Government caps liability for ICT contractors

Information technology and communications (ICT) suppliers will largely be freed from the dangers of uncapped legal liability in federal government contracts under moves by Canberra to reform its procurement practices.

Information technology and communications (ICT) suppliers will largely be freed from the dangers of uncapped legal liability in federal government contracts under moves by Canberra to reform its procurement practices.

Just a day after the Australian Information Industry Association (AIIA) called on all governments to follow moves by Victoria to scrap uncapped liability and allow suppliers to retain intellectual property developed during a procurement contract, Canberra announced plans to cap liability in most ICT contracts through release of a guide for government officers on managing risk in procurement.

The federal Minister for Communications, Information Technology and the Arts, Senator Helen Coonan and the Special Minister of State, Eric Abetz, jointly announced the move today as part of a review of the Government Information Technology and Communications (GITC) Framework and release of a draft version of the procurement guide.

The review re-examined the legal documents that make up the GITC, which are used by government agencies to create ICT contracts.

"The draft guide provides practical assistance to procurement officers on how to identify and manage risk in government ICT contracts, including sample clauses for ICT contracts," said the minister for Communications, Information Technology and the Arts, Senator Helen Coonan.

"Ultimately when the guide is finalised it will result in the capping of liability in the majority of Government contracts."

The unlimited liability conditions in current government contracts prevent many companies from bidding for government tenders, according to the AIIA, which welcomed the announcements.

"In the past many companies, particularly small Australian companies, were reluctant to bid because of the onerous implications of unlimited liability," said AIIA chief executive officer Rob Durie.

"Today's announcement provides greater opportunity for companies to bid and gain that all important first government customer," he said.

Also announced in the review outcomes were the development of model contracts for different types of ICT, such as software development and managed services. These would help simplify contracts, according to the government.

"It makes no sense for government agencies to have completely different forms of contracts. Prices and supply will be different in each case but there is no justification for other conditions in contracts varying as much as they do," said Senator Abetz.

The government will consult industry on the development of the model contracts, before they are available to agencies by the end of May 2006.

"The model contracts will be 'living' documents and can be adjusted as needs change," according to the review.

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