The GSA issued its final rule on the applicability of certain clauses that are frequently used in commercial license agreements such as EULAs (end-user license agreements) or click licenses on February 22, 2018. 552.212-4 Contract Terms and Conditions – Commercial Items (FAR Deviation) is applicable to all GSA contracts for commercial supplies or services that requires a license. As the Government fiscal year comes to an end on September 30, 2018, it is important to remember some key aspects of this final rule:

1. The Anti-Deficiency Act prevents the government from agreeing to automatic renewals of licenses, such as cloud subscription services. Thus, all automatic renewals are not enforceable against the Government. If your license requires a renewal, contact your Contracting Officer immediately, if you have not already been notified your license is extending, to ask whether the license will be extended. If you have Government data on your computers (i.e., a cloud provider), then make sure that you do not destroy the data even if the license expires without first notifying your Contracting Officer.
2. The Act also prevents the Government from accepting any clauses related to paying future fees, penalties, interest, legal costs or to indemnify the Contractor or any other person/entity for damages, costs fees or any other loss or liability. Instead, the laws regarding torts and contract disputes with the Government are applicable.
3. The FAR Deviation states that the following are “deemed incorporated in the commercial supplier agreement,” regardless of whether the clause is actually in your contract with the Government. Think Christian Doctrine.
4. The license is part of the contract between a commercial supplier and the Government for a supply or service that requires a license.
5. The license shall bind the Government, but not the Government employee or a person acting on behalf of the Government.
6. Federal Law applies and any language reflecting any other state or local law shall not apply. In addition, the Contract Disputes Act applies and any language regarding arbitration or other dispute resolution in a specific forum or venue does not apply.
7. Any time period for bringing an action other than that proscribed by Federal law shall not apply.
8. Any language that would permit a contractor to cease performance due to a breach by the Federal Government shall not apply and instead the contractor must continue performance.
9. Non-material revisions to the license may be made by the contractor, however, the contract is still required to be modified to reflect the revision. Material revisions to the license are deemed not to be enforceable against the Government, unless and until the Government modifies the contract.
10. Terms related to auditing the end users compliance with the terms of the license are permitted, however they are amended to provide that the contractor must continue performance. Furthermore, the ordering activity should be charged the additional charges, if any, and the additional charges, if disputed by the ordering activity, shall be subject to the Contract Disputes Act. The contractor is responsible for the costs of the audit.
11. Some other clauses: Taxes and surcharges must be included in the contract and not just listed in the license; the contractor may not assign the license, in accordance with the Anti-Assignment Act; and, neither the license, nor the contract price may be considered confidential, however, the unit prices may be confidential if an exemption applies under FOIA.

For more information, contact MWL Counsel, Jody Reed