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Chapter 27 - Software Licensing and Maintenance Contracts

27.0 Introduction

Typically in a software license agreement, the licensor (the one licensing the software technology to the customer), also known as the "supplier,"" will grant certain rights to a licensee (the agency or customer). The supplier will retain ownership to each copy of software delivered, but the agency will have a license to use it. The agency's rights to use, transfer, modify, access and/or distribute the software are defined in the license grants. Some guidance, but not all guidance in this chapter, may be applicable to cloud/Software as a Service (SaaS). Refer to Chapter 28 for more information regarding cloud/SaaS procurements. If you have any questions please contact

The supplier generally has an interest in restricting the rights granted. The supplier is also interested in protecting the secrecy of the software and its associated trade secrets.

The agency, on the other hand, generally wants the grant from the supplier to provide broad rights and few restrictions. The specific types of rights and restrictions negotiated, depends on many factors including:

  • Type of a software to be licensed
  • Intended use of the software
  • Bargaining power of the supplier and agency
  • Fee the agency is willing to pay for the license

Many rights can be negotiated into or out of a license agreement if the agency is willing to pay the fee. Many of these negotiated rights, such as bundled training or consulting, can often lead to positive bottom-line results for the Commonwealth.

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