TECHNOLOGY, OUTSOURCING, AND COMMERCIAL TRANSACTIONS
NEWS FOR LAWYERS AND SOURCING PROFESSIONALS

Please join us for a discussion of how the coronavirus (COVID-19) pandemic will affect existing and future outsourcing contracts and relationships. Partners Barbara Melby, Michael Pillion, and Mike Pierides will discuss the following topics:

  • Excused events and associated provisions
  • Business continuity: then, now, and going forward
  • Remote working blessings and challenges
  • Scalability and change
  • Step in, termination, and renegotiation

We hope you’ll join us on Tuesday, April 28, at 12:00–1:00 pm ET, 9:00-10:00 am PT, and 5:00-6:00 pm BST.

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Please join us for an in-depth discussion on how to successfully renegotiate your existing services contracts with technology, outsourcing, and commercial transactions partner Vito Petretti. Topics will include:

  • A general look at the renegotiation process
  • Business issues and drivers involved in renegotiation
  • How to conduct a renegotiation
  • Contract terms that may impact renegotiation

We hope you’ll join us on Wednesday, April 8, 2020, from 12:00–1:00 pm ET.

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The Financial Stability Board (FSB) published on December 9, 2019, its report on financial institutions’ increasing reliance on third parties to provide cloud computing services (the Report). Established by the G-20 in April 2009 to promote international financial stability, the FSB is an international body that assesses vulnerabilities in the global financial system and coordinates the work of national financial authorities and international standard-setting organizations to develop and promote appropriate regulatory and supervisory policies.

The Report outlines the benefits from the increasing use of third-party cloud computing services, focusing primarily on cost savings, improved competition and cybersecurity, and increased operational resilience. It notes, though, the new challenges that the current scale of use may pose, such as the significant and systemic effects that an operational failure of critical third-party infrastructure could have. This is due to the highly concentrated cloud computing sector and the increasingly complex network of third-party suppliers and dependencies.

In cloud services, whether it is infrastructure as a service (IaaS), platform as a service (PaaS), or software as a service (SaaS), service availability is often a significant customer concern because the customer is relying on the vendor to provide and manage the infrastructure and related components that are necessary to provide the services. To address this concern, vendors will often provide a Service Level Agreement (SLA) containing a commitment that the service will be available for a percentage of time (e.g., 99.9%) during a certain period (e.g., week, month, or quarter). This is often referred to as an uptime or availability commitment. When reviewing and negotiating an SLA with an uptime commitment, it is important to consider the following issues.

Uptime Percentage

Given the different types of cloud services and how those services are used, there is no standard uptime commitment provided by vendors. Rather, uptime commitments can range from 99.999% to 97% or even lower. It is also not uncommon for vendors to provide different uptime commitments for different parts of the service. Ultimately, a vendor’s uptime commitment will depend on a variety of factors, including the type of service, how a customer will use the service, negotiating leverage, and vendor’s business model.

Please join us in our Philadelphia office for our annual Technology, Outsourcing & Commercial Contracts Networking Roundtable. The roundtable will feature an in-depth discussion of hot topics relating to the increased connectivity of our businesses, including privacy concerns, data rights, cloud solutions, and contracting for the use of connected devices. Stay connected with us at the networking reception following the discussions.

We hope you’ll join us in Philadelphia on Thursday, April 16, 2020, from 3:30–5:30 pm ET.

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In a long-term outsourcing, software as a service (SaaS), or other services agreement, the customer will typically push for a termination right relating to the service provider’s breach, and perhaps for an insolvency event or change in control of the service provider. However, the customer should also consider including the right to terminate for its convenience (without cause), which could cover any of the following situations:

  • The customer is not satisfied with the service provider’s performance under the contract even though the provider is meeting its service level and other performance requirements under the contract.
  • Many alleged breaches by the service provider are initially “black and white” in the view of the customer, but they turn “gray” when the service provider pushes back and alleges nonperformance, nonresponsiveness, lack of cooperation, and the like on the part of the customer. Adding the customer’s right to termination for convenience can avoid the potential dispute over whether the customer has the right to terminate on other grounds.

Morgan Lewis has recently issued several LawFlashes on the 2019 Novel Coronavirus (COVID-19) outbreak, providing a number of resources for businesses across the globe dealing with various compliance challenges and unanswered questions. In this rapidly changing situation, for example, employers must carefully balance concerns related to employee and public safety with protecting employees from unnecessary medical inquiries, harassment, and discrimination.

To help guide companies through this multifaceted public health crisis, Morgan Lewis has launched Responding to the 2019 Novel Coronavirus to keep on top of developments as they unfold.

Are you about to sign a service agreement with a third-party service provider under which it will access and use technology of your company? Have you checked your applicable third-party contracts to see if you need any consents? The contracts under which your company uses technology every day, from the mundane to the critical, may contain hidden restrictions on the third party’s access and use for your benefit under the services contract.

There is an endless number of arrangements a customer could have with its third-party service providers, but this Contract Corner will discuss the case where the customer authorizes a service provider to access and use licensed software either while remaining at the customer site, or by moving it to the service provider’s site. More specifically, it explores just some of the issues and language in the customer’s license agreements with those third-party software providers to be checked during pre-signing due diligence.

The UK government has indicated that the UK’s approach to public procurement will fundamentally change post-Brexit. While it remains to be seen whether such a fundamental change will be possible in practice, the UK government’s pronouncements clearly suggest that change is on the way, which will most likely provide a less prescriptive framework for UK contracting authorities to follow.

These changes will almost certainly have a significant impact on how outsourcing and technology providers interact with the UK government, both in the context of their current agreements and also in respect of future contract bids and awards.

Current Regime

The laws that govern the UK’s public procurement regime are largely based on EU rules found in several EU directives and the Treaty on the Functioning of the European Union. Broadly speaking, these rules aim to open up public procurement to EU-wide competition. Public bodies must, for example, award public contracts without discrimination on grounds of nationality and advertise their contracts EU-wide via the Official Journal of the European Union ( OJEU).

The 2019 ISG Momentum Market Trends & Insights Geography Report was recently released and contains valuable insights on how the outsourcing industry is growing and transforming around the world. The report, which was published on December 27, 2019, is authored by Paul Reynolds, partner and chief research officer at ISG.

One of the key highlights of the report focuses on annual contract value, or “ACV.” The report finds that the “number of outsourcing contracts signed continues to rise each year, but the cumulative annual contract value (ACV) of those deals continues to fall.” The report attributes the decline in ACV, which fell for the sixth consecutive year in 2018, to the following three factors: (1) falling prices from commoditized service lines, (2) aggressive pricing policies from new market entrants, and