Smart Metering Infrastructure Program
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- Brendan Bruce
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1 Smart Metering Infrastructure Program MASTER SERVICES AGREEMENT SUMMARY December, 2010 The following is a general summary of the Master Agreement for the provision by Capgemini Canada Inc. of project management, project control, systems integration, deployment support and related services for the Smart Metering Infrastructure Program (the SMI Program ). This document is intended as a summary only and should not be formally relied on without reference to the original documents. Note: This summary is based on the execution draft of the Master Agreement issued under an Addendum to the Request for Proposals and as recently finalized by BC Hydro and Capgemini. A. BACKGROUND 1. Pursuant to a competitive request for proposal ( RFP ) process jointly managed by BC Hydro and Partnership s British Columbia ( PBC ), Capgemini Canada Inc. ( Cap ) was selected by BC Hydro to provide project management, project control and systems integration services to BC Hydro in relation to the SMI Program. 2. The selection of Cap was subject to BC Hydro and Cap entering into: (a) an Interim Agreement (the ISA ); and (b) a Master Agreement (the MSA ). 3. BC Hydro and Cap finalized and signed the ISA on August 24, 2010, pursuant to which Cap provided interim support services to BC Hydro in support of the SMI Program planning and implementation, including: (a) project initiation and planning services; (b) systems solution architecture services and design support; and (c) procurement related advice and support in relation to SMI procurement activities (the Interim ). 4. Concurrent with the performance of the Interim, BC Hydro and Cap finalized the MSA, including all schedules and collateral agreements and documents (ie. Guarantee, Dispute Resolution Agreement and other). 5. The MSA terms have been generally reviewed and approved by: (a) the SMI Contracts Team (Keith Anderson Lead); (b) the Project Board; (c) BC Hydro Legal (Myron Wallace/ Chris Cochrane); (d) external legal counsel (BLG, Bob Shouldice Lead); and (e) as required under the Financial Administration Act ( FAA ); the required approval is being obtained with respect to the indemnities being provided by BC Hydro under the MSA to Cap. 6. Upon the signing of the MSA, the term of the ISA expires and all completed work, work in progress, and deliverables transition to and become incorporated into the MSA
2 B. MASTER SERVICES AGREEMENT OVERVIEW OF TERMS Description Summary 1. Parties BC Hydro ( BCH ) Capgemini Canada Inc. ( Cap ) 2. Term From the Effective Date of the MSA (date of signing) until 6 months following Final Acceptance (satisfactory completion of work and deliverables and through to completion of theft detection) subject to early termination as described below in paragraph Contract Administration 3.1 Contract Representatives Cap will designate: (a) a SI Account Manager whose counterpart is the BCH Program Director, and (b) a SI Contract Manager whose counterpart is the BCH Contract Manager. These contract representatives will meet on a regular basis according to mutually developed governance protocols and reporting requirements. 3.2 PM Oversight Cap will have project management interfacing and coordinating responsibilities with respect to all SMI Program resources, including the SMI resources of BCH; other SMI suppliers and contractors to BCH, and other third parties involved in supporting the SMI Program (eg. ABSU; SAP; etc). The interfacing and coordinating responsibilities can only be exercised and performed within the project governance framework established by BCH. Cap should be motivated to provide superior performance in this role and within this framework through the incentive mechanism described in paragraph 6.6 below. 3.3 Key Personnel Key personnel for Cap have been specified and unauthorized changes of these assignments will result in liquidated damages of $10 K/day (unless outside of SI s control such as death, disability; voluntary resignation). Key personnel comprise approximately 17 Cap employees holding senior management and/or senior technician supervisory positions. 3.4 Project Governance 4. Scope of : 4.1 Project Management Cap is required to support BCH in the final development and adoption of a governance plan for the SMI Program to effectively manage in a coordinated manner all SMI supplied resources from all suppliers and contractors (including Cap) and from BCH. Cap will provide to BCH the following categories of support services (collectively the ): (a) Program Plan Development; (b) Schedule Management; (c) Risk and Issues Management; (d) Integrated Scope Change Monitoring; (e) Resources Planning; (f) Program Cost Management; (g) Team Management and Coordination; and (h) related and incidental services supporting the foregoing (the PM ). Cap will be the exclusive third party provider of the PM
3 4.2 Project Control (a) Integrated Project Scheduling; (b) Integrated Quality Assurance planning/programs; (c) Status Reporting and Analysis; (d) Document Control; and (e) Cost Control Monitoring and Forecasting (the PC ). Cap will be the exclusive third party provider of the PC. 4.3 Systems Integration (a) Requirements and Design; (b) Delivery, including: (1) Corp. System Modifications; (2) New Systems; (3) Systems Integration; (4) Security and Privacy; (5) Integrated Testing; (6) Environment Management The SI are non-exclusive and BCH has the discretion to utilize alternative service providers, including ABSU or internal BCH resources for systems integration support services, including one or more of the various statement of work ( SOW ) packages that are expected to arise during the term. 4.4 Deployment Support 4.5 Release O 4.6 Solution Architecture 4.7 Staff Augmentation 4.8 Termination Assistance Pre-deployment support in the development and adoption of a final deployment plan, including BCH readiness and ongoing monitoring of implementation of deployment services. Technical IT support services in finalizing the development and adoption of the SMI Technical Reference Architecture and related guidelines, strategies, business use cases, architectural principles and related security, privacy and security frameworks. Oversight support and technical IT support in assisting in the development of the SMI systems architecture following the performance of the Release O. Discretionary utilization by BCH of Cap resources to augment and support BCH personnel in connection with SMI Program activities. Termination and transition support services to be performed upon early termination of the contract term according to pre-approved transition plan. 4.9 Separate SOWs For the delivery component of the SI, the MSA works as a master agreement setting out general terms and conditions for all work activities, with a SOW for each work package being separately negotiated according to a prescribed SOW form SOW Adjudication In the event negotiations fail to finalize a SOW: (a) the work still commences according to BCH directions; (b) initially on a T/M basis according to a prescribed rate card; and (c) parties will be required to make a submission of their final proposed commercial terms for the SOW to a third party arbitrator according to prescribed guiding principles for SOW commercial terms. Under the final offer model of arbitration the arbitrator may only select one of the final proposals and has no authority to impose his/her own terms. 5. Changes BCH may at any time require changes to any aspect of the previously agreed to according to a prescribed change order procedure
4 6. Pricing and Compensation As long as the requested change is not contrary to law; does not render insurance void; does not infringe IP rights; and/or is not impossible to technically implement, Cap will be required to prepare a change proposal (at its cost) setting out how the change will be implemented and the cost of so doing. If BCH accepts the change proposal, it may request the change be implemented and may elect to pay for changes on T/M basis. BCH will be required to pay for the required change as per mutual agreement. If the parties do not agree on the commercial terms of a change proposal, BCH has the right to direct mandatory changes and refer the unresolved terms to the dispute resolution procedure. BCH will make partial T/M payments (70%) pending resolution of the change terms. BCH will be responsible for changes arising from discriminatory changes of law or directed changes in BCH policy, where the cost impact of the policy change is greater than $100K. Except for discriminatory changes in law or mandated BCH policy changes as per above, Cap may also request changes to the but BCH may in its discretion elect to accept or reject any change request and proposal from Cap. 6.1 PM Fixed price, payable monthly. 6.2 PC Fixed price, payable monthly. 6.3 SI T/M charges for all Planning and Design aspects of the SI. Delivery stages for each of the SI will be priced in accordance with the separately negotiated SOW, taking into account the agreed to guiding commercial principles (e.g. based on existing rate card). The SOW will be either a fixed price or a guaranteed maximum price with T/M pricing For all Delivery a milestone payment structure, including a general 10% holdback on all progress payments to be held to final payment for the applicable Release. 6.4 Deployment 6.5 Release O 6.6 Architecture Fixed price, payable monthly T/M charges; invoiced monthly Fixed price, payable monthly - 4 -
5 6.7 Staff Augmentation 6.8 Termination T/M charges; invoiced monthly T/M charges; invoiced monthly 6.9 Payment Terms: A mix of monthly payments in arrears for certain T/M work; some payment on completion of a specified deliverable and/or milestone; and all within 30 days of receipt of invoice from Cap unless disputed by BCH Price Escalation T/M pricing held firm until December 31, 2012 then escalated at CPI unless otherwise specified Incentive Mechanism 6.12 Reimbursable Expenses 6.13 Currency Exchange 7. BCH Responsibilities A tiered bonus structure be used as an incentive to motivate superior performance by Cap whereby: (a) part of the $10M bonus entitlement is automatically payable based on objective project completion measurements (on time volume installation; on budget) without any attribution for success (or failure); and (b) another portion is payable whether project objectives were achieved or not and based on subjective criteria (effective leadership; collaboration; team integration and cooperation) that is determined by BCH on a discretionary basis. Generally expenses are to be imbedded in rates (for T/M work) and included in the overall price (for fixed price work). Out of province resources will be reimbursed for travel expenses subject, however, to a per diem cap and other limitations. As well, BCH is specifically responsible for travel, lodging and meals outside of a 50 km radius for a resource that is required to perform the work (not including travel from and to a home), where preapproved by BCH. All pricing of services, and products (licences) and expenses in Cdn $. BCH to provide: (a) facilities (work space/communications); (b) IT systems; (c) timely access to BCH decision makers and other program personnel and required BCH data; (d) IT services support, including applicable IP licences held by BCH; (e) applicable BCH policies, including any changes; and (f) stakeholder, regulatory, and media communications and relations. BCH Policies to include: work site; procurement; code of conduct; privacy; media and communications; regulatory; data management and other applicable or relevant polices. 8. Consequences of BCH Failure 9. Performance Security BCH must make reasonable efforts to rectify and/or mitigate impact; possible relief in SI s project schedule; possible COR; and/or with possible adjustment to Service Fees or timetable/schedule. Capgemini North America Inc. has provided a parental guarantee, of both the financial and performance obligations of Cap. The guarantor has substantial net worth
6 10. Insurance Cap required to maintain: (a) auto liability ($5M per occurrence); (b) professional liability ($25M per claim); (c) commercial/general liability ($10M per occurrence); and (d) equipment (to full replacement value). Cap also required to comply with Worksafe BC requirements. 11. Performance Warranties/ Standards 12. Acceptance Testing Cap required to: (a) comply with laws; BCH policies, applicable industry standards; (b) supply properly trained, skilled personnel commensurate with tasks; and of a first tier service provider in this sector for this type of work; (c) provide an IT design warranty (on specified deliverables and software); (d) provide warranty that all deliverables conform to stipulated requirements or specifications; (e) maintain key personnel in place with $LDs for non compliance; (f) provide general warranty to rectify deficient or substandard work; (g) pass through of third party software or hardware licence warranties; (h) IP infringement warranty and obligation to rectify or replace; and (i) administer and comply with acceptance testing protocols for all IT deliverables. All specified IT deliverables will be subject to acceptance testing protocol as determined by each SOW based on both: (a) initial (or separate deliverable) acceptance tests; and (b) cumulative (or integrated system) acceptance tests. 13. Governance and Reporting: 13.1 Key Contacts In addition to Account Manager and Contract Manager points of contact, a governance plan will be collaboratively developed that will map other required lines of communication between BCH and Cap and amongst other SMI suppliers/contractors Audit Rights BCH will have the right to audit and investigate books and records of Cap relating to all to satisfy BCH regulatory requirements; verify Cap compliance with laws, BCH policies and/or the MSA, and the calculation of all T/M charges and expenses Reports Cap will be required to provide required reports in prescribed form dealing with performance of. 14. Indemnities 14.1 Cap Cap agrees to indemnify BCH against direct losses arising from: breach of the MSA terms, including Cap s representations or warranties; SI s legal fault, including negligence or wilful misconduct; infringement of third party IP Rights for Cap supplied IP; - 6 -
7 breach of laws or permits. loss of or physical damage to tangible property or assets of BCH or claims made by a third party, or claims in respect of death, personal injury, in each case arising from the legal fault of Cap or those for whom it is responsible; The indemnity is subject to exceptions for the legal fault of BCH or those for whom BCH is responsible in law BCH BCH provides an indemnity to Cap for BCH legal fault causing property damage, bodily injury or death or third party IP infringement for BCH supplied IP. 15. Limits of Liability 15.1 Cap Monetary limit equal to greater of: (i) fees paid and Fixed Fees payable; or (ii) $ 10 M prior to commencement of a claim. No $ limit for third party claims; death or bodily injury claims, property damage claims, or fraud, wilful misconduct or gross negligence claims; breach of confidentiality; security or privacy or an insurable event under the Contract. Claims must be made within a defined time period. No exclusion for consequential or indirect losses, but monetary cap applies BCH Liability for failure to perform BCH responsibilities (paragraph 7 above) is limited to possible adjustment to Service Fees and/or Schedule. BCH aggregate liability limit of $10M; with exclusion of limit for third party claims; breach of confidentiality; fraud, gross negligence, wilful misconduct of BCH; or third party IP infringement claims. 16. Early Termination: 16.1 At Will By BCH On 30 days notice for any service category, and 15 days notice for any SOW, and payment of outstanding service charges and reasonably incurred demobilization costs For Cause by BCH 16.3 Partial Termination 16.4 For Cause by Cap Causes include unremedied breach; insolvency; unauthorized contract assignment; failed acceptance testing; and liability cap exceeded. BCH may terminate any one or more of the service categories but not a part of a service category. For BCH non-payment after 30 days, plus notice and rectification period of 60 days Force Majeure Either party may terminate for an extended and sustained Force Majeure event lasting more than 60 days
8 16.6 Consequences of Termination 17. Contractor Relief BCH retains all deliverables; all work in progress; Cap ceases all work except for Termination ; BCH can claim damages or losses for termination for cause, subject to liability cap. The MSA includes certain events or circumstances ( Relief Events ) which generally entitles Cap to certain relief from its obligations, compensation for its direct losses or damages, or both. These include the occurrence of risks for which BCH bears responsibility which are outside of Cap s control (and not caused by Cap) and include: BCH breach of the MSA, including breach of any BCH Responsibilities (see paragraph above) or any BCH representation or warranty; the unlawful actions or deliberate misconduct of BCH, a person for whom BCH is responsible (exclusion from SI indemnity); a grossly negligent act or omission, fraud, or wilful misconduct of BCH, a person for whom BCH is responsible (exclusion from SI indemnity); traditional force majeure events such as fires, explosions, storm, flood, and other acts of God; strikes or lockouts affecting BCH (but not Cap); To the extent that Cap can demonstrate that a Relief Event delayed or disrupted the or has caused any direct losses, it is entitled to relief of its obligations under the MSA (including an extension of the schedule) as long as Cap could not have taken reasonable steps to avoid, or mitigate against, the consequences of such events. BCH also has discretionary right to suspend performance of work activities which may result in adjustments to Schedule. 18. Change in Law Cap takes risk (and benefit) of all changes in law that might affect performance of unless discriminatory in nature or in relation to HST. The impact of a change of law is somewhat mitigated by use of SOWs which are negotiated separately over time. 19. Disputes Any disputes between Cap and BCH that are not settled within a relatively short time by negotiation may be referred to a binding third party arbitration process. The arbitration procedure is a project specific multi-party final offer type arbitration model. The final offer arbitration model is also used for failed SOW negotiations. 20. Assignment and Change in Control Cap will not assign any interest in the MSA or a SI Contract, without the consent of BCH in its discretion, except for internal reorganization type circumstances where BCH is not prejudiced. No Change in Control will be permitted, except in connection with a public stock exchange transaction, without the consent of BCH in its discretion. All subcontractor engagements subject to BCH prior approval
9 Description Summary 21. IP Rights 21.1 Cap - IP Cap retains ownership and grants to BCH a nonexclusive, perpetual, no-charge, licence to use for BCH corporate enterprise and internal use only Cap s proprietary know-how (including modifications and enhancements) used for the performance of the SI and/or which form part of the SMI Program BCH IP BCH retains ownership of and grants to Cap a licence to use all BCH s proprietary know-how used to support the performance of the for the term on a nocharge basis for project purposes only Third Party IP To be provided by way of sub-licence, partial assignment or delivery of new/separate licence to BCH for use in the SMI Program, all third party software or know-how supplied or used by Cap Project Specific IP 22. Confidentiality and Privacy Any newly developed project specific know-how that is independent from the foregoing will become the property of Cap for general commercial use, with a licence to BCH to use for internal corporate purposes, unless otherwise agreed at time of adopting a SOW (eg. theft detection know-how) Cap to comply with standard BCH confidentiality, privacy and protection of personal data requirements
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