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12 - PROJECT PROCUREMENT MANAGEMENT

In all cases, the acquirer needs to specifically identify the required deliverables. A statement of objectives
(SOO) is often used in performance-based contracting, where the acquirer indicates the results to be
achieved, leaving the supplier to determine the processes, tools, and resources needed to deliver the
service or product.

Detailed requirements statements for software procurements can be complex. Over-specification may
lead to higher than necessary procurement costs when most of the needed features are available in one
or more commercially available off-the-shelf software packages (COTS). However, without the essential
features identified, the likelihood of the software meeting the needs is greatly reduced. Requirements
may also include a list of the standards or specifications to which the system or service is required to
conform. Lack of a detailed requirements statement at the onset of a project often leads to an adaptive
strategy in which only a few outcomes or scenarios are specified to get an acquisition project started.
A statement of work (SOW) itemizes the details of the work to be performed in a software acquisition.
A SOW for software procurement typically includes the scope of contractual obligations for the contracted
(i.e., bespoke) software. It should include management requirements as well as technical requirements.
Management requirements may include status reporting schedule, metrics to be reported, requests for
participation in meetings and reviews, and early delivery of product subset capabilities, when desired.
A SOW is often appropriate for time-and-effort support. (Section 12.1.3.2 of the PMBOK Guide provides
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additional details concerning the Procurement SOW.) 12
• Establishing proposal evaluation criteria. Criteria for evaluating procurement proposals submitted by
potential suppliers (i.e., bidders) should include the supplier’s specific technical capabilities, management
approach, experience, and cost factors. The evaluation criteria should explain how the various factors
will be weighted and evaluated. Usually, cost is not the most important factor in selecting a software or
service provider, and within the cost factors, the initial cost is less important than the total cost over the
project or product life cycle.

The acquiring project manager also needs to define the acceptance criteria or performance standard for
the product or service to be provided. Acceptance criteria for custom software may include successful
completion of acceptance testing by the users, or after installation and successful operation in the
production environment.

• Preparing terms and conditions. Terms and conditions provide the details on how, where, and when
the software product or service will be delivered. The supplier may have a preferred set of contract
conditions related to cost, schedule, capabilities, maintenance, contract type, intellectual property rights,
and data rights; the acquirer may also have a preferred set of contract conditions, which may be different
from those of the supplier. Therefore, it is critical that the software project manager participate in the
development of the terms and understand their impact.

Determining the appropriate licensing approach (ownership of intellectual property and data rights) is
critical in nearly all software procurements. Specifics as to who owns the product, noncompete clauses,
warranties, and data management are a few of the issues to be resolved. It is important to objectively
identify the acquirer’s needs for licensing rights and to determine the appropriate kind of license. The
acquirer may develop a licensing strategy for computer software and require the vendor to provide a

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