Third-party suppliers of technology products and services are notifying their customers that they are implementing business continuity and recovery plans (BCPs) in light of COVID-19 and are requesting written authorization for remote work arrangements. These requests typically are broad in scope, open in timeframe and, in some cases, provide certain information about the security, connectivity and continuity protocols that the supplier will put in place.
We expect customers to receive an increasing number of these requests in the coming days and weeks. When considering these requests, it is important for the customer to assess and respond in a manner that is as consistent as possible across its supplier base, subject to deviations appropriate for different services. Below are key topics to keep in mind.
More generally, it is necessary for customers to understand the pandemic planning efforts of their key suppliers and to consider what back-up options exist if a supplier is unable adequately to provide a critical service.
Like other companies worldwide, suppliers are grappling with how to respond to the spread of COVID-19. Suppliers rightfully feel compelled (if not strictly legally obligated in all cases) to look after the health and safety of their personnel (and their customers). Suppliers also must comply with applicable laws and any governmental restrictions that are put in place (e.g., executive orders, government directives or legislation regarding travel restrictions, limits on group size, quarantines, etc.). In this regard, as is the case with its customers, each supplier will do what it believes it must do to protect itself and its people.
It is in the customer’s interest to grant these remote work requests (within certain parameters, as noted below). During a time of crisis, it is paramount that the services provided by the suppliers continue uninterrupted and with no (or as little as feasible) degradation. If the customer does not authorize the remote work arrangement, the chances increase that the supplier may be unable to perform and may declare a force majeure event per the terms of the agreement. For example:
Of course, the extent to which a supplier can rely on a force majeure occurrence (and the rights and obligations it has upon such an occurrence) requires careful review of the force majeure provisions in the relevant contract. In the absence of a force majeure provision, a supplier may seek to rely on common law principles, such as impracticality of performance or frustration of purpose.
Customer Considerations and Parameters
When considering a supplier request for written authorization for remote work arrangements, the customer should consider the following:
Pillsbury’s experienced crisis management professionals are closely monitoring the global threat of COVID-19, drawing on the firm's capabilities in supply chain management, insurance law, cybersecurity, employment law, corporate law and other areas to provide critical guidance to clients in an urgent and quickly evolving situation. For more thought leadership on this rapidly developing topic, please visit our COVID-19 resources page.