Negotiating Software Agreements

Avoid contractual mishaps and get the biggest bang for your buck.

Purchasing software license and service agreements can be daunting for any district. Greg Lindner, director of information and technology services for the Elk Grove Unified School District in California, and Steve Midgley, program manager at the Stupski Foundation, advise taking the following steps to successfully negotiate contracts.

Define what you want to accomplish with the software before signing the contract. "There's often a mismatch between what the client wanted and what the vendor provides," says Midgley. How the software will be used to achieve its goal has to be clear, which means impacted end users—generally teachers and principals—should be part of prepurchase committee discussions.

If a district lacks negotiation experience, turn to a consultant. Consultants who walk a district through the process can be well worth their cost, Midgley says. Examples are Davidson Services in Sussex, Wisconsin, ViKiwi in San Francisco, and the BLE GROUP in Washington, D.C.

Contracts are negotiable. Although a vendor might say a district is getting its standard contract, it is only standard because the vendor says so, Midgley points out.

Pay as you go. Spread payments out. Just like working with a home contractor, paying for everything at once can reduce leverage with a vendor if there's a problem later. Also be sure contract cancellation policies are clear.

Spell everything out. Although it's more work, put "deliverables"—specifics of what a product will do at what time—in the contract. It can even include consequences if software doesn't perform as expected. A service-level agreement might say, for example, that for every hour a server is down past 24 hours, the vendor credits the district $1,000. "This is the place where a good business consultant can really help," Midgley says.

Don't accept the first price they offer—usually. "It's kind of a balance—you've got to push as hard as you can without destroying the long-term relationship," Lindner says. If that relationship isn't working, a district could get a good price one year, commit to a product, and then see the price increase the next year. Sometimes the long-term relationship with the vendor outweighs a product's cost.

Get vendors to base pricing on average daily attendance (ADA). Elk Grove originally purchased inventory control software on a per-computer basis. Although it took a few years, the district persuaded the vendor to change to ADA-based pricing, enabling it to save money and plan more efficiently. The cost dropped from $10 per computer a year to 30 cents per ADA.

Sign a multiyear contract in certain cases. For emerging technologies, it may be better to go year by year, but for some software, a multiyear contract makes sense. The Elk Grove district did just that to get a better price for its antivirus and video streaming software.

There's strength in numbers. Consider being part of a larger group of buyers by joining a district consortium. This increases the vendor's potential customers and can result in lower prices. Elk Grove is a member of the Sacramento Educational Cable Consortium, a group of K-20 educational institutions. The district parlayed its membership in the group into substantial price reductions for video streaming software.

Get information from peers. Talk to other districts. Lindner turns to the California Educational Technology Professionals Association e-mail list to compare notes on products and vendors.

Be creative and persistent in efforts to lower prices. "Keep hammering away," Lindner says. "We say, 'This is education, you've got to do better.'" If the account executive can't or won't lower prices, ask who has the authority to do it and go to him or her. Also, use the influence factor. Lindner reminds vendors that if Elk Grove adopts a new technology, other districts will follow. "We're seen as a tech leader in our area and statewide, so we play that up," he says.

Pilot a couple of schools. When districts do this, they get leverage and can suggest the vendor offer a better price in order to expand the product to all district schools. That can backfire, though, if a particular school doesn't like the product and lets the vendor know, Lindner cautions.

Be clear about the rights to your data. Vendors should be bound by a confidentiality agreement. At contract termination, a vendor is required to give all district data back in a usable format.

Final words of wisdom. "Keep in mind it's not always the vendor's fault," Midgley says. "The vendor can't be responsible for everything."

Sheila Riley is a San Francisco-based freelancer who also writes for EE Times and Investor's Business Daily.

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The Contract Commons Project helps schools deal.

Working from the premise that "appropriate technology can help public education institutions serve our communities' students...[and] effective contracts can improve upon...that technology," a new online initiative aims to help school districts negotiate and draft more effective software agreements.

The Contract Commons Project, a joint venture of the Institute for Information Law & Policy at New York Law School and the Stupski Foundation, provides an online system that includes a library of contract clauses and a community forum, among other tools.

—Susie Meserve