1. Contracting 101 Introduces basic elements, potential pitfalls and essential contract drafting techniques
Presenters:
Greg Shabram, Contracts Manager
Kristen Jackson, Contracts Technician 2

2. Goal and Objectives Goal: Provide departments information necessary to
support expanded contracting responsibilities
Present key concepts and learning activities that will help demonstrate contracting best practices.

3. Scenario 1
A UO Department meets with the owner of a large plot of land.
They agree that UO Department can place research instruments on the land and in exchange UO will build a fence.
UO Department and the land owner shake hands.

4. Scenario 2
UO Department sends a letter to Bethel School District containing the terms of a proposed arrangement.
UO Department signs the letter and requests that the School District also sign the letter if the terms are acceptable.
Bethel School District signs the letter and returns it to the Department

5. Scenario 3
UO Dept creates a PO with the standard terms and conditions for ten hand radios
What is the agreement if they
call in the order and file the PO in their file cabinet?
What is the agreement if send
PO to the vendor?

6. Scenario Similarities
What were the common factors that made all 3 scenarios contracts?

7. A Contract Is…
An agreement by each party to undertake certain responsibilities
Offer

8. A Contract Is…
An agreement by each party to undertake certain responsibilities
Offer
Acceptance

9. A Contract Is…
An agreement by each party to undertake certain responsibilities
Offer
Acceptance
Payment or
Something
Gained

10. Scenario 4 Automation Software Purchase
Written agreement to customize software to automate paperwork processing.
Statement of work contains no specific deliverables.
Agreement does not include a maximum not to exceed dollar amount.
Agreement does not list milestones for work progress.
The only remedy for breach is termination.

11. The Purpose of Contracts…
Help you assure agreement is reached
Are both sides on the same page?

12. The Purpose of Contracts…
Help you assure agreement is reached
Are both sides on the same page?
Help you manage risk
Who is at risk?
Are we at risk?
Are we able to absorb the risk?

13. The Purpose of Contracts…
Help you assure agreement is reached
Are both sides on the same page?
Help you manage risk
Who is at risk?
Are we at risk?
Are we able to absorb the risk?
Help you ensure fiscal responsibility
Is the action fiscally appropriate?
Is the money available?

14. Real Life Example Missing a Key Purpose
Oregon DMV Software Purchase Contract
A five year project took eight years
Budget grew from $50M to $123M (146% increase)
Public outcry killed project
No provisions for remedies
Resulted in DOJ legal
sufficiency review

15. Fraud Triangle

16. Factors Contributing to Fraud Occurring (2010 ACFE Report)
Lack of internal controls
Override of existing controls
Lack of management review

17. Segregation of Duties Department Purchasing Profile
Examples of Duties:
Commit Funds
Approve Purchases
Receive Goods/Services
Process Invoice Payment
Approve Invoices
Management Review

18. Authority to Commit Department Funds Contracting Authority
(to allow for the use budget funds)
vs.
Contracting Authority
(enter into a written or oral contract)

19. Level 1 vs. Level 2 Contracting Authority

20. Contracts Included in Delegated Level 1 Authority
Direct purchases of goods & trade services up to $5000
Online / phone order
No written contract/signature
Pay invoice
Purchase Orders up to $5000
Banquet Event Orders pursuant to a PCS-approved Hotel/Catering Agreement which do not modify any of the terms of the underlying agreement.

21. Contracts Not Included in Delegated Level 1 Authority
All purchases greater than $5000 (requires written contract or PO).
All purchases of personal services
All rental of space (hotel, hostel, office space, etc).
BEO with additional terms &
conditions or changes in total
dollar amounts

22. Contracts Included in Delegated Level 2 Authority
Approved UO contract templates
Purchase Orders
Facility Use Agreements
Personal Services Contracts
Banquet Event Orders under
existing agreements approved by PCS

23. Contracts Excluded from Delegated Level 2 Authority
Purchases or Contracts in excess of $25,000
Contract templates with any change to approved template terms and conditions
UO Custom Contracts
Vendor Contracts
BEO with additional terms & conditions

24. University Purchasing & Contracting Responsibilities
Programmatic Review
Does purchase relate to business purpose or meet the objectives of university’s and department’s mission?
Budgetary Review
Are funds available for purchase?
Compliance Review
Purchase meets all applicable laws, regulations, policies, and procedural requirements and that the purchase or contract is completed using good business practices.

25. Responsibilities of Contracting Authority
Act within OUS Code of Ethics
Apply best value principles
Obtain all relevant approvals
Establish and apply internal controls
Collect documentation to support purchases and contract awards
Ensure reconciliations are performed and documented

26. Compliance Approvals Sponsored Projects Services
Information Technology (CIO Approval)
Business Affairs Office
Printing & Mailing
Design & Editing Services
Marketing and Brand Management
(See Approvals List)

27. Legal Review As of January 1, 2012: Performed by UO General Counsel
Custom Software Contracts > $250,000
Settlement or Release Agreements
Faculty or Student Exchange Agreements
Technology Transfer Agreements involving UO obtaining an equity interest
Purchase or sale of real property
Employments Contracts >$300,000/yr
Any solicitation resulting in one of the above agreements
Any document submitted to the State Bd
Performed by UO General Counsel

28. Example
Dept XYZ wants to hire a developer to customize software package to be used campus-wide for $400,000 ($200K for software; $200K for services).
What does the department need to do the complete this purchase and
ensure compliance with
UO policies?

29. Examples
Department XYZ wants to hire a speaker for an open lecture for $900.
Department XYZ wants to pay the University of Florida for some research materials they are selling.

30. Statement of Work Basic Components: Work elements of tasks
Milestones (tasks that support the deliverables, and when they are due)
Timeline/timeframe for performance of services
Detailed description of services (requirements, assumptions, purpose, benefits)
Clearly defined UO responsibilities and contractor roles
Fees for services and expense reimbursements
Payment Schedule (fixed, time and material, per unit rate, rate schedule)

31. Statement of Work Additional items to consider:
Write in a way that one can easily understand the transaction and know what is expected to happen
Clearly define the tasks, specifications for deliverables, key dates and deadline expectations (both from the Contractor and University)
Use active voice and consistent terms
Do not include contractor qualifications
Do not use words that are by their nature uncertain
(e.g. should, expect, anticipate, assist, contribute)
Do not include details about the competitive process

32. Statement of Work Applies to all contracts including:
Personal Service Contracts (PSC)
Purchase Orders
Equipment Leases
Real Property Leases
Facility Use Agreements

33. SOW Scenario
Hiring a consultant to provide a 3 day team building workshop.
Topics to be covered include motivation, trust, stress management and communication.
Workshop includes participation in activities and games that promise to be fun and to unite the group.
Training materials provided.
Consultant fees are $300/day for 4 hour sessions. 50% deposit with remainder due at workshop completion.
Paying consultant travel & expenses up to set amount.
Consultant fees include a follow up meeting in 6 months to evaluate team progress.

34. Ready to Award a Contract…Now What? Due Diligence:
READ THE CONTRACT
Crucial Contractual Items
Money – amount of the contract and payment terms
Term and termination
Statement of Work
Other document references
Use official legal names
Insurance

35. Ready to Award a Contract…Now What? Due Diligence:
READ THE CONTRACT
Crucial Contractual Items
Money – amount of the contract and payment terms
Term and termination
Statement of Work
Other document references
Use official legal names
Insurance
Common Issues
Indemnity
Attorney Fees
Governing law
Control of defense
Late fees
Confidentiality

36. Example
A faculty member within Dept. XYZ wants to hire a consultant to provide a series of one-hour lectures.
Please identify what you need to make sure this contract meets its purposes and responsibilities are met.

37. Executed Contract Now What?

38. Contract Administration
Delivering the fully signed copy of the contract to the Contractor.

39. Contract Administration
Delivering the fully signed copy of the contract to the Contractor.
Maintain a contract file which includes all pertinent information regarding the purchase.

40. Contract Administration
Delivering the fully signed copy of the contract to the Contractor.
Maintain a contract file which includes all pertinent information regarding the purchase.
Ensuring that services/goods received under contract conform with language of the contract.

41. Contract Administration
Delivering the fully signed copy of the contract to the Contractor.
Maintain a contract file which includes all pertinent information regarding the purchase.
Ensuring that services/goods received under contract conform with language of the contract.
Track Important Dates – e.g. deliverables, expiration, amendments

42. Contract Administration
Delivering the fully signed copy of the contract to the Contractor.
Maintain a contract file which includes all pertinent information regarding the purchase.
Ensuring that services/goods received under contract conform with language of the contract.
Track Important Dates – e.g. deliverables, expiration, amendments
Payment is within contract terms
PCS is always available for questions or concerns.

43. Contract Administration Examples
PSC for design, editing and printing of a catalog for parents (assume printing waiver completed)
SOW includes all work to be completed in vendor’s studio
Four months later, for same project,
vendor submits invoice for printer rental
used to print the parent catalog
What are the issues?

44. Expired Contracts & Amendments
Contract Renewals
Must be done before end of contract term and according to the renewal terms laid out in the contract.

45. Expired Contracts & Amendments
Contract Renewals
Must be done before end of contract term and according to the renewal terms laid out in the contract.
End of contract term
Contract ceases to exist… it is DEAD
Contract cannot be reinstated by amendment alone

46. Expired Contracts & Amendments
Contract Renewals
Must be done before end of contract term and according to the renewal terms laid out in the contract.
End of contract term
Contract ceases to exist… it is DEAD
Contract cannot be reinstated by amendment alone
Contract amendments
Explanation of how the contract is being revised
Implementation instructions
Useful only if you have a complete copy of the contract
Party’s name change does not require an amendment

47. Additional Tasks Matching invoices to deliverables
Notes on purchase results/vendor satisfaction

48. What remaining questions do you have?
Wrapping it Up
What remaining questions do you have?
Evaluations