Entering into a contract with any new partner can be nerve racking.  You are unsure what to expect, what the service will be like, and whether or not you will get value out of the partnership.  While a lot of this comes down to the trust you built in your relationship along the way, there should be something concrete in place for when things do not go as planned.  In comes the master services agreement.

A Master Services Agreement (MSA) is a contract that establishes the terms and conditions under which a service provider will provide services to a client. It serves as a foundational document that outlines the overall relationship between the two parties and sets forth the general terms governing their business dealings. Ideally, this document will only have to be reviewed and agreed to one time, as the purpose of the word “master” is that all engagements between you and the service provider will be governed by these same terms and conditions.

The benefit of this approach is that when you need someone that you are not already contracting the service provider for in the future, you will not need to go through this sometimes lengthy document with legal jargon in it and you can simply agree to move forward based upon the value that you believe the “next” service will bring to your organization.

The downside to this approach is that for an MSA to cover all the terms and conditions that may apply in the future, unless you are buying everything the partner offers on day one, there will likely be sections of the agreement that will not immediately apply to your partnership.  An example we see often is when someone engages with us to do a security assessment.  There are plenty of sections of the MSA which will apply to that particular project, but there are also sections which govern minimum hardware and software standards which would only apply if we were taking the responsibility of managing and securing their network. It is important to read the document carefully to understand what applies to the engagement that you are hiring the service provider for at that time.

Any types of terms and conditions and other legal language can be in an MSA, however here are key components typically found in a Master Services Agreement:

  1. Parties Involved: The MSA identifies the parties entering into the agreement, namely the service provider (often referred to as the “vendor”, “partner” or “supplier”) and the client (often referred to as the “customer”, “client” or “recipient”).
  2. Term and Termination: The MSA specifies the duration of the agreement (e.g., one year, three years) and the conditions under which it may be terminated, such as for cause (e.g., breach of contract) or convenience (e.g., termination without cause with prior notice). This section also often covers any termination fees or conditions that need to be met for termination such as notice.
  3. Scope of Services: While specific services are not always included in these agreements, there are usually at least reference to other documents that will include the scope of what the parties will do together.  Assiciated documents could be executed proposals, Client Service Agreements, etc. that spell out the specific services that the Client is agreeing to with an associated investment.
  4. Payment Terms: The agreement outlines the financial terms of the engagement, including the fees for services rendered, payment schedules, invoicing procedures, and any applicable taxes or additional charges.
  5. Intellectual Property Rights: The MSA addresses ownership and rights to intellectual property developed or provided as part of the services, including copyrights, trademarks, patents, and trade secrets.
  6. Confidentiality: The agreement includes provisions governing the confidentiality and protection of confidential information shared between the parties during the course of the engagement.
  7. Indemnification and Liability: The MSA specifies the responsibilities of each party in the event of claims, damages, or losses arising from the services provided under the agreement, including indemnification obligations and limitations of liability.
  8. Dispute Resolution: The agreement outlines procedures for resolving disputes between the parties, such as through negotiation, mediation, or arbitration, and may specify the governing law and jurisdiction for legal proceedings.
  9. Minimum Standards: It is typical in the Managed IT Services industry to have a set of minimum standards that the managed hardware and software must reach to be in compliance with the agreement.  This is done to ensure quick repair to issues and the ability to properly secure the devices.  Common practice is to ensure that all hardware is under manufacturer support to ensure speedy replacement, and all software is in a “current” version still supported by the manufacturer for security and bug fix updates.
  10. Miscellaneous Provisions: The MSA may include various other provisions, such as representations and warranties, insurance requirements, compliance with laws and regulations, assignment and subcontracting rights, and changes or amendments to the agreement.

MSAs are commonly used in various industries, including IT services, consulting, professional services, and outsourcing arrangements, to establish a framework for ongoing business relationships and ensure clarity and consistency in the provision of services. They are often supplemented by additional documents, such as statements of work (SOWs) or service level agreements (SLAs), which provide more detailed specifications for specific projects or engagements under the MSA.