Professional Services Subcontracts

Professional Service (PS) agreements vary widely, many vendors that only offer an extremely specific service, like a staff augmentation PS on a daily basis, limit the terms to just those necessary for that sort of service. That sort of service is under your management and direction, so you would not get a warranty that the Service would result in a functional custom deliverable. However, if you engaged a PS consultant to develop a custom piece of Software, you would require a warranty that the Service deliverable would operate in compliance with the mutually agreed upon Statement of Work or mutually agreed upon documentation. If that Service deliverable did not work in compliance with that SOW during the warranty period (90 day -1 year), then the PS consultant would need to repair or replace the defective deliverable at their own cost and expense; if they failed to do that after a few opportunities the Customer should be able to terminate and receive a refund.

Another thing that is quite different about a staff augmentation or Time & Materials PS Service from a custom PS Software development Agreement is “Acceptance”. In  a staff augmentation or T&M Service the Service is provided under the management and direction of the Customer (they are responsible for assigning the consultant the work and reviewing the work the consultant delivers) that Service  would be accepted upon delivery of the Service and often the Customer is asked to sign a daily or weekly log of the service hors delivered. In a PS custom software development, the parties would defile specific Acceptance Test Criteria, a period of time during which that deliverable will be tested against those Acceptance Criteria, and the PS vendor is obligated to cure any defects with the PS service deliverable to successfully meet the pre-stated Acceptance Test Criteria, and upon acceptance the warranty discussed above would start.

PS Subcontracts often address:

• Consultant background screening requirements (criminal background, sanction checks etc.)
• My address workplace rules.
• Custom warranties
• Milestone deliverable
• Status reporting
• Change order process.
• Custom support obligations
• Assumptions
• Customer responsibilities
• Privacy regulation compliance
• Non-compete with the prime contractor for add-on business.
• IP ownership
• Limitation of liability
• Indemnity
• Governing Law
• Dispute resolution and Executive Steering committee.
• Customer Contract flow-down terms (Customer stated requirements that must be complied with).

Often many vital details are not addressed in the PS Agreement but deferred to and addressed in the Statement of Work, where the details regarding the project are understood. In addition to that sometimes the terms of your PS Subcontract might need to be amended to match the terms that the Prime Contractor has in place with the Customer for that specific project; so a customer might require drug testing or fingerprinting added to the project’s background screening for a financial services development project. Typically, this Order specific adjustments would be reflected in the associated SOW. Some customers may have IP assignment or direct confidentiality terms required with the subcontractor’s staff, again that might then be stipulated in in the Subcontractor’s SOW with the Prime Contractor.

There are many different ways to proceed with Professional Service Subcontracts, many of the issues are common, but the context of where they are addressed varies widely.

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