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					      Vendor Service
        Contracts:
Processes and Procedures
                   (AM 541)
    Initiating, Processing, &
      Establishing Vendor
             Contracts
       Robert Lee Dickens - Contracts Manager
  Richard “Rancher” Wollney Jr. - Contracts Specialist
              Agenda
What is a Contract?
Categorizing University Contracts
Initial Development and Submission
Formal Review of Contract Terms
Time Lines, High-Risks Agreements, and
Special Procedure Contracts
Finalizing and Executing the Agreement
Contract Administration
                                         2
       What is a Contract?
          Contract Law 101
         Determining the Initial Step




Everything you wanted to know about contract law that
          we can squeeze into 30 minutes.

                                                        3
       What is a Contract?
A contract is an agreement between two parties
that creates an obligation to perform (or not
perform) a particular duty. A legally
enforceable contract requires:

1. An Offer (I’ll mow your lawn this weekend, if you
   pay me $30)
2. An Acceptance (You’ve got a deal)
3. Consideration (The value received and given –
   the money and the lawn mowed)


                                                       4
   Establishing Offer and
Acceptance: “A Meeting of the
           Minds”
A legally recognized offer and an acceptance
creates a “meeting of the minds‟, or mutual
assent, between the parties.
Mutual Assent requires the presence of the
following factors:
1. Both parties must exhibit a “contractual intent”
   [words spoken in jest or frustration will lack the
   requisite intent];
2. The terms of the offer must be clear and definite;
3. The acceptance must be clearly communicated.
                                                        5
The Requirement for Clear and
       Definite Terms
Required Clarity: For terms to be legally
valid, a reasonable person must be capable of
readily understanding them.

Four primary areas in determining
definite terms:
1. the parties;
2. time for performance (term or service
  schedule);
3. the price; and
4. the subject matter or scope of service.
                                                6
          Consideration:
The Importance of the “Bargained Exchange.”


Consideration must be mutual. Both
parties must receive something of value.
Involvement of money is not required.
Contracts vs. Gifts




                                              7
What Authority Defines a Contract?
Sources of Contract Law

 Common Law – Court made case law governing
 contracts (primary law for service contracts)

 Uniform Commercial Code (UCC) –
 [Tex. Bus.& Comm.Code] – governs sales of tangible
 goods and secured transactions (not services).
 http://tlo2.tlc.state.tx.us/status.bc.toc.htm

 Specific Statutes – http://www.capitol.state.tx.us

                                                      8
Categorizing University
      Contracts
  Types of University Contracts
 Affiliation and            Prof. Service Agreements
  International Program       (for individuals not
  Agreements                  organized as a business)
 Athletic-Specific, or      Procurement Contracts;
  Student-Specific            Vendor Services
  Contracts (non-            Sponsored Research
  procurement in nature).     Contracts and Sponsored
 Interagency Cooperation     Projects
  Agreements (IAC) &         University-Provided
  Inter-local Agreements      Services
 Museum and Exhibit        See Categorizing Contracts
  Agreements
                                                     10
Classifying a Procurement Contract
 University payment is not a defining factor. [Many
 procurement contracts actually involve a vendor
 payment to UTSA.]

 Generally defined as: A formal agreement with a
 business entity to secure a particular service that is
 subject to compliance with competitive purchasing
 requirements or purchasing policies.

 Competitive requirements can be dictated by:
 1.   Statutory provisions;
 2.   UT System polices;
 3.   Best Value Procedures; and
 4.   Appropriate business relations.
                                                          11
              See “Procurement Contracts Defined”.
Initial Evaluation,
Development, and
   Submission
 Initial Contract Evaluation and
           Development

Determining the Need for an Agreement:

1. Vendor-Originated
2. UT Determination: The risk of the project
   may necessitate a formal agreement; or UT
   Policies may require it.


Using Sample Agreements
                                               13
    Routing and Submission of
      Contractual Projects

Where to Route:      Regardless of value or cost, route
Procurement Contracts through the Purchasing Office.


Electronic Purchase Requests (PB4 – Point)
– Establishes approval authorities – Authorizes
  implementation – Approves funding

Keep in mind that contracts for vendor goods and
services are the final stage of a proper procurement and
must never precede the purchasing procedures.


                                                       14
             Required Submission
               Documentation
    Appropriately weighing the risks of the project
    with the most efficient processing methods
    requires a clear understanding of the project.

    Upon submission, include the following
    information:
   1. A clear description of the requested service; and
   2. Details related to the purpose and benefit of the
      requested service;

Remember, an enforceable contract requires clear and definite terms!

                                                                       15
      Required Submission
        Documentation
If it is already known that a vendor will be
requesting that its agreement be signed,
the following information should also be
included:
1. A short explanation (1-3 sentences) of the
   extenuating circumstances that require a
   vendor‟s contract; and
2. An electronic version of the agreement in
   modifiable Word format.


                                                16
Purchasing Office Assistance
Routing to Assigned Buyer: The electronic
purchase request (PB4) will automatically
route to your department‟s assigned buyer
in the Purchasing Office.




                                        17
  Purchasing Requirements
The Purchasing Office Buyer will work with
the Contracts Office and your Department
to:
1. Determine the most efficient methods for
   project completion;
2. Ensure compliance with UT purchasing
   Regulations and Best Value Polices; and
3. Accurately define the Statement of Services
   (SOW) or Scope of Work.
                                                 18
Reviewing the Business Issues
Developing an Appropriate Statement of
Services (SOS):
 1. Does the SOS accurately define what you
    want?
 2. Will the SOS allow for legitimate evaluation
    of the result?
 3. Talk it through with an unaffected party.


     See Crafting the Agreement for more information.
                                                        19
Reviewing the Business Issues
Payment schedules: [Ensure terms are
acceptable and that the department has the ability to
comply.]

Service limitations: [i.e. A network license limited
to UTSA-controlled computers, when what is really
required is a network license that allows remote access.]

Length of contract terms: [Changing technology
may make a two-year agreement for database services
with three option years more preferable than a five-year
agreement with less monetary costs.]

                                                           20
     Finalizing the Needs
Assistance from
Purchasing and
Distribution Services
Defining Business
Risks
Minimizing the Risks
Departmental
Ownership
                            21
Understanding the Commitment
The Principle Issue: Ensure there is a clear
understanding of the two parties‟ commitment.
Ensuring Enforceability:
 1. Establish objective measures of
    performance (did you get what you wanted?)
 2. Create methods to resolve disputes without
    affecting progress.
 3. Determine means of recourse and remedies,
    if all else fails.

                                                22
   Requirements for Additional
    Expertise and Approvals

Review from other departments: The
Contracts Office may request a review and/or
approval from other affected departments and
additional University experts.

Departmental Ownership: As The „owner‟ of
the contract, the department should take
reasonable steps to secure all departmental
approvals.

                                               23
Formal Review of the
  Contract Terms
      Legal Office Review

Guidelines for review by UTSA‟s Legal
Office

Requirements for Review by the UT
System Office of General Counsel



                                        25
      Utilizing Alternate Contract
                Methods

  Purchase Order vs. Formal Contract

  Incorporating Contractual Terms into POs,
  Bids, and RFPs

See Alternate Contract Methods


                                          26
Formal Review and Analysis
Refining the SOS, if necessary
Matching the Terms to the SOS
Negotiation
– The Contracts Office will facilitate any
  required negotiations with the vendor‟s legal
  office or contract officers.
– The Contracts Office will maintain continuous
  consultation with the department, specifically
  in the area of business issues.
                                                   27
Major Areas within Every Contract

Parties                        Warranties
Effective Date and Terms       Remedies
Statement of Service (SOS)     Risk Allocation
Pricing                        Boilerplate
Performance Standards          Signatures
                             See:
                             contract components



                                                 28
Common Contractual Terms
Three commonly negotiated/contentious
provisions:

1. Warranties
2. Indemnification [protection against loss or
   liability from 3rd party claims]
3. Liability & Damages [legal responsibilities]


                                                 29
  Common Contractual Terms
Two common provisions specific to UTSA:

  1. Confidentiality


  2. University Marks




                                          30
 Constitutional & Court-Ordered
    Limitations & Authority

Sovereign Immunity

Prohibition Against Agency Debt

Right to Suit



                                  31
   Statutorily Required Clauses
  Governing Law (Jurisdiction) and Venue
  Financial Standing
  Dispute Resolution
  Electronic and Information Resources
  Accessibility (EIR Provision)
  Standard Addendum

See Standard Clauses

                                           32
Use of Template Agreements

Both UTSA and UT System have
developed template agreements that can
be utilized for various services.

Use of Template Agreements:
1. provides vendors with up-front notification of
   the terms required for the project; and
2. assists in protecting the University through
   the use of standardized terms & conditions.
                                                    33
      Time Lines:
     Minor Contracts,
High-Risk Agreements, and
 UT System Requirements
        General Time Lines
Standard or Template Agreements with no
Substantive Changes:
– typically reviewed (redrafted, if necessary) and
  comments relayed to the department and/or vendor
  within 7-10 days.

Minor Contracts (approx. 1-5 pages with
relatively high clarity and minor risk):
– typically analyzed, redrafted, and relayed to the
  department and/or vendor for review within 7-10
  days.

                                                      35
      High-Risk Agreements
Determining the Risk:
Certain agreements, because of value, policies,
or subject matter, can signify potential high risk
to the University.

Timeline:
The time required to analyze, redraft, and
coordinate issues (and departments) may be
significant, but an initial review will generally be
provided to the department and/or vendor within
3-4 weeks.

                                                     36
Required UT System Review
Special Procedure Contracts
– Requires review by the UT System Office of
  General Counsel (OGC). The Contracts Office
  will review the agreement locally and then
  forward to OGC for approval as to legal form.

General Business Contracts > $500,000
– Requires review and approval by OGC. The
  only exceptions to this requirement are those
  contracts designated by UT System as
  Standard Contracts.

                                                  37
Required UT System Review
Timelines
– Special Procedure Contracts and OGC review
  will require additional processing time (add an
  estimated 60-90 days to the normal process).

Board of Regents Approval
– Generally speaking, all contracts with a value
  exceeding $1M must be approved by the
  Board. A summary of contracts requiring
  Board approval can be found at
  http://www.utsystem.edu/policy/policies/uts145.html
                                                        38
Finalizing and Executing
     the Agreement
   Finalizing the Agreement
Final Negotiations
with the Vendor

Departmental
Approval Required

Additional Necessary
Approvals



                              40
     Executing the Agreement -
          Who can Sign?

Upon completion of negotiation, the
Contracts Office will:
1. route the Agreement to obtain appropriate
   signatures; and
2. distribute signed copies accordingly.

President-Delegated Authority:
1.   V.P. for Business Affairs
2.   Associate V.P. for Administration
3.   Associate V.P. for Financial Affairs
                                               41
Departmental Contract
   Administration
Cost Benefit Analysis Required for
     State Funded Contracts
If state appropriated funds (14 Accounts)
are used, the department must maintain
on file the following documentation:

1. A cost-benefit analysis for the services, or a
   justification of the need for the services; and
2. The relationship of the services to the
   staffing plan.

                                                     43
Final Stage: Departmental Contract
          Administration
 Upon completion of the procurement
 process and contract negotiations, the
 final phase of contracting is administration.

 Critical Nature of Administration:
 – Regardless of how well a contract is drafted,
   the contract will be ineffective if proper
   contract administration is not performed.


                                                   44
     Ensuring Compliance:
   Departmental Administration
A Department‟s Contract Administration
responsibilities include:
1. Verifying the contractor complies with the
   terms and conditions of the agreement;

2. Ensuring all services have been received to
   your specification prior to authorizing
   payment (or all revenue received); and

3. Ensuring the collection of renewal
   documentation (i.e. insurance, bonds).
                                                 45
Guide for Contract Administration
Departmental Guide for Contract
Administration:

– To ensure compliance, departmental
  administrators are strongly encouraged to
  review the guidelines found in the Department
  Guide for Administration of Major Service
  Contracts.


                                              46
         Contacts and References
   Robert Lee Dickens
   Contracts Manager
   458-4067
   Richard “Rancher” Wollney Jr.
   Contracts Specialist
   458-4069
   Nora Evans
   Business Law Attorney - Legal Affairs
   458-4703
   Yolanda Miller
   Director, Purchasing and Distribution Services
   458-4975
   Lane Brinson
    Purchasing Manager
    458-4066
http://www.utsa.edu/purchasing/contracts/



                                                    47
   What have we discussed …
 Definition of a Contract
 Types of University Contracts
 Initial Development and Submission of
  Contractual Project
 Overview of Contract Terms
 Time Lines, High-Risks Agreements, and
  Special Procedure Contracts
 How to finalize and execute an agreement
 Contract Administration
 Resource information
                                             48
Questions




            49

				
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