How To Fix Procurement 7: Standardized Terms for Companies That Want Them
What we’ve discussed so far are projects that involve bidding and sales – largely customizable IT integrations that come from professional services consultancies. But that’s not all that government buys, and it’s certainly not the place where the most innovation happens online.
Most of the webapps you use don’t come with salespeople. You didn’t get your twitter account by putting out an RFP for a “microblogging service” and waiting for Twitter and its competitors bid on it. The folks over at 37Signals don’t have an “enterprise salesforce” to compete with Microsoft Sharepoint. The past decade has ushered in a fleet of established independent software businesses whose web-based software is supposed to sell itself.
Except government can’t get to it, largely because of three reasons:
Culture. That’s “just not how you buy software”.
Purchasing requirements. It’s often difficult for government employees to sign up for these products, even if they have a purchase card. (That’s what government calls plastic cards with magnetic stripes on the back and numbers on the front.)
Terms of service. Standard terms of service for web applications usually come from a template and aren’t compatible with federal law. A government employee can’t do what the rest of us do and just click through the terms of service without actually reading them; Federal guidance suggests that a federal employee cannot engage in any online service without first consulting counsel.
That third one is the one I want to talk about today. Imagine how much money you’d spend, monthly, if you called your lawyer to review every terms of service you agreed to. Now imagine there are 4.5 million of you.
There are usually two major issues that government has with these boilerplate terms of service. The first is place of jurisdiction, and looks something like this:
You expressly agree that exclusive jurisdiction for any dispute with the Service or relating to your use of it, resides in the courts of the STATE NAME and you further agree and expressly consent to the exercise of personal jurisdiction in the courts of the STATE NAME located in CITY NAME in connection with any such dispute including any claim involving Service. You further agree that you and Service will not commence against the other a class action, class arbitration or other representative action or proceeding.
The problem is that the federal government can’t be tried in a state court, and so the federal employee who wishes to use these services cannot engage in that agreement, no matter how much authority they have.
The second problem is unlimited idemnification, which no lawyer, but especially no federal lawyer, would agree with.
So instead what happens is that the government employee goes to their agency’s legal counsel and the problem gets worse. From what I’ve seen, when they call a startup or one of these small businesses, they’re often hearing from government for the first time. And usually, the government lawyers start the conversation by using words like “you must” and “you shall”, rather than “can you” or “would you.” And sometimes the startup complies, and sometimes it doesn’t.
To their credit, GSA actually publishes guidance for social media providers for free tools (not commercial ones), which are quite useful in getting most of the way there. They even include a model template for a terms of service agreement.
But this doesn’t go far enough. The right answer is for government to publish terms of service language that they would find “blanket acceptable” for free and commercial services. Startups would be able to copy and paste this language as an amendment to their existing TOS, and there would be an expedited review process within government that gives them a little “GovReady!” image, so that future federal employees know that the service they’re subscribing to is using pre-existing, pre-negotiated terms that have already been approved. This would give federal employees the ability to bypass the expensive and arduous process of having to work with their counsel’s office, and make it so that the heavy lifting doesn’t need to happen over and over again.
What will it take to make this a reality? Most of the technology businesses I know would much rather spend more time innovating, and less time working with lawyers, and those firms will have to organize and let government know that they actively want this to happen.
The cost of copying and pasting government’s amendments into their stock terms of service is drastically less than the cost of their legal team dealing with GSA’s lawyers, and government has an opportunity to save money by reducing redundant staff time and letting their employees use tools that are less expensive, and often times, work better too.
Clay is the chairman and co-founder of The Department of Better Technology.