Avoiding Potential Contract Pitfalls
Greg Cruthirds, Director of Purchasing and Materials Management
Clear Creek Independent School District - League City, Texas
Where We’re Located
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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
Projected enrollment of 47,500 within 12
66 different languages spoken
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$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
o District Challenges
Managing student growth
Managing facility growth
Special Ed program growth
More than 4,800 employees
More than 2,600 teachers, librarians & nurses
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Over the next five years, Clear Creek ISD will:
o Experience tremendous growth in facilities
New Central Support Facility – Summer 2008
25th & 26th planned in 2009
9th planned in 2010
10th planned in 2011
11th planned in 2011
4th opened in August of 2007
5th planned in 2010
Early College High School
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To provide efficient and effective
management of resources:
o Meet the District’s administrative and
Ensure that end users are getting what they
Ensure that they are getting it when they need
Ensure that they are getting good value
o Be flexible enough to change with the times
Best practices, Innovative programs
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Define your needs
It is difficult to get what you need, if
you don’t know what you want.
o Solicit information from potential vendors
o Meeting between buyer and department
o Research the options
o Communicate with other school districts
o Attend vendor fairs
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o May go through the RFP process.
o May seek proposals from purchasing cooperatives.
o May get written quotes if less than $25,000.
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o 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.
Get Board Approval
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Now its time to formalize the agreement –
Often it is useful to use the vendors
boilerplate contract, but
Be Careful! There are some potential
contract pitfalls to watch out for…
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Don’t Indemnify Them
o Be careful not to agree to indemnify third
o Such language would violate the Texas
Constitution and should therefore be
eliminated from any contracts
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o 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
o Not New York, California, Massachusetts,
Kalamazoo or Timbuktu!
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God Bless Texas!
Governing Law Provision
o Make sure that the governing law is
Texas law, not that of another state, or
o You don’t want Napoleonic Law,
Canadian Law, or the Laws of Mexico to
decide your dispute.
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Bonds & Insurance
Certification of Insurance Provision
o 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
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o 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.
o Example: “District reserves the right to
terminate contract with, or without cause,
upon provision of thirty (30) days written
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Scope of Agreement
o Include a provision stating that the written
document is the entire agreement between
both parties, and supersedes any previous
written or oral agreements.
o Include a statement that any future
amendments to the agreement will be in the
form of a written amendment
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“It expires when?”
Length of Agreement
o Do not be silent on the length of a contract.
o It will be assumed the contract is perpetual!
o Always state a specific contract term,
subject to possible early termination.
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Length of Time to Pay
o Include a statement that the district is on a
Net 30 payment basis after receipt, not
issuance, of invoice.
o May include a provision for a discount for
early payment, ex. [2% - 10]
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Lawyers are $$$
Attorneys’ Fees and Costs
o 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.
o This can be a double edged sword, but
generally favors the school district.
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Identity of Parties
o Be precise about the identity of both parties.
o The district should be one party, not an
individual or a school.
o Also be precise about the identity of the
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“Do I have to renew?”
Unfavorable Renewal Terms
o Automatic renewals can be risky
o Consider annual renewal options at the
discretion of both parties
o Watch for early cancellation penalties
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“They are sending us junk”
Vague Substitution Clauses:
o It’s All In The Details…
Vague phrases like “Or similar materials” can
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Incomplete Cost Listings:
o Don’t overlook hidden costs!
Make sure all charges are included:
Training and travel
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“It wasn’t me!”
o 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.
o Payment for repair of district property.
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o Dispute Resolution Provision
o It is advisable to include a provision in your contracts
that would require the parties to mediate any disputes
before proceeding to litigation.
o 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.
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Senate Bill 9
Criminal Background Check
o In September 2007, Senate Bill 9 went into
effect, codified as Section 22.0834 of the
Texas Education Code.
o Effects both employees of districts and
contractors of districts
o 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
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Criminal Background Checks
Three Questions to Determine Whether a
Criminal Background Check is Required:
o Is there a direct contractual relationship
Subcontractors are exempt
o Are the duties to be performed by the
contractor continuing in nature?
More than one day?
o 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
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Criminal Background Checks
Who is Responsible For Obtaining Background
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.
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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 22.0834:
(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,
Any employee who will, or may, have direct contact with students must not have
been convicted of an offense in Texas Education Code Section 22.085.
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Contract Pitfalls To Avoid
Director of Purchasing and Materials
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