This article originally appeared in the January 2003 issue of The Rational Edge E-zine on-line magazine, copyright 2002-2003 IBM and Max Wideman.

The Rational Unified Process (RUP) is a rigorous software development process advocated by the Rational Software Corporation.

The downloadable PDF file of the paper on this site is the one prepared by the Rational Edge editorial staff with the special assistance of Ms Marlene Ellin.

Published here August, 2003.

PART II | Recap | Elements of a Valid Contract | Impediments to Successful Contracting
Progressive Contracting Overcomes Impediments
Advantages of Centralized Procurement | PART IV

Progressive Contracting Overcomes Impediments

As we saw in Part II, a new, progressive approach to software acquisition can accommodate the growing complexity of today's projects. Because of its flexibility and adjustability, a progressive contracting scheme can also help overcome many of the other barriers we noted above. We recommend that a software development acquisition contract be structured on two levels: 1) A Head Contract that sets the stage for 2) a series of overlapping Contract Work Orders (CWOs). The CWOs progressively describe the full technical details of the work to be done and the functionality or features to be delivered in the product. And they can be planned, developed, and delivered using the iterative, four-phase approach embodied in the Rational Unified Process,¨ or RUP¨ (see Part II for details).

Scope of a Head Contract

In addition to the requirements listed above under Elements of a Valid Contract, the Head Contract should contain the following:

  1. Clearly articulated definitions of terms used in the contract, preferably at the beginning of the document.
  2. Detailed descriptions of any special responsibilities of either party to the contract, such as responsibility for coordination or obligation to respond, as mentioned earlier.
  3. Permissions or limitations regarding subcontracting.
  4. Descriptions of acquirer-furnished property or facilities, such as existing hardware or software to be used in the course of the work.
  5. Specifications regarding ownership of patents, copyrights, or licenses applicable to the software and documentation involved in the contract.
  6. Provisions for inspection, testing, and correction of defects.
  7. Guidelines and restrictions regarding changes to the contract scope, with corresponding changes in schedule and price for the work.
  8. High-level schedule milestones and completion dates, as well as reasons for excusable delays and any incentives or penalties.
  9. Terms of payment and/or allowable expenses for remuneration.
  10. Regulations regarding overtime, staff premiums, and other forms of compensation.
  11. Circumstances under which the acquirer may terminate the contract, along with the terms of compensation under each circumstance.
  12. Penalties for default -- that is failure to perform on the part of the supplier.
  13. Notification and resolution procedures for disputes.
  14. Product warranties provided by the supplier.
  15. Clear ownership provisions for the resulting product or portions of it (e.g., source code for particular functions or components).

If this seems like a lot to digest and execute, it is! Even if they use a progressive approach, companies will typically rely on standard boilerplate clauses to fulfill many of these content requirements for the Head Contract.

Scope of a Contract Work Order

The scope of a contract work order (CWO) focuses on the technical content of the next iteration in the series, the nature of which will change as the project progresses to maturity. In general, and assuming the work has been discussed and agreed-upon during original contract negotiations or during the last stage of the previous CWO, as discussed earlier, the CWO should contain the following:

  1. Instructions to proceed.
  2. Technical Instructions, or the increment's technical scope of work.
  3. Any special instructions relating to this increment, such as product testing and acceptance.
  4. Requirements for CWO administration, such as coordination requirements, and a schedule of milestones and delivery instructions for this increment.
  5. Form of payment for this increment -- in other words, whether it is cost reimbursable or fixed price.
  6. Acquirer's and supplier's authorizing signatures, typically of those at the working management level.

This "two-tier" contracting approach lays out the main legal content at the outset and greatly simplifies the content of CWOs, which represent supplementary agreements. This enables the technical people on both sides of the agreement to focus on content, to the advantage of both parties as well as the end product.

Impediments to Successful Contracting  Impediments to Successful Contracting

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