- Professional Services Agreements

S Simple provision (basic information) S Detailed provision (sensitive information) S Information security requirements depending on nature of data

☐ Force majeure S Ensure proper scope S Avoid overbroad provisions to include staffing problems, unavailability of materials and failure of third parties

S Right to terminate

S No payment for services not rendered ☐ Nonsolicitation of supplier’s employees ☐ Insurance tailored to customer’s requirements ☐ Fees and costs

S All fees expressed in contract, statement of work (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 software and hardware

☐ Limitation of liability caps account for fees paid across agreements

Professional services agreements are used for a wide range of service engagements, including software development, implementation work, outsourcing services, website development, and many other activities for which services are rendered for an agreed-upon fee. While these types of agreements are frequently entered into on a stand-alone basis, they are also commonly part of larger engagements. For example, a software license agreement may also include a professional service agreement or component (i.e., professional services terms, or a professional services exhibit, included

40 

in a software license agreement) for customization work or implementation services. Similarly, a hardware purchase agreement may include a professional services agreement or component for installation services. Depending on the nature of the engagement, it may be appropriate and more protective in these larger engagements to combine the agreements into a single contract with uniform provisions. In that case, the agreement would be appropriately called, for example, a master license and services agreement or a hardware purchase and installation agreement.