To structure a partnership agreement with another MSP, first define the operating model: who contracts with the customer, who performs each task, who controls access, who invoices, and who responds when service fails. Put the core terms in a master agreement, then use schedules for each service or customer, service levels, fees, security, and any regulated-data obligations. The agreement between MSPs must support—not contradict—the promises made to the customer.
Choose the operating model before drafting
“Partnership” can describe several different arrangements. The contract should name the arrangement and spell out how it works in practice. A label alone does not establish who is responsible for customer commitments, security, or delivery.
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| Model | Questions the agreement should answer |
|---|---|
| Referral | Does the referring MSP receive a fee? Who contracts with, invoices, and supports the customer? What customer information may be shared, and when? |
| Resale | Which party sells the service and sets customer-facing terms? Who delivers and supports it? Who handles billing, customer complaints, and credits? |
| Subcontracting | Which MSP holds the customer contract? What work is delegated, what customer-facing commitments flow down, and what authority—if any—does the subcontractor have with the customer? |
| Co-delivery | How are tasks, customer communications, approvals, access, service levels, and incident responsibilities divided between the MSPs? |
| New joint business | Are the parties forming a separate venture or entity, or only agreeing to provide services together? Define ownership, authority, funding, governance, and exit arrangements with counsel. |
For every model, identify the customer-contract path, the party authorized to quote or change scope, the party that can make customer-facing commitments, and any exclusivity or non-solicitation terms. State whether the parties intend an independent-contractor services relationship and whether either has authority to act for or bind the other. Have counsel tailor those terms to the actual arrangement and applicable law; the wording and the parties’ conduct both matter.
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A master agreement can hold terms that apply across the relationship. Attach a service or statement-of-work schedule for each customer or project, plus schedules for service levels, fees, security, and regulated data when relevant. This keeps customer-specific obligations visible and makes scope changes easier to document without silently changing the whole relationship.
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Parties, term, and authority
- Name each legal entity, the effective date, term, renewal process, and relevant territory.
- Define the relationship model and identify which party contracts with the end customer.
- Specify who may quote, approve changes, make service promises, speak on behalf of the service, or bind either party. State that any authority not expressly granted is not granted.
- Set any exclusivity, referral, or customer non-solicitation arrangement precisely, including its scope and duration, for legal review.
Scope of work and responsibility matrix
For each service or customer, document covered systems, deliverables, operating hours, planned maintenance, exclusions, prerequisites, customer duties, required licenses and tools, and escalation contacts. Add a responsibility matrix that names the lead, approver, and any supporting party for each activity. Do not leave tasks assigned only to “the MSP” when two providers are involved.
| Activity to assign | What the schedule should make clear |
|---|---|
| Provisioning and access | Who requests, approves, creates, changes, and removes accounts and privileges. |
| Monitoring and patching | Which systems are covered, who performs the work, the applicable windows, and how exceptions are handled. |
| Backup and restore | Who configures and monitors backups, who approves a restore, and the recovery expectations for the service. |
| Incident triage and customer notification | Who detects, investigates, escalates, preserves evidence, and communicates with the customer or other affected parties. |
| Changes and documentation | Who can approve changes, where approvals are recorded, and who maintains current operational documentation. |
Define a change-control process: who can request a scope change, how its price and impact on service levels are assessed, who approves it, and where the approved change is recorded. Guidance from the New York State Comptroller emphasizes describing service expectations and knowing which vendors or subcontractors can access protected information; its education-data requirements apply in that specific New York context, not to every MSP agreement.
Set measurable service levels and a governance process
Put performance expectations in a service-level schedule rather than relying on phrases such as “prompt support” or “commercially reasonable response.” For each applicable severity, specify response and restoration targets, the coverage hours and measurement method, escalation contacts, reporting cadence, and any remedies or service credits. Define maintenance windows and how customer-caused delays, missing access, or other dependencies affect measurement.
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- Choose severity definitions that connect to observable impact, not just labels.
- Distinguish acknowledgement or response from diagnosis, workaround, and restoration.
- State how the parties document exceptions, review recurring misses, and agree on corrective actions.
- Align the MSP-to-MSP targets with the customer-facing agreement. A delivery partner cannot reliably satisfy a commitment that is tighter than its own assigned obligations or coverage.
The FTC recommends putting provider expectations, performance standards, and monitoring methods in writing. The New York Comptroller describes service-level agreements as setting measurable targets and remedies. The latter’s guidance is directed to local governments and schools; these sources support a drafting approach, not a universal set of targets.
Allocate cybersecurity, confidentiality, and data duties
MSP access can create risk across customer trust relationships, so the contract should identify who owns each security decision and operational control. Do not assume that the party with technical access is responsible for every security obligation. The 2022 joint MSP cybersecurity advisory emphasizes transparent allocation of security responsibilities; FTC guidance and the New York Comptroller’s materials also stress written requirements and subcontractor oversight.
Access and safeguards
Define confidential information and permitted uses, data categories, approved storage locations, access approval, account controls, logging and monitoring, least privilege, encryption where appropriate, and secure transfer methods. Set requirements for unique accounts and MFA for MSP accounts. Specify who approves access, who reviews it, and how quickly access must be changed or removed when a worker’s role ends or the service terminates.
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Subcontractors and incidents
Require notice or approval before either MSP uses downstream subcontractors with access to customer systems or information. Flow down the security and confidentiality obligations that apply to their work. Define what constitutes an incident for contract purposes, how promptly the other MSP must be notified, cooperation and investigation duties, evidence preservation, remediation, and a coordinated process for customer or regulator communications. Do not leave notification timing or decision authority implicit.
Return, retention, and regulated information
Specify retention periods, permitted copies, return format, deletion duties, and confirmation of deletion when the service ends. If electronic protected health information (ePHI) is involved, map the covered entity, business associate, and subcontractor roles and determine whether a HIPAA-compliant business associate agreement (BAA) is required. HHS explains that cloud providers handling ePHI on behalf of a covered entity or business associate can be business associates, including some subcontractors, and discusses service-level topics such as recovery, data return, security responsibility, and use and retention. That cloud-specific guidance does not resolve every MSP arrangement; assess the parties’ actual functions and data flows.
Other rules can apply in narrower settings. For example, New York education requirements concern contracts involving student, teacher, or principal personally identifiable information in that context. Do not copy sector-specific clauses into an unrelated engagement without checking whether they apply.
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Set fees, customer responsibilities, and intellectual-property rights
Specify how money and customer-facing responsibilities work, especially where one MSP collects from the customer and pays the other.
- Define fixed or variable fees, referral or resale calculations where applicable, invoice timing, payment-dispute steps, taxes, approved pass-through costs, and how prices may change.
- State who may authorize expenses and customer credits, and how credits or refunds are allocated if a service-level commitment is missed.
- Identify who handles support requests, complaints, service changes, and customer termination; say how quickly relevant customer information must be shared between the MSPs.
- Separate each party’s pre-existing tools, scripts, documentation, configurations, and other materials from work created for the engagement. Define ownership or permitted use of deliverables and operational data, and license rights to use the other party’s tools, materials, and marks.
- Assign responsibility for third-party software, hardware, and license costs, including who obtains and maintains required licenses.
Federal Reserve interagency guidance for banking organizations identifies compensation, licensing and ownership, software and hardware costs, and customer complaint handling as contract topics. It is useful as a checklist, but its regulatory duties apply in its own banking context.
Negotiate liability, indemnity, and insurance against the real exposure
Set performance commitments and exclusions, responsibility for employees and subcontractors, claim-notice and defense procedures, and any negotiated indemnities—for example, for specified intellectual-property, confidentiality, or security claims. Define the liability-cap basis and any carve-outs. Choose insurance types and limits to match plausible service and data exposure rather than copying a number from another agreement.
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Compare the MSP-to-MSP allocation with the customer contract. If the customer-facing MSP has an uncapped or broader obligation but the delivery partner’s cap is narrow, the first MSP may retain an exposure it cannot pass through. Federal Reserve guidance recommends considering indemnification, proportionality of liability limits to potential loss, and insurance commensurate with risk. These are negotiation issues, not universal numerical standards.
Plan for continuity, disputes, and exit
Set the initial term, renewal, termination for convenience or cause, cure periods, and any immediate suspension right for urgent security risks. Specify payment obligations that survive termination and whether essential services continue while a dispute is handled.
Make a transition workable before it is needed. Define the assistance each party must provide, its scope and fees, the documentation and customer handoff required, cooperation with a replacement provider, data return or deletion, and secure credential and access removal. Assign backup and recovery responsibilities, recovery objectives, and continuity testing where appropriate to the service. Establish escalation steps and any mediation or other dispute process, plus governing law and venue.
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Use a final alignment check before signing
- Can each party explain who contracts with the customer, invoices, controls scope, and owns each customer communication?
- Does every operational task have a named responsible party, an approval path, and an escalation contact?
- Can the delivery chain meet the customer-facing coverage, service-level, security, and incident commitments?
- Do access controls, subcontractor terms, and data handling match the systems and information the partner will actually touch?
- Are fees, customer credits, IP rights, liability allocation, insurance, and transition duties consistent across the agreement and its schedules?
- Have qualified counsel reviewed the agreement for the governing jurisdiction, actual conduct, and any sector-specific data obligations?
No single clause set is legally sufficient for every MSP arrangement. The right structure depends on the parties’ roles, customer commitments, jurisdiction, and data flows.
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