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Blair MacDonald, Managing Director (July 30, 2026)
Municipalities routinely enter into multi-year agreements for software and services. In many cases, these arrangements provide stability, predictable budgeting, and pricing certainty.
However, automatically renewing an existing software agreement for another three to five years may not always be the best decision for an organization, particularly when technology, service expectations, and market offerings are evolving rapidly.
Before committing to another long-term agreement, municipal leaders should consider the following questions.
Software that met an organization’s needs three years ago may no longer represent the best available solution.
Municipalities should ask:
A contract renewal should reward continued innovation, not simply preserve the status quo.
Long-term relationships are built on trust and responsiveness.
Consider whether:
If service levels have deteriorated, a lengthy renewal may reduce leverage to encourage improvement.
Municipalities operate in an environment of changing priorities, elections, budget pressures, and staffing transitions.
A new multi-year commitment may:
Maintaining flexibility can be particularly valuable during periods of transformation.
Annual subscription increases are common, but municipalities should evaluate whether those increases correspond with additional value.
Questions to consider include:
Good stewardship requires periodically testing the market.
The municipal technology landscape continues to evolve.
New providers may offer:
Even if a municipality ultimately remains with its current provider, understanding available alternatives can strengthen decision-making and negotiations.
Organizations that value flexibility, accountability, and prudent financial stewardship do not need to view a multi-year renewal as the only option.
While vendors may present a longer-term agreement as the standard or preferred path, contract terms are negotiable. Municipalities should feel comfortable discussing alternatives that better align with strategic priorities, procurement policies, and responsibility to taxpayers. In many cases, a collaborative negotiation can produce an arrangement that provides stability for the vendor while preserving flexibility for the municipality.
Before committing to another multi-year agreement, consider whether one or more of the following approaches could better serve your organization’s interests.
If the vendor values the relationship, they may be willing to maintain current pricing for an additional year while the municipality evaluates its long-term strategy and future technology needs.
A one-year extension provides both parties with continuity while avoiding an immediate multi-year commitment. It allows the municipality time to assess emerging solutions, complete appropriate due diligence, and determine whether the current platform continues to provide the best overall value.
For the vendor, retaining a satisfied customer for another year demonstrates confidence in the strength of the relationship and provides an opportunity to continue earning the municipality’s long-term business. For the municipality, it preserves flexibility and ensures that any future commitment is based on ongoing value rather than contractual momentum.
Rather than immediately committing to another multi-year agreement, municipalities can consider a one-year renewal with the option to extend for additional years if agreed-upon product enhancements, service improvements, or other commitments are successfully delivered.
This approach creates a shared accountability model: the vendor has an opportunity to demonstrate continued value, while the municipality retains the flexibility to evaluate whether the solution continues to meet its evolving needs.
If a vendor is confident in its product roadmap, customer service commitments, and ability to deliver ongoing value, a performance-based renewal structure can be a reasonable way to align long-term commitments with measurable outcomes.
Obtaining demonstrations, budgetary quotations, or proposals from alternative suppliers provides valuable context and demonstrates that the municipality is conducting appropriate due diligence before making a significant long-term financial commitment.
Even if the municipality ultimately decides to remain with its existing vendor, understanding the available alternatives provides important leverage during renewal discussions. It helps ensure that pricing, product capabilities, service levels, and contract terms remain competitive.
Entering a renewal conversation with a clear understanding of the market allows municipalities to have a more informed and productive discussion with their current vendor – one based on value, performance, and future needs rather than simply accepting the terms presented.
A municipality can ask the vendor to hold pricing for two or three years while retaining the right to renew annually. This approach provides many of the budgeting benefits associated with a longer-term agreement while preserving the municipality’s ability to reassess its options each year.
For municipalities, predictable pricing can be valuable when preparing multi-year budgets and forecasting future technology costs. However, budget certainty does not necessarily require a long-term contractual commitment.
A pricing guarantee demonstrates a willingness to maintain a positive relationship while ensuring the municipality retains the flexibility to evaluate vendor performance, changing technology needs, and market alternatives before making future commitments.
If a vendor insists on a longer agreement, municipalities may wish to negotiate provisions allowing termination for convenience, non-performance, material service degradation, or failure to deliver committed enhancements.
If the municipality has already completed an initial contract term of three or more years, it has demonstrated its commitment to the relationship. At that stage, it is entirely reasonable to request the flexibility to exit the agreement without cancellation penalties, particularly if the vendor is seeking another multi-year commitment. A long-standing customer should not be expected to sacrifice future flexibility simply to continue receiving the services it has already supported for years.
Long-term agreements can make sense when a vendor continues to innovate, delivers excellent service, and offers fair commercial terms.
However, municipalities have a responsibility to periodically reassess whether existing arrangements continue to represent the best value for taxpayers.
Renewing a contract should be a deliberate decision based on performance, market conditions, and organizational priorities – not simply the easiest path forward.
