Protecting against supplier failures during the development
process is a continuing challenge, but particularly so when proper
consideration is not given to the impacts of such failures and
steps that can be taken on the front end of the relationship to
protect the purchaser. For a variety of different reasons, many
times multiple sources for a development program is not a viable
option. That being the case, escrow agreements have become a go-to
risk mitigation process for both hardware and software development
failure.
Escrow agreements can provide some measure of comfort if the
development agreement: (i) properly defines the materials to be
escrowed that provide the necessary property, data and rights to
manage potential developer failures including licenses and
authorizations, and (ii) requires the developer to make periodic
escrow deposits of the escrow materials. These issues require the
input of technologists within the purchasing company to properly
define
