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IT procurement contract

Contributor(s): Matthew Haughn

An IT procurement contract is a document detailing the legally-binding agreement between a vendor of IT products and services and the purchaser.

IT procurement contracts require careful oversight and more interaction between the contracting parties and any involved third party, such as a lawyer, who is evaluating the contract. The complex nature of information technology means that the third party is unlikely to have insight into the special requirements of IT systems, so the purchaser must ensure that all relevant requirements are fully detailed.

Following are common elements of an IT procurement contract:

A statement of work (SOW): The SOW specifies the requirements of a project or service contract and addresses how success will be assessed.

Item specifications: These include details for the design, function and performance of all items in the contract.

Testing and inspection schedule: This schedule identifies dates when goods or services will be made available to the buyer for evaluation prior to delivery.

Delivery schedule: The schedule stipulates contractual dates for delivery and penalties for failing to deliver on time.

Warranties: This area details warranties provided and stipulates areas and conditions under which no warranty is offered.

Governing laws: Identifies the jurisdiction whose laws will apply for contract enforcement.

Termination: The terms under which either party may terminate the agreement.

Arbitration: Details if and how arbitration may be used to help resolve any disputes.

Charge-back policy: Specifies any buyer expenses that may be charged back to the vendor.

Payment schedule: Stipulates dates and terms for payment.






This was last updated in May 2016

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