The new Victorian Government ICT policies came into effect on 3 July, with improvements to the contractual framework viewed positively by AIIA.

There are four new policies relating to: Intellectual Property (IP) in Software, Types and Levels of Insurance, Tendering Documentation and Liability Clauses.

“AIIA has worked with the Victorian Government over recent months on the drafting of the policies,” says AIIA’s Victorian Branch Chairman, Kee Wong. “Generally, they represent a significant step forward and will reduce some of the barriers for members doing business in the Victorian Government market.”

Insurance
The state government’s new policy on insurance recognises that the need to carry insurance imposes a cost on suppliers that can significantly impact their ability to do business. The policy now requires that the type and level of insurance is determined on the basis of a risk assessment, with minimums of $5 million for public liability and product liability and $1 million for professional indemnity.

Tendering
This policy simply requires that key contractual terms, including IP ownership, insurance and liability, are set out “at the earliest opportunity in a tendering process” to help inform the market and reduce costs associated with tendering and negotiations.

Liability
The policy on liability requires that the supplier’s liability reflects the risk profile of the procurement, recognising that “unlimited liability is unrealistic and is an impediment to suppliers being able to do business … [and has] reduced choice for government as a result of some suppliers deciding not to participate in government tenders”.

The accompanying Guidance suggests that either the government can communicate its proposed limitations to bidders or indicate whether it is prepared to consider limitations proposed by the bidder – both must reflect the risk profile of the procurement. The Guidance does not propose any alternate drafting, but includes a brief explanation of the relevant GITC clause.

Intellectual Property
The policy on intellectual property in developed software is probably the most complex and in AIIA’s view, will require further discussion in light of practice.

The policy effectively reverses the existing default position, whereby the government would own IP in software created for it. The Victorian Government has recognised that its requirements can be met through licensing arrangements and if the developer retains ownership, this may encourage innovation and allow them to commercially exploit the software outside of the Victorian Government.

However, the Victorian Government requires a very broad licence that extends to all their public entities (and their contractors) and includes access to source code. Members are advised to review the provisions carefully and consider the implications for the development and management of their IP, including impact on any warranties provided. Departure from the new default position is permitted, but only in exceptional circumstances and requires senior level approvals to be obtained. The accompanying Guidelines provide a little further detail, including analysis of the relevant GITC clause and drafting.

AIIA positive about policy changes
According to AIIA, the changes to Victorian Government ICT procurement policies are largely positive.

The policies apply broadly to all Victorian public entities, but as they are drafted at a fairly high level, their effectiveness in practice will depend largely on implementation at an agency level, which in turn requires training and support to transform existing practices. The Victorian Government has indicated that training will comprise part of their strategy.

Victorian Branch Chairman Kee Wong encourages members to familiarise themselves with the new policies so that they are prepared to respond appropriately.

“The policies are scheduled for revision in one year’s time, so any feedback that you have is most welcome and will help ensure that we can work with the Victorian Government to continue to improve them as practice emerges,” Mr Wong adds.

Click here to view the policies online.

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