V21 Software That Goes “Bump in the Night”: Software Licensing Do’s and Don’ts Floyd Groce, DoD ESI Co-Chair Terri Baxter, Naval Inventory Control Point Contract Specialist Suzi Ellison, SPAWAR-SSC Pacific Umbrella Program DON IT East Coast Conference 2011/AFCEA East May 2011

Agenda  Introduction  DoD Enterprise Software Initiative (ESI) and SmartBUY  Software licensing pitfalls and recommendations  Summary  Questions 2

Introduction  Ground rules – What will we discuss? –Commercial off the shelf (COTS) software –DoD perspective –Licensing expertise –Lessons learned – hopefully not too costly –Share, Share, Share 3

DoD ESI And SmartBUY  DoD ESI established June 1998 by DoD CIO  Mission –Lower total cost of ownership across DoD, Coast Guard and Intelligence communities –Establish and manage enterprise COTS IT agreements, assets and policies  Methodology –Chaired by an OASD(NII)/CIO staffer –Co-chaired by Navy, Army or Air Force Working Group rep (currently Navy) –DoD Components appoint Software Product Manager (SPM) to: Consolidate requirements and develop business case Negotiate best-value deals Administer resulting agreements 4

DoD ESI and SmartBUY (cont.)  Goals –Reduce acquisition and support costs by leveraging DoD buying power –Provide best, most flexible DISR-conforming software –Obtain buy-in for DoD enterprise-wide software agreements –Create a funding mechanism that incentivizes the use of DoD-wide software initiatives  DoD SmartBUY Policy – 22 Dec 05 5

DoD ESI and SmartBUY (cont.)  Authority: DoD Enterprise Software Initiative (DFARS ) –Procure COTS software IAW DoD Enterprise Software Initiative (ESI) –ESI Order of Precedence DoD inventory DoD Enterprise Software Agreement (ESA) Other means  Authority: SmartBUY –FAR change pending –22 Dec 2005 policy memo – DPAPS and deputy DoD CIO 6

7 Software Licensing Pitfalls and Recommendations  Selecting software by name not licensing model  Terms and conditions (T&C’s)  End user license agreements (EULA) – license grants  Sarbanes-Oxley – revenue recognition  Maintenance  Maintenance Escalation  The “*”  Re-use clause

8 Software Licensing Pitfalls and Recommendations (cont.)  Software function tied to maintenance  Virtualization – risk of license non-compliance if not managed  Transferability  Termination and rights of survival clauses  True up/true down  Audit clauses  Cost may not be the cost

Software Licensing Pitfalls and Recommendations (cont. )  License Rights –License Scope Restrictive, i.e., program specific Unlimited use Third Party use –License Use Named user/concurrent user Device Non-human devices Processor based and multi-core processing license –License Use (con’t) Developer or Test vs. full use license Secondary use rights (laptop, home use) –License Type Perpetual Subscription or term  Compliance 9

10 Summary  Seek advice when selecting your software –Consulting groups –License experts –Network with other service and agencies –Software attorney  Assemble the right team –Requirements personnel may understand technology but not licensing –Requirements side may not have the enterprise perspective –Bring contracting personnel in as early as possible

11 Summary (Cont.)  Define the requirement –What do you need to do with the software? Share inward and outward Describe your requirement – give examples Definitions Describe your customer base clearly –How will the product or vendor be determined? Competitive -- provide technical evaluation criteria Limited or sole source -- provide brand name justification –How many years coverage are needed? –Has software distribution been considered? –Is there a need for an Escrow Agreement?  Validate Pricing  Document negotiated changes in resultant contract

12 ESI Web Site ESI Web Site: