In order to participate in the various aspects of contracting for software development, it is necessary to establish an acquisition life cycle for contracted software. This life cycle contains the following three activities:

Selecting an Outside Organization

Selecting a contractor is similar to systems design. It is a time of studying alternative contractors, costs, schedules, detailed implementation design specifications, and the specification of all the deliverables, such as documentation. The selection of an outside organization may involve the following individuals in addition to the quality control reviewer:

Systems analysts

User personnel

Internal auditor

Purchasing agent

Legal counsel

Contract Negotiations

In some organizations, the purchasing agent conducts all the negotiations with the contractor; the other parties are involved only in the needs specification. In other organizations, there is no purchasing agent, so the data processing department deals directly with contractors for the acquisition of application systems.

Operations and Maintenance

The maintenance and operations of purchased applications may be subject to contractual constraints. For example, some contracts limit the frequency with which an application can be run without paying extra charges, and limit an organization’s ability to duplicate the application system in order to run it in a second location. In-house personnel can maintain some purchased applications, but others do not come with source code and thus are not maintainable by in-house personnel. There may also be problems in connecting a purchased application from one contractor with purchased or rented software from another contractor. It is important that software from multi contractors be evaluated as to its capability to work in the same operating environment.