REPORT/RECOMMENDATION TO THE BOARD OF SUPERVISORS
OF SAN BERNARDINO COUNTY
AND RECORD OF ACTION
March 14, 2023
FROM
JAKE CORDOVA, Interim Chief Information Officer, Innovation and Technology Department
SUBJECT
Title
Non-Financial Value Incentive Plan for Large Government Agencies Agreement with Adobe, Inc.
End
RECOMMENDATION(S)
Recommendation
Approve non-financial Agreements with Adobe, Inc., including non-standard terms, to be accepted by the Purchasing Agent upon issuance of the Purchase Order, beginning on the date the County places its first order and continuing until terminated by either party, for licenses, support and maintenance of Adobe, Inc. software products used for graphic design, video editing, web development applications, and editing PDF format files, consisting of:
1. Value Incentive Plan for Large Government Agencies
2. Adobe Value Incentive Plan Terms and Conditions
3. Adobe General Terms of Use
4. Adobe Developer Additional Terms
5. Adobe Fonts Service Additional Terms
6. Document Cloud Additional Terms of Use
7. Adobe Stock Additional Terms
8. Business Catalyst Additional Terms of Use
9. InDesign Server Additional Terms of Use
10. Software Additional Terms
11. Teams and Enterprise Additional Terms
(Presenter: Jake Cordova, Interim Chief Information Officer, 388-5501)
Body
COUNTY AND CHIEF EXECUTIVE OFFICER GOALS & OBJECTIVES
Operate in a Fiscally-Responsible and Business-Like Manner.
FINANCIAL IMPACT
Approval of the Value Incentive Plan for Large Government Agencies Agreement (LGA) with Adobe, Inc. (Adobe) will not result in the use of Discretionary General Funding (Net County Cost). The LGA is non-financial in nature and does not commit the County to make any purchases. If future purchases are made under this Agreement, the Innovation and Technology Department (ITD) and other County departments will adhere to County purchasing policies and return to the Board of Supervisors (Board) for approval, if necessary.
BACKGROUND INFORMATION
ITD and other County departments maintain perpetual licenses for several Adobe proprietary software products, including Acrobat Pro, Photoshop, InDesign, Creative Suite, and Captivate, which are used for graphic design, video editing, web development applications, and editing PDF format files.
On March 12, 2019 (Item No. 28), the Board approved the LGA (Agreement No. 19-110) and incorporated terms of other Adobe agreements (LGA Package) with Adobe for licenses, support and maintenance of Adobe software products used for graphic design, video editing, web development applications, and editing PDF format files.
On February 11, 2020 (Item No. 42), the Board approved Amendment No. 1 to the LGA with Adobe to revise the terms. The revisions updated the governing law for the LGA and amended terms in the Developer Additional Terms and VIP Program Guide.
On March 2, 2021 (Item No. 19), the Board approved Amendment No. 2 to the LGA with Adobe to revise the terms, to be accepted electronically. The revisions included new non-standard terms, including a limit on the time to make claims and indemnification or defense by the County of a Contractor.
On March 1, 2022 (Item No. 37), the Board approved a new LGA (Agreement No. 22-115) and incorporated terms of other Adobe agreements with Adobe, including non-standard terms, to be accepted by the Purchasing Agent upon issuance of the Purchase Order, for an indefinite term, until terminated by either party, for licenses, support and maintenance of Adobe software products used for graphic design, video editing, web development applications, and editing PDF format files. Adobe revised the LGA and the incorporated terms, which constituted a new agreement.
The Adobe LGA Package has historically been indefinite. However, the LGA Package is reviewed annually, prior to the issuance of the annual Purchase Order by the Purchasing Agent, and is presented to the Board for approval of an amendment or new agreement if there are substantive revisions to the terms.
Adobe has revised the LGA Package since the last approval. The Adobe LGA, together with the Adobe Value Incentive Plan Terms and Conditions, Adobe General Terms of Use, Adobe Developer Additional Terms, Adobe Fonts Service Additional Terms, Document Cloud Additional Terms of Use, Adobe Stock Additional Terms, Business Catalyst Additional Terms of Use, InDesign Server Additional Terms of Use, Software Additional Terms, and Teams and Enterprise Additional Terms comprise Adobe’s standard government contract, which includes terms that differ from the standard County contract and omits certain County standard contract terms. Adobe is not willing to negotiate these terms. The non-standard and missing terms include the following:
1. Adobe may assign the Agreement without notice to the County and without the County’s approval.
• The County must approve any assignment of the Agreement.
• Potential Impact: Adobe could assign the Agreement to a third party or business with which the County is legally prohibited from doing business due to issues of Federal debarment or suspension and conflict of interest, without the County’s knowledge.
2. All disputes arising under the Agreement must be settled by binding arbitration in Santa Clara County, California, except for small claims and injunctive relief. Adobe and the County will equally share all fees and costs of arbitration.
• The County standard contract does not require arbitration.
• Potential Impact: Arbitration decisions are not appealable. In addition, the County’s
equal share of arbitration fees and costs may exceed the Agreement amount.
3. The Agreement does not require Adobe to meet the County’s insurance standards as required pursuant to County Policy 11-07.
• The County Policy requires contractors to carry appropriate insurance at limits and under conditions determined by the County’s Risk Management Department and set forth in the County standard contract.
• Potential Impact: The Agreement does not include County standard insurance requirements. This means that the County has no assurance that Adobe will be financially responsible for claims that may arise from the County’s use of the software, which could result in expenses to the County that exceed the total Agreement amount.
4. The Agreement does not require Adobe to indemnify the County, including for intellectual property infringement claims.
• The County standard contract indemnity provision requires the Contractor to indemnify, defend, and hold County harmless from third party claims arising out of the acts, errors or omissions of any person. The standard contract provision for intellectual property indemnity is Contractor will indemnify, defend, and hold harmless County and its officers, employees, agents and volunteers, from any and all third party claims, costs (including, without limitation, reasonable attorneys’ fees), and losses for infringement of any United States patent, copyright, trademark or trade secret (Intellectual Property Rights) by any goods or services.
• Potential Impact: If the County is sued for any claim, including intellectual property infringement based on its use of Adobe’s software or services, the County may be solely liable for the costs of defense and damages, which could exceed the total Agreement amount.
5. To the extent permitted by applicable law, the County is required to indemnify Adobe and its subsidiaries, affiliates, officers, agents, employees, partners, and licensors against any claim arising out of the County’s content, Creative Cloud Customer Fonts, use of the Services or Software (as applicable), or violation of the terms. Adobe has the right to control the defense of any claim, action, or matter with counsel of its own choosing at the County’s expense. The County is also required to indemnify for claims arising from the County’s breach of the developer terms, use of the developer tools, third party privacy violations, end user claims related to the developer software including product liability, and any claim related to the County’s relationship with an end user.
• The County standard contract does not include any indemnification or defense by the County of a Contractor.
• Potential Impact: By agreeing to indemnify Adobe, the County could be contractually waiving the protection of sovereign immunity. Claims that may otherwise be barred against the County, time limited, or expense limited could be brought against Adobe without such limitations and the County would be responsible to defend and reimburse Adobe for costs, expenses, and damages, which could exceed the total Agreement amount.
6. Adobe’s total liability in any matter arising out of or related to the terms is limited to the greater of (A) United States $100; or (B) the aggregate amount that the County paid for access to the services and software during the three-month period preceding the event giving rise to the liability.
• The County standard contract does not include a limitation of liability.
• Potential Impact: Claims could exceed the liability cap and the Agreement amount leaving the County financially liable for the excess. In addition, the County’s liability under the Agreement is not similarly limited.
7. The term is indefinite until terminated by either party.
• County Policy 11-06SP does not permit indefinite term or automatically renewing contracts unless approved by the Board.
• Potential Impact: There is no end term to the Agreement and the County is indefinitely bound to the terms and conditions of the Agreement.
8. There is no termination for convenience without penalty. The County may cancel the subscription and terminate use of the services and software at any time, subject to the payment of outstanding subscription fees, including early cancellation fees.
• The County standard contract gives the County the right to terminate the contract, for any reason, with a 30 day written notice of termination without any obligation other than to pay amounts for services rendered and expenses reasonably incurred prior to the effective date of termination.
• Potential Impact: Upon termination by the County, the County is required to pay outstanding subscription fees and unspecified early cancellation fees, which could result in payment liability where no funds are available due to lack of allocation or loss of funding.
ITD recommends approval of the new LGA Package, including the non-standard terms, to allow ITD and other County departments to purchase licenses, support and maintenance of Adobe software products used for graphic design, video editing, web development applications, and editing PDF format files.
PROCUREMENT
The LGA, including the non-standard terms, will be used to accompany future purchase orders to be approved, as necessary, per County Policy 11-04 Procurement of Goods, Supplies, Equipment and Services.
REVIEW BY OTHERS
This item has been reviewed by County Counsel (Bonnie Uphold, Supervising Deputy County Counsel, 387-5455) on February 3, 2023; Purchasing (Tevan Stremel, Buyer III, 387-2098) on February 6, 2023; Risk Management (Victor Tordesillas, Director, 386-8623) on February 7, 2023; Finance (Ivan Ramirez, Administrative Analyst, 387-4020) February 14, 2023; and County Finance and Administration (Paloma Hernandez-Barker, Deputy Executive Officer, 387-5423) on February 27, 2023.