Views of Calgary. Calgary submitted that the Board must have regard to the source of the evidence before it. Calgary submitted the ATCO Utilities provided no expert witnesses qualified to speak to the drafting, negotiation and interpretation of IT contracts, nor the manner in which such contracts were dealt with in the industry. Calgary conceded that the ATCO witnesses were qualified to speak to company matters, such as the intention of the various ATCO Utilities, or to the numbers regarding expenditures or budgets. However, Calgary argued they were not experts on the general IT industry, outsourcing issues or industry standards. Calgary submitted that the only witness for the ATCO Utilities with any IT experience was Xx. Xxxxxx. Xxxxxxx suggested Xx. Xxxxxx’x experience was limited entirely to his various positions with ATCO.22 Calgary also submitted Xx. Xxxxxx had never been involved with an outsourcing company, nor had he been involved in any outsourcing arrangements outside of the ATCO companies.23 Calgary argued there was no evidence that Xx. Xxxxxx’x personal experience regarding IT outsourcing, and the contracts related thereto, went beyond his experience with ATCO I-Tek. Calgary submitted that Xx. Xxxxxxxx, by contrast to the ATCO witnesses, was clearly an independent expert, and that she was very experienced in the areas of drafting, negotiation and interpretation of information technology contracts and the manner in which such contracts were dealt with in the industry. Calgary noted that Xx. Xxxxxxxx had 23 years of experience in IT 20 ATCO Utilities Argument, page 6 21 ATCO Utilities Argument, pages 7 and 8 22 Exhibit 113-2 – CV of X. Xxxxxx, and Transcript, page 32 23 Transcript, page 32 contracts, with past retainers on a significant number of the major outsourcing transactions in Canada. Calgary argued that the ATCO Utilities’ witnesses were not independent and did not possess the extensive expertise of Xx. Xxxxxxxx. Xxxxxxx submitted that the expertise of the witness was an issue that went to the weight to be given to the evidence provided by that witness. In assessing the appropriateness of the terms and conditions of the Renewal MSA, and their use within the industry, Calgary submitted that the Board should give more weight to the evidence of Xx. Xxxxxxxx and should give little or no weight to that of the ATCO Utilities witnesses.
Views of Calgary. Calgary submitted that the provisions related to IP ownership in the Renewal MSA were a significant departure from the ownership provisions in the Original MSA. The Original MSA provided that ownership in and to any new developments, deliverables, and/or know-how arising out of or otherwise created in the course of the Services, including any IP rights therein, belonged to the ATCO Utilities if they were funded substantially by the ATCO Utilities.49 Calgary submitted that in the Renewal MSA, ownership of all of the improvements, enhancements, etc., to existing custom designed programs, any new custom designed programs, and all ATCO I-Tek software were owned by ATCO I-Tek. Calgary disagreed with ATCO’s argument that while the ATCO Utilities would not own any of the IP that they had paid for under the Renewal MSA, such lack of ownership was not a problem because the ATCO Utilities were now using only third party software. Calgary submitted in response that, first, the ATCO Utilities have provided no evidence that they were in fact using only third party software. Second, the evidence was clear that the ATCO Utilities have made significant expenditures, and continue to do so, regarding the development of custom projects.50 Xx. Xxxxxx acknowledged the ATCO Utilities had previously followed a policy of extensive custom developed IT programs.51 48 Transcript, pages 137-138 49 Exhibit 101 - Old MSA, Section 10.8 50 For example: load settlement, work management and the utilities’ financial systems, Vol 3, page 315 51 Transcript, page 42 and page 43 Calgary submitted that Xx. Xxxxxx provided no explanation as to why the ATCO Utilities, after having spent millions on such custom-developed software, would not use them any more and would instead use only third party software. Calgary submitted that it was much more likely that these custom-developed programs would continue to be used by the ATCO Utilities via ATCO I- Tek for many years to come. Under the terms of the Renewal MSA, ATCO I-Tek would own any and all enhancements, alterations, etc., to those custom programs used by the ATCO Utilities. Third, there was a requirement in the Renewal MSA that the ATCO Group commit to 55,000 hours of development, enhancement and consulting services from ATCO I-Tek each year.52 Calgary concluded that ATCO I-Tek would own the product that resulted from those hours. Calgary therefore doubted ATCO’s argument that the ATCO Utilities would only be using third party software. Calgary ...
Views of Calgary. Calgary referred to the evidence of Ms. Xxxxxxxx00 wherein it was submitted the Renewal MSA did not provide sufficient remedies to ensure maintenance of the level of service the ATCO Utilities were paying for, since any service level credits were simply a deferral of payments of relatively small amounts, and successive failures to provide service did not result in the ability to terminate the agreement. In addition, the service level credits set out in the Renewal MSA were substantially below what other outsourcers agreed to. Calgary suggested ATCO presented no evidence that the remedies contained in the Renewal MSA were common in the industry. Calgary argued that the only evidence, contrary to that of Xx. Xxxxxxxx appeared in the form of a legal opinion in the Rebuttal Evidence regarding the enforceability of penalties75. Calgary concluded that the remedies provided for in the Renewal MSA set it apart from industry standards. This served to make the benchmarking process more difficult and increased the chances that the benchmarker would have to make assumptions and judgments that might result in more subjective and less objective benchmarking results. 72 Exhibit 102 Schedule C Article 5.2 73 Exhibit 102 Article 16 74 Exhibit 307-3 - Evidence of Xxx-Xxxxx Xxxxxxxx, pages 9 and 10 75 Exhibit 114 - ATCO Rebuttal Evidence, page 9
Views of Calgary. Calgary commented on service levels and proposed a variety of changes to Schedules A through D in the Renewal MSA. Schedule A – Service Level Agreement Calgary requested information78 on the technology plan that ATCO I-Tek was to develop for each of the ATCO Utilities as part of the MSA Schedule A – Service Level Agreement. In response, ATCO provided79 a high-level description of the IT planning process, indicated that the technology plan and the resulting IT costs were filed in the respective rate applications, and stated that the application plan (often called the application architecture or application blueprint) had not been developed. In Calgary’s view, this response showed that the planning approach of the ATCO Utilities and ATCO I-Tek was inappropriate.80 Calgary suggested that the apparent disregard by the ATCO Utilities for the application plan and for what ATCO I-Tek was to deliver to them was further evidence that the relationship between these affiliates was much different from that one would expect from an independent, arms-length outsourcer. Calgary was concerned that the absence of appropriate planning would make it difficult to benchmark the Renewal MSA. 76 Calgary Argument, page 26 77 EUB’s letter dated May 5, 2003 78 CAL-ATCOMSA-4 79 CAL-ATCOMSA-4 80 Exhibit 308 - Calgary Further Written Evidence dated May 30, 2003, page 2 to page 3 Schedule B – Definition of Services Calgary requested information81 on the methods that ATCO I-Tek proposed for quality control under the MSA Schedule B – Definition of Services. In response, ATCO provided82 an outline of the quality control processes including those used by the help desk for service management and those used by project staff through a project management office (PMO). Calgary submitted that, as in past proceedings, the ATCO Utilities and ATCO I-Tek were not following the PMO procedures that were outlined in the ATCO IR Response83. Calgary had recommended in GRA and GTA proceedings that the Board “require each regulated utility to file annually, in a single understandable table, the spending on each IT service obtained from any affiliate or third party”.84 Calgary believed it was important for the Board to understand the frustration that parties experienced in attempting unsuccessfully to obtain information from the ATCO Utilities, and to understand that lack of such information could impair the potential success of any benchmarking exercise. Schedule C – Service Measures Calgary submitted that...
Views of Calgary. Calgary was a proponent of the Collaborative Process, however, from the experience to date137 Calgary stated that it would not succeed without transparency, objectivity, and clear terms and conditions capable of being benchmarked. Calgary argued the ATCO Utilities attempted to bring evidence on the Collaborative Process through witnesses who were not part of the process and were not at the meeting that included interviews of prospective benchmarkers.138 Calgary submitted correspondence filed prior to the hearing139, set out Calgary’s view that the primary reason for the breakdown in the benchmarking Collaborative Process was that ATCO was unable to agree on the terms of reference. Under cross-examination140 it became clear that while parties agreed on the underlying principles regarding benchmarking, the process broke down over the attempt to deal with those principles in detail through the draft terms of reference.141 Calgary’s request that the Board determine certain terms and conditions of the MSA to be benchmarked, was an attempt to remove some of the details over which there was significant disagreement.
