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CHECKLIST

FOR OUTSOURCING AGREEMENTS



This checklist will help you ensure that you included all relevant clauses in an outsourcing agreement. Please ask your lawyer to review any agreement or contract before signing it.


Definition of the relationship, goals and objectives of both parties

Exclusive of other vendors
Protect market position of customer


Scope of services to be provided

Define services and deliverables to be provided to customer by vendor
Define services excluded
Define service levels (i.e., performance standards) and remedies
Provide for modification of service levels from initial levels upon execution after conversion to vendor operations
Provide for milestones and project schedules (time phased, person loaded)
Scope of vendor's authority


Term of agreement

Renewal periods
Automatic renewal
 

Personnel
Staffing requirements
On customer site/off customer site
Vendor right to change personnel
Customer right to approve personnel
Specific obligations of vendor regarding vendor personnel
Confidentiality
Non-compete
Guaranteed service period for certain personnel
Succession planning
Mix of staff levels
Vendor to offer employment to customer's work force
Define employees to be transitioned
Parameters for offers of employment
Employee transition plan

Use of customer facilities

Vendor to provide services from customer premises until specified date for conversion to other facilities
List of equipment and services at facilities available for vendor use
List of facilities square footage and rate to be paid, if any for use by vendor
Vendor access to customer facilities
24 hour/normal vendor working hours
Security issues
Relocation of vendor


Customer owned equipment

Purchase of equipment owned by customer used to perform the services
List of equipment/depreciated value
Disposition of equipment subject to capital leases
Obligation of customer to provide or acquire certain equipment


Customer leased equipment

Vendor permitted to use equipment leased by customer to perform the services
Customer to terminate or assign leases for the leased equipment
Customer to exercise option to purchase equipment under terminated lease and sell to vendor at cost


Data Processing services

For customer owned intellectual property
Customer grants vendor license to use customer owned intellectual property for term of the agreement or until conversion of services using other intellectual property, if contemplated by parties
Assignment to vendor of licenses for non-customer owned intellectual property to be used to provide services
Termination of licenses for intellectual property not required by vendor to perform services
Obligation for integration, new products
Cost of correction of processing errors


Vendor intellectual property

License to use/included as part of services
License with respect to termination
Bankruptcy issues
Substantive license issues (scope of use, updates, warranties, etc.)


Third party services

Customer to assign agreements for third party services to vendor
Vendor responsible for cost of third party services
Vendor to have the right to replace third party services with its own services or services of a third party of its choice


Management of projects and other services

Appointment of project managers by vendor and customer to be principal liaisons between parties
Respective roles of parties (e.g., establishing priorities)
Management planning
Acceptance testing of vendor deliverables


Customer responsibilities

Establish priorities
Delivery of data
Training
Forms/documents/supplies/consumables


Confidentiality obligations

Customer business information/data
Vendor business information
Intellectual property of either party or its licensor


Customer data

Security
Right of customer to obtain data at any time
Back-up procedures


Procedures to change scope of services

Customer right to change priority or scope of vendor's services/effect on rights and obligations of both parties
Procedures for requesting changes to vendor's services
Different performance standards for changes





Conversion services

Development of a plan to convert from customer's procedures to vendor's procedures to provide services
Rights and obligations related to performance standards
Software or processing modifications
Scope
Approval by customer
Vendor obligations for updates, legal and regulatory changes


Training

Training for customer personnel
Full training/"train the trainer"
Daily/hourly


Fee structure

Fixed time/time based fee/volume based fee
Basis of calculation
Credits/reimbursements to customer
Expenses
Cost of living adjustment
Fee schedule based on milestones
Late fees/payment and billing/disputed amounts


Liability issues

Limitation of liability
Warranties regarding services/products/personnel
Disclaimer of warranties
Indemnities


Termination

Specific rights
Right to extend for limited time upon termination
Termination assistance
Transitional rights and obligations
Offers to personnel
Acquisition of equipment/software



Sharing of computer resources

Use of resources other than customer purposes
Use by customer (if less than a full outsourcing)


Dispute resolution

Assignment

Insurance requirements

Independent contractor status

Restriction on hiring of other party's personnel

Taxes

Disaster Recovery/Force Majeure

Audit issues

Most Favored Customer

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