until the System as a whole passes all Acceptance Tests. Clause 9.3 contains warranties in relation to the overall System.	Clause 5.11 did not exist Clause 9.3 did not exist
Liability	All references to "loss", "damage" and "expense", “cost” and “liabilities” have been updated to "loss, damage and expense" for consistency.	Some inconsistency in the language relating to loss, damages, costs and expenses
Termination for Convenience	Clause 25.4: clarifies that the contractor will either be paid (i) the amount specified on the order form; or (ii) those losses, damages or expenses which are reasonably and properly incurred by the Contractor as a direct result of the termination of the contract	Clause 25.4: previous drafting left open the question as to whether the Contractor could claim both item (i) and item (ii) (double-dip on termination payments) when the customer terminates for convenience.
Escrow	Clause 6.42(a): amended to enable some flexibility in the form of the Escrow Agreement, provided that it must be in a form “reasonably acceptable to the Customer".	Clause 6.24(a) required the parties to enter into an escrow agreement on the terms of the Escrow Agreement in Schedule 5 of the Customer Contract.
Audit	Clauses 23.5 to 23.11 govern the conduct of audits to confirm a Contractor's compliance with the Customer Contract and the accuracy of invoices.	Clauses 23.5 to 23.11 did not exist
Regulatory Compliance	New definition of "Privacy Laws" and amended definition of "Personal Information" are incorporated. Clause 15.1 has been amended for compliance with Privacy Laws. Amendments require the contractor to: exercise its rights in relation to Personal Information “only for the purposes of performing its obligations under the Customer Contract”, comply with applicable Privacy Laws “as it if were a person subject to the Privacy Laws”, not disclose Personal Information to any other person without the prior written consent of the Customer or as expressly required by Statutory Requirements, comply with any “reasonable” direction from the Customer with respect to remedying breaches, or in relation to the rights of individuals to access and correct Personal Information, “take all technical, organisation and other security measures reasonably within the Contractor’s power to protect the Personal Information from misuse, interference and loss”, and not allow, or permit access to, or transfer any Personal Information falling within the scope of clause 15.1(h) outside of Australia without first obtaining the Customer's approval in writing or as specified in Item 25B of the General Order Form. Clauses 26.12 to 26.16 have been inserted to reflect requirements under the GIPA Act and other relevant obligations.	Clause 15.1 of the Procure IT v3.1 require the contractor to: use personal information “only for the purpose for which the Personal Information was acquired; reference was made to the IPPs instead of the ‘Privacy Laws’ additional privacy safeguards have been incorporated, which were not present in prior version Clauses 26.12 to 26.16 did not exist
Intellectual Property Rights	New definition of "Online Service". Amended definition of "Open Source Software" consistent with the Commonwealth Government's Source IT ICT procurement templates. Clause 13.5(c) is updated to reflect changes in legislation, including the introduction of the Government Sector Employment Act 2013 (NSW). Clause 13.6(e) expands the grant of a non-exclusive licence in respect of Existing Material to include an Online Service procured under Module 10 (As a Service). Clause 13.9 incorporates the grant of a perpetual and irrevocable licence for certain Existing Materials and methodologies that are provided in connection with a Deliverable, but only to the extent required for the Customer to receive the benefit of the Products and the Services. This grant of licence does not extend to Licensed Software under clauses 13.6(a) and (b), or to Online Services under clause 13.6(e). This grant of licence may be varied under the General Order Form. Clause 13.11(b) incorporates an option for the Customer to grant certain licence rights back to the Contractor in respect of New Materials that are vested in the Customer. This grant of licence is at the Customer’s discretion, and the Customer is entitled to determine the scope of the licence. Clause 13.14 provides that the Contractor is not permitted to use Open Source Software for the purpose of developing or enhancing Deliverables or incorporating Open Source Software into Deliverables unless it obtains the prior written consent of the Customer. This creates a trigger for assessing the impact of Open Source Software on Deliverables where applicable. Clause 13.15 provides that where the Customer consents to the use of Open Source Software, the Contractor has certain obligations to ensure that this does not lead to adverse consequences for the Customer. Clause 19.5 is amended so that the Contractor’s indemnity applies in relation to IP claims caused by (i) the use of Deliverables in combination with other items (that is, other products, equipment, business methods, software or data) where approved by the Contractor or where it is in accordance with the Contract Specifications; or (ii) modifications to any Deliverables which are not made by the Contractor or its Personnel, but are approved by the Contractor.	The concept of “online service” did not exist Clause 13.5 previously referred to legislation such as Public Sector Employment and Management Act 2002 (NSW) – now repealed. Clause 13.6(e) did not exist Clause 13.11(b) which was clause 13.11(b) in Procure IT v3.1 did not give this discretion to the Customer. Clause 13.14 - did not exist Clause 13.15 - did not exist Clause 19.5 did not require the Contractor to indemnify the Customer for IP claims in these circumstances.
General Order Form and Schedules	new Item 25A Transfer of Records outside NSW- Customer Data: Customer to specify whether any State Records will be transferred to the Contractor’s possession, and if so: (i) whether consent is granted to transfer State Records outside NSW, (ii) if yes, the jurisdiction(s) for which consent is granted, and (iii) the conditions on which such consent is granted. new Item 25B Transfer of Records outside NSW- Personal Information: Customer to specify whether consent is granted to transfer Personal Information outside NSW, the jurisdiction(s) for which consent is granted, and the conditions on which such consent is granted. Item 25 Secrecy and Security: Incorporates an option for Customer to specify changes to the default timeframes for: (i) notification of actual, alleged or suspected security breach (default timeframe: immediate), (ii) investigation (default timeframe: within 48 hours) and (iii) time to remedy the breach (default timeframe: within 24 hours of completion of investigation). Any alternate timeframe is subject to approval by the Customer’s CIO and compliance with certain policy requirements - see guide note for Customers contained in the General Order. Item 34 Intellectual Property: Existing Material: Where a Deliverable incorporates Existing Material that is owned by a third party, and the default licensing terms in clause 13.7(b) are not intended to apply, then Item 34 should specify the terms and conditions on which the Customer is granted a non-exclusive licence for those third party Existing Materials (and any fees, if applicable); Item 34 Intellectual Property: Customer Owned New Material: Where the Customer elects to grant certain licence rights back to the Contractor under clause 13.11(b) in respect of New Materials that are vested in the Customer, and the Customer does not wish to adopt the default licensing terms in clause 13.11(b), then the Customer will specify the licensing terms in this Item 34. Item 40A Audit: Incorporates an option for the parties to specify that the default audit provisions in clauses 23.5-23.8 do not apply, and to specify an alternate audit mechanism. This is subject to compliance with the Contractor’s obligations relating to Customer Data, security and privacy, and with such other obligations required by the Customer and reasonably agreed by the Contractor – see guide note for Customers contained in the General Order. No Procure IT v.3.1 Module 13 or 13A were ever released. Agencies and suppliers were directed to use Procure IT v.3.0 Module 13 and 13A and corresponding order forms. To assist stakeholders, DFSI has refreshed these forms and made them available under Procure IT v.3.2.	Item 25A did not exist Item 25B did not exist Item 25 did not offer this flexibility Item 34 did not offer this flexibility Item 40A did not exist There are no substantive changes to the current Procure IT v.3.0 Module 13 and 13A documents.