Contract Risk Management for Airport Agreements (2016)

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37 the old version to Contractor, provided City pays Contractor the applicable rental or license fee and maintenance charges for the new version of the Licensed Software; or (iii) City may retain and use both versions of the Products, provided City pays Contractor the applicable rental or license fee and maintenance charges for both versions of the Licensed Soft- ware. City will promptly issue the necessary Authorization Document(s) to accomplish the above. See Appendix H-4, San Francisco International Airport. Appendix H-4 provides a survey of additional contractual provisions used by other airports to address obsolescence risk. Methods to Contractually Mitigate Risk The following list provides topics and issues to address when drafting or reviewing a contractual provision related to obsolescence risk: • Require the contractor to update the licensed software to cause it to operate under new versions or releases of the airport’s operating system. • Require the contractor to provide the airport with improvements, enhancements, extensions, and other changes to the licensed software as it is developed by the contractor. CONCLUSION Although the operation of airports involves sig- nificant risk, a well-prepared airport can minimize risk through the use of risk-shifting and risk- sharing provisions in its standard agreements and the use of tailored insurance vehicles. This digest highlights primary risks associated with standard aviation agreements and ways to address that risk. Airports should also consider, however, any unique circumstances and applicable laws when assessing new contract and insurance requirements, as the variations in airport finances, governance, size, or location can impact the options that are available. Once an airport can identify areas and opportuni- ties to mitigate risk in its daily operations and then shift that risk to the appropriate entity, the airport, and as a result, the traveling public, will benefit. • Ensure that the scope of services and specifi- cations are clearly delineated. • Require the vendor to obtain a performance bond to insure satisfactory performance. • Obtain a copy of the source code for all software programs. 4. Obsolescence.—Technology is changing faster than ever, making the risk of software obsolescence that much more prevalent. Airports must ensure that software/IT agreements provide for frequent, if not constant, updates to airport systems in order to mitigate the risk of having out-of-date software and IT systems. Example/Sample Provision The following contractual provision is an example of how obsolescence risk may be addressed in a soft- ware/IT agreement. 10. Maintenance and Support. a. Maintenance and Support Services. After Acceptance of the Licensed Software and subject to the terms, conditions, and charges set forth in this Section, Contractor will pro- vide City with maintenance and support services for the Licensed Software as follows: (i) Contractor will provide such assistance as necessary to cause the Licensed Soft- ware to perform in accordance with the Specifications as set forth in the Documentation; (ii) Contractor will provide, for City’s use, whatever improvements, enhancements, exten- sions and other changes to the Licensed Software Contrac- tor may develop, and (iii) Contractor will update the Licensed Software, as required, to cause it to operate under new versions or releases of the operating system specified in the Authorization Document so long as such updates are made generally available to Contractor’s other Licensees. b. Changes in Operating System. If City desires to obtain a version of the Licensed Software that operates under an operating system not specified in the Authorization Docu- ment, Contractor will provide City with the appropriate ver- sion of the Licensed Software, if available, on a 90-day trial basis without additional charge, provided City has paid all maintenance and support charges then due. At the end of the 90-day trial period, City must elect one of the following three options: (i) City may retain and continue the old version of the Licensed Software, return the new version to Contractor and continue to pay the applicable rental or license fee and maintenance charges for the old version; (ii) City may retain and use the new version of the Licensed Software and return