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A Guide to IT Contracting by Michael R. Overly, Matthew A. Karlyn

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55
5
Statements of Work
CHECKLIST
Preliminary Considerations
Due diligence process
Form of professional services agreement
General Requirements
Term—open-ended or limited
Termination provisions
S Material breach of agreement
S Insolvency/cessation of business
S For cause
Acceptance testing
S Procedures
S Criteria
S Remedies at no cost
S Timeframe for failures to correct
S Payment of fees linked to milestones and testing completion
Personnel requirements
S Minimum skill requirements
S Interview process
S Naming of key personnel
S Replacement procedures; no charge for overlap and ramp-up
S Eorts to ensure consistency of personnel
S Turnover penalties
S Supplier has sole responsibility for personnel
56  •  A Guide to IT Contracting: Checklists, Tools, and Techniques
Use and identication of subcontractors
Warranties
S Material compliance of services
S Compliance with applicable laws
S Workmanlike manner
S Timeliness
S Disabling devices
S No IP owned by third parties
S Compliance with data security and privacy laws
Indemnication
S Intellectual property infringement
S Violation of applicable laws
S Personal injury and property damage
S Breach of condentiality
S Procedures to permit supplier control of claim
S No settlement without customer consent
S Exclusion from limitation of liability
Limitation of liability
S Mutual
S Exclude indemnity obligations
S Exclude gross negligence and willful misconduct
S Exclude condentiality and data security breaches
S Tie cap to all fees paid under agreement
Intellectual property ownership
S License to use pre-existing materials
S Who owns IP developed under the agreement
S If supplier owns, restrictions on use (competitors)
S Identication of third-party IP and fees associated with
third-party IP
Change order process
Condentiality and information security
S Simple provision (basic information)
S Detailed provision (sensitive information)
S Information security requirements depending on nature of
data
S Force majeure
S Ensure proper scope
S Avoid overbroad provisions to include stang problems,
unavailability of materials and failure of third parties
Statements of Work • 57
S Right to terminate
S No payment for services not rendered
Nonsolicitation of supplier’s employees
Insurance tailored to customers requirements
Fees and costs
S All fees expressed in contract, SOW, or change order
S Payment schedule for all fees
S Fixed fee vs. time and materials
S Overall cap for time and materials projects
S Ensure estimates are accurate
S Specify percent over estimate to be paid by supplier
S Specify percent over estimate to be shared by both parties
S Rate card for future services
S Allocation of taxes (customer pays only for tax on services
received)
S Payment of fees tied to performance
S Holdback if payment based on passage of time
S Travel and expenses tied to customer’s policies
S Financial audit rights
Relationship to Other Agreements
All contract terms in a single agreement
If multiple agreements, ensure termination rights across agreements
Acceptance testing of services linked to acceptance testing of
related soware and hardware
Limitation of liability caps account for fees paid across agreements
OVERVIEW
Statements of work, commonly referred to as SOWs, are the heart of
any professional services engagement. It is critical that the SOW clearly
describe all services and deliverables the customer expects to receive.
Without that clarity, the customer may not receive what they expect, cost
overruns may result, and delivery schedules may be missed. Remarkably,
even though SOWs are keys to the success of a professional services engage-
ment, they are frequently written at the last minute, seldom given the time
they deserve to perfect, and generally fail to provide the level of detail nec-
essary to clearly dene the services and deliverables to be provided. SOWs

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