Payment for acquisition of Software Licenses

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Payment for acquisition of Software Licenses

Post by Stitch on Mon Jul 13, 2009 5:41 pm

May I inquire if there will be any violation for the one-time payment (upon delivery) of a software subscription for Three (3) years.

Thank you
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Re: Payment for acquisition of Software Licenses

Post by engrjhez® on Mon Jul 13, 2009 10:05 pm

Stitch wrote:May I inquire if there will be any violation for the one-time payment (upon delivery) of a software subscription for Three (3) years.

Thank you
I see none.

First, subscription may pertain to software licenses as part of the legal use of the applications or data it may have with it. The said subscription (license) is only a "safe pass" for the software application itself, where we are primarily concerned.

Second, should the subscription/license be good for 1, 2, 3 or even "n" years doesn't matter, for as long as the need for the software is justified as to the mandate and necessity of the procuring agency, there should be no issue at all to the time frame.

Third and final, the appropriate procurement method shall dictate other requirements such as performance security and warranty which may be equally important as the term of the license. Should there be enough security for the procuring agency that the performance and reliability of the said software is guaranteed over specified periods, there would be no other instances where such purchase is violative of the law.
Very Happy
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Re: Payment for acquisition of Software Licenses

Post by Stitch on Mon Jul 13, 2009 10:46 pm

Many thanks for your time and reply Sir/ma'am!

However, may I just further inquire what the implication of COA Circular 82-177 on "Prohibition against advance payment on government contracts" to R.A. 9184, in connection to this kind of procurement?

Or, what is the most relevant provision under R.A. 9184 that allows the acquisition and One-time (advance) payment for a Three-year software license contract.

Thank you again.
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Re: Payment for acquisition of Software Licenses

Post by Stitch on Tue Jul 14, 2009 7:45 pm

Sir engrjhez,

Considering that the software license procurement has a validity of Three years and the payment for Three years is required upon delivery of the license, will this not be a violation of the Annex D, Item 4.1, page 102 of the May 21, 2009 IRR draft?

"4.1. In accordance with Presidential Decree 1445, advance payment shall be made only after prior approval of the President, and shall not exceed fifteen percent (15%) of the contract amount, unless otherwise directed by the President; Provided, however, that for cases mentioned under 4.3, and 4.4, and 4.5 of these guidelines, no prior approval by the President shall be necessary."

Or, does this transaction fall under a different category?

Will appreciate your input on the matter!

Thank you!
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Re: Payment for acquisition of Software Licenses

Post by RDV @ GP3i on Wed Jul 15, 2009 10:24 am

Stitch wrote:May I inquire if there will be any violation for the one-time payment (upon delivery) of a software subscription for Three (3) years.

Thank you

There are no clear guidelines yet on procurement of software licenses. When you procure a software license, you are actually procuring only a "subscription" or a "permit" to use an Intellectual Property. There is no actual transfer of ownership. That is the reason why you renew a software license.

Unless you have a multi-year obligational authority (MYOA), I think, your subscription/contract for software license should only be for a one-year period, and you will just have to renew the license or subscription yearly. Renewal of subscription could be done by "Direct Contracting" but, I think, again there is no clear/explicit GPPB guidelines on this yet.

It is also for the advantage of the procuring entity to procure the license on a one-year basis only, unless there is a benefit of discount given by the supplier if you procure a license with a subscription of more than one year. We know for a fact that obsolesence and rapidly changing technology could be to your disadvantage if you procure a 3-year license.

Therefore, a one-time payment of a 3-year subscription could be construed as advance payment that is not allowed under the law, unless it fall under the exceptions. From the looks of it, it does not.


Last edited by RDV on Wed Jul 15, 2009 11:42 am; edited 1 time in total
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Re: Payment for acquisition of Software Licenses

Post by Stitch on Wed Jul 15, 2009 11:23 am

Thank you very much Sir RDV for your straightforward answer to my question. That was really very helpful. Very Happy

Actually, it is suposedly a "Buy 3 years subscription for the price of 2" deal which also covers the warranty for updates.

The truth is, I have a feeling our Accounting Department have already decided not to give the green light on this, but chose to let us, the Internal Audit Department to do the job, by pretending to solicit our opinion.

Engrjhez is right in saying browsing though the posts in this forum can be addictive. A good venue for learning and sharing knowledge. Though by participating, I might be more often on the receiving end. Embarassed

It is really a refreshing and at the same time inspiring realization that there are after all many government employees who are really serious and care about what they do, and defies the impression people have on government employees who just go to offices and wait for paydays. Rolling Eyes

Also, it is evident that the exchanges are coming from mature and professional adults who are willing to learn and contribute at the same time without any ulterior motives.

Again many thanks again Sirs! Very Happy
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Re: Payment for acquisition of Software Licenses

Post by RDV @ GP3i on Wed Jul 15, 2009 6:21 pm

Stitch wrote:Thank you very much Sir RDV for your straightforward answer to my question. That was really very helpful. Very Happy

You are most welcome, stitch! cheers

Stitch wrote:Engrjhez is right in saying browsing though the posts in this forum can be addictive. A good venue for learning and sharing knowledge. Though by participating, I might be more often on the receiving end. Embarassed

It is really a refreshing and at the same time inspiring realization that there are after all many government employees who are really serious and care about what they do, and defies the impression people have on government employees who just go to offices and wait for paydays. Rolling Eyes

Also, it is evident that the exchanges are coming from mature and professional adults who are willing to learn and contribute at the same time without any ulterior motives.

Again many thanks again Sirs! Very Happy

Everybody's posts contribute to the success of this forum. It is truly "refreshing" and "inspiring" as you mentioned. It is also refreshing to hear from the Internal Audit's perspective. I hope to see more posts from you, stitch. Cool
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Re: Payment for acquisition of Software Licenses

Post by Stitch on Thu Jul 16, 2009 11:10 am

Bountiful thanks for the kind encouragement Sir RDV! cheers
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Re: Payment for acquisition of Software Licenses

Post by real_renz on Thu Jun 28, 2012 3:11 pm

Gud PM Sirs

I would like to inquire if the Annual Support Software Maintenance for the purchase of additional software licenses should have performance security be posted by the vendor for the succeeding year?

As a background, the mother contract was contracted prior to implementation of RA 9184, the contract in the purchase of additional software license was incorporated and deemed part of the mother contract which was approved by HOBAC last year. The purchase includes the software license and the support software maintenance up to end of 2011.

Thanks

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