Homework Assignment 8

Ethical Analysis - The Back Door

 

[note - students were provided a copy of the contract described below, in class].

Acme Software, a custom software developing company in Atlanta, has a contract with GoodCare, a large chain of health clinics along the east coast of the US., to provide a custom software and hardware solution for an appointment management system. GoodCare provides alcohol and drug rehabilitation and short-term psychiatric care for private-pay patients. These patients choose to pay on their own without the benefit of insurance. Many of the patients are high-profile sports players and actors.

Lynn Smith, VP of IT at Goodcare negotiated the contract with Terry Jones, VP of Client Development for Acme Software. The contract, which was effective on July 1, 2007, provides that Acme Software will 1) provide consulting services to Goodcare to determine the specifications for the project to recommend hardware and any off-the-shelf software that would support the specifications; 2) develop any custom software; and 3) provide negotiating services for the purchase of the hardware from third party vendors. The contract includes master terms and conditions and Statement of Work No. 1 that sets out the details about the work. Phase 1 (Design) is due August 31, 2007; Phase 2 (Procurement) is due October 31, 2007; and Phase 3 (Development, Installation, and Testing) is due December 31, 2007. Payments for each phase are tied to the deliverables of those phases.

After the contract was signed, Terry provided a copy of the Statement of Work to Sid Johnson, the Project Manager for this contract. On September 4, 2007, Sid walks into Terry's office, tenders his immediate resignation, telling Terry that he has as an offer for a job in San Francisco with RoadRunner Systems, a competitor to GoodCare.

That afternoon, Terry meets with Chris Wolf and tells him that he putting Chris in charge of the Goodcare Project, to substitute for Sid. Terry states, "This is a really high-profile project for our company. Our investors are considering another round of about $2,000,000. This project with Goodcare will not only go a long way to helping us make our revenue numbers, but the investors will be very interested in helping us build a business around the code that we develop for this appointment management system. There is a big market out there for smaller chains that could use a system like the one we are building for Goodcare." Terry gives Chris a copy of the Statement of Work No. 1 and says "Here's the Statement of Work No. 1 that's got all the details about your deadlines and deliverables. Sid got us through Phase 1. You need to make sure that we make good on Phase 2 and Phase 3."

The following day, Chris meets with the other Acme employees working on the project, Mary and Dan. Mary explains to Chris that they did deliver the Design Document as part of the Phase 1 deliverable. The Design Document includes the deadlines for the rest of the project, including the installation of BETA software on hardware at Goodcare's headquarters on November 1, 2007. Goodcare will be using the BETA version to test the appointment capabilities with one of the remote offices of Goodcare, using live patient data. Goodcare has already provided test data to Acme Software that has "fake" patient names, but is otherwise based on historical data. Mary tells Chris that the project is behind the time-table for the deliverables of Phase 3 and that Sid knew of the delays. Mary says that at the current pace, they could probably finish the coding by December 31, 2007, but they would not be able to perform all the testing that is required by the Acme Software standard operating procedures ("SOP's"). Chris learns from Mary that Sid engaged a real "cracker jack" programmer named Joe Keen on a freelance basis. Joe has been writing most of the "hard stuff" of the code. After the meeting, Joe hangs around obviously waiting to talk to Chris. Joe tells Chris that delays were caused by Sid's many days of absence over the past several months, that now everyone knows resulted from Sid's job interviewing schedule. Joe suggests that if they use some open source libraries and code in a few of the modules, they can definitely complete the coding by the deadline and might even be able to complete the testing.

Chris talks to his new boss, Terry, about the huge delays in getting the code ready for the November 1, 2007 installation. Terry shakes his head and says, "We have to make that delivery. The investors are watching us closely and if we don't make that deliverable, they may decide not to go ahead with that $2milllion round. Go see what you can figure out to make it work."

On October 24, 2007, Chris gets an email from Mary that says she is resigning immediately for personal reasons. "Sorry for the short notice." Chris, in panic, meets with Joe to talk about progress on the project and the fact that Mary has now left. Joe tells Chris that he found some open source libraries and code that will speed up development considerably. Just to make sure that there will not be a problem, Joe tells Chris that he has built a "back door" into the system. He explains that he wants to be able to test the software according to the Acme SOP, but if they can't do all the testing, they will deliver the software and install it at the client's site. Then, if further testing reveals a major problem, they'll be able to use the back door to update the code with fixes. A few days later, Chris learns that Mary went to work with Sid.

On November 1, 2007, the day the BETA version of the software is due, Chris takes Joe with him to New Jersey to deliver and install the system at Goodcare. Lynn Smith, the IT Project Manager at Goodcare, meets them in the lobby of the offices and says, "Wow, Chris, I am really impressed with your work. I heard from Sid recently and he told me he had big doubts about the system being delivered on time. I told him that my job really depends on this project going well; it's such a high-profile project for the company. I am so glad that you guys are here. Chris introduces Joe to Lynn. As Lynn is shaking Joe's hand, she says "Great to meet you. How long have you worked for Acme? Sid never mentioned you were on his team." Joe answers, "I've known Sid for years. He called me in for this project I think when it started in July. I had to drop all my other clients to work on this matter for Acme." "Your other clients?", says Lynn. "Aren't you an employee of Acme?" Chris jumps in, "Joe's with us temporarily as we wanted to get the best talent to work on this for you." Lynn says, "don't you know that the contract doesn't allow for any outside contractors on this project? This is a highly sensitive matter and we want to make sure we have confidence that not just anybody has access to it. This system is going to be highly strategic for our company and our ability to beat out our competition. let's go ahead with the installation, but I need to talk with your boss immediately about the issue of Joe."

Chris calls back to Acme's offices. His boss, Terry, had left for a four-week sabbatical the prior week, for a world trip. During Terry's absence, the CFO, Janet Jones was filling in for Terry's responsibilities. Chris talks to Janet and tells her that Lynn has raised some issue about contractors that he does not understand and schedules a meeting with her when he gets back to Atlanta the next day. That afternoon, Janet finds a copy of the original contract to read through that night. Chris and Joe return from New Jersey the next afternoon. Joe goes home. Chris goes to the office for a late meeting with Janet. She asks him about how the installation went. That's when Chris tells her about the problems with delays, but tells her that the situation is under control because a) Joe is the best programmer in this area and they were lucky to even be able to retain him; b) Joe found a short-cut by using the open source code and libraries; and c) Joe built in the back-door.

Janet tells Chris "good night" and closes her office door. Janet thinks to herself , "What a time for Terry to take that stupid sabbatical." Janet has to present a draft Powerpoint memo to her boss about the status of the Goodcare contract, the CEO, for him to use at a board meeting including the investors the following week. Janet has read the contract and has found that there may be an issue as to whether Acme can use the code that they are developing for Goodcare with other potential clients. Chris's revelations are truly troubling. Janet takes a long sip of from her diet soda and begins to write.

Write a memo:

Prepare the draft Powerpoint that Janet needs to provide to the CEO, outlining the ethical and legal issues that are involved in the Goodcare project, including:

• whether the issue is legal or ethical or both
• the material facts and assumptions
• alternatives for the CEO to consider
• Janet's recommendation to the CEO as to what he should tell the Board.

Present your Memo in Class:

You will present your Powerpoint memo in class. Your presentation should last between 5 - 8 minutes. Bring a paper copy of your presentation to class (print it out as 2 slides per page) for the instructor; also bring it in electronic format to load and display on the class room computer.