The IT Alliance for Public Sector (ITAPS), a division of ITI, recently sent a letter urging North Carolina Gov. Pat McCrory (R) to sign state Senate bill 792 into law. The legislation, which was approved by the state legislature last week, clarifies that state information technology contracts include an expanded limitation of contractor liability.
While North Carolina has existing standard terms and conditions that contain a limitation of liability of two times the value of a contract, Senate bill 792 ensures that the existing limitation applies to all damages resulting from any form of action, including data breach. Under the existing standard terms and conditions there is no limit on data breach liability placed on vendors, which can reduce competition in the bidding process and increase costs to the state because vendors are often unwilling and unable to accept such a high risk.
Closing the existing “data breach exception” to the limitation of liability in existing terms and conditions will increase the number of qualified vendors competing to provide information technology products and services to the state. Additionally, Senate bill 792 provides the state chief information officer (CIO) with considerable flexibility to increase the limitation of liability up to three times the value of a contract if the CIO completes a risk assessment determining that an increase is necessary to protect the state’s best interest.
The bill is the result of thoughtful discussions between industry and the state legislature and was vetted through the North Carolina Joint Legislative Committee on Information Technology. ITAPS views Senate bill 792 as a clear step in the right direction and continues to urge Gov. McCrory to sign this forward thinking legislation into law before the deadline at the end of the month. ITAPS applauds the bipartisan effort by lawmakers in both the House and Senate in passing this much needed change in statute and looks forward to continuing to work with the governor’s office and state legislature to improve procurement practices in North Carolina.