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Avoiding Potential Contract Pitfalls

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Presentation on theme: "Avoiding Potential Contract Pitfalls"— Presentation transcript:

1 Avoiding Potential Contract Pitfalls
Presented by: Greg Cruthirds, Director of Purchasing and Materials Management Clear Creek Independent School District - League City, Texas

2 Market Driven Salary Plans
Where We’re Located October 2006 Market Driven Salary Plans

3 Market Driven Salary Plans
The District Academics Only “Large” school district in Texas to be “Recognized” for 10 of the last 11 years 15 of 37 campuses (41%) are Exemplary 60% of Elementary campuses are Exemplary Stewart Elementary named a National Blue Ribbon School of Excellence One of only 23 schools in Texas Students 36,200 students Projected enrollment of 47,500 within 12 years 66 different languages spoken October 2006 Market Driven Salary Plans

4 Market Driven Salary Plans
The District Finances $249 million General Fund Budget $44 million Debt Service budget $12 million Food Service Budget Completing a $264 million bond program Beginning a $183 million bond program District Challenges Managing student growth Managing facility growth Special programs Special Ed program growth Workforce More than 4,800 employees More than 2,600 teachers, librarians & nurses October 2006 Market Driven Salary Plans

5 Market Driven Salary Plans
The District Over the next five years, Clear Creek ISD will: Experience tremendous growth in facilities New Central Support Facility – Summer 2008 Elementary Schools 25th & 26th planned in 2009 Intermediate Schools 9th planned in 2010 10th planned in 2011 11th planned in 2011 High Schools 4th opened in August of 2007 5th planned in 2010 Early College High School October 2006 Market Driven Salary Plans

6 Market Driven Salary Plans
The Goal To provide efficient and effective management of resources: Meet the District’s administrative and operational needs Ensure that end users are getting what they want Ensure that they are getting it when they need it Ensure that they are getting good value Be flexible enough to change with the times Best practices, Innovative programs October 2006 Market Driven Salary Plans

7 Market Driven Salary Plans
Define your needs It is difficult to get what you need, if you don’t know what you want. Solicit information from potential vendors Meeting between buyer and department director/school principal Research the options Communicate with other school districts Attend vendor fairs October 2006 Market Driven Salary Plans

8 Market Driven Salary Plans
Request Proposals May go through the RFP process. May seek proposals from purchasing cooperatives. May get written quotes if less than $25,000. October 2006 Market Driven Salary Plans

9 Market Driven Salary Plans
Select Vendor Select the vendor Evaluate proposals as a committee whenever possible Must use purchase price, vendor reputation, quality, school district’s needs, past relationship with vendor, total long term cost and any other relevant factors to evaluate. Finalize negotiations BAFO Get Board Approval October 2006 Market Driven Salary Plans

10 Market Driven Salary Plans
Contract Time! Now its time to formalize the agreement – “Contract Time” Often it is useful to use the vendors boilerplate contract, but Be Careful! There are some potential contract pitfalls to watch out for… October 2006 Market Driven Salary Plans

11 Market Driven Salary Plans
Don’t Indemnify Them Indemnification Clauses Be careful not to agree to indemnify third parties Such language would violate the Texas Constitution and should therefore be eliminated from any contracts October 2006 Market Driven Salary Plans

12 Market Driven Salary Plans
Stay Home Venue Provision Make sure that you have a venue provision in your contract whereby any lawsuits that may arise are brought in the county of the administrative headquarters of the school district. Not New York, California, Massachusetts, Kalamazoo or Timbuktu! October 2006 Market Driven Salary Plans

13 Market Driven Salary Plans
God Bless Texas! Governing Law Provision Make sure that the governing law is Texas law, not that of another state, or foreign country. You don’t want Napoleonic Law, Canadian Law, or the Laws of Mexico to decide your dispute. October 2006 Market Driven Salary Plans

14 Market Driven Salary Plans
Bonds & Insurance Certification of Insurance Provision Make sure that all contracts are specific as to the type of insurance required and that your district is named as the insured party. Verify the insurance coverage Verify any payment and performance bonds October 2006 Market Driven Salary Plans

15 Market Driven Salary Plans
“Terminator” Termination Provision Whenever possible, include a termination provision in your contract to allow your district the ability to terminate a contract for any cause, or no cause, with a certain number of days written notice. Example: “District reserves the right to terminate contract with, or without cause, upon provision of thirty (30) days written notice.” October 2006 Market Driven Salary Plans

16 Market Driven Salary Plans
Scope Scope of Agreement Include a provision stating that the written document is the entire agreement between both parties, and supersedes any previous written or oral agreements. Include a statement that any future amendments to the agreement will be in the form of a written amendment October 2006 Market Driven Salary Plans

17 Market Driven Salary Plans
“It expires when?” Length of Agreement Do not be silent on the length of a contract. It will be assumed the contract is perpetual! Always state a specific contract term, subject to possible early termination. October 2006 Market Driven Salary Plans

18 Market Driven Salary Plans
“Pay Up” Length of Time to Pay Include a statement that the district is on a Net 30 payment basis after receipt, not issuance, of invoice. May include a provision for a discount for early payment, ex. [2% - 10] October 2006 Market Driven Salary Plans

19 Market Driven Salary Plans
Lawyers are $$$ Attorneys’ Fees and Costs Include a provision in the contract that states that the prevailing party in any suit shall pay all reasonable attorneys’ fees and costs incurred in a lawsuit brought to enforce the agreement. This can be a double edged sword, but generally favors the school district. October 2006 Market Driven Salary Plans

20 Market Driven Salary Plans
Who? Identity of Parties Be precise about the identity of both parties. The district should be one party, not an individual or a school. Also be precise about the identity of the vendor. October 2006 Market Driven Salary Plans

21 Market Driven Salary Plans
“Do I have to renew?” Unfavorable Renewal Terms Automatic renewals can be risky Consider annual renewal options at the discretion of both parties Watch for early cancellation penalties October 2006 Market Driven Salary Plans

22 “They are sending us junk”
Vague Substitution Clauses: It’s All In The Details… Vague phrases like “Or similar materials” can be dangerous Specify costs Specify responsibilities Specify terms Specify approvals October 2006 Market Driven Salary Plans

23 Market Driven Salary Plans
Budget Busters Incomplete Cost Listings: Don’t overlook hidden costs! Make sure all charges are included: Delivery Setup/Installation Maintenance Repairs Training and travel Annual fees October 2006 Market Driven Salary Plans

24 Market Driven Salary Plans
“It wasn’t me!” Collateral Damage Include a contract provision that will hold the vendor responsible for damage they may cause to district property in the performance of their contracted duties. Payment for repair of district property. October 2006 Market Driven Salary Plans

25 Market Driven Salary Plans
Mediate Dispute Resolution Provision It is advisable to include a provision in your contracts that would require the parties to mediate any disputes before proceeding to litigation. This provision should include language that the parties should attempt to agree on a mediator, and that both parties will share equally in the costs of mediation. October 2006 Market Driven Salary Plans

26 Market Driven Salary Plans
Senate Bill 9 Criminal Background Check In September 2007, Senate Bill 9 went into effect, codified as Section of the Texas Education Code. Effects both employees of districts and contractors of districts Important date: January 1, 2008 For contractors hired prior to this date criminal background checks can be run by any law enforcement agency For contractors hired after this date, fingerprints are required to be processed through the DPS criminal history clearinghouse October 2006 Market Driven Salary Plans

27 Criminal Background Checks Continued
Three Questions to Determine Whether a Criminal Background Check is Required: Is there a direct contractual relationship Subcontractors are exempt Are the duties to be performed by the contractor continuing in nature? More than one day? Does, or will, the contractor have direct contact with students? Any project that requires a vendor to work in a classroom, gymnasium, parking lot, or other part of a school building where students will have access is effected October 2006 Market Driven Salary Plans

28 Criminal Background Checks Continued
Who is Responsible For Obtaining Background Checks? The contractor is responsible for obtaining and is also required to certify to the district that it has received all criminal history record information for all employees to whom the law applies. October 2006 Market Driven Salary Plans

29 Suggested Contract Language for Criminal Background Checks
Prior to commencing any work on this Project, Proposer [or Vendor] will certify, on the form provided herewith, that for each employee of Proposer [or Vendor] that will have direct contact with students, the Proposer [or Vendor] has obtained, as required by Texas Education Code Section : (a) national criminal history record information from a law enforcement, or criminal justice agency, for each employee of Proposer [or Vendor] hired before January 1, 2008; and (b) national criminal history record information from the Texas Department of Safety for each employee of Proposer [or Vendor] hired on or after January 1, 2008 Any employee who will, or may, have direct contact with students must not have been convicted of an offense in Texas Education Code Section October 2006 Market Driven Salary Plans

30 Contract Pitfalls To Avoid
QUESTIONS? Contact Information Greg Cruthirds, Director of Purchasing and Materials Management October 2006 Market Driven Salary Plans


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