Chapter 25 - IT Contract Formation

25.8.9 Termination of IT services

Agencies should strive to obtain a contractual commitment from the supplier that the supplier will not suspend services except in the most limited circumstances. Agencies should try to negotiate an exception to the typical limitation of liability clause in the IT contract to include damages caused by a supplier's suspension or cancellation of services. For example, those damages might include the cost of finding a replacement service. Any revenue commitment in the agreement should also be reduced by an amount equal to or greater than the revenue generated for the supplier from the cancelled service if the supplier will continue to provide other services under the contract.

It is important to include "transition assistance" language within the IT contract. For instance, if the contract is not renewed or terminated or if work on a project is terminated for any reason, the supplier is responsible to provide reasonable transition assistance to allow for the expired or terminated portion of the services to continue without interruption or adverse effect and to facilitate the orderly transfer of such services to the agency. Here is language from VITA's contract templates, customized for agency use:

"Prior to or upon expiration or termination of this Contract and at the request of Agency, Supplier shall provide all assistance as Agency may reasonably require to transition Name of Project/Contracted Services to any other supplier with whom Agency contracts for provision of a Project services. This obligation may extend beyond expiration or termination of the Contract for a period not to exceed six (6) months. In the event of a termination for breach and/or default of Supplier, Supplier shall provide such assistance at no charge or fee to Agency; otherwise, Supplier shall provide such assistance at the hourly rate or a charge applicable under the Agreement or as otherwise agreed upon by Supplier and Agency."