Software That Goes “Bump in the Night”: Software Licensing Do’s and Don’ts Floyd Groce, DoD ESI Co-Chair Sylvia Neidig, Naval Inventory Control Point Contract Specialist Suzi Ellison, SPAWAR-SSC Pacific Umbrella Program DON IT West Coast Conference 2011/AFCEA West 2011 25 January 2011 Architecture, Operations, Networks, and Space (AONS)

DoD Enterprise Software Initiative (ESI) and SmartBUY Agenda Introduction DoD Enterprise Software Initiative (ESI) and SmartBUY Software licensing pitfalls What do you do to protect your software project from going “bump in the night”? Questions

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

DoD ESI established June 1998 by DoD CIO Mission 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

DoD SmartBUY Policy – 22 Dec 05 DoD ESI And SmartBUY 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

Authority: DoD Enterprise Software Initiative (DFARS 208.7402) DoD ESI And SmartBUY Authority: DoD Enterprise Software Initiative (DFARS 208.7402) 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

Software Licensing Pitfalls Selecting software by name, not licensing model Terms and conditions (T&Cs) End user license agreements (EULA) – license grants Sarbanes-Oxley – revenue recognition Maintenance & maintenance escalation The “*” Re-use clause Q/A: AWCF funds available, approximately $60MM per FY

Software Licensing Pitfalls (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 Compliance Q/A: AWCF funds available, approximately $60MM per FY

Software Licensing Pitfalls (cont) License use 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 Developer vs. full use Secondary use rights (laptop, home use) License type Perpetual Subscription or term Q/A: AWCF funds available, approximately $60MM per FY

Seek advice when selecting your software: What to do to protect your software project from going “bump in the night” ? Seek advice when selecting your software: Consulting groups License experts Network with other service and agencies Software attorney Requiring technical team may understand technology but not licensing May not always have enterprise perspective Q/A: AWCF funds available, approximately $60MM per FY

Use the following to describe your requirement to contracting: What to do to protect your software project from going “bump in the night” ? Use the following to describe your requirement to contracting: What do you need to do with your system? Share inward and outward Describe your requirement – give examples Definitions Describe your customer base clearly Government, civilian, military, contractors supporting government, non-human devices, etc Manipulating data vs. static data (viewing data) How will the product or vendor be determined? Competitive - provide technical evaluation criteria Limited or sole source – provide brand name justification Q/A: AWCF funds available, approximately $60MM per FY

Document negotiated changes in resultant contract What to do to protect your software project from going “bump in the night” ? How many years will you need to contract? Flat lined maintenance Audit clauses Transferability True up/true down Test & development vs. full use license Escrow agreement Software distribution Price Estimate based on market research Document negotiated changes in resultant contract Q/A: AWCF funds available, approximately $60MM per FY

ESI Web Site: http://www.esi.mil 13