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8 escrow agreement, a developer deposits certain proprietary materials, such as source code, that would be required if the developer fails to support and maintain its software.58 A sample escrow agree- ment is included as Appendix E.59 The use of an escrow does not apply to off-the-shelf software.60 An escrow agreement ârequire[s] the developer of a software product to place proprietary materials necessary to maintain the product in escrow with a neutral party,â the escrow agent.61 If a developer fails to support its software, the escrow agent releases the source code and/or other proprietary materials to the end user.62 Unfortunately, licensees may not give the attention to escrow agents and agreements that escrows require. First, an escrow agreement should be executed prior to a license or other agreement for software.63 Second, the escrow agreement should state the date by which the devel- oper must deposit the proprietary materials in escrow, with the escrow agent mutually selected by the parties.64 Third, before using an escrow, a transit agency should be involved and exercise due dili- gence in the selection of an escrow agent, rather than merely use an agent selected by a developer, such as a developerâs attorney. Fourth, a transit agency considering the use of an escrow may want to develop a standard list of materials that technology developers must deposit in escrow.65 There are other issues for transit agencies to address, such as an escrow agentâs facilities for the storage of a developerâs proprietary materials (e.g., for the protection of magnetic media), periodic audits of an escrow agentâs facility, and a procedure for verifying that a developer provides an escrow agent with updates or upgrades to source code.66 Further- more, a licensee may want an escrow agreement to include a âquick releaseâ provision so that a devel- oper has no power to prevent a release of escrow materials but has legal recourse to attempt to reverse a release.67 58 VITA, supra note 57, at 1. 59 Id. 60 Id. 61 Richard Sheffield, The Keys to a Reliable Escrow Agree- ment, nationaL institute of standards and tecHnoLogy, 1 (1996), http://csrc.nist.gov/nissc/1996/papers/NISSC96/ paper001/article.pdf (last accessed Feb. 24, 2017). 62 Id. 63 Id. at 2. 64 Id. 65 Id. at 3. See id. for partial list of recommended materials. 66 Id. at 4. 67 Id. at 6. 68 Appendix G, item 9, provided by the Greater Cleveland Regional Transit Authority. 69 Darrell A. Fruth, Economics and Institutional Con- straints on the Privatization of Government Information Technology Services, 13 Harv. j. Law & tecH. 521, 528 (2000), hereinafter referred to as âFruth.â 70 Id. at 531 (emphasis in original). 71 maryLand dePât of transPortation, Office of Procure- ment, http://www.mdot.maryland.gov/Office%20of%20 Procurement%20TSO/index.html (last accessed Feb. 24, 2017). 72 Fruth supra note 69, at 530â31. 73 See part III of the report. 74 caL. PuB. contract code § 20217(b) (2016); N.Y. CLS Pub. A §§ 1209(2)(b), (d), and (f) (2016); and VA. code ann. § 2.2-2012(B) (2016). H. Nondisclosure and Confidentiality Agreements Contractors, designers, developers, licensors, and vendors, as well as transit agencies, may have proprietary, trade secret, and other information that they want to protect from disclosure. Although Appendix D is a checklist of clauses to consider when drafting a technology agreement and references the inclusion of nondisclosure and confidentiality clauses, Appendix F is a sample nondisclosure and confidentiality agreement.68 III. STATE STATUTES APPLICABLE TO TECHNOLOGY CONTRACTING Some states and local governments have under- taken the task to centralize the design, procure- ment, and operation of their technology systems or services.69 Some states have entered into a âsingle, long-term contract with a private entity to provide nearly all of the [governmentâs] information services,â including the design and procurement of âevery government data center, computer network, and other information technology that provides services to the government itself and the public.â70 The Maryland Department of Information Tech- nology handles the procurement of most of the Maryland Department of Transportationâs purchases of IT services, software, and hardware through âstatewide master contracts.â71 Likewise, Connecticut has created a Department of Information Technol- ogy to handle information technology services for state entities.72 Some statesâ technology depart- ments also assist local government agencies with their technology procurements.73 Although some state statutes apply only to the procurement of technology by state agencies, some state laws apply to procurements by political subdi- visions and other units of local government.74 Thirty- five transit agencies reported that they are subject
9 local agency includes a city, county, or city and county, any transit district, municipal operator, any consolidated agency, any authority formed to provide transit service, and any county transportation commission or any other local or regional agency responsible for the construction of transit projects.82 Pursuant to section 22162, a local agency, except as otherwise provided, may use designâbuild contracts for projects in excess of $1,000,000 and award a contract based either on the low bid or the âbest value.â83 When a transit district or similar local agency, as described in section 22161(f)(3), âawards a contract for the acquisition and installation of technology applications or surveillance equipment designed to enhance safety, disaster preparedness, and homeland security efforts,â there is no âcost threshold and the contract may be awarded to the lowest responsible bidder or by using the best value method.â84 The Maryland Transit Administration stated that Maryland regulations allow procurements of commercial products that are unique to a transit agency to bypass Marylandâs Information Technol- ogy Departmentâs project oversight.85 A Minnesota statute, designed to protect the blind or visually impaired, requires the Commissioner of Administration to develop nonvisual, technology access standards with minimum specifications as set forth in the statute.86 The standards must be included in all contracts for the procurement of IT by or for the use of agencies and political subdivisions.87 A New York statute that applies to the New York City Transit Authority requires that [a]ny contract for public work, except where there is an emergency involving danger to life or property, the esti- mated cost of which exceeds twenty thousand dollars shall be made by the authority only upon public letting founded on sealed bids.88 Furthermore, although the statute allows for some exceptions, [a]ny purchase contract, including but not limited to contracts for the purchase of equipment, materials or 75 See Appendix C, transit agenciesâ responses to ques- tion 8. Five agencies reported that they are not and two agencies did not respond to the question. Id. 76 N.C. Gen. Stat. § 147-33.97 (2016). 77 See Appendix C, transit agenciesâ responses to ques- tion 9. Twenty agencies said that there are none, and eight agencies did not respond to the question. Id. 78 caL. PuB. cont. code § 20217(a) (2016). 79 Id. 80 caL. PuB. cont. code § 20217(b) (2016) (emphasis supplied). 81 caL. PuB. cont. code § 22160(a) (2016). to state or local public procurement laws when solic- iting and/or contracting for technology.75 There are also state statutes that apply specifically to the procurement of technology.76 Some statutes are specific to transit agencies. Fourteen agencies stated that there are state statutes or local ordinances that apply specifically to a solicitation and/or a contract for an acquisition of technology by their agency.77 Although discussed to a limited extent in this part of the report, part XIII discusses state statutes that permit government agencies to negotiate with contractors, designers, developers, licensors, and vendors to obtain the best price or value for goods and services, including technology. California has determined that âthe award of purchase contracts by transit agencies under competitive bid procedures may not be feasible for products and materials that are undergoing rapid technological changes or for the introduction of new technologies into agency operationsâ¦.â78 Thus, the legislature has determined that âit is in the public interest to consider the broadest possible range of competing products and materials available, fitness of purpose, manufacturerâs warranty, vendor financ- ing, performance reliability, standardization, life cycle costs, delivery timetables, support logistics, and other similar factors in addition to price in the award of these contracts.â79 Consequently, the stateâs Public Contract Code provides, inter alia, that a transit district or transportation agency may direct the purchase ofâ¦computers, telecommunications equipment, fare collection equipment, radio and microwave equipment, and other related electronic equipment and apparatus used in transit operationsâ¦by competitive negotiation upon a find- ing by two thirds vote of the board that the purchase of those products or materials in compliance with provisions of this code generally applicable to the purchase does not constitute a method of procurement adequate for the agencyâs needs.80 Another California statute allows the use of designâbuild contracts when agencies âhave reported benefits from such projects including reduced proj- ect costs, expedited project completion, and design features that are not achievable through the traditional designâbidâbuild method.â81 The term 82 caL. PuB. cont. code §§ 22161(f)(1) and (3) (2016). The term local agency also includes the San Diego Asso- ciation of Governments, as referenced in the San Diego Regional Transportation Consolidation Act. Cal. Pub. Cont. Code § 22161(f)(4) (2016). 83 caL. PuB. cont. code § 22162(a) (2016) (not applicable to state highway system projects). 84 caL. PuB. cont. code § 22162(b) (2016) (not applicable to state highway system projects). 85 Citing md. code regs. § 21.01.03.5 (2016). 86 minn. stat. § 16C.145(a) (2016). The statute also applies to state colleges and universities and encourages the University of Minnesota to consider similar standards. 87 Id. 88 N.Y. CLS Pub. A § 1209(1) (2016).