Open Hardware Distribution and Documentation Working Group: Contracts and Agreements

Source: Contracts, Branko Collin

This is the 15th post of the series of the Open Hardware Distribution and Documentation Working Group. The group aims to produce a proof of concept for distributed open science hardware (OScH) manufacturing, exploring key aspects like quality, documentation, business models and more using as a starting point a paradigmatic case study. We hope the experience motivates others to discuss and implement new strategies for OScH expansion.

By Shannon Dosemagen

As the working group was circling around a cooperative structure with a single administrative body, conversations about agreements and contracts (specifically manufacturing, product, and zone contracts) became increasingly present as a means to formalize relationships once created. Several key topics came to the forefront including zoning of agreements, the value of belonging to a cooperative network of manufacturers, and governance of the network.

Zoning

In relation to the work of this group, zones cover geographic regions far and wide, but because of working group member focus areas and existing partnerships, much of the conversation centered on zoning agreements between entities in the US, UK and East and West Africa. The group covered a number of questions about what zoned agreements between manufacturers and developers would need to consider, including:

• Should there be a fixed price that could be adjusted according to how quickly products are moving?
• What is a reasonable rate to pay for manufacturing time? Does this need to be one single rate or fluctuate based on product complexity, use and additional associated costs?
• Does it make sense to collectively set a determined cost vs. price for each product? Or as a network, work with manufacturers to have them set their own price and then mark it up based on the overhead of the network?
• When contracts with the network are co-created together by a manufacturer and developer, how do we ensure equitable cross-project percentage mark-ups across different types of relationships within the network?

One of the key things the group noted to be aware of is that if a manufacturing company in zone one sets a contract amount, in their markup they are also setting market demand and the actual costs of manufacturing. Across regions there will need to be some kind of check and balance on pricing to ensure that manufacturers can both handle increased costs, but also the potential for abstracted product inflation.

Value of the network

We’ve spent a lot of time discussing the value of a distributed manufacturing and distribution network, but in the context of zoning and contracts, the central question was — if you, for instance, get the zone two contract for this network, what will prevent someone else from selling the same product in zone two? Or in other words, what is the value of selling through the network?

Group members acknowledged that this is certainly going to happen (and should, since we are working with open designs) and that it will present interesting micro-scenarios for the group to be aware of. The short answer to this question was that it isn’t an issue for other people to sell in the same zone, but that only the manufacturer in zone two working in agreement with the network will have access to things such as the quality mark, being able to use the network marketing staff member, brand creation and management, a payment system, etc.

Group members also talked about the value to developers and manufacturers of the networked approach to liability, namely, responsibility for network-wide reporting if something breaks and the fixes and updates to solve the issue. This also makes sense from the perspective of end users in terms of getting support when something breaks or doesn’t work as expected on their side.

Governance

Governance is always the behemoth in the room, it’s of critical importance, but takes care, time, attention, and usually in the beginning, flexibility to get “right”. Even once it feels right, governance structures need review, room for growth and the ability to be reflexive to shifts in a network. The group decided that governance can’t be determined until there is a network that is functioning and it is identified who the named stakeholders (entities and individuals) are in the network. Topics for further discussion that the group identified included:

• Determining a voting structure for different functions of the network. For instance if there was a call to modify the manufacturing group contract, the product contract or the zone contract, all manufacturing zones could each get one one vote, developers collectively get one zone, and the central administrative body gets one vote.
• How do customers get included in the network? One of the working group members noted that in member cooperatives customers have a voice in network agreements to provide input on how to use resources. Some group members saw complication in this, because the network contract would represent an agreement and investment of trust between developers and manufacturers and additional input from customers could become increasingly complicated. It was suggested by a third group member that there are different ways for stakeholders to provide different types of input and that at a high level, in any agreement, there is potential for misalignment between different stakeholders at times. So perhaps the question needs to be, how can all stakeholders have an equitable vote without reducing effectiveness in the organization?
• What types of methods of empowerment could be utilized in a governing body (noting there are potential selection biases of those engaging that need to be solved for)? For instance, legal control over decision making, advisory positions, once a year consumer meetings, forums for creating feedback, generating consensus, etc.

And go!

As the reader might have noticed, to get into the minutiae of these questions, testing a network approach and structure for governance would be helpful. At this point the group agreed that a small number of independent, initial organizations would take the first steps to begin establishing agreements amongst each other so that they can begin to test assumptions while allowing for broader (and sometimes more philosophical questions about governance) to be addressed by the larger collective group.