Technology Contracting for Transit Projects (2017)

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3 TECHNOLOGY CONTRACTING FOR TRANSIT PROJECTS By Larry W. Thomas, J.D., Ph.D., The Thomas Law Firm I. INTRODUCTION This report discusses technology contracting for the kinds of technology that transit agencies typi- cally procure. The Federal Acquisition Regulation (FAR) definition of information technology appears to be an apt description of the scope of the topic of the report. The term information technology means “any equipment, or interconnected system(s) or subsystem(s) of equipment, that is used in the automatic acquisition, storage, analysis, evaluation, manipulation, management, movement, control, display, switching, interchange, transmission, or reception of data or information by [an] agency.”1 The term includes computers, peripheral equip- ment, software, and related resources. Part II of this report discusses technology agree- ments; types of software; alternative methods of project delivery, such as design–build; the central- ization in some states of technology procurements; maintenance and support and service level agree- ments; the acquisition of technology through non-technology procurements; and escrow and nondisclosure and confidentiality agreements. Parts III and IV deal primarily with state laws that apply to technology agreements. Part III discusses states’ statutes that apply to procurements by state entities or political subdivisions or other units of local government, statutes that are specific to procurements of technology, and statutes that are specific to procurements by transit agencies. Part IV explains that, to the extent not addressed by state or local procurement laws or by a transit agency’s technology agreement, any disputes aris- ing under an agreement are likely to be decided under state law, including state law on contracts and torts, and/or Article 2 of the Uniform Commer- cial Code (UCC). The report also discusses the Uniform Computer Information Transactions Act (UCITA), which only the states of Maryland and Virginia have enacted. Parts V and VI discuss the drafting of technology agreements. Part V discusses issues and clauses that a transit agency may want to consider when drafting such agreements. Appendix D to the report is a detailed checklist of clauses to consider with citations to specific provisions of technology agree- ments that many transit agencies provided for the report. Part VI analyzes technology contracting and cloud computing as an alternative delivery mode for transit agencies, factors that transit agencies may want to investigate when considering cloud comput- ing, and clauses that agencies may want to include in an agreement for cloud computing. Parts VII and VIII discuss issues of special concern to transit agencies in technology contract- ing. Part VII deals specifically with technology providers’ attempts to limit their liability, transit agencies’ need for indemnification for claims arising out of technology they procure, and warranties by a contractor, designer, developer, licensor, or vendor of technology that transit agencies procure. Part VIII discusses the importance to transit agencies of contractual protection for claims arising out of a data-breach or privacy violations caused or not prevented by technology that an agency procured. Parts IX through XI focus on three kinds of intel- lectual property (IP) that are implicated by transit agencies’ procurement and use of technology: trade secrets, copyrights, and patents. Part IX analyzes federal and state laws applicable to the protection of trade secrets, including the federal Defend Trade Secrets Act of 2016 (DTSA) and the Uniform Trade Secrets Act (UTSA). Because digital IP, such as soft- ware, is copyrightable, part X concerns transit agen- cies’ rights under the federal copyright laws. Whether a state or local agency may copyright a work, however, is a matter of state law. Part X also discusses the federal government’s rights in data resulting from experimental, developmental, or research work funded in whole or in part by the federal government. Part XI discusses the protec- tion of a transit agency’s rights to its IP under the patent laws. Depending on the circumstances, either computer hardware or software may be patentable. Part XI reviews the patent rights of the federal 1 Federal Acquisition Regulation, subpart 2.101 (Defi- nitions) (2016), https://www.acquisition.gov/?q=browsefar (last accessed Feb. 24, 2017). See also, American Public Transportation Association, APTA Procurement Technol- ogy Standards Workgroup, APTA PS-TP-WP-001-11, at 1 (2011), hereinafter referred to as “APTA Report,” http:// www.apta.com/resources/standards/Documents/APTA- PS-TP-WP-001-11.pdf (last accessed Feb. 24, 2017).