Page 252 - Automated Fingerprint Identification Systems (AFIS)

CONTRACTUAL ISSUES REGARDING THE PURCHASE OF AN AFIS 237

9.7.6.14 Escrow Requirements
Escrow requirements can be hotly negotiated clauses for valid reasons. In
general, under an escrow arrangement, a neutral third party holds property
that belongs to one entity with permission to release such property to another
entity under express circumstances. The government’s purpose in seeking an
escrow arrangement is to ensure its ability to continue operations and protect
its business environment, in the event of certain negative occurrences, by ensur-
ing it can obtain the software source code and other information relevant to
the AFIS. The vendor’s purpose is to protect its investment in its proprietary
software and to limit access to its source code. There is a natural conflict
between the two goals. Very often the solution lies with the establishment of an
escrow arrangement, with a neutral third party permitting the government
access to materials under very limited circumstances. The RFP clauses should
outline the features the government seeks in the escrow arrangement.
For the escrow clause to have meaning, the escrow account must hold every-
thing necessary to understand and operate the System. Deposit of the source
code is not enough. The clause should require deposit of release notes, instal-
lation guides and tools, source release guides, patches and bug fixes, equip-
ment configurations, and so on. The deposit requirements are unique to the
AFIS application, but must be comprehensive enough to permit continued
operation of the System. The parties must develop an understanding regard-
ing any third party intellectual property used in the System and how the vendor
proposes to protect the government’s business needs with respect to such
property.
The escrow deposits must be kept up to date. In addition to including an
annual verification process in the escrow agreement, it may be beneficial to
require updated escrow deposits before the government is obligated to pay for
customizations or enhancements performed after the initial escrow deposits.
This arrangement works most effectively if the escrow agreement obligates the
third party provider to send written notification when additional materials are
submitted for deposit. It also serves as a further control that the necessary
deposits are made and up to date.

9.8 WHAT CAN GO WRONG IN THE PROCESS

Despite the substantial planning, effort, and training that goes into a solicita-
tion, things can and do go wrong. But not everything that goes wrong is fatal
to the procurement effort. Oftentimes the general reservation of rights lan-
guage provides the ability to correct honest mistakes or omissions (case law
usually will define what constitutes an honest mistake or omission). So if a
vendor’s proposal presents cost figures with an obviously misplaced decimal