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GSA Legal Now Reviewing Software EULAs

software- eulaIf you have software on your GSA contract or are considering adding it, you may be aware of the new requirements for software End User License Agreements (EULAs). If not, now’s the time to learn!

When the Schedule 70 released Refresh 30 in February, one change was fairly significant. It reads:

“In order to facilitate GSAs review and negotiation of each individual set of terms for compliance with Federal Law, or loss of business that occurs when the terms are added on Schedule unmodified and ordering activities later decline to place an order because of non-compliant terms, vendors are required to submit their End User License Agreements (EULAs) or Terms of Service (TOS) Agreements in editable formats for offers and modifications. Such submissions for software and hardware may help GSA avoid delays in reviewing and negotiating each individual agreement. “Click wrap” submissions or links to agreements are not acceptable. Vendors shall clearly define what additional products and services and prices are included with an End User License Agreements (EULAs) or Terms of Service (TOS) Agreements.”

Essentially, this means that you must submit your EULA or Terms of Service in Word format to your Contracting Officer. GSA’s Legal Department reviews your EULA and provides markup with sections to be edited and removed. When you’ve received the Legal Department’s comments, you’ll need to incorporate the changes into your EULA and submit it to your Contracting Officer for finalization.

GSA’s Legal Department is very thorough in their review. Since this process began, some common problem areas have emerged. I’d suggest having your internal Legal or Licensing Department review your EULA in these areas to see if there are any pre-emptive changes you might make: customer indemnities, contractor indemnities, arbitration, jurisdiction, third-party terms, equitable remedies, termination, negative options, order of precedence clauses and ownership of derivative works.

Here’s an example: many license agreements have a Venue, Jurisdiction and Choice of Law section, stating where litigation will be handled – perhaps in state court where the software company is headquartered. This clause will have to be removed or edited, as the Government mandates that disputes will be heard in federal court – either the US District Court or the US Court of Federal Claims.

As expected, this new process has significantly increased the time it takes to process software modifications now. The good news is that the Legal review should be a one-time event, provided your EULA does not change. But the GSA Legal review is currently taking anywhere from 2-4 weeks. If you submit a modification to add or edit software products, the modification won’t be approved until GSA Legal has approved your EULA.

Although the legal review may seem like a hurdle, the idea is that this will allow Government agencies to approve terms more quickly at the task-order level. Once the EULA is approved, you can also incorporate it into your GSA Terms and Conditions document as an Appendix.

Don’t hesitate to contact us if you need guidance on your EULA and what GSA expects. We’ve assisted many clients through this process, and it’s definitely better to address these issues as soon as possible so as not to cause extra delays with your offer or modification.

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